U.S. foreign aid is becoming increasingly outdated, analysts here are suggesting.

Rather, reforms to U.S. assistance need to focus on issues of accountability and country ownership, according to a policy paper released this week by Modernizing Foreign Assistance Network (MFAN), a prominent coalition of international development advocates and foreign policy experts.“Aid should be structured in a way that citizens and NGOs can monitor how the government implements development projects." -- Casey Dunning

“Aid is a strong expression of U.S. moral, economic, and national security imperatives, and in many contexts the U.S. is still the most significant donor,” the paper states. But according to many metrics, U.S. aid is both non-transparent and inefficient.

“The United States needs to frame and deliver aid in a structured way that would support the effectiveness of aid in partnership countries and generate sustainable results,” Sylvain Browa, director of aid effectiveness at Save the Children, an independent charity, told IPS.

“In such dynamic environments, where all aid remains critical to savings lives, curing diseases and putting children in school, new players come to stage, and these include local leaders and citizens who know first-hand what their priorities are.”

In terms of aid quality, the United States ranked just 17th out of 22 major donors according to the Commitment to Development Index in 2013. Each year, the index ranks wealthy countries on how efficiently they help poor ones in areas of aid, trade, finance, migration, environment, security, and technology.

According to that ranking, just one U.S. agency was rated “very good” in terms of transparency. The agency responsible for the bulk of U.S. foreign assistance, USAID, was rated just “fair”, while the State Department and PEPFAR, the landmark anti-AIDS programme, were rated “poor” and “very poor” respectively.

MFAN suggests that a newly streamlined policy agenda, structured around two “mutually reinforcing pillars of reform” – accountability and country ownership – could significantly improve the effectiveness of U.S foreign aid.

“The donor-recipient paradigm of foreign aid is outdated,” the report states, and without priority on these two pillars, “we revert to old, tired, and stagnant paradigms of aid – paradigms that unnecessarily perpetuate aid dependency.”

The new program is designed to empower communities, which in turn should carry out country ownership, says George Ingram, MFAN’s co-chair and a senior fellow at the Brookings Institute, a think tank here.

“The two pillars are prerequisites to build the kind of capacity that will help enable leaders and citizens in the aid-recipient countries to take responsibility for their own development,” Ingram told IPS, “such as spending priorities, as well as making evidence-based conclusions about what works and what doesn’t.”

The report emphasises that such changes are also somewhat time-sensitive. Given looming domestic and international deadlines, MFAN’s analysts say the next two years constitute “an important window of opportunity for U.S. aid reform”.

“The midterm elections in 2014 are certain to shake up the membership of Congress,” they write. “In 2015, the Millennium Development Goals will expire and a new global development agenda will take its place. And 2016 will bring a new administration and further changes on Capitol Hill.”

Local destiny

The recommendations have received quick support from other development groups.

“The paper is of universal importance to all aid agencies, implementers and thinkers,” Casey Dunning, a senior policy analyst for the Centre for Global Development, a think tank here, told IPS.

But she warned that there were inherent difficulties in the recommendations, as well.

“There is a lot of rhetoric on what country ownership means or what accountability encompasses,” she says. “Ambiguities in definitions and measurements of accountability and country ownership make it difficult to make aid more effective. However, the MFAN report helps to find metrics for capacity-building and to see what it actually means.”

Save the Children’s Browa, too, notes that the concepts outlined in the report are not necessarily new.

“But when put together, these pillars are vital to building local capacity and creating local ownership of resources and tools for development,” he says, “so that country leaders and citizens can take leadership in their destiny.”

To achieve better transparency, the report’s authors are calling on the U.S. government to fully implement new global standards called the International Aid Transparency Initiative (IATI) by the end of 2015. In addition, the ratings of the Aid Transparency Index should be extended to all U.S. government agencies, which currently doesn’t happen.

Further, all U.S. agencies should begin contributing comprehensive financial information to a landmark new online government information clearinghouse, known as the Foreign Assistance Dashboard.

Finally, aid and development decisions need to be guided by rigorous evaluation, MFAN says. Together, transparency and evaluation will help these agencies to achieve stronger results for both U.S. taxpayers and communities receiving U.S. assistance.

In all of this, Ingram notes, learning is one of the most important aspects in the policy proposal. “Data and evaluations are useless unless we learn from them and use them to make better decisions and achieve better results,” he says.

Defining partners

The aid paradigm has already shifted, MFAN’s report suggests. “Today, countries that give support through bilateral assistance and countries that receive such support are partners,” it states.

Yet how exactly to define those partnerships remains a work in progress.

“Aid should be structured in a way that citizens and NGOs can monitor how the government implements development projects,” CGD’s Dunning says, “and how the resources are utilised.”

Would such an approach run the risk of strengthening corruption at lower levels? Dunning says this isn’t necessarily the right question.

“We can’t shy away from the corruption issue, since it’s such an integral issue for debate,” she says. “And transparency is the key. It is vital to every programme, every sector. Together with other tools, such as evaluation and learning, transparency contributes to sustainable country ownership, which militates against corruption.”

MFAN’s Ingram, meanwhile, sees the empowerment of local communities as an anti-corruption tool in itself.

“Engaging smart and trusting people who know the culture and know how to manoeuvre through the dynamics of that country is very important,” he says.

“Informed and empowered citizens who demand good governance and sound priorities act as a check against corruption.”

A deadlocked U.S. Congress proved unable to settle budgetary differences late Monday evening, leading to a federal government shutdown that could soon be felt by foreign aid programmes and their recipients.

Tuesday was the start of the fiscal year in Washington, but polarised lawmakers have been unable to agree on how to fund the federal government in an era of austerity. As such, a vast but complex patchwork of federal government agencies and programmes has been forced to slow or shut down entirely."A shutdown starts to threaten the reliable, longer-term term relationship that is really central to a lot of the programmes that USAID undertakes.” --Lisa Schechtman of Water Aid America

Thus far, much of the focus here has been on the impact on domestic social spending – important food programmes for seniors, children and pregnant mothers, for instance, will be cut off completely – and on U.S. jobs. Indeed, one of the last moves President Barack Obama took on Monday was to sign into law an emergency measure to continue paying members of the U.S. military.

Members of the Foreign Service, however, will likely see impacts if the shutdown continues, as will programmes dependent on U.S. foreign aid.

“Internationally, the U.S. government will not be able to make any new contributions to agencies that deliver food aid and other services to poor and hungry people around the world, nor respond to new humanitarian emergencies. Over time, hungry people relying on U.S. aid will not receive food, and children will not receive inoculations against disease,” Rev. John L. McCullough, the president of Church World Service, an anti-poverty campaigner, said during a press call Monday.

“For decades Democrats and Republican alike have agreed on the vital importance of robust humanitarian and development assistance. But the myopia of some [lawmakers] and their unwillingness to compromise has eroded this consensus, literally taking away food from the mouths of hungry children.”

For the moment, U.S. officials have been quick to offer assurances that most U.S.-assisted development programming would not be affected by the shutdown, which formally began at midnight Monday night. But the complexity of U.S. federal programmes and their varying budgetary schedules means that it is impossible to offer an overarching analysis of the ramifications for USAID, the government’s main foreign aid arm.

“If the government shuts down, initially Department of State and USAID activities can be sustained on a limited basis for a short period of time,” Jen Psaki, a State Department spokesperson, told reporters Monday. “Because we’re able to sustain our operations on a limited basis, the vast majority of normal functions and operations will continue.”

Psaki was unable to say whether this “short period” meant additional funding periods of days, weeks or months, however, noting only that the State Department’s budget analysts were “still punching through” the fallout.

Loss of confidence

But it is clear that U.S. assistance will begin to feel shutdown-related economic pinches – or worse – if lawmakers are not able to reopen the government in the near term. The first to be impacted would likely be some of the development programmes that receive funding in just one-year durations.

According to guidance put out on Friday by USAID, the agency says it plans to “continue as many normal operations as possible … until all appropriated balances are insufficient to continue.” For many programmes, that will mean until funding for the past fiscal year is finished.

Even before that point, humanitarian and assistance programmes will feel strains. During the shutdown, new programmes will be unable to begin, new personnel will not be hired, and even unplanned travel by U.S. officials will be barred.

Further, there are already very real long-term negative implications for the stability and confidence often required for the intricate associations required for modern development programmes to succeed.

“Our biggest concern right now is the loss of confidence and predictability in ongoing U.S. government relationships with partner governments in poor countries,” Lisa Schechtman, head of policy and advocacy at Water Aid America, a development group, told IPS.

“For instance, to implement a successful sanitation programme requires a relatively long-term investment to actually change community behaviour. A shutdown starts to threaten the reliable, longer-term term relationship that is really central to a lot of the programmes that USAID undertakes.”

Further, as fiscal disagreement continues in Washington, Schechtman notes that foreign assistance – although constituting less than 1 percent of the overall budget – will remain increasingly vulnerable to cuts.

“The challenge is that USAID is often disproportionately targeted in budget negotiations, with members of Congress viewing USAID’s work as a good place to start when trying to save money,” she says.

“[Foreign assistance] appropriations are already lacking in comfortable funding levels, which means that their staying power is not as long as we would like. That’s not just about the U.S. government missing opportunities, but also translates into impacts on human lives around the world.”

Protracted disagreement

Although political pressures are quickly growing on lawmakers to arrive at a funding solution to re-open the federal government, the current situation could drag on longer than some have previously suggested.

Despite new moves towards negotiation on Tuesday, there is remarkably little overlap in the negotiating stances adopted by Republicans and Democrats. Thus, unlike previous shutdowns of the federal government (the last took place in the mid-1990s), today’s political positioning appears to offer remarkably little room for eventual compromise.

At the centre of the conservative stance is a demand to halt or dismantle new health-care legislation that also went into effect Tuesday and would require that nearly all U.S. citizens receive some sort of health coverage. Yet that stipulation is a nonstarter for Democrats, particularly for President Barack Obama, for whom the health-care law is considered a signature achievement.

The health-care debate is actually a central part of a much broader disagreement, however, over the size and sustainability of U.S. debt, an issue that has become a key mobilisation tool for conservative Republicans. This spring, a similar stalemate in Congress led to automatic budget cuts of an estimated 3 to 8 percent for every federal government agency, USAID included.

It’s important to note, then, that any hiccup in foreign assistance delivery from the current shutdown would be coming on top of those broader cuts. Further, unless politicians are able to agree to a long-term spending deal, another round of these across-the-board budget cuts are due in the spring and each year for the next decade.

These ramifications are already being felt. This year’s automatic cuts, for instance, could shrink global health spending at the State Department and USAID by almost a half-billion dollars this year alone.

U.S. President Barack Obama Wednesday asked Congress to approve some 52 billion dollars in foreign aid and international spending in 2014, slightly higher than the current year’s budget which was cut due to the partisan impasse over how to reduce the yawning federal deficit.

Among other provisions, the new proposal calls for modest increases in global health and development assistance, as well as cuts in military aid to foreign countries and in special contingency funding for so-called “front-line states” — Iraq, Afghanistan, and Pakistan.

The proposal also calls for major reform – which is likely to prove controversial in Congress — of the U.S. food-aid programme both to save money in shipping and other costs and encourage greater investment in food production and security in recipient countries.

A number of development and humanitarian non-governmental organisations (NGOs) active in poor countries expressed guarded relief at the proposed foreign-aid budget, which was unveiled as part of a total 3.8-trillion-dollar federal budget package that will now be taken up by Congress.

“At first glance, I am pleased to see President Obama’s sustained overall commitment to poverty-focused development,” said Samuel Worthington, president of InterAction, a coalition of nearly 200 NGOs. “Even in a time of belt-tightening, the U.S. must maintain its moral leadership in helping the world’s most poor and vulnerable.”

He and other NGO leaders appealed for lawmakers in Congress, who approved budget resolutions for international affairs spending earlier this year that are well below the administration’s request, to reconsider their position. Last month, the House of Representatives approved a resolution that provided only 38.7 billion dollars for the international affairs base budget – a 25-percent cut from 2012.

“As budget negotiations continue, tough choices must be made, but it is imperative to support robust funding for interventions that are both cost-effective and save lives, like maternal health, food security and emergency humanitarian response,” said Adam Taylor, vice president of World Vision, a major relief group.

As in the past, the proposed international affairs budget, which funds the State Department and the Agency for International Development (USAID), as well as U.S. contributions to the United Nations and other multilateral institutions, accounts for only slightly more than one percent of the total federal budget and about slightly less than 10 percent of the Pentagon’s proposed spending.

Under the administration’s proposal, the Defence Department would receive 527 billion dollars – more than the world’s next 20 biggest military establishments combined — for its core 2014 budget. That total does not include an estimated 88 billion dollars to fund continuing military operations in Afghanistan.

Advocates of aid and diplomacy have long complained about the imbalance – which worsened considerably under President George W. Bush (2001-09) – between Washington’s “hard” and “soft power” spending.

“If you don’t fund the State Department fully, then I need to buy more ammunition,” the head of the U.S. Central Command (CentCom), Gen. James Mattis, warned senators just in testimony last month.

Wednesday’s release of the proposed budget begins a process of negotiation involving the Republican-dominated House and the Democratic-led Senate — as well as the administration — that is certain to last most of this year and possibly well into 2014, particularly given the persistent inability of the parties to agree on a long-term deficit-reduction plan.

Failure to reach such an accord this year will almost certainly result in another round of major across-the-board cuts in all discretionary spending.

The proposed 52-billion-dollar international affairs budget includes an overseas contingency operations (OCO) fund of 3.8 billion dollars mainly for State Department and USAID activities in the three “front-line states”, as well as 48.2 billion dollars in core spending. While the latter figure is slightly more than the current year’s total, it represents a decline of nearly 15 percent compared to 2010.

While proposed funding levels overall are roughly the same as this year’s, the request includes some significant changes in the way the funds will be allocated.

In light of the killings last September in Benghazi of the U.S. ambassador to Libya and two members of his staff, the budget for embassy security will increase by 55 percent, or almost 900 million dollars. Contributions to international peacekeeping are slated to rise by nearly 10 percent, in part due to anticipated costs of a U.N. presence in Mali and Syria, as well as a new African Union mission in Somalia.

Bilateral development assistance would increase by five percent over 2013 levels to nearly three billion dollars, while global health programmes, the biggest component of which is the President’s Emergency Plan for AIDS Relief (PEPFAR), will increase by about 3.4 percent to some 8.3 billion dollars.

The proposed budget would also provide 580 million dollars to a new Middle East and North Africa Incentive Fund that would be designed to encourage countries to implement democratic and economic reforms in the wake of the “Arab Spring”. Obama had proposed 700 million dollars for a similar facility but Congress declined to fund it.

Some of the most notable reductions, on the other hand, include a nine-percent cut in the Foreign Military Financing (FMF) account, which provides credits and guarantees for foreign countries to buy U.S. military goods; and much bigger declines in aid to poor countries in Europe and Central Asia, as well as the “front-line states” of Iraq, Afghanistan, and Pakistan.

Compared to 2012, aid to Eurasia will be reduced by almost half. The budget for State Department and USAID operations in the three front-line states is due to fall from 11.2 billion dollars just two years ago to 6.1 billion dollars in 2014, with Iraq taking the brunt of the cuts.

Some relief groups expressed concern about proposed major cuts in humanitarian and international disaster assistance, although changes in the food-aid programme are theoretically supposed to help compensate.

For the current year, Congress has appropriated 5.6 billion dollars for international disaster aid, migration and refugee assistance, and the Food for Peace programme. But the proposed budget provides a combined total of only 4.1 billion dollars for those accounts, including a reformed food-aid programme, according to Jeremy Kadden, InterAction’s senior legislative manager. “It’s a huge cut, and we don’t have an explanation for it yet,” he told IPS.

“The U.S. has long been generous in assisting those whose lives have been shattered by conflict and disaster, but humanitarian-assistance funding in President Obama’s budget is unlikely to keep up with global needs,” said George Rupp, president of the International Rescue Committee.

“We hope the House and Senate will provide robust humanitarian assistance in next year’s budget, and toward that end we look forward to working closely with Congress.”

On multilateral agencies, a number of which have also played major roles in providing humanitarian assistance, U.S. contributions would remain mostly unchanged from current levels, which is also of concern to some groups.

“In an increasingly complex world with new crises breaking out every year, is consistent support going to be enough?” asked Don Kraus, who heads Citizens for Global Solutions.

“It is still unclear if this budget will give the White House enough resources to respond to global emergencies or increase the U.N.’s capacity to play a more effective role in the world,” he added, noting that this could be a major topic of discussion when Obama meets at the White House Thursday with U.N. Secretary-General Ban Ki-moon.

*Jim Lobe’s blog on U.S. foreign policy can be read at http://www.lobelog.com.

Since the 2008 financial crisis, and most recently with the broad federal spending cuts beginning Mar. 1, experts have warned that an austerity-minded political system could bring about dramatic changes in the U.S. foreign aid model.

A significant part of this conversation has focused on shifting away from a government-led approach and instead strengthening the role of the private sector in development assistance. But critics are focusing attention on the potential pitfalls of such a redesign.

“The idea that there is a lack of public resources, so we need to be leveraging private money, ignores some of the options to increase public funds,” Janet Redman, director of the Sustainable Energy and Economy Network at the Institute for Policy Studies, told IPS.The danger lies in pretending that gross domestic product and foreign direct investment is the same as making economies more sustainable.

She says there are numerous other public sector options available for a country in the United States’ position. These include, for instance, taxes on financial transactions and carbon, both approaches that have largely been left out of the political discussion here in Washington amidst a shift in focus onto the private sector.

In a report released this week, a think tank task force of development experts and business leaders here urged the U.S. government to increase its reliance on the private sector in foreign aid flows aimed at development.

Citing changes in technology and an increased willingness among developing countries to engage with U.S. companies, researchers with the Center for Strategic and International Studies (CSIS) predict that the United States’ current model of development assistance could be obsolete within 25 years.

The CSIS report authors are calling for a shift from a government-based approach to a “blend of development, trade and investment”.

Such recommendations are based on global shifts in technology and business, especially the rapid outpacing of public sector development funds by the private sector. According to the report, the private sector currently spends over 87 percent of U.S. funds flowing to the developing world.

The share of public funding, meanwhile, has fallen from 71 percent in 1960 to just nine percent today.

Some also feel there is evidence that the private sector may be able to deepen the impact of foreign aid by equipping people in developing countries with new skill sets.

By equipping a person with a skill set instead of simply money, said Thomas J. Pritzker, executive chairman of Hyatt Hotels Corporation, “You’ll also give him hope – and hope is a crucial aspect of social stability.” He called peace and prosperity “two sides of the same coin”.

Narrative problem

Still, the prospect of the private sector serving as a primary engine of growth for development indicators is, for some, a controversial premise. Janet Redman, for instance, notes that the report’s findings are predicated on a potentially dangerous “narrative problem”.

She also cautions against adopting a system in which development institutions are designed to function more like companies, at the expense of meeting the needs of people who stand to benefit the most from foreign assistance.

Ensuring access to, for instance, health care, water and education should not be profit-driven enterprises, she stressed, because doing so would set up a “dynamic where companies looking for an investment may need to see a particular rate of return for them to invest.”

Redman continued: “The danger lies in pretending that gross domestic product and foreign direct investment is the same as making economies more sustainable and enabling them to meet the needs of their citizens.”

Private sector funds often don’t trickle down to the poorest members of a host country, a finding supported by a 2011 report published by the Independent Evaluation Group, the internal watchdog for the International Finance Corporation, the World Bank’s private-sector arm.

“The link from growth to poverty reduction is not automatic,” that report found, “particularly in situations where market failures and other inefficiencies limit participation of the poor.”

According to the auditor’s findings, less than a quarter of the IFC projects that generated satisfactory returns also generated identifiable benefits to the poor.

U.S. weariness

Of course, there are major challenges to any such dramatic overhaul of the United States’ development assistance model.

Many, for instance, refer to an increasing gap between how companies, federal agencies and NGOs function and communicate with each other. Business and NGO leaders at the event also attested to notable deficiencies in trust between the public and private sectors.

“There is not a system in place that would allow for cooperation on this scale between the different actors,” Sam Worthington, president of InterAction, a coalition of U.S.-based NGOs, told IPS. Developing such a system may be a task for the donor countries, he added.

Meanwhile, the challenge of U.S. public opinion looms large in any current discussion of foreign aid. As the Mar. 1 budget cuts are phased in, and as the United State withdraws from more than a decade of military involvement in the Middle East, many here are eying any kind of international engagement more warily than ever.

Experts on the issue are urging a shift in public opinion, warning against allowing war-weariness to translate into weariness with international engagement in general.

Advocacy groups working on global hunger and poverty are hailing rumoured proposals that would change the way the United States distributes its international food aid.

A child receives food aid in Ghana from FMSC Distribution Partner – Health and Humanitarian Aid Foundation. Credit: FMSC/cc by 2.0

The news comes just as President Barack Obama is finalising his highly anticipated national budget proposal for fiscal year 2014, the most specific indicator yet of the president’s policy vision as he starts his second term in office.

Meanwhile, sweeping budget cuts are set to go into effect on Friday, without action from the U.S. Congress. These automatic reductions, thought to make up three to eight percent of most federal budgets, would have particularly inordinate ramifications for foreign aid, development and global health programmes.

Yet the rumoured changes in food aid appear to be in line with reforms that advocates have urged for decades, aimed at increasing efficiency and halting market distortions brought about by the arrival of cheap U.S. grains. The United States is the world’s largest provider of food aid, meant to function as a stopgap measure of last resort.

“What we’re hearing is that instead of cuts, the president could be proposing a shift to local or regional procurement of U.S. food aid, rather than the ‘in kind’ giving we’ve done for years – which would be terrific news,” Karen Hansen-Kuhn, international programmes director with the Institute for Agriculture and Trade Policy (IATP), a think tank, told IPS.

“That would be a common sense move, and it would be about 50 years overdue. Purchasing this food locally would be a far more efficient use of food aid, while it would also benefit small-scale farmers in the community or region.”

IATP, together with 11 other humanitarian and advocacy organisations, on Tuesday released a statement welcoming unofficial reports of these proposed changes. They also called on President Obama’s administration to “include a bold reform proposal that builds upon the United States’ historic leadership as the world’s most generous donor of food aid.”

The joint statement is not calling for an outright end to in-kind food aid, but rather for greater flexibility in how the programmes operate.

According to several of these groups, it appears that the administration will propose shifting responsibility for food aid programmes from the U.S. Department of Agriculture to USAID, the country’s central foreign aid agency. (Neither the USDA nor the White House have publicly discussed these details.)

The administration is also reportedly considering ending the practice of food aid “monetisation”, a process by which Washington gives U.S.-grown grains to local organisations, which can then sell them for cash. Critics say this process is notably inefficient, a finding corroborated by a 2011 report by the Government Accountability Office (GAO), the U.S Congress’s main investigative arm.

Over the past half-century, the United States has become the world’s largest food aid donor. Last year, the Congress appropriated some 2.5 billion dollars for such programmes, including nearly 1.5 billion dollars for the largest, called Food for Peace.

When it was established in 1954, Food for Peace was able to tap into the United States’ massive grain reserves, redistributing these to the needy around the world even while offering some financial fillip for U.S. farmers and shippers (the programme was also aimed at countering communism). Among other requirements, 75 percent of U.S. food aid must still be transported on U.S.-flagged ships.

And yet, the United States’ grain reserves were largely discontinued in the late 1990s, and critics say that, for the most part, the purchases do not amount to enough to actually sway U.S. agricultural prices in favour of farmers.

Today, the United States is the only major donor country that continues to send actual food items to humanitarian crisis spots, rather than offering money with which to procure locally produced grains and other products.

Critics say the practice increases aid prices by 50 percent for the U.S. government. Amidst ongoing and highly polarised budget negotiations here in Washington, advocates are now hoping that such efficiencies will be widely welcomed by lawmakers.

Missing a third

The idea of local procurement is not new. President George W. Bush proposed changes that would have allowed for a quarter of U.S. food aid to be locally procured, while leaders of USAID have also come out forcefully in favour of such changes.

Beyond a small pilot project on local procurement, however, no major reforms have been adopted. (Recent reports on the feasibility of that pilot programme were positive, available here and here.)

While this inertia can in part be attributed to lobbying on behalf of certain farming and transport interests, Hansen-Kuhn suggest that “many today are concerned that if we tinker with the current system, then support for funding levels more generally will go away.”

Yet many advocates are increasingly urging that the debate over food aid – or any foreign aid – be concerned less with dollar figures than with the number of beneficiaries reached.

According to some estimates, if the United States were to switch completely to local procurement for its food aid, “it would be able to reach 17 million more people – so we’re only getting to about two-thirds of the people we could be,” Timi Gerson, with American Jewish World Service, an advocacy organisation, told IPS.

“So what I’m looking to see from the administration is their math: How many beneficiaries are they going to reach, and could they reach as many or more because they are using funding more efficiently? Ultimately, this is not just about money but also about what that money is doing.”

Beyond arguments over lower costs for donors and higher response speeds for crisis-hit communities, reforms in favour of local procurement could have an important long-term impact.

“One of the things we are hopeful for is that any new reforms, by providing cash, would be able to empower local economies,” Blake Selzer, a senior policy advocate at Care, a relief agency, told IPS.

For decades, Care has implemented U.S. food aid and other development programmes, among others. In 2006, it unilaterally decided that it would massively scale back its use of aid monetisation.

“Today we’re at a point where this is about reaching as many people with less money, or reaching more people with same amount of money,” Selzer continues.

“But at the same time, local procurement could go a long way towards empowering these communities and building long-term economies – so they don’t have to rely on international assistance and, rather, can develop their own markets and assistance programmes.”

With just a week to go before massive, indiscriminate spending cuts kick in across the U.S. government, policymakers and humanitarian groups are becoming increasingly anxious about the enduring impact the cuts would have on the communities across the globe assisted by U.S.-funded development and aid programmes.

“[W]e fear that the U.S.agencies that oversee humanitarian response will be put in an impossible position, choosing between saving lives in one country over another,” 40 humanitarian groups wrote in an open letter to policymakers this week. “We also ask that any additional resources not come from other critical poverty fighting accounts within the International Affairs budget, which will also be under pressure.”

The groups warn that costs for international humanitarian needs have already become “overstretched” due to security concerns in Syria, Mali, Congo and Sudan, as well as ongoing food security issues across the Sahel. In Syria alone, they note, humanitarian-related costs are estimated at 1.5 billion dollars just through June, double the figure since September.The important thing to understand is that these cuts will cost lives.

Driving these concerns is the suddenly real possibility that a piece of compromise legislation signed into law in August 2011, aimed at forcing Republicans and Democrats to agree to a long-term deal to bring down the country’s foreign debt, could be enacted starting Mar. 2.

Known here as the “sequester”, the process stipulated that if such a deal were not agreed upon by the end of last year, budgets across the federal government would be summarily slashed by 85 billion dollars this fiscal year and 1.2 trillion dollars over a decade.

Most frustrating to economists and other observers is that the sequester does not cover most healthcare-related spending, the source of much of the country’s soaring deficit. Yet because the legislation would become law partway through the current fiscal year, all cuts would have to be done on an expedited basis to meet deadline requirements.

While a minor last-minute agreement was struck in late December, it merely pushed off a decision on the sequester. Meanwhile, Democrats, led by President Barack Obama, are insisting that the debt problem needs to be solved by raising additional tax revenue, while Republicans maintain that the money needs to come solely from lowering government spending.

Importantly, the sequester cuts were crafted to be “dumb”, in that neither policymakers nor agency heads would be allowed to aim the cuts at waste or areas of lesser priority. The cuts are also purposefully painful to both Democrats, who typically favour social programmes, and Republicans, who typically favour defence spending.

For these reasons, most observers had expected that legislators couldn’t possibly allow the sequester to go through. Analysts, after all, are forecasting an economic contraction of up to 0.6 percent, with ramifications for essentially all U.S.citizens.

However, barring further last-minute deals – and Congress is currently on a 10-day break – agencies throughout the states and federal government are currently forced to scramble to plan for what could be one of the most destabilising moves the country has ever inflicted on itself.

Cuts cost lives

No exemption will be made for overseas spending, despite constituting less than one percent of overall federal spending. Indeed, as reported in a new public poll released Friday by the Pew Research Center, U.S. respondents preferred cutting “aid to the world’s needy” more than any of 18 other budget options.

According to information released this week by John Kerry, the new secretary of state, the State Department and USAID, the country’s main overseas aid agency, would need to cut around 2.6 billion dollars from this year’s budget.

That would entail chopping 200 million dollars in humanitarian assistance and 400 million dollars in global health programmes. That would include a reduction of 300 million dollars in the budget of the Global Fund to Fight AIDS, Tuberculosis and Malaria – this year alone.

“Such a reduction would hinder our ability to provide life saving food assistant to 2 million people and USAID would have to cease, reduce, or not initiate assistance to millions of disaster affected people,” Kerry wrote to legislators. He also noted that the cuts would “gravely impede” efforts at reducing AIDS-related and child deaths.

“The important thing to understand is that these cuts will cost lives,” said Jeremy Kadden, senior legislative manager with InterAction, an alliance of U.S. NGOs working in developing countries.

“We’ve made very significant progress over the past 10 years, with real people improving their lives, and this would set that process back enormously, devastating actual people on the ground.”

Sequester cuts would lead to some three million children losing access to the basic education they’re currently receiving, Kadden says. Two million people would also see reductions or outright cuts in food aid, while 600,000 children would lose nutrition assistance. (The group is offering more figures here and here.)

According to InterAction estimates, theUnited Stateshas helped some 400 million people get out of extreme poverty over the past two decades. Last year alone,U.S.food aid reached around 70 million people.

New baseline

Despite the fact that the sequester was never meant as policy, its impact would reverberate for years. According to a new article by Tony P. Hall, a formerU.S. ambassador to the World Food Programme, the current budget negotiations could prove to be “the most far-reaching for the next decade”.

Pointing to the long-term ramifications of even temporarily halting basic education, nutrition or health programmes, including vaccines, Kadden likewise warns that the impact would be “enormous”. Further, this newly reduced funding could constitute baseline budgets in the future.

“If the budget in use at the end of fiscal year 2013 is, say, 5 percent lower than in previous years, and that’s the basis for subsequent years, we’re talking about millions of people who don’t have access to the food, vaccines or basic education they need,” Kadden says.

“There are so many places around the world right now that need help, and we need to ensure, first, that we do no harm. Unfortunately, that seems to be the direction we’re heading in at the moment.”

Even if the sequester goes into effect at the end of next week, members of Congress are required to pass new related legislation by the end of March. Advocates are currently looking at that window as a critical opportunity to ensure that members of Congress hear from constituents and are made to understand the full implications of all sequester-related cuts.