Gov Romney and Foreign Aid

Written by Andrew Lubin, Foreign & Defense Analysis

Foreign policy in the 21st century is more than massive firepower; it’s the adroit use of defense, diplomacy, and development. Yesterday at the Clinton Global Initiative in New York, Gov Romney addressed ‘development.’

What Romney calls a “Prosperity Pact” is a re-labeling of the same basic principles of foreign aid as practiced by the past Obama, Bush, and Clinton administrations while ignoring how defense and diplomacy make development possible. Stabilizing weak states provides both stability and potential export markets; as does combating drug shipments, WMD threats, and nuclear proliferation, responding to humanitarian disasters, and training foreign military and police creates partnerships that improve regional security and export markets.

Most Americans would be surprised to know how little is actually spent on foreign aid. When asked on the street, guesses often range from 10-25% of our budget-which in times of massive deficits would be difficult to defend  – except the actual figure is 1.4%.

It’s called the International Affairs Budget, and in actual terms, 1.4% equates to$ 48 billion in 2011. This funds the State Dept and every aid and assistance program except for the Peace Corps (which costs only $ 342 million). Most Americans would be equally surprised at how the money is spent; it’s not spent on give-aways and abortion programs as claimed by the Tea Party and other isolationist groups; but instead includes military aid to Israel, a $ 100,000 grant that led to $ 61 million of US exports to Morocco, and Counternarcotics programs in Mexico – as a businessman; Gov Romney surely appreciates how the multiplier effect of that $ 100,000 US Trade & Development Agency grant to a small New Jersey company.

But what Romney still doesn’t understand is that trade will not happen in a vacuum; businessmen only invest in countries where the laws don’t change overnight and warlords don’t steal goods from the docks. While his Prosperity Pact guidelines state that the U.S. will provide aid to developing countries that remove barriers to investment and trade; it’s the International Affairs Budget that builds rule of law so countries can fight corruption, have free and fair elections, and have governments based on democratic principles creating the infrastructure that Romney-the-businessman takes for granted.

Only then will US businessmen invest and export into these growing markets

Six billion+ people live in the 3rd world or developing world, and those countries are far from easy business opportunities. While Romney acknowledged the growth of microloans and microfinance companies, in a separate memo his campaign said microloans are only a “poverty alleviation strategy” and called for a “much greater focus” for small and medium-sized businesses that are too big for microfinance. That’s a shame because the entrepreneurs Romney talks about empowering are usually small groups of Zambian women with sewing machines making clothing in Peruvian ladies selling lunches to miners; the larger companies are usually the corrupt government companies stifling those fledgling entrepreneurs.

Yesterday’s speech was a good start for Romney; his “Prosperity Pact” is an important step in the 3-part program of “defense – diplomacy – development” so necessary in the 21st Century. But as former Marine Corps Commandant Gen Michael Hagee said “This strategic approach will only be effective if all three are coherent, coordinated, and adequately resourced.”

We’ll be looking forward to the Governor’s thoughts on how – or if – he intends to implement a foreign and defense strategy that recognizes the unclear and muddled world in which these six billion potential consumers live.

Photo Courtesy of CNN 

Good Business Makes Strange Bedfellows

Representative Steve Chabot (R-OH) just introduced H.R. 6178, which calls for the establishment of tighter working relationships between the U.S. government and private companies making vital progress in advancing economic growth and eliminating poverty in developing countries.  What’s more, in accordance with common sense and defiance of all patterns, this developmental measure and its counterpart in the Senate are receiving bipartisan support.  Color me pleasantly surprised.

A marriage between public and private to stimulate development is a sensible step towards reaching Obama’s goal of stimulating growth in Africa.  As discussed at a Center for Strategic and International Studies event on July 24th, there is much for both parties to gain from partnering to achieve this goal.

Development may seem like the terrain of government rather than business, but nothing could be further from the truth; in order to access the vast potential profits in African nations companies basically need to stimulate development.  Take Diageo, for example, which took over a brewery in Ethiopia and was originally importing most of the required barley.  This made production more expensive, so the company initiated an agricultural development project that gave local farmers incentives to grow barley.  The livelihoods of locals improved and the company secured sustainable access to vital raw materials, a significant developmental step taken in the name of good business.  This is just one example; companies from PepsiCo to Boeing are doing much the same thing.

Yet if private companies are already aiding development on their own, the question then becomes why it’s necessary for them to work with public organizations like the United States Agency for International Development (USAID).  The answer is that private companies have much to gain from cooperation with USAID, and vice versa.  USAID provides private companies credibility they might otherwise lack.  Plus, as a government organization, they have access to information private companies lack regarding developing nations’ markets.   In addition, organizations like USAID are interested in long term development, which means they are likely to support projects with long term payoffs.   This contrasts starkly with private shareholders, who tend to be interested in short term profits and usually won’t fund projects that don’t produce large profits until ten years have passed.  On the flip side, USAID and similar organizations can encourage these companies towards endeavors that advance development in particular ways.

In this time of polarized politics, it is good that our leaders recognize how important development is to the US.  It provides national security at home and economic security abroad and, as former Secretary of Defense Robert Gates said, “development is a lot cheaper than sending soldiers.”  That is why Congress is supporting H.R. 6178, which will substantially advance the efficiency of overseas development, and why we hope they will continue to do so; because investing abroad makes America great.

We Shouldn't Outsource Leadership in Africa to China

Developing nations in Africa are sure to prove powerful strategic partners to whoever helps them move from poverty to prosperity.  China understands this opportunity and has taken it upon itself to seize it.  For the US, failing to demonstrate leadership in Africa would be a monumental mistake.

The fifth meeting of the Forum on China-Africa Cooperation was held on July 19th.  The forum promoted China’s intended strategic partnership with Africa, one it will forge largely through developmental aid programs to which it pledged $20 billion.  Originally, the Chinese pursuit of solidifying its long term strategic partnership with Africa via investment-driven, no-strings-attached aid was met with skepticism from much of the world community due to the country’s questionable human rights record.  Yet as both the need for aid and the lack of US investment to meet it becomes increasingly evident, major world players, including some of our closest allies, are warming to the idea of Chinese taking the reins.  For example, the United Kingdom has indicated a desire to partner with China in order to end African poverty, a development that demonstrates China’s approach will win it strategic partnerships with more than just African countries.

Should the United States fail to step into the aid vacuum that China is already filling, it will represent a major setback to our long term economic and national security.  China’s program of investment based aid will give it an unshakeable foothold in Africa’s economy, cutting off an enormous source of potential trade.  It will effectively remove the ability of the US to influence the direction in which African countries develop, making it difficult to eliminate threats from within their borders and ensure their emergence as America’s partners rather than its adversaries.

We have a fast-closing window of opportunity to strengthen America’s economy and security by stabilizing ailing African nations.  If America is to be looked to by emerging African nations as a critical ally and partner, we must invest in their development now.

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About Make US Strong

Make US Strong is a nationwide coalition of national security professionals who know that America’s security relies on the global stability that only international development can provide. Make US Strong is a campaign of the Truman National Security Project.