U.S. Trade Policy
South Africa, AGOA, and nonalignment
In May 2017, the Trump administration released its 2018 budget proposal, which features an $11.5 billion cut to the State Department and USAID funding levels—a decrease of over 28 percent from the 2017 appropriations estimate. With respect to Africa, the budget calls for a 13 percent cut to development assistance for the continent. Representatives from both sides of the aisle have expressed concerns over these cuts, citing a dangerous loss of the United States’ “soft power.” Reform proponents, on the other hand, argue that disposing of duplicative, unproven, or unsuccessful forms of aid could improve accountability and effectiveness of remaining programs.
On Monday, June 26, the Brookings Institution’s Africa Growth Initiative, the American Enterprise Institute (AEI), and the Congressional African Staff Association (CASA) hosted an Africa Policy Dialogue on the Hill to discuss the future of U.S.-Africa relations in light of the Trump administration’s budget proposal. Brahima Coulibaly, Senior Fellow and Director of the Africa Growth Initiative, gave opening remarks and moderated the discussion. Panelists included Danielle Pletka, Senior Vice President of Foreign and Defense Policy Studies at the American Enterprise Institute; Earl Gast, Senior Vice President of the Education for Development & Economic Growth Divisions at Creative Associates International and former Assistant Administrator for Africa at USAID; and Rob Mosbacher, Jr., former CEO of the Overseas Private Investment Corporation (OPIC).
Pletka launched the discussion by noting that these adjustments may be the opportunity to rethink (a perhaps outdated) U.S. aid strategy and architecture, though also highlighting the many challenges of government spending reform. Reform, she argued, is often considered a “dirty word,” and debates surrounding reform often tend to be framed in “maximalist” terms: on the one hand, portraying reform proponents as immoral for cutting life-saving programming, and, on the other hand, depicting program advocates as being wasteful for spending taxpayer dollars on untested, unsuccessful programs. Unfortunately, such arguments inhibit candid discussions and are ill-serving and ineffective, she stated. Instead, these debates should focus on the potential to transform government spending and maximize sustainable development outcomes while recognizing the limited resources available for such programming. She cited the U.K.’s Department for International Development (DFID) as an example of an agency that succeeded in becoming more economical and effective with their funding following an in-depth programmatic review.
Gast, in turn, provided an overview of how the Trump administration’s proposed budget might affect U.S.-Africa engagement. He noted that while three famines were announced in sub-Saharan Africa this year, the recent budget proposes a 44 percent reduction in humanitarian assistance. Funding for peacekeeping forces in Africa are to be cut by 65 percent, and the U.S. African Peacekeeping Rapid Response Partnership and Security Governance Initiative programs will be eliminated. Furthermore, support for the Mandela Washington Fellowship Young African Leaders Initiative (YALI), regional integration programming, and Feed the Future will be downsized. Twelve African countries are completely zeroed out of the budget, including Niger in the Sahel, which is facing security threats from terrorism. In general, these changes do not seem to encourage much needed investment or job creation and could ultimately perpetuate extremism and violence among vulnerable youth, he asserted.
Additionally, he mentioned that the White House has not defined an Africa strategy yet (noting, however, that the Obama administration took 3.5 years to develop theirs so such a strategy might not emerge for a while). Still, according to Gast, the cuts to Africa-related programs presented in the budget proposal suggest that the Trump administration might be moving away from deeper engagement with Africa, and that it does not view Africa as a growth market for U.S. exports in the way that the previous administration did. The proposed cuts to the operational budgets in USAID and State have also prompted concerns that a reduction in force could be imminent and could lead to a withdrawal of development engagement and diplomacy with the continent.
Beyond the direct scope of USAID and State, other U.S. agencies with linkages to Africa, such as the Overseas Private Investment Corporation (OPIC), are on the chopping block. Mosbacher discussed how OPIC fits into the overall architecture of U.S. economic and development assistance by helping U.S. firms mitigate the risk of foreign direct investment in low-income countries through loans and guarantees, private equity funds, and political risk insurance. According to Mosbacher, OPIC helps American companies compete abroad since many European countries and China, (among other countries,) subsidize firms attempting to enter emerging markets. Notably, OPIC makes roughly $350 million in revenue annually and its operating costs amount to $70 million, so it actually reduces the federal deficit by approximately $280 million every year. Although the panelists agreed that OPIC is an important part of the U.S.’s international development strategy, Pletka pointed out that some members of government view OPIC as corporate cronyism and claim that it skews free markets. Mosbacher argued that this is due to a misunderstanding of what OPIC does. OPIC does not compete with the private sector since it only steps in once private sector actors choose not to provide their products to American firms, he contended. Its contribution to creating jobs both in the U.S. and on the continent, especially in light of the demographic boom there, cannot be understated.
In response to a question from Coulibaly regarding the appropriate vision and criteria policymakers should employ during budget allocation discussions, Pletka argued that budget adjustments should address structural budgetary issues, but also follow a coherent foreign policy and development strategy, which, she noted, in the present budget documents, is missing. Although panelists agreed that some reform in the development community is needed, maintaining international programming related to the region’s key development issues, including humanitarian assistance, enhancing U.S. and African competitiveness, and encouraging innovation and entrepreneurship, is important. Finally, some panelists raised concerns that the cuts to foreign assistance and diplomacy may equate to the U.S. “ceding Africa to China” or that overreliance on military engagement in the region could even provoke instability in some already unstable countries. Panelists agreed that continued debate on the right level and form of engagement is essential to effective and sustainable foreign policy engagement in Africa.
