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New MCC-PEPFAR Partnership Aims to Boost Ownership

April 1st, 2014
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See below for a guest post from Sylvain Browa, Director of Aid Effectiveness at Save the Children. Browa writes about a new partnership between MCC and PEPFAR to promote country ownership.

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The 2010 QDDR called for the U.S. Government to change the way it does business, particularly, “work smarter to deliver results.” A new memorandum of agreement (MOA) between PEPFAR and MCC announced last week could do just that. Over the next three years, MCC will help PEPFAR increase host-country responsibility and ownership of HIV/AIDS and Tuberculosis (TB) programming in select countries.

This agreement is an important demonstration of PEPFAR’s commitment to doing business differently, and demonstrates how an already successful multi-billion dollar initiative can recognize the need to improve and act on it.

Putting host countries in the driver’s seat in the fight against HIV/AIDS and TB is not just the right thing to do, but has the potential to effectively help sustain the massive gains achieved by PEPFAR over the years. In this new approach, countries will own and (where necessary, learn to) implement PEPFAR priorities. As drivers, these countries will also bring something for the trip – if not the car, at least gas money and a deep knowledge of the road ahead. Greater host country responsibility and ownership of PEPFAR activities puts countries in the position to coordinate investments from other donors to strengthen their national fight against HIV/AIDS and TB.

This new agreement tells us that, in order to reap the full benefit of this mid-course correction, PEPFAR understands the need to get the partnership with host countries right. And they have reached out to a sister agency (MCC) with the comparative advantage and experience to help frame, structure, and set up these partnerships. MCC remains the guru among U.S. aid agencies on how to structure trustworthy partnerships where partner countries are accountable (and rewarded) for formulating their own priorities, implementing them, and delivering results for their people.

From my perspective, this agreement with MCC will work if PEPFAR can objectively commit to:

  • Amending its country operational plan (COP) process to allow partner countries to bring their own priorities forward for meaningful negotiation.
  • Aligning PEPFAR’s often uncoordinated multi-agency interventions in country behind a single entry point of engagement with partner countries like in MCC’s partner government-led MCA teams.
  • Being transparent with partner countries about all PEPFAR programs related information, including budgets, and even policy constraints at home.

In addition to being paid for its services, MCC could learn from PEPFAR’s increasing efforts to value and integrate domestic resources with U.S. funding at the country level and position our financial support (direct support to the public and private sector) as a fundamental element of the country’s available domestic and external resources to fight HIV/AIDS and TB.

This is an interagency collaboration worth following closely. And we will.

PEPFAR and MCC Partner to Promote Country Ownership

March 26th, 2014
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See below for a guest post from Jenny Ottenhoff, Policy Outreach Associate at the Center for Global Development. Ottenhoff writes about a new agreement between MCC and PEPFAR to promote country ownership. The original post can be found on CGD’s blog.

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Last week, PEPFAR signed a three-year agreement with the Millennium Challenge Corporation (MCC) to support efforts to promote greater host-country responsibility and ownership in the US global AIDS program.  Country ownership has been at the core of MCC’s mission (and structure and governance) since its creation, so it’s exciting to see a formalized agreement that will help facilitate lesson sharing and technical support between the two US development efforts.

Transitioning to a sustainable response is an ongoing challenge facing PEPFAR, and no easy feat considering the program was originally designed as an emergency response.  But as we highlighted in arecent report, the MCC model includes three features that could be extremely useful in moving PEPFAR toward a more country-owned approach:

1. First, MCC creates incentives for government commitment as expressed through policy and programmatic performance, where only countries that pass a threshold are eligible for assistance.  Similar indicators and thresholds related to HIV/AIDS and TB performance could be established under PEPFAR to incentivize greater country investment and reward progress towards greater coverage.

2. Second, MCC sets up a compact and account in-country, usually with a government-owned project implementation unit that can compete, contract, and supervise programs directly.  Such a facility could serve as PEPFAR’s country counterpart, channel Global Fund and other donor funding, and evolve toward a single payer or fund as modeled in countries like Rwanda and Liberia.

3.  Finally, MCC is one of the most transparent aid agencies in the world.  The agency posts its planning, obligation and spending data as well as procurement activity and reporting online in aggregated and country-based sites that are easy to access and understand.  These tools help facilitates better understanding, oversight and collaboration among all stakeholders — including partner governments — and would go a long way in helping manage expectations for country-ownership as PEPFAR moves forward.

While specific details of the agreement are not yet public, we do know that PEPFAR funds will be made available to facilitate technical assistance from MCC to help advance country ownership in a yet-to-be-decided set of countries.  But we’ll be watching to see if any of these “MCC features” are reflected in PEPFAR’s program in the coming years.

What the 2014 National Security Strategy Ought To Say, But Won’t

March 14th, 2014
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See below for a guest post from Diana Ohlbaum, Nonresident Senior Associate of the Project on Prosperity and Development at the Center for Strategic and International Studies and MFAN Executive Committee Member. Ohlbaum writes about what she’d like to see included in the 2014 National Security Strategy. This original post can be found on CSIS’s blog.

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President Obama announced last fall that he intends to release a new National Security Strategy (NSS) in early 2014, updating the previous version, published in 2010.  Given that these strategies generally function more as public relations documents than as guiding doctrines, and that 2014 is a high-stakes election year, it may be unreasonable to expect anything risky or bold.  But if the 2014 NSS were to put a clear stamp on U.S. foreign policy and articulate a principled vision of our role in the world, here are a few of the things it ought to say:

#1: Explain why development is important to our national security.

The 3 Ds doctrine – defense, diplomacy and development – has long been de rigeur in Washington’s foreign policy circles.  But the 52-page 2010 National Security Strategydevotes all of 5 paragraphs to sustainable development. There is no clear articulation of why sustainable development is important to U.S. national security and national interests.

The 2010 NSS contains only one sentence that addresses the link between sustainable development and national security, which was then cited in the 2010 Quadrennial Diplomacy and Development Review (QDDR): “Through an aggressive and affirmative development agenda and commensurate resources, we can strengthen the regional partners we need to help us stop conflict and counter global criminal networks; build a stable, inclusive global economy with new sources of prosperity; advance democracy and human rights; and ultimately position ourselves to better address key global challenges ….”[emphasis added].

This is quite an incredible statement when you think about it.  It is not saying that development will create more markets for U.S. exports or level the playing field for American workers.  It is not saying that development reduces the risk of pandemic disease or the impact of environmental change.  It doesn’t say that good governance, transparency and accountability are effective antidotes to transnational crime or that they reduce the risk of violent conflict.  What it says, in effect is: development creates better partners who will do our bidding for us.  Is that the message we want to send the world about why development is important?

#2: Development assistance is not a lever of American policy and influence.

This is probably the most bitter pill to swallow.  But if we are to help bring about lasting gains, swallow it we must.  The United States has other types of aid – Economic Support Funds and billions of dollars of security assistance — that are designed for political ends.

That doesn’t mean, however, that development assistance should ignore politics: in fact, poor governance, weak institutions, and unaccountable processes may be the largest obstacles to growth.  However, there is a difference between using development assistance to build more inclusive and capable institutions for the benefit of local partners and stakeholders, and using it to achieve short-term foreign policy gains for ourselves.

Development assistance is, plain and simple, an investment in a better, safer world.  And it ought to be designed to achieve maximum development outcomes. We are finally starting to learn the lessons of 50 years of development assistance, such as the importance of data transparency, program monitoring and evaluation, clear strategies with measurable goals, country ownership, use of local systems, and harmonization with other donors.  Let’s not abandon those lessons by attempting to leverage aid for short-term diplomatic gains – which doesn’t usually work, anyway.

#3: Development isn’t only about aid.

It’s high time we started recognizing that aid is only a small drop in the bucket when we talk about resources for development.  Foreign direct investment, remittances, and domestic resources are all larger than official development assistance, and private philanthropy is rapidly growing as well.  CSIS’s Project on Prosperity and Development recently released a report examining the ways that the private sector can engage emerging markets.

This doesn’t mean that aid isn’t important – it just means that our development policy must be broader than an aid policy.  And once we start talking about a broader development policy we find two elephants in the room: trade and tax.

Our agricultural and trade policies were not touched on at all as a part of the 2010 Presidential Policy Directive on Global Development precisely because of their political sensitivity.  But we are probably doing more damage to developing countries through our farm subsidies and trade quotas and tariffs than we are helping through our aid.  Such protectionist policies cause poor countries to lose potential jobs and export revenues, and create significant price distortions on their domestic markets, undermining the value of our assistance.  The new Farm Bill and FY 2014 Omnibus Appropriations bill take some baby steps toward a more enlightened food aid program, and the Administration proposes to expand on these in its FY 2015 budget, but more comprehensive reforms are in order.

Second is the issue of illicit financial flows.  Washington hasn’t quite woken up to the fact that the total volume of aid going in to the developing world pales in comparison to the amounts being siphoned out.  In fact, according to a report by the Africa Progress Panel, chaired by Kofi Annan, Africa loses more each year through illicit outflows than it receives in external aid and foreign direct investment combined. Global Financial Integrity estimates that nearly $1 trillion was drained out of the global “south” in 2011 (the last year for which statistics are available) – roughly 10 times the amount these nations received in official development assistance.

Some of this is due to plain old corruption – bribes, kickbacks and embezzlement, pure and simple.  But the vast majority of this is due to tax evasion – in essence, cheating countries out of their own natural and financial resources.   Developing countries are estimated to lose $120-160 billion each year of potential tax revenue from their own citizens who hide their wealth offshore.  And the United States is directly complicit in that, by allowing the registration of untraceable corporations that are the primary vehicle for money laundering, tax evasion, and hiding the profits of transnational crime.

Addressing this problem is essential not only to enable low and middle income countries to finance their own development, but also as a matter of our own national security.  The same laws and policies that make it easy to move, hide, and use dirty money are used by all types of transnational criminals, including drug lords, terrorists, gun runners, sanctions busters, wildlife poachers, and human traffickers.  Cracking down on illicit flows may be one of the most cost-effective ways we have of advancing development, stability, and human security all at the same time.

Which brings me to:

#4 – Strengthen the linkage between efforts to promote development, human rights, and conflict prevention

It has already been shown that conflict and fragility are some of the greatest challenges to development.  USAID’s excellent new discussion paper on “Ending Extreme Poverty in Fragile Contexts” notes the strong correlation between violent conflict and high rates of extreme poverty, with fragile states expected to be home to nearly half of those living under $1.25 a day by 2015.  Similarly, as USAID’s Strategy on Democracy, Human Rights, and Governance points out, “Poverty is underpinned by poor and undemocratic governance, weak and corrupt institutions, and entrenched power dynamics that lead to political and economic exclusion.”

What the 2014 NSS needs to make clear is that the same policies and programs that address corruption, exclusion, and non-accountable governance will help make development more effective and conflict less likely.  We need a much broader conception of what “democracy promotion” really means – as well as a term for it that does not close doors for us around the world – alongside a much stronger capacity to prevent and transform conflicts other than by selling arms, training foreign military forces, or sending in our own troops.

Almost six years ago Gayle Smith, then at the Center for American Progress, authored a marvelous report, “In Search of Sustainable Security,” which was essentially a memo to the future President about what the next National Security Strategy should say.  One of the key points she makes is that “America must recalibrate its foreign policy to rely less on military power and more on other tools that can foster change and enhance our security.”

But in order to do this, we can’t simply cut defense spending, although that’s important.  We need to ramp up our civilian capacities to prevent violent conflict, both through direct prevention – such as diplomacy, dialogue and sanctions – and through structural prevention – which are long-term interventions to transform key socioeconomic and political institutions.

The 2010 NSS and QDDR both talk about strengthening civilian capacity for conflict prevention and transformation, but in practice both USAID and State treat it as something that is way outside the mainstream, unconnected and incidental to their routine work.  The offices that handle these issues are underresourced and underrepresented in the bureaucratic hierarchies, and the work they do is viewed as competing with, and sometimes even at odds with, the priorities of our embassies and missions abroad.  The U.S. Institute of Peace is constantly fighting off attempts to eliminate it entirely.

Conflict prevention ought to be one of the main, if not THE main job of the State Department.  It’s not a special interest or a side-show, it’s what the entire Foreign Service ought to be trained and equipped to do.  Likewise, our efforts at poverty reduction are doomed to failure if USAID does not build its own capacity to help local partners transform power dynamics.  A major investment of time and resources will be required to shift the culture as well as the build the knowledge, skills, tools, and incentives to make the United States as effective at peacemaking as we are at warmaking.  Ultimately, though, that’s the only way that Diplomacy and Development will ever take their rightful place as full partners at the national security table.

The Farm Bill reform that will feed millions

March 11th, 2014
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See below for a guest post from Adam Olson, Oxfam America’s Regional Advocacy Lead based in Chicago. Olson writes about the reforms to international food aid in the 2014 Farm Bill.  The original post appeared on Food Tank.

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Tucked away in Title III of the 2014 US Farm Bill, occupying just one of its 357 pages, quietly sits a reform that will empower thousands of farmers to feed millions more people a year suffering from hunger. Despite its practicality and comparatively low profile, it represents a long, hard fought victory. It’s an expansion of local purchasing of international food aid – and it’s worth celebrating.

Food aid is the backstop of our global food supply. When all else fails, it stands between life and mass starvation. With more than 850 million people suffering from hunger, efficiency in supporting their right to food matters. By using up to $80 million a year to buy food from local sources instead of distant American ones, the reform will feed millions more people. The concept is simple. For instance, if food aid was needed in Vietnam and rice was available in nearby Thailand, it could be purchased there instead of the current practice of shipping it from the US.

This process, proven by other food aid donors and a US pilot project:

1. Cuts food and delivery costs by 25-50%;

2. Reduces the average time it takes to deliver food by 14 weeks;

3. Reaches more people at a lower cost;

4. And, can have longer-term benefit of investing in farmers abroad, making them better able to support their own communities.

Despite all this, even small steps toward permitting local purchasing have been bitterly opposed by special interests, including agribusinesses and shippers. They cling to an antiquated status quo that requires all food to come from the United States. This made some sense when established in the 1950s, when my grandparents were farming in Minnesota. America had a surplus of cheap commodities and food aid was difficult to procure elsewhere. This hasn’t been true for a long time.

The old regime isn’t even particularly profitable for those who defend it, and they know it. In a hilarious Daily Show segment, a shipping industry representative repeatedly cites “heritage” as reason to maintain obsolete regulations. A Farm Bureau economist told Reuters she was more concerned with a loss of “pride” than farm revenue. Food aid amounts to about one percent of US agricultural exports – not enough to measurably impact commodity prices. My grandparents would have been proud to sell that fraction of their crop elsewhere in order to support fellow farmers abroad.

It’s taken common-sense sentiments like that, pushed in a sustained effort over years to achieve this victory. A coalition of organizations, including American Jewish World ServiceBread for the WorldCARECatholic Relief ServicesMercy CorpsOxfam America, and others have helped lead the charge. Champions on Capitol Hill have seen it through. The tragic case of Typhoon Haiyan’s impact in the Philippines and resulting outcry for change emboldened advocates as the Farm Bill went to conference committee. This win is a big, lifesaving step forward.

However, local food aid procurement remains the exception to the rule. If fully funded, the new reform would account for about 5 percent of total food aid activities authorized under the Farm Bill. The best approach is to remove the straightjacket and allow the US Agency for International Development (USAID) to choose the best way to procure food based on individual circumstances. By doing so, an estimated 17 million more people could receive food aid at no extra cost. There is no one-size-fits-all method (see USAID’s great infographics here), and there will always be a need for some commodities grown in the US, but experts should make the call for each situation free of legislative constraints.

We came close to ending more of those restraints last year. President Obama proposed sweeping reform to allow food aid to be purchased locally. Another proposal,offered as a Farm Bill amendment by Representatives Royce and Engel, failed by only 17 votes[i]. The vote was remarkably bipartisan – the issue always has been. In fact, the Bush administration unsuccessfully called for reform. Local purchasing of food aid is something everyone can get behind.

2014 is the year to do it. We expect the Obama administration to continue to push for reform. Budgetary pressures aren’t letting up, mandating the kind of cost efficiencies local purchasing delivers. The need for food aid seems set grow in the short-term; the increasing threat of climate disasters and manmade disasters, like the plight of Syrian refugees, demand a more responsible approach.

2014 is also the International Year of the Family Farmer. What a great time to allow more farmers to respond to food emergencies and break cycles of aid dependency through a more flexible food aid system. Reform in the 2014 Farm Bill, while an important victory unto itself, has given us the momentum to do even better.

 


[i] Correction: Royce-Engel failed by 9 votes rather than 17

FY15 Budget Request Puts Heavy Emphasis on Initiatives

March 7th, 2014
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See below for a guest post from Casey Dunning, Senior Policy Analyst at the Center for Global Development. Dunning writes about the President’s 2015 budget request. The original post appeared on CGD’s blog.

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President Obama launched the opening salvo in the FY2015 budget process with his recently released request, and while some of his foreign assistance proposals seem destined to go the way of the cutting room floor, you certainly can’t fault the request for having a specific point of view.

The FY2015 international affairs budget request is edgy (a word I’ve never used to describe a budget request) in what it chooses to prioritize and push for, given basically flat funding. Indeed the $50 billion request is actually 1 percent below enacted FY2014 levels due to a downsized Overseas Contingency Operations (OCO) account. The base International Affairs FY2015 request stands at $44.1 billion with an additional $5.9 billion for the OCO account.

Here are the priorities, highlights, and surprising reversals that stand out the most. There are quite a few, hence the longer post.

  • Power Africa powers up. This is the first budget request since the launch of the Power Africa Initiative last June.  President Obama wastes no time in seeking to advance this signature initiative, both rhetorically and monetarily. The only actual line item at this point is a $77 million USAID allocation for technical assistance, risk mitigation, and regulatory reforms. But the budget request draws on the resources of the MCC (see more on MCC’s budget request here), OPIC, Export-Import Bank, and USTDA – all of which see increased budgets. If the bipartisan support around theElectrify Africa Act is any indication, funding for expanded energy access in Africa stands a good chance of making it into a final FY2015 appropriations bill.
  • OCO decreased in $ and expanded in scope. The OCO request sees a $600 million decrease compared to FY2014 enacted levels. The President’s request also puts forth a big substantive shift by expanding its country scope. In the past, OCO was almost exclusively reserved for Afghanistan, Pakistan, and Iraq. However, the FY2015 request devotes $1.5 billion for Syria and to support transitions throughout the Middle East and North Africa. This shift away from a singular focus on the “Frontline States” represents a recognition that these three countries can no longer dominate US foreign policy interests.
  • Feed the Future lives on. With its contemporary cohorts dead (Global Health Initiative) or under-resourced (Global Climate Change Initiative), the Feed the Future Initiative stands out in the FY2015 budget request with a $1 billion allocation, roughly 5 percent higher than in FY2013. The multi-year Feed the Future effort is due to wrap up in 2015 (at least for the first phase), and the budget request aims to ensure the initiative finishes strong.
  • Aid for humanitarian efforts in Syria is up; aid for efforts everywhere else down. The FY2015 budget request singles out humanitarian efforts in and around Syria to the tune of $1.1 billion. (And this doesn’t include additional aid for opposition groups and transition funding in Syria).  At the same time, other humanitarian assistance accounts get slashed by over $1.5 billion, with the Migration and Refugee Assistance account getting hit the hardest (a 33 percent cut). Due to large carryover funds, this cut shouldn’t mean a direct hit for humanitarian assistance, but expect some scrambling if any new crises strike.
  • Global Health is no longer a sacred cow. For the first time since 2000, the funding request for global health programs has decreased. This year’s global health request still stands at a mighty $8.1 billion (a full 18 percent of the base budget request). But, this level represents a 4.6 percent drop compared to enacted levels last year.
  • The aid spotlight swings to Afghanistan, leaving Pakistan in the dark. Aid to Afghanistan grew in this year’s budget request as compared to FY2014 appropriations, increasing 4 percent to $1.4 billion. This increase stands in stark contrast to the 44 percent reduction in aid to Pakistan. This near halving comes as a result of the conclusion of the Kerry-Lugar-Berman aid bill and the availability of sizeable carry-over funds. Yet, the reduction sends a worrying signal at a time when the US and Pakistani governments are in the midst of a successful Strategic Dialogue process.
  • USAID operating expenses, ever the unsexy line item, get a needed boost. The FY2015 budget request proposes a 21.4 percent increase to USAID OE after a painful FY2014 cut. OE funds are necessary in providing adequate levels of personnel to implement, manage, and monitor programs around the world while giving USAID the ability to lead Feed the Future, robustly contribute to Power Africa, and institutionalize its USAID Forward reforms.
  • USAID’s Global Development Lab given funding to experiment. Meant to be a legacy of Administrator Raj Shah, the newly founded Global Development Lab is funded at $146.3 million in the budget request. The Lab is born out of a merger of two offices (and their resources): the IDEA office and the Office of Science and Technology. Administrator Shah is due to officially launch the Lab in late March so details are still sparse, but the new entity aligns with the budget request’s emphasis on innovation, technology, and the modernization of development.
  • Multilateral institutions get much-need attention. FY 2015 looks to be a catch-up and consolidation year as funding requests are up slightly for the regional development banks, multilateral debt relief programs, and most of the environmental trust funds. The request also offers the first official announcement of the US pledge to IDA-17 and includes funding for the long-delayed IMF quota reform package, which the administration is separately seeking to move more quickly in an emergency Ukraine assistance package.
  • Opportunity, Growth, and Security Initiative makes a big splash, and will most certainly drown. This new initiative – clocking in at $56 billion, with half for defense and half for non-defense programs – is a veritable grab bag of funding allocations. Less than $1 billion is meant for international affairs programs, but these allocations are directed to multiple programs including the MCC, GAFSP, the Global Fund, Feed the Future, USAID’s Global Development Lab, maternal and child health, and the Broadcasting Board of Governors. While the extra allocations would no doubt be welcome additions to these entities, the chances of this initiative making its way through Congress are slim to none.

The budget request does an admirable job of honing in on key initiatives and programs that President Obama sees as transformative in power and scope. It also includes a scaled-back but important development-related reform – a proposal to make food aid more flexible, allowing this assistance to reach an additional two million people each year. Stay tuned to the Rethink blog for updates on how each of these initiatives fare as the FY2015 appropriations process gets underway on the Hill.

For a detailed breakdown of the FY2015 budget request including specific line-item changes, see USGLC’s excellent analysis here.