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Transparency and Corruption: like Garlic and Vampires

Transparency International released its annual Corruption Perceptions Index (CPI) last week.  Not surprisingly, some of the biggest recipients of U.S. foreign aid fared poorly in the corruption rankings- countries like Afghanistan, Iraq, Sudan, and Pakistan.  Daniel Kaufmann writes in the Brookings Institute’s blog  that it would be misguided to simply pull the plug on aid channeled to corrupt countries, but we need to examine the evidence and ask some hard questions.  To allow the status quo to continue would be just as negligent as discontinuing aid entirely.  Kaufmann suggests five important questions to ask of U.S. foreign aid, which I summarize here:

1. Has there been any improvement in corruption in countries where the U.S. and other donors provide aid?
2. What have we learned about aid from the experience of large aid flows to not-very-corrupt countries?
3. Is aid making a difference one way or another- is it making corruption better, worse, or having no effect?
4. How can we work around corrupt governments- is there a way to work in the country without perpetuating the problem?
5. How has U.S. foreign aid been directly tainted by corruption?

One possible way to reduce corruption, over time, is to shine the light on corrupt practices through transparency.  The Extractive Industries Transparency Initiative (EITI) is an example of an international initiative to do just that.  EITI sets a global standard for transparency in the extractive industries.  Countries that sign on to this initiative agree to publish the amount of funds received from their extractive industries (mining, oil, etc), and require companies to publish what they pay for these extractive industries.  Then these reports are compared, and any discrepancies are brought to light. 

There are currently 28 EITI candidate countries, which means that they are in the process of reporting on their extractive industries but they haven’t had their reports validated yet.  Two countries have completed the validation process and are now compliant countries, Azerbaijan and Liberia.  It may be a coincidence, but these two countries have improved their standing on the Corruption Perceptions Index since becoming EITI compliant.  EITI countries are mostly resource-rich developing countries that have had problems with the so-called resource curse, but Norway is also a candidate country, and EITI is open to any resource-rich country.  In fact, many observers are calling for countries such as the United States and Russia to become EITI compliant.

Where does the United States stand on the EITI?  It is officially listed as a supporting country, which means that it endorses the initiative.  The U.S. also provides funds to EITI, and it just contributed $6 million to the EITI trust fund facility, which is managed by the World Bank.  In September, Senator Dick Lugar introduced the Energy Security Through Transparency Act, S. 1700 , which would: require companies listed on U.S. stock exchanges to disclose their extractive payments to foreign governments; encourage the President to work multilaterally with other countries to promote similar disclosure; express the sense of Congress that the United States should become an “implementing country” of EITI; and commit the Department of the Interior to disclose extractive payments received for resources derived from federal lands.

And while we’re talking about transparency, U.S. foreign aid could stand to have some light shed on it too.  It could commit to being more transparent about aid through the International Aid Transparency Initiative , which came out of the Accra High Level Forum on Aid Effectiveness in September 2008.  So far most developed countries are signatories, but the United States is absent from that list.

We Need You to Act Now for a Robust FY11 International Affairs Budget

Nearly 140 members of Congress have signed on to the FY11 Congressional Letter to the President supporting a robust International Affairs budget. From Washington State, Senator Patty Murray, as well as Representatives Adam Smith, David Reichert, Richard Larsen, and Jim McDermott have signed on. The U.S. Global Leadership Coalition needs your help to get more members of the Washington State delegation signed on to this important letter! The deadline is November 25th– only two days away.

Click here to urge your members of Congress to sign the letter.

UPDATE:  Thank you for taking action- the USGLC reports that a record number of legislators have signed on to this letter demanding a robust FY 11 international affairs budget.  Representatives Jay Inslee and Brian Baird of Washington State added their names to the letter after this post was published.  For a full list of the signatories to the letter, see the FY 11 Congressional Letter to the President Update Center on the USGLC website.

Kerry/Lugar Foreign Aid Reform Bill in Markup Today

by Global Washington Policy Coordinator Danielle Ellingston

The Senate Foreign Relations Committee is scheduled to mark up the Kerry/Lugar Foreign Aid Reform Bill, S. 1524 today, despite objections from the State Department.  According to Foreign Policy’s blog, the Cable, State Department leaders asked Senator Kerry to hold off on moving the bill forward, at least until they had a chance to finish the Quadrennial Diplomacy and Development Review (QDDR).  Kerry would have complied with this request, but Senator Lugar reportedly forced his hand- Lugar would withdraw his support for the bill if Kerry didn’t move it forward.  And understandably, Kerry could not afford to lose Lugar.

The State Department was asking a lot of Kerry, since the QDDR isn’t due to be completed until fall 2010.  That is a long time to wait for action on foreign aid reform by Congress, and a lot can happen in a year.  If Congress wants to have a say in this process, it needs to get its chips on the table now, especially with the administration taking so long with each step.  The White House has already shown us how slow it can be, by taking more time to announce a USAID administrator nominee than the polar ice caps need to melt.  If moving forward on this bill helps push the White House to move a little faster on foreign aid reform, so much the better.

S. 1524, the Foreign Assistance Revitalization and Accountability Act of 2009, strengthens USAID by restoring its policy planning staff and giving it new authority to oversee foreign assistance programs throughout the government.  It is a small but necessary step in modernizing U.S. foreign assistance, which is fragmented and uncoordinated.  Maybe everything in this bill and more could be accomplished through the QDDR and the Presidential Study Directive, but without Congressional action that could take a very long time.

There are two other foreign aid reform bills which have been introduced in the House.  H.R. 2139, The Initiating Foreign Assistance Reform Act of 2009, was introduced by Howard Berman in April 2009, and directs the President to develop a comprehensive national strategy to promote global development, as well as a system for monitoring effectiveness.  H.R. 2639, The Global Poverty Act of 2009, introduced by Adam Smith of the 9th district of Washington State in May 2009, directs the President to develop a similar strategy, with the objective of eliminating extreme global poverty and achieving the United Nations Millennium Development Goal of reducing by one-half the proportion of people living on less than $1 per day.   The NGO Bread for the World has a nice side-by-side comparison of S. 1524 and H.R. 2139 in its blog.