Up Front

50th Anniversary Ministerial: Spotlight on the D in OECD

Noam Unger

Secretary of State Hillary Clinton will chair the upcoming Ministerial Council Meeting of the Organization for Economic Cooperation and Development (OECD) and analysts interested in global development policy may want to pay close attention.

This year’s event, structured around the theme “Better Policies for Better Lives,” marks the 50th anniversary of the OECD. According to a preview by Under Secretary of State Robert D. Hormats, Secretary Clinton’s participation will be centered on a discussion of new paradigms for development. As Ambassador Richard A. Boucher (Deputy Secretary-General of the OECD) noted in the same briefing, “development is big on the agenda.”

Armed with President Obama’s policy directive on global development (see commentary) and the findings of her own Quadrennial Diplomacy and Development Review (more commentary), it is no surprise that Secretary Clinton is focusing on development. But what should we look for? A number of items come to mind and they fall into the following four categories:

Emphasis beyond traditional aid: Apparently Secretary Clinton is planning to lay out a detailed vision that is meant to “expand the discussion from aid effectiveness to development effectiveness.” This is an important step since the U.S. and other countries trying to support sustainable development must establish more coherent approaches across a wide array of policy areas that impact development, like trade, agriculture, investment, energy, military security and migration. As I noted in a recent paper with my colleague, Homi Kharas, incoherent policies are characterized by counterproductive efforts and by missed opportunities for synergy. The coordination necessary to surmount the problem requires strong political will.

This broader approach to development is directly in line with President Obama’s policy directive on global development, which calls for a modern organizational architecture that enables greater policy coherence across the U.S. government. Since the announcement of the president’s directive in September 2010, however, much of the momentum on reform has remained focused on aid. The administration has rather quietly referenced the “Partnership for Growth,” which is intended to be a broader, more coordinated approach to supporting development in some countries, but details are lacking. Big changes take time but there has been little if any public elaboration on some of the initiatives announced in the presidential directive that could help with coherence beyond the State Department and USAID. These include the formulation of a presidentially-approved U.S. Global Development Strategy, robust assessments to determine the impact of all relevant policy decisions on development investments and outcomes, or even the creation of a U.S. Global Development Council that could be mandated to advise the president on practical steps to promote policy coherence across agencies. Perhaps the OECD ministerial meeting will mark a turning point by announcing concrete steps that draw upon the full range of U.S. instruments to promote development, including efforts through which aid can be more catalytic.

Secretary Clinton is expected to highlight the issue of promoting domestic financing for development through more effective tax systems in partner countries. The U.S. appetite to push this approach was foreshadowed by President Obama’s recent trip to El Salvador, where he and President Mauricio Funes endorsed plans to pilot a “new DF4D program, which will assist countries to mobilize domestic resources by improving public tax administration.” Secretary Clinton has also publicly hinted at the value of such an approach in the case of Pakistan.

Promotion of accountability and transparency: The emphasis on domestic financing in developing countries ties into efforts to reduce corruption and strengthen accountability. Support for the establishment of fair tax collection systems also presents a good opportunity to link donor aid transparency and the importance of transparent budgeting and spending by governments of developing countries. If members of the U.S. delegation do talk about this connection in the context of mutual accountability, expect them to also reference the new U.S. Foreign Assistance Dashboard as an example of the Obama administration’s commitment to aid transparency and accountability to both U.S. taxpayers and aid beneficiaries. The dashboard should, of course, be even more impressive as it develops and fulfills its potential.

Framing USAID’s role: In talking about development policy on the international stage, Secretary Clinton has to navigate the tension between using her platform to promote more coherent initiatives and making it appear like the State Department operates all the relevant moving parts of the U.S. government. Secretary Clinton should shine a light on other agencies of the U.S. government, and this is especially true for the U.S. Agency for International Development. President Obama’s policy directive includes an explicit “commitment to rebuilding USAID as the U.S. government’s lead development agency,” and Secretary Clinton must continually use development diplomacy opportunities to empower USAID and its administrator, Rajiv Shah, in the eyes of other U.S. government and international officials. Secretary Clinton is certainly capable of using her star power in this way, but will she?

Agenda setting for international development cooperation: Celebrating the 50th anniversary of the OECD, Secretary Clinton and the U.S. delegation are likely to mount a forceful defense of multilateral partnership. This is not to say multilateralism will be under attack at the ministerial meeting – quite the opposite! But with regard to development assistance, most official development donors have swung toward bilateralism in recent years, decreasing the share of aid that they channel through core funding for multilateral agencies. The U.S. presents an extreme example: cutting its share of development assistance channeled through multilateral organizations by more than half over the past decade. While a dramatic reversal of this budgetary trend is unrealistic in Washington’s current political climate, the Obama administration has taken steps to embrace multilateral efforts to promote more effective development. This has been evident in the G20, in the serious rather than dismissive treatment of the Millennium Development Goals and the principles of the Paris Declaration, and in the renewed enthusiasm of the U.S. to play a leadership role in the Development Assistance Committee of the OECD.

It will be interesting to see how Secretary Clinton and the U.S. delegation use the opportunity of the OECD ministerial meetings to lay the groundwork for future leadership on international development cooperation. Might the U.S. signal openness for a more merit-based approach to selecting the leaders of the IMF and the World Bank that could pave the way for others beyond Europe and the U.S., respectively, to fill these roles? During the week of the G8 summit in Deauville and one year before the U.S. hosts the G8 again, will Secretary Clinton note that the U.S. is looking more toward the G20 than the G8 as an appropriate forum in which to exert leadership on development effectiveness? Will Secretary Clinton up the ante of the High Level Forum on Aid Effectiveness by announcing that she will also attend that meeting in Busan, Korea later this year?

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