Mdg Report 2007

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THE UNITED STATES AND THE

MDGs U.S. Contributions to Reducing Global Poverty An Assessment of the U.S. and the Millennium Development Goals

InterAction is the largest coalition of U.S.-based international nongovernmental organizations (NGOs) focused on the world’s poor and most vulnerable people. Collectively, InterAction’s more than 165 members work in every developing country. Formed in 1984 with 22 members and now based in Washington, DC with a staff of 40, InterAction’s member agencies are large and small, faithbased and secular and are headquartered across 25 states. In poor communities throughout the developing world, InterAction members meet people halfway in expanding opportunities and supporting gender equality in education, health care, agriculture, small business, and other areas. To forestall or recover from the violence that impacts millions of innocent civilians, InterAction exercises leadership in conflict prevention, the peaceful resolution of disputes, and peace-building initiatives in post-conflict situations. InterAction members respond to natural disasters all around the world. The U.S. public shows its support for advancing human dignity and peace in the world through contributions to InterAction members totaling around $7 billion annually. InterAction leverages the impact of this private support by advocating for the expansion of U.S. government investments and by insisting that policies and programs are responsive to the realities of the world’s poorest and most vulnerable populations. InterAction’s comparative advantage rests on the uniquely field and practitioner-based expertise of its members. InterAction works with its members to compile data on the impact of NGO programs, as a basis for promoting best practices and for evidence-based public policy formulation. InterAction brings the values and experience of the NGO community into the broader development and humanitarian assistance community through strategic alliances with key partners around particular issues and objectives. These partnerships further leverage InterAction’s political, intellectual, and financial capital. InterAction believes its future is one of strategic alliances. Neither InterAction nor its members bear lightly the responsibility of the trust the American people place in us. As such, members adhere to InterAction’s standards that help assure accountability in the critical areas of financial management, fundraising, governance, and program performance.

U.S. Contributions to Reducing Global Poverty An Assessment of the U.S. and the Millennium Development Goals

By InterAction, with Bread for the World, on debt Oxfam America, on trade World Wildlife Fund, on environmental sustainability

© Copyright by InterAction. All Rights Reserved. 2007

Photo: courtesy of Oxfam America 

Table of Contents 4 5 6 8 10 14 16 26 48 56 68 76 80 90 92

Acronyms List of Boxes, Figures and Tables Preface Acknowledgments Talking Points and Recommendations The Millennium Development Goals (MDGs) U.S. Official Development Assistance (ODA) The U.S. and the MDGs Goal 1. Eradicating extreme poverty and hunger Goal 2. Achieving universal primary education Goal 3. Promoting gender equality and empower women Goal 4. Reducing child mortality Goal 5. Improving maternal health Goal 6. Combating HIV/AIDS, malaria and other diseases Goal 7. Ensuring Environmental Sustainability Goal 8. Developing a Global Partnership for Development - Official Development Assistance Goal 8. Developing a Global Partnership for Development - Trade Goal 8. Developing a Global Partnership for Development - Debt relief Appendices Appendix A. The MDGs, Targets and Indicators Appendix B. MDG Progress to Date by Region Appendix C. Foreign Assistance Framework Appendix D. U.S. Aid and FDI to Recipient Countries by Income Level in 2006 Notes on Tables and Figures References



Acronyms ACCESS Access to clinical and community maternal, neonatal and women’s health services AfDB African Development Bank AGOA African Growth and Opportunity Act AIDS Acquired Immune Deficiency Syndrome ATPA Andean Trade Promotion Act ATPDEA Andean Trade Promotion and Drug Eradication Act BASICS Basic Support for Institutionalizing Child Survival CBERA Caribbean Basin Economic Recovery Act CBTPA Caribbean Basin Trade Partnership Act CDC Centers for Disease Control and Prevention CFCs Chlorofluorocarbons CRS Congressional Research Service CRS Online Creditor Reporting System of the DAC CSH Child Survival and Health DA Development Assistance DAC Development Assistance Committee of the OECD DFA Director of Foreign Assistance DOD Department of Defense EU European Union FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment FTA Free Trade Agreement FY Fiscal Year G-7/8 Group of Seven/Eight leading industrialized nations GDA Global Development Alliance GDP Gross Domestic Product GHAI Global HIV/AIDS Initiative GNI Gross National Income GSP Generalized System of Preferences HHS U.S. Department of Health and Human Services HIPC Heavily Indebted Poor Countries HIV Human Immunodeficiency Virus



IDA International Development Association IDFA International Disaster and Famine Assistance IFI International Financial Institution IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change LAC Latin America and Caribbean LDC Least Developed Countries MCA Millennium Challenge Account MCC Millennium Challenge Corporation MDGs Millennium Development Goals MDRI Multilateral Debt Relief Initiative NGO Non-Governmental Organization NIH National Institutes of Health ODA Official Development Assistance ODP Ozone-depleting potential OECD Organization for Economic Cooperation and Development OECD/DAC Organization for Economic Cooperation and Development/ Development Assistance Committee OFDA Office of U.S. Foreign Disaster Assistance PEPFAR President’s Emergency Plan for AIDS Relief PL 480 Food aid PMI President’s Malaria Initiative PPP Purchasing power parity SIDS Small Island Developing States TB Tuberculosis UN United Nations USAID United States Agency for International Development USDA United States Department of Agriculture WFP World Food Program WHO World Health Organization WID Women in Development WTO World Trade Organization WWF World Wildlife Fund

List of Boxes, Figures and Tables Boxes Box 1. Box 2. Box 3. Box 4. Box 5. Box 6.

Transformational Development Country Categories Environmental Sustainability Indicators Climate Adaptation Official Development Assistance Indicators Market Access Indicators Debt Sustainability Indicators

Figures Figure 1. U.S. Net ODA from 1960 to 2005 Figure 2. The Changing Management of U.S. ODA Figure 3. Donors Ranked by Net Disbursements of ODA in 2005 Figure 4. Donors Ranked by ODA as a Percentage of GNI in 2005 Figure 5. U.S. Aid to Multilaterals as a Percentage of Total ODA Figure 6. U.S. Aid to Recipient Countries by Income Level in 2006 Figure 7. U.S. Aid in FY 2006: Top Recipients versus Poorest Countries Figure 8. Share of U.S. FDI to Developing Countries in 2006, by Income Level Figure 9. Top Developing Country Destinations of U.S. FDI in 2006 Figure 10. Average Tariffs on Dutiable Exports to the U.S. in 2006

Tables Table 1. Selected Sector Funding, FY2006 and FY2008 Table 2. U.S. Spending on Food Aid Table 3. U.S. Spending on Goal 2 Table 4. U.S. Spending on Goals 4 and 5 Table 5. U.S. Spending on Goal 6 Table 6. U.S. Progress on Environmental Sustainability Indicators Table 7. U.S. Progress on Official Development Assistance Indicators Table 8. U.S. Non-official Flows to Developing Countries in 2005 Table 9. U.S. Trade Agreements Giving Preferential Access to Imports from Developing Countries Table 10. U.S. Progress on Market Access Indicators Table 11. U.S. Government Contributions for Debt Relief



InterAction, as the main coalition of U.S.-based international NGOs focused on global poverty, is doing its part to contribute to the attainment of the MDGs.

Mobilizing around the MDGs A powerful revolution is underway in the world: the revolution to cut global poverty in half by 2015. This goal to end extreme poverty was set by nations of the world at the 2000 UN Millennium Summit in the form of the Millennium Development Goals (MDGs). It is a goal these nations must meet. InterAction, as the main coalition of U.S.-based international NGOs focused on global poverty, is doing its part to contribute to the attainment of the MDGs. In poor communities throughout the world, our 165 member organizations meet people halfway in expanding opportunities in education, health care, agriculture, small business and other areas. Our community also exercises leadership in conflict prevention, the peaceful resolution of disputes, and peace building initiatives in post-conflict situations. The U.S. public expresses its support for reducing global poverty and advancing human dignity through contributions to InterAction members, which total around $7 billion annually. To date, the Millennium Development Goals have not been fully embraced by the U.S. government, which has often seen them as flawed and overly ambitious. The MDGs are, however, the first and only framework that the entire world, encompassing donor and recipient countries, has adopted to improve the human condition of the world’s poor. They have been described as the “most broadly supported, comprehensive, and specific poverty reduction goals the world has ever established.” Only by aligning its contributions with the MDGs can the U.S. coordinate effectively with other donor countries, best leverage the impact of its funds by building on the efforts of nations with MDG plans, truly partner with the efforts of developing countries, and play a leading role in the first, truly global effort to improve the well-being of the world’s poorest and most vulnerable people. As the world reaches the halfway point for achieving the MDGs, many donor countries are evaluating their individual contributions and performances in order to advance this global commitment. The U.S. should issue its own report. It has not. InterAction’s response to this gap is an assessment of the U.S. contributions to the MDGs, from a U.S. international nonprofit (U.S. NGO) perspective. Our response is founded on a concern that the U.S. government has not fully joined the world community in making the reduction of global poverty a priority of its official development assistance (ODA). U.S. contributions to advance the MDGs are mixed. In recent years, the U.S. has made major investments to advance specific MDGs – leading the global battle against HIV/AIDS and launching efforts to reduce poverty through job creation through the Millennium Challenge Corporation. At the same time, the U.S. has placed national security and



short-term outcomes at the center of its growing investment in ODA. Sustainable development and poverty alleviation are intrinsically valuable goals. The pursuit of these goals will have a direct, positive impact on the image of the American people in the poorest parts of the world, thereby advancing our country’s national interests. At the same time, they will lead to a more secure world. As we address immediate diplomatic and security challenges, the U.S. must therefore continue to make proper investments to counter poverty, ignorance and hopelessness, which can foster militant ideologies and conflict. InterAction’s concern is that the current framework for U.S. foreign assistance reform appears to take an approach that frames development goals either as being in competition for resources with security goals or as being subservient to them. We applaud the significant new investments made to advance certain MDGs, especially through the President’s Emergency Fund For AIDS Relief (PEPFAR) and the elevation of U.S. development efforts as central to our country’s relationship with the developing world. Within this greater U.S. engagement, we are concerned by the following trends in:

The level of spending: Overall U.S. ODA has increased, largely due to funding for PEPFAR (with a focus on HIV/AIDS) and the Millennium Challenge Corporation (with a focus on infrastructure and economic growth). Without funding for these two programs, however, other forms of development assistance to many countries in health, education and other areas of the MDGs actually diminishes, particularly in Africa and Latin America.



Country allocations: The bulk of foreign assistance in the U.S. government’s budget for Fiscal Year (FY) 2008 budget has been allocated to countries of strategic interest to the U.S., rather than to those that are simply poor or facing a humanitarian crisis. The top five U.S. aid recipients are Israel, Egypt, Afghanistan, Iraq, and Pakistan. The poorest countries, including many that are committed to advancing the MDGs, are losing out.



The lack of an integrated approach: The MDGs offer a comprehensive framework to fight poverty, but the U.S. has limited its main interventions to a vertical approach in areas such as malaria and HIV/AIDS.



The lack of program coordination: More than 26 U.S. government agencies are involved in foreign assistance with no unifying goals or country-level coordination. The U.S. is not in harmony with the other bilateral donors, who have adopted the MDGs as their framework for foreign assistance and country-level cooperation. These new investments and the multiple competing threads of U.S. foreign assistance need a much greater coherence.

PREFACE

A powerful revolution is underway in the world: the revolution to cut global poverty in half by 2015. This goal to end extreme poverty was set by nations of the world at the 2000 UN Millennium Summit in the form of the Millennium Development Goals (MDGs). It is a goal these nations must meet.



Acknowledgements InterAction members authored or reviewed sections of this report: Bread for the World (the debt section): Jim McDonald – Vice President for Policy and Programs, Asma Lateef – Director, Bread for the World Institute, Erin Tunney – Senior International Policy Analyst, & Charles Uphaus – Senior Foreign Assistance Policy Analyst; CARE USA, Advocacy and program staff; The International Youth Foundation, Bill Reese – President and CEO; Oxfam America, Raymond Offenheiser – President and CEO, and (the trade section): Stephanie Burgos—Senior Policy Advisor & Raquel Gomes—Research Associate; The Women’s Edge Coalition, Ritu Sharma Fox – President and CEO; World Wildlife Fund (the environment section): Kristin Clay – U.S. Government Aid Agency Liaison & Drew Crandall – Program Officer for U.S. Government Relations/ Global Support InterAction staff and consultants developed the report and authored sections: Laia Grino – Research Associate; Suzanne Kindervatter – Vice President, Strategic Impact; Cherri Waters – Managing Director, Policy Research and Analysis, and Senior Advisor to the President; Julie Montgomery – Designer



The U.S. has a long and noteworthy history of global leadership in the arena of development assistance. The U.S. should not let concerns about the MDGs themselves, particularly that failure will lead to disillusionment, cloud its commitment to join this global effort. No one set of goals can ever cover all aspects of development and, while overly-ambitious, the MDGs can be modified for particular countries, and they remain the only development framework agreed upon by governments across the rich-poor nation divide. We live in a world with global challenges and threats such as avian flu that can only be addressed in the long run through global alliances. Fully engaging with the MDGs offers an excellent opportunity for the U.S. to reestablish its leadership by becoming a true partner with the global community and contributing from its storehouse of technical experience. We offer this report as a constructive assessment of how the U.S. currently is contributing to the Millennium Development Goals. We hope the analysis and recommendations presented will expand our community’s dialogue with the U.S. government and lead to even greater opportunities for partnership.

Samuel A. Worthington President and CEO InterAction

PREFACE

Photo: courtesy of Darcy Kiefel

Photo: courtesy of Darcy Kiefel



Talking Points and Recommendations

Building on agreements at the 2000 UN Millennium Summit, most donor nations and developing countries have aligned their development planning and spending with the Millennium Development Goals (MDGs), which aim to cut poverty in half by 2015. In 2007, the mid-point to the MDG deadline, many donor nations have prepared national progress reports. A conspicuous exception is the United States. To date, the U.S. government has not fully embraced the MDGs, which officials often portray as flawed and overly ambitious. The U.S. does not use the MDGs as a framework for its official development assistance (ODA), nor does it track spending according to the goals. The MDGs are, however, the first and only framework that the entire world, encompassing donor and recipient countries, has adopted to improve the human condition of the world’s poor. The purpose of this report is to provide the missing stocktaking of the U.S. contributions to the MDGs from a U.S. international non-profit (U.S. NGO) perspective. In undertaking this study, a major challenge has been the limitation of data, since the federal budget does not reflect the areas of the MDGs. Data was drawn from a range of sources, including the U.S. budget, the Organization for Economic Cooperation and Development/Development Assistance Committee (OECD/DAC), the World Bank, and various UN agencies. The report begins with an overview of U.S. development assistance, followed by an introduction to the Millennium Development Goals and a review of the U.S. and the MDGs, including critiques of the goals themselves. It then highlights U.S. contributions to the first six MDGs, which include targets for progress within developing countries. MDGs 7 (environment) and 8 (aid, trade and debt) specify actions to be taken by donor countries, so a more lengthy assessment is presented of U.S. progress for these two goals. Overall, the report shows that U.S. development assistance does not have poverty reduction as its central purpose and continues to operate outside the global community’s poverty reduction agenda. Only by aligning its contributions with the MDGs can the U.S. coordinate effectively with other donor countries, best leverage the impact of its funds by building on the efforts of nations with MDG plans, truly partner with the efforts of developing countries, and play a leading role in the first truly global effort to improve the well-being of the world’s poorest and most vulnerable people. Our assessment of the U.S. and the MDGs finds the following:

MDG 1 – Eradicate extreme poverty and hunger:

The U.S. funds many

programs worldwide to promote economic growth and feed the hungry, but still lacks clear strategies for promoting sustainable, poverty-reducing growth or addressing the root causes of hunger. 10

MDG 2 – Achieve universal primary education:

The U.S. government has made an important contribution to achieving Goal 2, more than doubling bilateral funding for basic education from 2000 to 2005. In order to meet the global commitment to get all children in school, the U.S. must make sure that resources are concentrated in countries with the greatest need.

MDG 3 – Promote gender equality and empower women:

The U.S. is contributing to the attainment of Goal 3 but does not track its contributions. Data from the OECD/DAC – as well as actual U.S. programming – show that gender equality and women’s empowerment is not a U.S. policy and spending priority. Global poverty cannot be reduced without women and girls at the center of any and all strategies.

TALKING POINTS AND RECOMMENDATIONS

We call on the U.S. to focus its official development assistance on poverty reduction and to align with the global develoment community around the Millennium Development Goals.

MDG 4 – Reduce child mortality:

The U.S. needs to build on and expand its positive, long-term track record in supporting and providing technical leadership in promoting child survival.

MDG 5 – Improve maternal health:

The U.S. has made significant contributions to improving maternal health, but U.S. assistance for this sector has remained stagnant over the last decade – especially when compared to investments in other areas such as HIV/AIDS. Investment in improving maternal health should be comprehensive and not overlooked in the fight against any particular disease.

MDG 6 – Combat HIV/AIDS, malaria and other diseases:

The U.S. has been the global leader in the fight against HIV/AIDS and continues to make significant investments. Changes in U.S. policy are needed to make U.S.-funded programs more effective. Especially important is building the capacity of health systems and making women and girls a priority in program planning and implementation.

MDG 7 – Ensure environmental sustainability:

The U.S., while making notable progress toward the achievement of MDG 7 in some indicators, is falling short in its contributions overall. Specifically, the U.S. has made strong progress in reducing consumption of chlorofluorocarbons, but carbon emissions and energy use remain high. In order to reduce poverty, the U.S. must commit to global efforts to respond to climate change. The U.S. should also require that climate adaptation be integrated into its development programs in order to reduce the risk that climate change will undermine the effectiveness of its current investments in poverty alleviation, health and the environment. 11

MDG 8 – ODA:

In absolute terms, the U.S. has been the leading donor of official development assistance for most of the past sixty years. The global development community, however, regards ODA as a percent of gross national income, not volume, as the best measure of a donor’s relative contribution. Here, the U.S. continues to fall short of expectations for a country of such tremendous wealth and generosity.

MDG 8 – Trade:

U.S. trade preferences are promising, but the U.S. has yet to live up to its commitment to building a trading system that is open, rule-based, predictable and non-discriminatory, and that accounts for the special needs of least developed countries. By committing to a global trade round, reforming the farm bill, and improving trade preferences, the U.S. can take important strides in helping poor farmers.

MDG 8 – Debt relief: The U.S. is on track to meet its MDG commitment for debt relief and has been a leader in removing debt as an obstacle for development. Offering terms more generous than other Paris Club members, the U.S. has cancelled 100 percent of bilateral debts with HIPC countries. Additionally, the U.S. pledged 100 percent of its target contribution to IDA, effectively freeing up much needed resources for development. The U.S. can also exercise its leadership to extend debt relief to include more debt-burdened countries and to ensure money saved in debt service actually goes into needed public investment. In conclusion, we call on the U.S. to focus its official development assistance on poverty reduction and to align with the global development community around the Millennium Development Goals. We recommend specifically that the U.S: 1.

12

Make addressing the causes and consequences of poverty the primary objective of U.S. official development assistance. To promote poverty-reducing growth, U.S. policy and programs should – a.

Help create the conditions and remove the obstacles to participation of the poor in both the economic growth process, and the development efforts that improve the quality of their lives by advancing all of the MDGs.

b.

Enable impoverished people to earn a living with dignity and accumulate assets that can be sustained over time.

c.

Enable poor communities to reduce their vulnerability to disaster and adapt to the growing impact of climate change.

d.

Help to strengthen the voice of the poor – especially women; empower them to participate in their countries’ decision-making (particularly in their own development efforts) and to foster democratic accountability.

e.

Improve poor peoples’ access to, and ability to shape, local, regional and global markets.



We advocate for a comprehensive, multi-faceted approach to poverty reduction that directly invests in the poor and their ability to engage in efforts that shape their future prosperity.

2.

Consolidate the management of all U.S. ODA under a new Cabinet-level department to ensure coordination in planning and implementation. The new department should be able to track its investments in the MDGs and development assistance programs, which have as their primary objective the halving of global poverty and directly addressing the devastating impact of poverty.

3.

Improve and substantially increase coordination and harmonization of U.S. ODA with other donors as this will increase the effectiveness of U.S. assistance, avoid duplication and leverage aid efforts based on the principles of the OECD/Development Assistance Committee Paris Declaration.

4.

Take measures to ensure that climate change adaptation is addressed in development programming by ensuring that the relationship between the environment and poverty reduction is a crosscutting theme for all U.S. ODA-funded programs.

5.

Translate the proven knowledge on women and girl’s central roles in reducing poverty into action by expanding support for women’s empowerment and requiring that gender is integrated into all U.S. ODA in alignment with OECD/DAC guidelines and indicators.

TALKING POINTS AND RECOMMENDATIONS

13

The Millennium Development Goals

At the September 2000 United Nations Millennium Summit, the largest-ever gathering of world leaders adopted the Millennium Declaration, an agreement to take a comprehensive, coordinated approach to rid the world of poverty. In adopting the declaration, 189 nations – including the U.S. – pledged to work together to: halve world poverty and hunger; eliminate gender inequalities; prevent and treat HIV/AIDS and other deadly diseases; protect the world’s environment; and provide education, healthcare, and clean water for all. From the actions and targets set forth in the declaration, the UN Secretariat developed eight goals, now known as the Millennium Development Goals (MDGs), with eighteen quantifiable targets measured against forty-eight indicators.

A shared vision … The Millennium Development Goals represent a common vision for the future: “A world with less poverty, hunger and disease, greater survival prospects for mothers and their infants, better educated children, equal opportunities for women and a healthier environment.”1 As such, they serve as a powerful basis for mobilizing resources for development and coordinating international development efforts. The quantitative nature of the goals also allows for a degree of accountability, making it possible for countries to track progress and citizens to hold governments responsible for improving people’s lives.

… with shared responsibilities. The MDGs are also the first international goals to recognize that eradicating poverty worldwide will only be possible through cooperation between rich and poor countries. This fact is explicitly acknowledged in Goal 8, which calls for a “global partnership for development.” Though individual countries are responsible for achieving Goals 1-7, Goal 8 calls on developed countries to support the development efforts of poor countries committed to poverty reduction by: increasing and improving aid, providing more debt relief and establishing a more fair trading system. In turn, developing countries have pledged to practice good governance and strengthen the rule of law.

Some regions are making progress … July 2007 marked the midway point between the adoption of the MDGs and the 2015 target date for achieving most of the goals. UN reports show that the world overall is close to meeting the goal of halving the proportion of people living in extreme poverty, though this is in large part due to the remarkable reduction in poverty rates in China and India. Countries are also making progress in achieving universal primary education.2 14

… but others lag seriously behind. According to World Bank data, East Asia is closest to achieving all the MDGs.3 For example, it has already surpassed two targets: halving the percentage of people living in extreme poverty and reducing the proportion of children under five who are underweight. In contrast, sub-Saharan Africa is far behind on many of the goals. Despite some progress in reducing the percentage of people living in extreme poverty, the absolute number of poor remains roughly the same due to population growth.4 Likewise, though the region is making progress towards achieving universal primary education, in 2005, 30 percent of primary school-aged still children remained out of school.5 In sub-Saharan Africa, child and maternal mortality remain high, and it is one of the regions with the greatest proportion of children going hungry. In addition, the number of deaths from AIDS in the region has increased.6 The success of individual countries demonstrates that under certain conditions achieving the MDGs is possible, but success on a global scale will only occur if developing and developed countries fulfill their commitments under the global partnership for development. If the world is to meet the MDGs by 2015, as countries pledged to do, developing countries must implement policies and interventions that benefit the poorest and most disadvantaged segments of their populations. For their part, developed countries must keep their promises – namely, more and better aid, less debt and more fair trade.

INTRODUCTION TO THE MDGS

“We will spare no effort to free our fellow men, women, and children from the abject and dehumanizing conditions of extreme poverty, to which more than a billion of them are currently subjected.” - Millennium Declaration, Sect. III, Art. 11

The list of the MDGs, targets and indicators is included in Appendix A, and a chart noting progress on the goals by region in Appendix B.

1

UN Statistics Division. “About the Millennium Development Goals Indicators.” United Nations. http://mdgs.un.org/ unsd/mdg/Host.aspx?Content=Indicators/About.htm.

2

United Nations, The Millennium Development Goals Report 2007, (New York: United Nations, 2007), 4.

3

World Bank. Global Monitoring Report 2007: Confronting the Challenges of Gender Equality and Fragile States, (Washington, DC: World Bank, 2007).

4

Ibid, 41.

5

United Nations, The Millennium Development Goals Report 2007, (New York: United Nations, 2007), 11.

6

Ibid, 18.

15

U.S. Official Development Assistance

Foreign aid and official development assistance: What is the difference? The OECD’s Development Assistance Committee (DAC) defines foreign assistance as:1 “Financial flows, technical assistance and commodities provided by donor governments: (1) to promote economic development and welfare as their main objectives (thus excluding aid for military or other non-development purposes); and (2) as grants or concessional loans.”2 The largest category of foreign assistance is ODA: aid provided to low- and middle-income countries.3 After a very brief overview of the history of U.S. foreign assistance, this section discusses aid’s changing purposes, recipients and funding. The remainder of the report focuses on whether or to what extent:

U.S. ODA is contributing to the attainment of MDGs 1 to 6.



The U.S. is on-track to meet MDG commitments in four areas: 1.

Environment: curbing the loss of environmental resources in both the U.S. and developing countries (Goal 7).

2.

Aid: providing ODA to low- and middle-income countries (Goal 8).

3.

Trade: opening the U.S. market to goods from those countries (Goal 8).

4.

Debt: lifting the crushing debt burden of developing countries (Goal 8).

U.S. foreign aid began in the aftermath of World War II In 1947, to provide aid to rebuild European countries left in ruins in the aftermath of World War II, Secretary of State George Marshall announced the creation of the Marshall Plan (1947-1951), the first U.S. bilateral assistance program. Heartened by the Marshall Plan’s tremendous success, President Truman, in his 1949 inauguration speech, announced a “bold new plan” to provide assistance to developing countries as a key component of U.S. foreign policy.4 U.S. foreign aid did not, however, have a department to administer it until President Kennedy established the U.S. Agency for International Development (USAID) in 1961. Although 16

USAID had primary responsibility for managing U.S. foreign assistance programs directly or jointly with the Department of State, over the next forty-plus years, a growing number of domestic agencies and the Department of Defense (DOD) began managing foreign aid programs.5 From 2002 to 2005, President Bush created three new foreign assistance agencies and initiatives:

The President’s Emergency Plan for AIDS Relief (PEPFAR): a bilateral commitment to support HIV/AIDS prevention, care and treatment programs primarily in a limited number of “focus countries.” A presidential appointee who reports directly to the Secretary of State heads the Office of the Global AIDS Coordinator (OGAC) and is responsible for managing PEPFAR.



The Millennium Challenge Corporation (MCC): a U.S. government corporation, created in 2004 to combat poverty through “sustainable, transformative economic growth.”



The President’s Malaria Initiative (PMI): a five-year program to reduce deaths due to malaria by 50 percent in fifteen African countries. According to the administration, USAID “in conjunction with the Department of Health and Human Services’ Centers for Disease Control and Prevention, the Department of State, the White House, and others” leads the initiative.

U.S. ODA

“We will seek to use bilateral foreign assistance to build toward a safer and more secure, democratic and prosperous world to enhance our own national security.” - USAID, Policy Framework for Bilateral Foreign Aid, January 2006

As a consequence, by 2005, more than twenty-six government units were managing and implementing U.S. foreign assistance programs.6

Aid: To whom, for what? At the heart of any discussion of U.S. foreign aid is a debate about the motivations and objectives for giving aid. Why do we give aid? Why should we give aid? There have always been multiple, and competing, stated purposes for U.S. foreign assistance. Fundamentally pragmatic considerations have been the principal drivers of U.S. aid policy. From the 1950s onward, administrations have described ODA as a “foreign policy tool,” intended primarily to serve U.S. security, political and economic interests:

From the 1950s to the collapse of the Soviet Union in 1991, aid’s primary purpose was “containing communism.”



After signing of the Camp David Accords in 1979, “peace and security” in the Middle

17

Figure 1. U.S. Net ODA from 1960 to 2005 Source: DAC Online – Table 1 (October 5, 2007)

$30 $25

US$ 2005 billions

From the 1950s onward, administrations have described ODA as a “foreign policy tool,” intended primarily to serve U.S. security, political and economic interests.

September 11 attacks

$20

Cold War ends

Gulf War

$15 $10 Camp David Peace Accord

$5

Low point of U.S. ODA

$0 1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

East became a primary focus of aid. As a result, Israel and Egypt have been the largest aid recipients from 1979 to the present – with one exception: in FY 2004, aid to Iraq was seven times aid to Israel.

For a brief moment from the mid- to late-1990s, foreign aid’s two stated objectives were “sustainable development” and “opening markets.”

Development in its own right has been only one of several foreign aid objectives. What has changed over the past sixty years is the level of importance policy-makers have attached to development, the approaches taken to promote development, funding and primary recipients. Figure 1 presents changes in U.S. ODA since the 1960s.

In the post-9/11 era, U.S. foreign aid has been recast All of this has changed dramatically since September 11, 2001. In September 2002, the Bush administration published the National Security Strategy of the United States. In it, the ad18

ministration articulated a national security policy that, for the first time, established global development as one of three pillars (the 3 Ds) of U.S. national security – the others being defense and diplomacy.7

U.S. ODA

Some in the development community applauded the administration’s decision to raise development to a new place of prominence in U.S. foreign policy. Others have voiced concerns, to paraphrase Orwell, that “all ‘Ds’ might be equal, but some ‘Ds’ would be more equal than others.” In effect, their concern was that U.S. development policy would be subordinated to defense and diplomacy. As evidence, they cited the fact that U.S. foreign aid programs had already been recast to focus on their contribution to winning the war on terrorism. Indeed, the 2002 foreign assistance budget justification explicitly named the war on terrorism as the top foreign aid priority.8

What is “transformational development”? On January 19, 2006, Secretary of State Condoleezza Rice announced her intent to reform and restructure U.S. foreign assistance, aimed, she argued, at “transformational development.” The stated goals of the process were to ensure that foreign assistance is used effectively to meet the Administration’s broad foreign policy objectives and to better align USAID and State Department aid activities.9 That day, Secretary Rice also announced creation of a new position, the Director of Foreign Assistance (DFA), who would serve concurrently at a level equivalent to Deputy Secretary in the State Department and as USAID Administrator. As the first DFA, Ambassador Randall Tobias led the reform process; the acting DFA, Henrietta H. Fore, will now lead its refinement and implementation.10 By early 2006, the DFA had developed a new comprehensive framework for U.S. foreign assistance (presented in Appendix C). The framework created five country categories. (See Box 2, page 20):

Rebuilding: countries in, or emerging from, internal or external conflicts.



Transforming: low and lower-middle income countries that meet certain performance. criteria based on good governance and sound economic policies.



Developing: low and lower-middle income countries that are not yet meeting performance criteria.



Sustaining Partnership: upper-middle income countries with which the United States maintains economic, trade, and security relationships beyond foreign aid.

19

The stated goals of the transformational development process were to ensure that foreign assistance is used effectively to meet the Administration’s broad foreign policy objectives and to better align USAID and State Department aid activities.

Box 1. Transformational development country categories Rebuilding Countries Afghanistan Colombia Cote d’Ivoire Dememocratic Rep. of the Congo

Lebanon Haiti Iraq Liberia Nepal

Developing Countries Sierra Leone Somalia Sudan Kosovo

Transforming Countries Benin Bolivia Brazil Bulgaria East Timor El Salvador Gambia Ghana

Honduras India Lesotho Madagascar Mali Mongolia Mozambique Namibia

Nicaragua Philippines Samoa Sri Lanka Tanzania Thailand Uruguay Vanuatu

Sustaining Partnership Countries Argentina Bahamas Bahrain Belize Botswana Chile Costa Rica Croatia Cyprus Czech Republic Eastern Caribbean Equatorial Guinea Estonia

20

Gabon Greece Hungary Ireland Israel Kuwait Latvia Marshall Islands Mauritius Mexico Oman Panama Poland

Portugal Qatar Russia Saudi Arabia Seychelles Singapore Slovakia Slovenia South Africa Taiwan Trinidad & Tobago Turkey United Arab Emirates

Albania Algeria Angola Armenia Azerbaijan Bangladesh Bosnia & Herzegovina Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Republic Chad Comoros Djibouti Dominican Republic Ecuador Egypt Ethiopia Fiji Georgia Guatemala Guinea Guinea-Bissau Guyana Indonesia Jamaica Jordan Kazakhstan Kenya

Kyrgyz Republic Laos Macedonia Malawi Maldives Mauritania Moldova Montenegro Morocco Niger Nigeria Papua New Guinea Paraguay Peru Republic of the Congo Romania Senegal Serbia Solomon Islands Suriname Swaziland Tajikistan Togo Tonga Tunisia Turkmenistan Uganda Ukraine Uzbekistan Vietnam Yemen Zambia



Restrictive: authoritarian regimes – most ineligible for U.S. aid – with significant freedom and human rights issues.

U.S. ODA

The DFA also added a sixth “global” category to encompass global or regional programs that transcend any one country’s borders. In addition, the framework linked the country categories to five strategic objectives: 1.

Peace and security.

2.

Governing justly and democratically.

3.

Investing in people.

4.

Economic growth.

5.

Humanitarian assistance.

The foreign assistance framework shows the relationship between these objectives, the country categories, program areas and funding accounts.

Allocation of U.S. aid has changed substantially This section of the report compares FY 2001-FY 2006 aid allocations with the administration’s FY 2008 budget request.11 Over the past twenty months, many in the development and foreign aid communities have debated the extent to which the reform process, combined with an inordinate focus on the war on terrorism, would result in the major shifts in funding out of development programs and into security. The analysis below compares actual aid allocations with the administration’s intent, as expressed through its budget request. Of course, actual allocations of funding for FY 2008 will not be determined until Congress passes an appropriations bill – after this report is completed. As in years past, Congress has already begun shifting funding across accounts, providing less than the president’s request in some areas (e.g., the MCC and the Andean Plan) and more in others (e.g., development assistance and child survival and health). In comparing past aid allocations with the current administration’s request for FY 2008, we found:

By 2005, U.S. foreign aid funding had reached a record high. It is likely to grow more in the FY 2008 appropriations. U.S. total gross ODA (in constant 2004 dollars) more than doubled – from $13.114 billion in 2001 to $27.682 billion in 2005.12 The administration’s total request for FY 2008 is a 12 percent increase over FY 2006.13

21

Figure 2. The Changing Management of U.S. ODA Source: OECD (2006), DAC Peer Review of the United States

In 1998 USAID managed 64.3 percent of U.S. ODA. By 2005, it managed only 38.8 percent.

100%

Other

80%

Agriculture

60%

Treasury Defense

40%

State

20%

USAID

0% 1998

22

2005



Foreign aid has become more “militarized” as the proportion of aid managed by USAID has declined sharply. In 1998 USAID managed 64.3 percent of U.S. ODA. It has since fallen to 50.2 percent in 2002 and 38.8 percent in 2005. ODA managed by the Department of Defense, on the other hand, rose from 3.5 percent in 1998 to 5.6 percent in 2002 to 21.7 percent in 2005 (See Figure 2).



Aid would become more concentrated by region. Aid to Africa nearly doubled: from 13.1 percent FY 2001 to 22.3 percent in FY 2006. The president’s FY 2008 request for more HIV/AIDS funding would give the Africa region the largest overall increase in aid (53.8 percent). This increase, however, masks decreases in basic education, agricultural sector productivity, water supply and sanitation, and family planning and reproductive health funding for Africa.14





2002



In FY 2008, the Near East Region and South and Central Asia would receive increases of 3.6 and 5.5 percent respectively – due to increased funding for Iraq, Afghanistan, and Pakistan. Aid to these regions had already more than doubled from FY 2004 to FY 2006.15



The president’s request would cut funding for Latin America by 9.1 percent, largely due to cuts in basic education, environment, and humanitarian assistance.16

Table 1. Selected Sector Funding, FY 2006 and FY 2008 (in millions of current US$)

U.S. ODA

Sector

FY06

Good Governance

$354.22

$507.39

43.2%

$90.32

$81.98

-9.2%

Maternal and Child Health

$738.85

$608.53

-17.6%

Family Planning/ Reproductive Health

$429.82

$332.29

-22.7%

Basic Education

$520.80

$535.30

2.8%

Trade and Investment

$408.74

$238.58

-41.6%

Agriculture

$561.99

$498.72

-11.3%

Environment

$292.11

$248.73

-14.9%

Counter-terrorism

$157.05

$185.27

18.0%

Rule of Law

$210.73

$317.28

50.6%

Human Rights

FY08 Request

% Change

Source: U.S. Department of State Foreign Operations Congressional Budget Justification, FY 2008, and CRS calculations.





Funding for security would go up, but development down. Table 1 compares funding levels for specific sectors between FY 2006 and FY 2008. Counter-terrorism and rule of law would receive increases of 18.0 and 50.6 percent respectively. Good governance would receive an increase in funding; and yet human rights funding would decrease. Also cut are maternal and child health, family planning and reproductive health, trade and investment, agriculture, and the environment.17

1

Established in 1961, the Organization for Economic Cooperation and Development (OECD) is a grouping of thirty countries “committed to democracy and the market economy. Its mission is to help its member countries achieve sustainable economic growth and employment and to raise the standard of living in member countries while maintaining financial stability. The United States was a founding member. The Development Assistance Committee (DAC) is a twenty-two-member committee of the OECD which deals with development co-operation matters. To enable comparisons of the ODA of member countries, the DAC has established common definitions and methodologies for ODA reporting. The DAC is regarded as the authoritative source of information on ODA.

2

Steve Radalet. “A Primer on Foreign Aid.” In Working Paper Number 92. (Washington, DC: Center for Global Development, 2006), 4.

3

The DAC classifies aid into three categories: (1) official development assistance, the largest; (2) official assistance, and (3) private voluntary assistance. Official assistance (OA) is provided to higher income countries with per capita incomes of more than $9000. Private voluntary assistance includes grants from NGOs, religious groups, charities, foundations, and private companies. See Steve Radalet. “A Primer on Foreign Aid.” In Working Paper Number 92. (Washington, DC: Center for Global Development, 2006), 4.

23

24

4

Baltimore County Public Schools. A Brief History of U.S. Foreign Aid. 2007, http://www.bcps.org/offices/lis/models/ foreignaid/history.html.

5

Development Assistance Committee. DAC Peer Review of the United States, (Paris: Organization for Economic Cooperation and Development, 2006), 45.

6

Ibid.

7

White House. The National Security Strategy of the United States of America, (Washington, DC: White House, 2002).

8

Curt Tarnoff and Larry Nowels. Foreign Aid: An Introductory Overview of U.S. Programs and Policy, (Washington, DC: Congressional Research Service, 2004).

9

Condoleezza Rice. Remarks on Foreign Assistance, (Washington, DC: U.S. Department of State, 2007), http://www. state.gov/secretary/rm/2006/59408.htm.

10

At the time this report was completed, Mrs. Fore had not been confirmed by the Senate. We assume that her confirmation is imminent.

11

The House and Senate passed a one-year continuing resolution (CR) which was signed into law by the president on February 15, 2007. The CR included $32.56 billion for the International Affairs programs, 3.7 percent higher than FY2006 funding, but -7.2 percent below the president’s request. The CR amount falls between levels provided in earlier House and Senate action on International Affairs appropriation bills.

12

Development Assistance Committee. DAC Peer Review of the United States, (Paris: Organization for Economic Cooperation and Development, 2006), 25.

13

Congressional Research Service. State, Foreign Operations, and Related Programs: FY2008 Appropriations (RL34023), by Connie Veillette and Susan B. Epstein, (Washington, DC: June 13, 2007), 12.

14

Congressional Research Service. U.S. Foreign Aid to East and South Asia: Selected Recipients (RL31362), by Thomas Lum (Washington, DC: Updated August 22, 2007), 5.

15

Congressional Research Service. State, Foreign Operations, and Related Programs: FY2008 Appropriations (RL34023), by Connie Veillette and Susan B. Epstein, (Washington, DC: June 13, 2007), 15.

U.S. ODA

Photo: courtesy of Cheol Ham

25

The U.S. and the Millennium Development Goals

This report looks at what the U.S. government is doing to support attainment of each of the MDGs. However, we begin with a more fundamental question: to what extent has the U.S. demonstrated a commitment to achievement of the MDGs as a whole? For evidence, we turned to three sources of information:

U.S. government statements and policies related to the MDGs.



Operational use of the MDGs, targets and indicators in planning and managing aid programs.



The allocation of foreign aid dollars (See discussion of Goal 8, pages 56 to 63).

The administration has made a commitment to the MDGs At the UN Summit in September 2005, President Bush affirmed the U.S. commitment to the attainment of the MDGs. Three days later, Secretary of State Rice, in a speech to the UN General Assembly, also stated, “the United States is committed to the Millennium Development Goals.”1 But it would also be fair to say that U.S. support for the MDGs is not unqualified. A major U.S. concern is the call for donors to contribute 0.7 percent of gross national income for development assistance, whereas the U.S. points to its position as the top contributor of assistance in terms of overall dollar amount. Administration officials, other policy-makers and development specialists also have raised specific issues about the MDGs:

26



The MDGs tend to focus on public or government assistance for development, yet more than 80 percent of U.S. resources flowing to the developing world are private, including foreign direct investment, remittances and a range of other sources. This places unrealistic expectations on what aid alone can achieve.2



The MDGs are overly ambitious, setting up the world for failure when the goals cannot be reached.3



MDGs are heavily weighted towards social services. In overemphasizing these particular goals, there is the risk of underemphasizing the importance of equitable economic growth, the rule of law and democratic institutions.4



The MDGs take a “one size fits all” approach that fails to take into account that the goals and targets need to be adapted for each particular country.5



The goals do not speak to a strategy to achieve them. Adequate funding for development is necessary but it is far from being a sufficient condition of success.6

Despite these possible shortcomings, the world community has embraced the MDGs as a set of targets to work toward and as a means to work in coordination. In practice, countries are using the MDGs as a guide and adapting them to their own priorities and needs. With this common yardstick, the 2007 stocktaking reports by both donor and developing countries indicate areas in which progress is occurring and where it is falling short and more action is needed. U.S. commitment to the MDGs is not reflected in current policy or practice. Conceptually, the MDGs are not embedded in either the DFA’s new “comprehensive” foreign assistance framework (See Appendix C) or the supporting documentation.7 Moreover, the U.S. government does not use the MDGs, targets or indicators:

Operationally in foreign assistance programming as goals, objectives, outcomes or indicators of programs and projects.



In monitoring projects or tracking their results.



In accounting for the use of assistance dollars.

For these reasons, InterAction sometimes had tremendous difficulty in determining the U.S. contribution to each particular MDG. In the sections that follow, whenever data was available, we report U.S. government spending for each goal. 1

Carnegie Endowment for International Peace. “Remarks by Secretary of State Condoleezza Rice to the United States General Assembly,” http://www.carnegie endowment.org/publications/index.cfm?fa=view&id=19226.

2

“USAID Speeches: Remarks by Andrew Natsios, USAID Administrator, Five Debates on International Development —The US Perspective,” (London: U.S. Agency for International Development, October 12, 2005) http://www. usaid.gov/press/speeches/2005/sp051012.html.

3

Michael Clemens and Todd Moss. CGD Brief: What’s Wrong with the Millennium Development Goals? (Washington DC: Center for Global Development, September 2005).

4

“USAID Speeches: Remarks by Andrew Natsios, USAID Administrator, Five Debates on International Development —The US Perspective,” (London: U.S. Agency for International Development, October 12, 2005) http://www. usaid.gov/press/speeches/2005/sp051012.html.

5

Ibid.

6

Ibid.

7

Development Assistance Committee. DAC Peer Review of the United States, (Paris: Organization for Economic Cooperation and Development, 2006).

U.S. AND THE MDGS

“To spread a vision of hope, the United States is determined to help nations that are struggling with poverty. We are committed to the Millennium Development Goals. This is an ambitious agenda that includes cutting poverty and hunger in half, ensuring that every boy and girl in the world has access to primary education, and halting the spread of AIDS – all by 2015.” – President George W. Bush, 2005 UN World Summit, High Level Plenary Meeting , September 14, 2005

“In short, the MDGs are a necessary and desirable set of development objectives, but are an incomplete and insufficient description of where we need to go between now and 2015.” – USAID Administrator Andrew Natsios, Five Debates on International Development: The U.S. Perspective , London, October 12, 2005

27

Goal 1: Eradicating Extreme Poverty and Hunger

Goal 1 represents the world’s promise to halve the proportion of people living in extreme poverty and suffering from hunger by 2015. About one billion of the world’s people live on less than $1 a day, almost three billion live on less than $2 a day.1 Every 3.6 seconds, another person dies of starvation. More than 800 million people go to bed hungry every day; 300 million of them are children, most under the age of five.

The U.S. has many programs, but no overarching strategy for halving global poverty The U.S. government supports the goal of halving extreme poverty by 2015 through a variety of U.S. Agency for International Development (USAID), Department of State, Millennium Challenge Corporation (MCC), and other U.S. government programs to promote economic growth in developing and transition economies. In its submission to Development Assistance Committee (DAC) peer reviewers, the U.S. reported that it provided $180 million in FY 2004 and $200 million in FY 2005 to support almost four million entrepreneurs and their households worldwide.2 Perhaps the MCC tagline “reducing poverty through economic growth” best captures the U.S. approach to poverty reduction. The DAC report concluded, however, that the U.S. government: … [has] no policy guidance specifically addressing the issue of poverty … does not have a clear policy on poverty reduction [and] ... has yet to integrate poverty as a cross-cutting theme of the new foreign assistance framework.3 We concur with this assessment and argue further that an unqualified emphasis on economic growth per se is not well-founded. Reality is far more complex. World Bank studies, for example, have provided compelling evidence that economic growth does not always lead to poverty reduction – especially for the billions of impoverished people who live well beyond the global market’s reach.4 Thus, we believe that U.S. ODA should promote growth that is “pro-poor” or poverty reducing. Essentially, this means creating an enabling environment for, and removing barriers to, “a pace and pattern of growth that enhances the ability of poor women and men to participate in, contribute to, and benefit from growth.”5

28

Table 2. U.S. Spending on Food Aid Region

FYOO

FYO1

(in millions, constant 2005 US$) FYO2

FYO3

FYO4

FYO5

Middle East & North Africa

$197.1

$131.2

$7.1

$284.7

$90.9

$33.8

Sub-Saharan Africa

$774.4

$821.9

$724.0

$1,595.2

$1,335.7

$1,734.7

Latin America & Caribbean

$197.2

$293.8

$180.7

$280.1

$270.8

$177.0

Asia

$547.6

$671.7

$533.5

$414.9

$366.5

$253.9

Eurasia

$323.0

$209.1

$72.6

$113.6

$105.2

$53.2

Eastern Europe

$123.0

$131.6

$16.2

$24.0

$13.9

$0.5

$10.8

$5.2

$3.3

$6.6

$5.7

$41.9

$2,173.0

$2,264.5

$1,537.4

$2,719.1

$2,188.6

$2,294.9

World (not specified) Total

MDG1

U.S. AND THE MDGS

Source: USAID Greenbook (accessed October 4, 2007) Note: Includes funding for the following food aid programs: Title I, Title II, Title III, Section 416(b)/Commodity Credit Corporation Food for Progress, and Food For Education

POVERTY AND HUNGER

The U.S. funds many programs worldwide to promote economic growth and feed the hungry, but still lacks clear strategies for promoting sustainable, poverty-reducing growth or addressing the root causes of hunger.

Six food aid programs do not add up to a strategy to halve global hunger Since the 1954 passage of the Agricultural Trade Development and Assistance Act (commonly known as the Food for Peace Act or PL-480), the U.S. government’s primary response to global hunger has been to provide food assistance. Over the past fifty years, PL-480 programs alone have contributed more than 340 million metric tons of U.S. agricultural commodities to feed many millions of hungry people around the world – making the U.S. the world’s largest provider of food aid (See Table 2).6 The U.S. has no overarching approach or strategy for reducing global hunger or preventing it in the long term. Our food assistance programs respond to the immediate needs of recipients, saving lives and reducing malnutrition, but do not address the underlying causes of their hunger and, therefore, cannot contribute to halving hunger in the long term. The largest portion of food aid (approximately 57 percent) goes to save lives in disasters and other emergencies; but shipping food from the U.S. on American carriers is both costly and slow. When the food arrives, it reaches a small portion (an estimated 11 percent only) of the world’s hungry people, typically those most easy to reach.

29

The U.S. government “has yet to integrate poverty as a crosscutting theme of the new foreign assistance framework.” -DAC Peer Review of the United States (2006)

Food assistance, like other ODA programs, suffers from bureaucratic duplication, fragmentation and lack of coordination across government agencies. There are now six different food aid programs with conflicting objectives that run through both USAID and the Department of Agriculture. Moreover, food aid has become increasingly controversial. U.S. NGOs, which historically have had strong connections to these programs, now hold sharply divergent views on the efficacy of food aid programs.7 Critics of U.S. food assistance programs assert that sending U.S. commodities is an ineffective way of meeting even the stated goals of food aid programs themselves. More importantly, they argue that the monetization of food aid does more harm than good.8 Some proponents of food aid acknowledge the validity of at least some of the above points. Certainly, their preference would be a cash-based food assistance program. Still, given prevailing political realities, their greatest fear is that policy-makers will adopt a solution that will not be cash instead of commodities; instead it will be no food aid at all.

30

1

UN Millennium Project. “Fast Facts: The Faces of Poverty,” (New York: United Nations), http://www. unmillenniumproject.org/documents/MP-PovertyFacts-E.pdf.

2

Development Assistance Committee. DAC Peer Review of the United States, (Paris: Organization for Economic Cooperation and Development, 2006), 34.

3

Ibid, 34.

4

See, for example, Martin Ravillion. “Growth, Inequality, and Poverty: Looking Beyond Averages,” World Development: 29 (2001), 11.

5

OECD. “Key policy messages.” In Promoting Pro-poor Growth: Policy Guidance for Donors (Paris: Organization for Economic Co-operation and Development, 2006), 10.

6

U.S. Government Accountability Office. Foreign Assistance: Various Challenges Limit the Efficiency and Effectiveness of U.S. Food Aid (GAO-07-905T), Statement to Congress by Thomas Melito (Washington, DC: May 24, 2007), i.

7

Congressional Research Service. International Food aid and the 2007 Farm Bill (RL34145), by Charles E. Hanrahan, (Washington, DC: 2007, August 28), 10-15.

8

See Christopher B. Barrett. The United States’ International Food Assistance Programs: Issues and Options for the 2007 Farm Bill, (Washington, DC: American Enterprise Institute, 2007). Also see the Congressional Research Service. Agricultural Export and Food Aid Programs (RL33553) by Charles E. Hanrahan, (Washington, DC: 2007), 15-17.

U.S. AND THE MDGS

Photo: courtesy of Jon Warren

31

Goal 2: Achieving Universal Primary Education

Eight out of ten children in developing countries begin primary school, but only a third of these children actually complete their schooling. The dropout rate for girls is generally higher than the rate for boys. More than seventy million children – three out of five of whom are girls – do not attend school at all. Goal 2 is a global commitment to ensuring that every child – both girls and boys – completes primary school. From 2001 to 2006, seven different U.S. government agencies – USAID, the Millennium Challenge Corporation (MCC), the Peace Corps, and the Departments of State, Agriculture, Defense and Labor – funded and managed basic education projects in over seventy countries around the world. The activities supported by these agencies were directly or indirectly related to increasing access to, or improving the quality of, basic education.1 Better coordination amongst these agencies is needed to ensure that resources are put to the most effective use. Both USAID and the Department of State have made “promoting education” strategic priorities. USAID has not only worked on increasing the number of boys and girls in school, but has also sought to ensure that all children receive a quality education.2 From 2000 to 2003, U.S. funding for basic education in developing countries rose only slightly, from $214.9 to $238.1 million. In 2004, however, basic education spending more than doubled to $511.6 million – due in no small part to the Administration’s decision to focus on education in the Muslim world.3 Consequently, the top recipients of USAID’s basic education funding are now predominately Muslim countries and countries of strategic interest for short-term foreign policy goals.4 A look at “winners and losers” as the administration has shifted funding is telling. Afghanistan, Egypt, Indonesia and Pakistan all received substantial increases in basic education funding from 2004 to 2006. These countries, plus Iraq, were also the top five recipients of basic education assistance from 2001 to 2006. Among the countries that received significant

Table 3. U.S. Spending on Goal 2

2000

20O1

20O2

20O3

20O4

2005

U.S. bilateral commitments for basic education

$214.9

$225.8

$237.7

$238.1

$511.6

$508.5

As % of U.S. bilateral commitments for education

74.4%

64.2%

74.7%

81.0%

85.4%

73.3%

Source: CRS Online (September 19, 2007)

32

(in millions, constant 2004 US$)

MDG2

U.S. AND THE MDGS

PRIMARY EDUCATION

The U.S. government has made an important contribution to achieving Goal 2, more than doubling bilateral funding for basic education between 2000 and 2005. In order to meet the global commitment to get all children in school, the U.S. must make sure that resources are concentrated in countries with the greatest need.

Photo: courtesy of Darcy Kiefel

33

cuts in funding were Mali, despite an adult literacy rate of 19 percent and a 44 percent primary school completion rate, and Benin with a 35 percent adult literacy rate and a 49 percent primary school completion rate.5

34

1

Basic education is defined as all program efforts aimed at improving early childhood development, primary education, and secondary education, as well as training in literacy, numeracy, and other basic skills for adults or out-of-school youth. Basic education also includes efforts that facilitate and support such learning activities, including building host countries’ institutional capacity to manage basic education systems and measure results, constructing and rehabilitating schools, training teachers, increasing parent and community involvement in schools, providing learning materials, and developing curricula. U.S. Government Accountability Office. Foreign Assistance: Enhanced Coordination and Better Methods to Assess the Results of U.S. Basic Education Efforts are Needed. (Washington, DC, March 2007; GAO-07-523).

2

Ibid, 13.

3

Ibid, 20.

4

Ibid, 56–58.

5

Ibid, 56–59.

MDG2

U.S. AND THE MDGS

BASIC EDUCATION

Photo: courtesy of Karl Grobl

35

Environment Goal 3: Promoting Gender Equality The U.S. has yet to live and up to itsEmpowering commitment to building a trading Women system that is open, rulebased, predictable, nondiscriminatory, and that accounts for the special needs of least developed countries.

The face of poverty has been, and continues to be, overwhelmingly female. Investing in Goal 3 has a virtuous cycle. Women and girls benefit, as well as families and communities. When a country educates girls, its mortality rates usually fall, fertility rates decline, and the health and education prospects for the next generation improves. We believe, as the World Bank’s 2007 Global Monitoring Report noted, that addressing gender discrimination must be a priority in order to attain the MDGs by 2015.1

The U.S. is contributing to the attainment of Goal 3 ... Since 1973, when Congress mandated the need to address gender equality and women’s empowerment in U.S. development assistance, USAID has funded a wide range of programs for women and girls and the integration of gender. Examples of recent efforts include:

USAID’s specific focus on girls’ education in 67 percent of its basic education programs.



USAID-supported microfinance institutions make over 60 percent of their loans to women; and nearly one-third of the clients receiving USAID-supported enterprise development services are women.



USAID provided $27 million to support anti-trafficking activities in 30 countries in 2006.2

The Millennium Challenge Corporation (MCC) has demonstrated leadership in this area by adopting a gender policy in 2006. Acknowledging that “gender inequality can be a significant constraint to economic growth and poverty reduction,” the policy requires that gender be integrated into all stages of the MCC process, from the selection of eligible countries to the monitoring and evaluation of program results and impacts.3

... but the evidence shows that gender is not a policy priority … Despite these contributions, the bulk of the available evidence demonstrates that the promotion of gender equality is not a current priority:

36



USAID’s Office of Women in Development (WID), the focal point of technical leadership and expertise on gender issues, has a small annual budget of $10-11 million and is located within one bureau (the Bureau for Economic Growth, Agriculture, and Trade), rather than in a more centralized location with the clout of executive leadership behind it.



Within USAID, gender equality and women’s empowerment are clearly not agencywide priorities. The agency currently has no gender policy, even though it has adopted gender as a cross-cutting theme for all programs and made it a responsibility of all operating units. Moreover, USAID has no mechanism for ensuring that requirements to consider gender in assessing competitive bids and to use gender analysis in programming are followed.



Under the 2006-2007 State Department-led aid reform process, attention to gender equality and women’s empowerment has been extremely weak. Simply put, the word “gender” does not appear anywhere in the new foreign assistance framework.



Most telling – given the importance that the reform process attached to “measuring what matters” – is the fact that of the 530 indicators selected to track U.S. ODA, only some 15 address the unique needs and issues of women and girls specifically, and only about 105 are disaggregated by sex.4

... and gender is not systematically tracked.

MDG3

U.S. AND THE MDGS

GENDER EQUALITY

The U.S. is contributing to the attainment of Goal 3 but does not track its contributions. Data from the OECD/DAC – as well as actual U.S. programming – show that gender equality and women’s empowerment is not a U.S. policy and spending priority. Global poverty cannot be reduced without women and girls at the center of any and all strategies.

Without comparative data on progress for males and females and without pro-active targets to address areas of gender discrimination, U.S. development assistance can have only a limited impact on achieving Goal 3. It is impossible to fully assess the U.S. contribution to Goal 3 because USAID neither collects nor reports data on any of the established indicators of progress. The OECD/DAC developed a “gender marker” in order to track spending on both “mainstreaming gender and women-targeted activities,” that was agreed upon by member states–including the U.S.5 The U.S., unlike most other bilateral donors, has failed to report sufficient, if any, data on these measures. Overall, USAID does not routinely gather sex-disaggregated data on its projects and programs. One area in which the U.S. has been a relative leader among western donors is in sex-disaggregated data in its AIDS programming. PEPFAR is committed to ensuring that all the activities it supports provide equitable access to services and meets the unique needs of

37

women, girls, men and boys. In U.S. FY 2006 in the focus countries, gender-disaggregated data were available for more than 90 percent of service statistics at downstream sites.6

38

1

World Bank. Global Monitoring Report 2007: Confronting the Challenges of Gender Equality and Fragile States, (Washington, DC: World Bank, 2007).

2

U.S. Agency for International Development. “Women in Development,“ http://www.usaid.gov/our_work/crosscutting_programs/wid/.

3

Millennium Challenge Corporation. “Gender Policy,” In Fiscal Year 2007 Guidance for Compact Eligible Countries, chapter 14, (Washington, DC: U.S. Government, 2006).

4

InterAction. “Gender and Women in the U.S. Foreign Assistance Indicators,” (Washington, DC: InterAction, 2006).

5

According to a 2007 OECD report, Aid in Support of Gender Equality and Women’s Empowerment, the United States is one of six DAC member countries that either does “not report on the gender equality policy marker, or for which the marker coverage over 2004-2005 is too low.” See the Development Assistance Committee. Aid in Support of Gender Equality and Women’s Empowerment, (Paris: Organization for Economic Cooperation and Development, June 2007).

6

President’s Emergency Plan for AIDS Relief. “Chapter 5—Responding to Critical Issues: Gender and HIV/AIDS.” Washington, DC: U.S. Government, http://www.pepfar.gov/pepfar/press/81164.htm.

U.S. AND THE MDGS

Photo: courtesy of Peter Biro

39

Goal 4: Reducing Child Mortality

The number of deaths worldwide among children under five dropped to a record 9.7 million in 2006.1 Despite this decline, progress on the child mortality MDG lags behind all the other goals. Progress has been insufficient to reach the MDG target, which requires an annual decline of 4.3 percent in child mortality rates from now until 2015. As of 2005, no sub-Saharan African country was on track to achieve the goal.2 Most children who die will suffer from easily preventable or curable diseases, such as acute respiratory infections, diarrhea, measles and malaria. In order to meet the child mortality goal, accelerated action by both developing countries and donors is critical. However, according to a report by the Congressional Research Service, rather than increasing assistance in this area, the Bush Administration’s FY 2008 budget request decreases funding for the maternal and child health sector (as opposed to the child and maternal health sub-account) by 17.6 percent from FY 2006 levels.3 These cuts occur even though funding for health-related programs in the FY 2008 budget overall goes up nearly 50 percent, mostly for AIDS, malaria and avian flu programs.4 However, indications are that Congress will at least partially restore cuts to this area, as it has done in the past. Members of Congress also introduced the United States Commitment to Global Child Survival Act of 2007 in both the Senate and the House of Representatives in May. The bill calls for providing assistance to improve the health of newborns, children and mothers in developing countries. From 1993 to the present, USAID has provided technical assistance for developing and implementing child survival programs through its BASICS contracts (Basic Support for Institutionalizing Child Survival). BASICS has introduced innovations in child health and is now focusing on broad coverage of child survival interventions.5

Table 4. U.S. Spending on Goals 4&5

(in US$ millions)

CSH Fund sub-accounts

FY00

FYO1

FYO2

FYO3

FYO4

FY05

Child Survival and Maternal Health

$266.8

$295.4

$337.0

$411.9

$328.1

$347.5

Family Planning and Reproductive Health

$327.3

$376.2

$385.5

$366.1

$373.3

$396.8

Total

$594.0

$671.6

$722.5

$778.0

$701.3

$744.3

Sources: U.S. Government Accountability Office (GAO-07-486), U.S. Agency for International Development

40

The U.S. has also contributed to efforts to improve child mortality through the President’s Malaria Initiative (PMI). The initiative, launched in June 2005, seeks to reduce malaria-related deaths by 50 percent in 15 African countries over five years and is focused on the most vulnerable groups – children under five and pregnant women. Malaria is one of the leading causes of child mortality. Funding under PMI has increased rapidly since its initiation, growing from $30 million in FY 2006 to $135 million in FY 2007. Funding is expected to reach $300 million in FY 2008 and FY 2009, and $500 million by FY 2010.6 1

Christopher Lee. “Under-5 Mortality Drops to Record Low,” Washington Post, September 13, 2007, section A16.

2

World Bank. “Millennium Development Goals—Charting Progress,” in Global Monitoring Report 2007: Confronting the Challenges of Gender Equality and Fragile States, (Washington, DC: World Bank, 2007), 4.

3

This sentence refers to cuts to the maternal and child health sector, and not the child and maternal health sub-account within the Child Health and Survival (CSH) Fund. Congressional Research Service, State, Foreign Operations, and Related Programs: FY2008 Appropriations (June 13, 2007; RL34023), by Connie Veillette and Susan B. Epstein, pg 19.

4

Ibid.

5

Management Sciences for Health. “BASICS,” http://www.msh.org/programs/basics.html.

6

U.S. Agency for International Development. “Fast Facts: The President’s Malaria Initiative,” September 2007, http://www.fightingmalaria.gov/resources/pmi_fastfacts.pdf.

MDG4

U.S. AND THE MDGS

CHILD MORTALITY

The U.S. needs to build on and expand its positive, long-term track record in supporting and providing technical leadership in promoting child survival.

41

Goal 5: Improving Maternal Health

Every minute of every day, a woman dies in pregnancy and childbirth. This totals more than half a million women each year, making pregnancy-related complications among the greatest killers of women of reproductive age in developing countries.1 USAID’s approach to maternal and neonatal programs includes community involvement, promotion of evidence-based policies, and high quality services. Promoting the attendance of skilled personnel at birth is central to its approach. ACCESS (“Access to Clinical and Community Maternal, Neonatal, and Women’s Health Services”), which is implemented by a university-NGO consortium, has been the Agency’s flagship program on maternal health aiming to improve availability, access and use of maternal health and newborn services in select countries.2 A number of USAID-assisted countries have achieved significant reductions in maternal deaths from pregnancy-related causes.3

In Egypt, maternal mortality has declined by 52 percent since the late 1980s. Honduras (41 percent), Bangladesh (22 percent), and Morocco (8 percent) have also had substantial decreases.



In Bangladesh, a maternal mortality reduction program contributed to an 11 percent increase in use of antenatal care services at health facilities and a 42 percent increase in hospital deliveries in 17 program communities between 2000 and 2001.



In Afghanistan, a USAID-supported training program for midwives has reopened and a new training program for auxiliary midwives has been initiated. Training curricula have been developed and training sites upgraded with equipment, water and sanitation, and essential supplies.

Given these accomplishments, it is troubling that, as mentioned in the previous section on child mortality, the administration proposed cutting funding for the maternal and child health sector in its FY 2008 budget request by 17.6 percent from FY 2006 levels.4 Again, indications are that Congress will restore at least some of these cuts. The U.S. has also been a leader among donor nations in both technical and financial terms for family planning and reproductive health programs. In its FY 2008 budget request, however, the Bush administration cut funding for the family planning and reproductive health sector by nearly 23 percent from FY 2006 levels.5 In addition, since the 1980s, the U.S. has imposed restrictions on its funding with ramifications for reproductive health services and supplies – including contraceptives – around the world.6 When women have access to family planning they tend to space the births of their children, giving all members of the family a greater chance of survival and good health. 42

MDG5

World Health Organization. “Make Every Mother and Child Count,” World Health Report 2005 (Geneva: WHO Press, 2005), 5.

U.S. AND THE MDGS

2

U.S. Agency for International Development. “ACCESS Program,” (September 7, 2007), http://www.accesstohealth. org/.

MATERNAL HEALTH

3

U.S. Agency for International Development. “USAID Health: Maternal and Child Health,” (August 16, 2007) http:// www.usaid.gov/our_work/global_health/mch/mh/index.html.

4

Congressional Research Service. State, Foreign Operations, and Related Programs: FY2008 Appropriations by Connie Veillette and Susan B. Epstein (Washington, DC: June 13, 2007; RL34023), 19.

5

Ibid.

6

Population Action International. “Reproductive Health.” http://www.populationaction.org/Issues/Reproductive_Health/ Index.shtml

7

Global Health Council, e-mail message, October 2, 2007.

1

The U.S. has made significant contributions to improving maternal health, but U.S. assistance for this sector has remained stagnant over the last decade – especially when compared to investments in other areas such as HIV/AIDS.7 Investment in improving maternal health should be comprehensive and not overlooked in the fight against any particular disease.

43

Goal 6: Combating HIV/AIDS, Malaria and Other Diseases

Goal 6 flows from the recognition that HIV/AIDS and other deadly diseases have been among the greatest threats to development, especially in poor countries. At the end of 2006, an estimated 39.5 million people worldwide were living with HIV – an increase of 2.6 million since 2004. In the areas hardest hit by the epidemic, more than half of those living with HIV are women. Malaria and tuberculosis also continue to take a heavy toll: combined they kill more than 3 million people every year.1

The U.S. has made an unprecedented commitment of resources to combating the diseases that threaten development The United States is, without a doubt, the world leader in the fight against HIV/AIDS, having provided at least $7 billion in total funding for AIDS research, treatment, care and prevention from FY 2002 to FY 2005.2 In announcing the creation of PEPFAR, the President’s Emergency Plan For AIDS Relief, in 2003, President Bush made a five-year commitment to provide $15 billion to support treatment for two million people, prevention for seven million, and care for 10 million, including orphans and other vulnerable children. With the FY 2008 request for $4.15 billion in Global HIV/AIDS Initiative (GHAI) funds, $346 million in child survival and health, and a $300 million contribution to The Global Fund to Fight AIDS, Tuberculosis and Malaria, U.S. funding will total $15 billion.3 Moreover, in May 2007, President Bush called on Congress to reauthorize PEPFAR, requesting an additional $30 billion in aid by FY 2013.4 In mid-2005, the administration launched a second health initiative, specifically for malaria. In creating the President’s Malaria Initiative, or PMI, President Bush pledged to provide $1.2 billion more in malaria funding to reduce deaths due to malaria by 50 percent in 15 African countries. Funding under PMI was $30 million in FY 2006 and $135 million in FY 2007. The President’s request for FY 2008 is $300 million, keeping the pledge on target.5 The U.S. has also been the largest donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria, also called the Global Fund, since its founding in 2002. Continued and growing U.S. support for the Global Fund, however, is attributable to the fact that each year since FY 2003 Congress has allocated more than the administration’s request.6 Table 5 highlights U.S. spending on HIV/AIDS, malaria and tuberculosis programs from FY 2002 to FY 2005.

44

Table 5. U.S. Spending on Goal 6

MDG6

(in US$ millions)

Programs

FYO2

USAID CSH account for HIV/AIDS – regular

U.S. AND THE MDGS FYO3

FYO4

FY05

HIV/AIDS, MALARIA

$395.0

$587.6

$513.4

$347.2

$50.0

$248.4

$397.6

$248.0

-

-

$-87.8*

$87.8

$165.0

$129.0

$155.0

$168.6

$40.0

$38.2

$51.7

$51.1

State Dept. Global AIDS Initiative (GHAI)

-

-

$488.1

$1,373.9

GHAI for the Global Fund

-

-

-

-

Foreign Military Financing

-

$2.0

$1.5

$2.0

$650.0

$1,005.2

$1,519.5

$2,278.6

$143.8

$182.6

$273.9

$123.8

CDC International Applied Prevention Research

$11.0

$11.0

$9.0

$14.0

CDC International TB & Malaria

$15.0

$15.8

$11.0

$11.0

NIH International Research

$218.2

$278.6

$317.2

$332.3

Global Fund contribution, NIH/HHS

$125.0

$99.3

$149.1

$99.2

$8.5

$9.9

$9.9

$2.0

$521.5

$597.2

$770.1

$582.3

DOD HIV/AIDS prevention education

$14.0

$7.0

$4.2

$7.5

USDA Section 416(b) Food Aid

$25.0

$24.8

$24.8

$24.8

Total, all appropriations

$1,210.5

$1,634.2

$2,318.6

$2,893.2

Total, Global Fund

$175.0

$347.7

$458.9

$435.0

USAID CSH account for the Global Fund USAID Global Fund Carry-over USAID CSH account for TB & Malaria USAID other economic assistance

Subtotal, Foreign Operations CDC Global AIDS Program

Labor Dept. AIDS in the Workplace Subtotal, Labor/HHS/Ed

The U.S. has been the global leader in the fight against HIV/AIDS and continues to make significant investments. Changes in U.S. policy are needed to make U.S.-funded programs more effective. Especially important is building the capacity of health systems and making women and girls a priority in program planning and implementation.

Note: All years include malaria funding. *Reflects the amount that could not be transferred to the Global Fund in FY2004, but that was carried over for and contributed in FY 2005. Source: Congressional Research Service, PowerPoint Presentation, “Foreign Policy Budget for FY2007: Issues for Congress,” February 10, 2006

45

Still, there is room for improvement The number of HIV/AIDS infections among women and girls continues to rise in every region of the world. Women, who live at the epicenter of the problem, must also be at the epicenter of the solution.

46

We have learned a great deal from these U.S. health programs in just a short time. Given the information currently available, we have concluded that to make these programs optimally effective, U.S. policy and practice must address the following:

HIV/AIDS is more than a medical problem; it influences, and is influenced by, social, cultural and economic problems. This calls for adoption of a “development approach” that would address the disease within this broader context. Yes, provide anti-retrovirals and palliative treatments, but also attend to the need to address fundamental inequities and the need for sustainable livelihoods, proper nutrition, family and psychosocial support, and education. This approach also seeks to maximize the role and capacity of communities, families, individuals and local organizations to address the causes and consequences of HIV/AIDS in a sustainable way.



Focusing exclusively on individual diseases, however deadly, does not eliminate the need to strengthen whole health care systems. Indeed, in some places, disproportionate funding for HIV/AIDS or malaria may deliver a crushing blow to local health systems by diverting already scarce personnel and stretching infrastructure beyond its limits. Strengthening health systems, on the other hand, would enhance local capacity to cope with all diseases in a manner that is sustainable.7



PEPFAR legislation and policy have limited the abilities of local communities and healthcare providers to respond to the disease in ways that are most appropriate given local circumstances. The people working at ground level need the freedom to tailor solutions to the local context – free of ideological and other constraints imposed by Washington. We would like to see their freedom restored through the PEPFAR reauthorization process.8



The number of HIV/AIDS infections among women and girls continues to rise in every region of the world. HIV/AIDS programs must make women and girls a priority: in reducing their vulnerability to the disease; in addressing the role that social and economic inequalities play; and, to paraphrase Graça Machel, in recognizing that women, who live at the epicenter of the problem, must also be at the epicenter of the solution.9

1

2

World Bank. “Millennium Development Goals—Charting Progress,” in Global Monitoring Report 2007: Confronting the Challenges of Gender Equality and Fragile States, (Washington, DC: World Bank, 2007). Congressional Research Service. PEPFAR: From Emergency to Sustainability, by Tiaji Salaam-Blyther. Washington, DC, 2007), 18.

3

Ibid.

4

Congressional Research Service. State, Foreign Operations, and Related Programs: FY2008 Appropriations (RL34023), by Connie Veillette and Susan B. Epstein, (Washington, DC: June 13, 2007), 20.

5

U.S. Agency for International Development. “Fast Facts: The President’s Malaria Initiative,” September 2007, http://www.fightingmalaria.gov/resources/pmi_fastfacts.pdf.

6

Geeta Rao Gupta. Luncheon Remarks on Women and AIDS Paper read at InterAction Forum 2005, (Washington, DC, June 2 2005).

7

J. Stephen Morrison, Allen Moore, and Jennifer Cooke. Advancing U.S. Leadership on Global HIV-AIDS. In A Report of the Task Force of HIV-AIDS, (Washington, DC: Center for Strategic and International Studies, 2007), 6.

8

Ibid, 7–9.

9

Geeta Rao Gupta. Luncheon Remarks on Women and AIDS Paper read at InterAction Forum 2005, (Washington, DC, June 2 2005). Fleischman, Janet. Priorities for Action: Gender and PEPFAR Reauthorization. A Report of the Task Force in HIV/AIDS, (Washington, DC: Center for Strategic and International Studies, September 2007), 1.

MDG6

U.S. AND THE MDGS

HIV/AIDS, MALARIA

47

Goal 7: Ensuring Environmental Sustainability

Goal 7 makes the important but under-recognized link between the environment and poverty reduction. It is the first of the MDGs that calls on developed countries to commit to particular actions, in addition to contributing to the efforts of developing countries. This section of the report assesses the U.S. performance on ensuring environmental sustainability and then considers U.S. efforts to increase access to safe water and sanitation in developing countries.

The building blocks of poverty alleviation A healthy environment provides the building blocks for the primary goal of the MDGs: poverty alleviation. Forests provide the world’s poorest communities with an important source of livelihoods including firewood, medicinal plants and building materials. Agroforestry helps generate income and increase agricultural productivity. Indirectly, forests help maintain key ecosystem services such as climate regulation, water purification and flood control. People depend on freshwater for drinking, sanitation, agriculture, transport, electricity generation and recreation, while freshwater ecosystems help regulate floods, droughts and soil nutrients. Biodiversity, whether in forests or rivers, oceans or deserts, contributes to food security, human health, energy security and clean water, and provides raw materials. Coral reefs, for example, provide an important barrier against severe storms and coral reef organisms are used in treatments for HIV/AIDS.1 Conversely, the loss or degradation of environmental goods and services undermines sustainable development and leads to such negative impacts as poor nutrition, the spread of disease and conflict over scarce resources. Ultimately, it is the world’s poor that are most dependent on environmental goods and services for daily living, and, therefore, also most vulnerable to their loss.

Climate change and development The strong need for U.S. participation in supporting MDG 7 is driven by the high-level of threat to environmental sustainability from various sources, most notably climate change. If this threat is not mitigated and adaptation measures implemented, the ramifications for development are startling. Experts predict that water shortages as a result of glacial melt and changes in precipitation patterns could adversely affect more than one billion people by the 2050s. In Asia alone, decreased crop and livestock productivity due to rising temperatures is expected to put an additional 49 million at risk of hunger by 2020. Rising water temperatures in lakes and oceans will negatively affect local food supplies by decreasing fisheries resources. Towards the end of the 21st century, a projected sea level rise will affect low-lying coastal areas with large populations, exacerbating inundation, storm surge, erosion and other coastal 48

hazards, damaging settlements and infrastructure, and increasing the salinity of potable water and agricultural fields.2 Climate change is also expected to set off large-scale migrations as people seek to maintain food security, water access and protection from natural disasters – intensifying competition for resources and increasing the potential for violent conflict.

The U.S. protects its own forests but globally consumes more than its share Compared to other national averages, U.S. progress toward this indicator is relatively good at 33.1 percent. However, it is not clear if 33.1 percent forest cover is enough to ensure U.S. environmental sustainability and maintain the benefits forests provide. In addition, it is also important to note how U.S. consumption patterns impact forests globally. In 2005, for example, the U.S. was the top global consumer of industrial Box 2. Environmental Sustainability roundwood, sawnwood, wood-based Indicators panel, pulp for paper, paper and pa Proportion of land area covered by forest perboard, with rates ranging from 25 3 to 32 percent. Global forest loss av Ratio of area protected to maintain biological erages about 13 million hectares per diversity to surface area year, in part due to wood trade.4 The world’s poorest people bear the brunt Energy use (kg oil equivalent) per $1 GDP (PPP– of this loss, since forest resources susPurchasing Power Parity) tain most of the 1.2 billion people in Carbon dioxide emissions per capita and the world who live in extreme povconsumption of ozone-depleting CFCs (ODP– erty.5 Ozone-depleting potential – tons)

U.S. performance on protecting land areas is unclear Classifications of protected areas – whether terrestrial or marine – range from strict protection to land managed for recreation and cultural purposes. Under the less strict

Proportion of population using solid fuels Proportion of population with sustainable access to an improved water source, urban and rural Proportion of population with access to improved sanitation, urban and rural

MDG7 ENVIRONMENT

The U.S., while making notable progress toward the achievement of MDG 7 in some indicators, is falling short in its contributions overall. Specifically, the U.S. has made strong progress in reducing consumption of chlorofluorocarbons, but carbon emissions and energy use remain high. If poverty reduction efforts are to be successful, the U.S. must commit to global efforts to combat climate change. The U.S. should also require that climate adaptation be integrated into its development programs in order to reduce the risk that climate change will undermine the effectiveness of its current investments in poverty alleviation, health and the environment.

Proportion of households with access to secure tenure

49

Table 6. U.S. Progress on Environmental Sustainability Indicators The U.S. should strengthen its leadership globally in responsible wood product consumption, forest conservation and climate change mitigation.

Indicator

2000

2001

2002

Proportion of land area covered by forest

33.0 %

-

-

Ratio of land area protected to maintain biological diversity to surface area

23.2 %

23.2 %

23.2 %

Energy use (kg oil equivalent) per $1,000 (PPP) GDP

240

233

Carbon dioxide emissions (metric tons per capita)

20.4

Consumption of ozone-depleting CFCs (thousands of ODP tons)

2,613.0

2003

2004

2005

-

33.1 %

23.2 %

23.2 %

23.2 %

230

222

-

-

20.1

20.0

19.8

-

-

2,805.2

1,357.2

1,605.2

1,153.6

1,496.6

Sources: Food and Agriculture Organization, Forest Area Statistics (July 2, 2007); UN Statistics Division, Millennium Indicators Database (July 2, 2007)

categories exploration for minerals, gas, oil and forestry is allowed, which can adversely impact ecological conditions. For this reason, conservation biologists generally believe that

the proportion of land placed under the full spectrum of protection categories should be close to 50 percent.6 If the U.S. ratio of 23.2 percent in 2005 only reflects areas under strict protection, then U.S. performance on this indicator would be quite positive, but this figure reflects all protection types. Though not covered under the MDG indicators, it is also important to consider protected area effectiveness (enforcement, adaptation to natural change), which is vital to ensuring the sustainability of important ecological processes such as nutrient cycling.

The U.S. continues to consume too much energy The indicator on energy use reflects the ‘energy intensity’ of production, essentially the inverse of energy efficiency. It is intended to capture structural changes in the economy, the energy efficiency of particular sectors, and differences in fuel mixes.7 Energy technologies can produce higher or lower levels of carbon emissions. The type of resources 50

used in energy production can also impact climate change and the environment. For example, large-scale conversion of tropical forests eliminates a source of stored carbon. According to the World Bank data, the U.S. has not made significant progress in curbing energy use as defined by this indicator. Furthermore, the U.S. ranks number one in per capita energy consumption globally.8 The necessary technologies and resources necessary to meet demand, expected to double by 2050, and stabilize greenhouse gas emissions are available and time is sufficient to implement them – “…. But only if the necessary decisions are made in the next five years.”9

MDG7 ENVIRONMENT

The U.S. has failed to curb CO2 emissions While the U.S. has done admirably in reducing consumption of chlorofluorocarbons (CFCs), it has performed poorly when it comes to cutting carbon dioxide emissions. Experts suggest that avoiding catastrophic climate change would require temperature stabilization at no more than two degrees Celsius above the pre-industrial baseline.10 To achieve this, carbon emissions must start declining by the year 2015; and by 2050 emissions must be 50 to 85 percent below 2000 levels.11 While the emissions from the European Community increased by 1.11 percent between 1990 and 2003, emissions from the U.S. increased 6.7 percent during the same period of time (although U.S. carbon emissions did begin easing off slightly in 2003). The U.S. also failed to sign the Kyoto Protocol. On a more positive note, since 2001, the U.S. has invested some $37 billion12 on climate-related work, focused on clean energy technology, promoted sustainable land use and forestry, and used climate science for decision-making. The U.S. is a signatory to the Montreal Protocol. It has also finished an almost complete phase-out of the most damaging ozone-depleting substances and closely monitors limited exemptions.13

The U.S. should expand current efforts on water and sanitation The U.S. has greatly increased investments in this area since the 1990s. In 2005, for example, Congress passed the Paul Simon Water for the Poor Act. Through this Act and additional appropriations, the U.S. obligated some $370 million dollars in 2006 for water supply, sanitation, wastewater management, watershed management, water productivity and disaster preparedness.14 In general, however, implementation and funding for this Act has been lacking. In FY 2006, for example, sub-Saharan Africa was allocated less than $22 million for sustainable water supply and sanitation, while countries of strategic importance to the U.S., such as Egypt and Jordan, received far more funding.15 In addition, it is crucial that investments be 51

Box 3. Climate Adaptation Climate adaptation is the process of adjusting “…. to climate change (including climate variability and extremes) [in order] to moderate potential damages, to take advantage of opportunities, or to cope with the consequences.”[16] To date, climate adaptation has focused largely on approaches for protecting and managing natural resources in order to build their resilience to climate change. Community adaptation is a new and growing area of inquiry. World Wildlife Fund (WWF), as part of an internal study on the issue, has defined community adaptation as the process of adjusting to and effectively recovering from the economic, social, environmental, and institutional impacts brought about by climate change.17 This work is in response to a growing awareness of the climate change impacts that people around the world – in particular the rural poor – are experiencing or will soon experience. Positive models already exist from which we can learn. In Bangladesh, CARE is working with local partners to help communities cope with environmental changes such as increased salinity in water and agricultural land, and short- and long-term flooding: problems that are expected to worsen as a result of climate change. The project has worked with communities to identify strategies to cope with these challenges by increasing food and income security, as well as improving access to safe water. In addition, the project is helping to create a “people-centered” movement in the southwest of Bangladesh to advocate with the government for access to safe water. In the Northern Andes, deterioration of high-elevation wetlands, exacerbated by climate change, will lead to significant environmental and socioeconomic impacts for downstream water users, who depend upon the water provided by these wetlands. WWF is implementing adaptation strategies to enable communities to improve water conservation, respond to climate change, and maintain natural resourcebased livelihoods. To meet the growing needs of both nature and people in adapting to climate change, WWF is developing an EpiCenter of Climate Adaptation and Resilience Building. The EpiCenter will support conservation and development organizations worldwide by providing research and technical support, developing a framework for climate adaptation and resilience programs, building capacity, and documenting and sharing valuable lessons and models beyond the conservation community. 52

MDG7 ENVIRONMENT

53

Poverty reduction and a healthy environment are integrally linked. Given both its global footprint and high capacity level, the U.S. has the responsibility to do more at home and abroad to contribute to achieving MDG 7.

programmed in effective and sustainable ways. In the rush to meet people’s immediate water needs, the importance of maintaining freshwater ecosystem benefits (such as the regulation of floods, droughts, nutrients and sediments) is often overlooked.

In sum, the U.S. can do more Poverty reduction and a healthy environment are integrally linked. As a highly developed nation, the U.S. draws heavily on the Global South for energy and natural resources to maintain its high quality of life. U.S. wealth, technology and know-how give it the ability to significantly impact all MDG 7 indicators. Given both its global footprint and high capacity level, the U.S. has the responsibility to do more at home and abroad to contribute to achieving MDG 7. If the world is to avert dangerous climate change, the U.S. needs to commit to a significant, absolute reduction in carbon dioxide emissions and constructively participate in UN negotiations for a post-2012 climate agreement. Overseas, the U.S. should strengthen its leadership role globally in responsible wood product consumption, forest conservation and climate change mitigation. Successful development efforts across the breadth of the MDGs require that the reality of climate change be fully integrated into their design. USAID has taken an important initial step toward the integration of climate adaptation into its programs through the production of a manual for USAID missions and their partners. However, a much stronger approach is needed. The U.S. should require that climate adaptation be integrated into USAID and Millennium Challenge Corporation programs in order to reduce the risk that climate change will undermine the effectiveness of its current investments in poverty alleviation, health and the environment.

54

1

World Wildlife Fund. “Coral Reefs, ”http://www.panda.org/about_wwf/what_we_do/marine/blue_planet/coasts/ coral_reefs/index.cfm.

2

IPCC. “Summary for Policymakers,” In Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, eds. O.F. Canziani et al. (Cambridge: Cambridge University Press, 2007), 7-22.

3

UN Development Programme, Indicators for Monitoring the Millennium Development Goals: Definitions Rationale Concepts and Sources (New York: United Nations, 2003), 56.

4

Food and Agriculture Organization. “Global Forest Resources Assessment 2005: 15 Key Findings,” (New York: United Nations, 2005), 3.

5

World Wildlife Fund. “Forestry,” http://www.worldwildlife.org/forests/.

6

Food and Agriculture Organization. “Faostat,” United Nations, http://faostat.fao.org/site/339/default.aspx.

7

Michael E. Soulé and M. A. Sanjayan. “Conservation Targets: Do They Help?” Science, March 27, 1998, 2060.

8

UN Development Programme, Indicators for Monitoring the Millennium Development Goals: Definitions Rationale Concepts and Sources (New York: United Nations, 2003), 56.

9

Carnegie Endowment for International Peace, “Globalization 101,” http://www.globalization101.org/index.php?file= issue&pass1=subs&id=326_.

10

Mallon, Bourne and Mott. “Climate Solutions: WWF’s Vision for 2050,” Paper prepared for WWF’s Global Energy Task Force (Washington, DC: World Wildlife Fund, 2007), 1.

11

Associated Press. “U.N. Gets Climate Plan: Mobilize, Triple Research Dollars, Set ‘Ceiling’ on Temperatures,” International Herald Tribune (Paris, February 27, 2007).

12

IPCC. “Summary for Policymakers,” In: Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, eds. B. Metz et al. (Cambridge: Cambridge University Press, 2007), 15.

13

Robert Portman. Cover letter in the Federal Climate Change Expenditures, report to U.S. Congress (Washington, DC: Office of Management and Budget, May 2007).

14

Drusilla Hufford. “Celebrating 20 Years of the Montreal Protocol: United States of America,” Our Planet, September, 2007, 10.

15

U.S. Department of State. Senator Paul Simon Water for the Poor Act of 2005: Report to U.S. Congress, (Washington, DC: U.S. Department of State), 48. Figure does not include OFDA funding for water and sanitation.

16

IPCC. “Summary for Policymakers”. In Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, eds. O.F. Canziani et al. (Cambridge: Cambridge University Press, 2007), 7-22.

17

Emma L. Tompkins. “Planning for Climate Change in Small Islands: Insights from National Hurricane Preparedness in the Cayman Islands,” Global Environmental Change 15, no. 2 (2006), 139-49, http://elsevier.lib.tsinghua.edu. cn/cgibin/sciserv.pl?collection=journals&journal=09593780&issue=v15i0002 2005.

MDG7 ENVIRONMENT

55

Goal 8: Developing a Global Partnership for Development – Official Development Assistance

Goal 8 articulates what donors must do, at least in part, to make the first seven MDGs possible. The remaining sections of this report will break Goal 8 into the three key constituent parts of a global partnership for development (aid, trade and debt). Each section will, in turn, present U.S. progress to date on the relevant targets and indicators.

Official flows In absolute terms, the U.S. remains the largest donor ... The U.S. government increased official development assistance from $13.114 billion in 2001 to a record high of $27.682 billion in 2005 (See Figure 3). At least part of the significant increase (35.6 percent) in aid from 2004 to 2005 is attributable to debt relief operations and reconstruction aid for Afghanistan and Iraq.1

…but not as a share of national income. At 0.22 percent, U.S. aid as a percentage of gross national income more than doubled from 2000 to 2005 (See Table 7, page 58). Even so, it remains well below aid from nineteen other DAC members. Of the twenty-two DAC donors, only Portugal (0.21 percent) and Greece (0.17 percent) provide a smaller share of income as aid; and the DAC average is 0.47 percent of GNI (See Figure 4, page 59).2 U.S. policy-makers have often questioned the value of a comparison between the U.S. and countries with much smaller populations and economies. Their point is well-taken. Still, a comparison between the U.S. and the European Union countries that are members 56

Box 4. Official Development Assistance Indicators Net ODA, total and to the least developed countries, as percentage of OECD/DAC donors’ gross national income

Proportion of total bilateral, sectorallocable ODA of OECD/DAC donors to basic social services

Proportion of bilateral official development assistance of OECD/DAC donors that is untied

ODA received in landlocked developing countries as a proportion of their gross national incomes

ODA received in small island developing states as a proportion of their gross national incomes

Figure 3. Donors Ranked by Net Disbursements of ODA in 2005 Source: DAC Online – Table 1 (September 13, 2007)

MDG8 ODA

UNITED STATES JAPAN UNITED KINGDOM GERMANY FRANCE NETHERLANDS ITALY CANADA SWEDEN SPAIN NORWAY DENMARK BELGIUM SWITZERLAND AUSTRALIA AUSTRIA FINLAND IRELAND GREECE PORTUGAL NEW ZEALAND LUXEMBOURG $0

$5

$10

$15

$20

$25

$30

US$ 2005 billions

In absolute terms, the U.S. has been the leading donor of ODA for most of the past sixty years. The global development community, however, regards ODA as a percentage of gross national income, not volume, as the best measure of a donor’s relative contribution. Here, the U.S., when compared with other donor countries, continues to fall short of expectations for a country of such tremendous wealth and generosity.

of the DAC shows that EU DAC members provided twice the amount of U.S. ODA in 2004. Using ODA per capita, another measure of relative contribution, shows that the EU, with a population 31 percent larger than the U.S. disbursed about $112 per person compared with $65 per American.3 Others reject counting U.S. ODA alone and want to add private flows – aid from private donors to NGOs, direct foreign investment, and remittances – to gauge the true measure of U.S. contributions.4 We will look at these flows as a means of funding development on pages 64 to 65.

57

Table 7. U.S. Progress on Official Development Assistance Indicators Indicator

2000

2001

2002

2003

2004

2005

Net ODA as percentage of gross national income: Total To Least Developed Countries

0.10% 0.02%

0.11% 0.02%

0.13% 0.03%

0.15% 0.04%

0.17% 0.04%

0.22% 0.05%

18.4%

21.7%

27.4%

25.2%

19.1%

18.4%

-

-

-

-

-

-

Percentage of ODA to landlocked developing countries

8.93%

7.67%

13.15%

14.5%

12.46%

12.04%

Percentage of ODA to small island developing states

2.08%

2.95%

2.18%

1.88%

1.57%

1.5%

Proportion of total bilateral, sectorallocable ODA to basic social services (basic education, primary health care, nutrition, safe water and sanitation) Proportion of bilateral ODA that is untied

Sources: DAC Online – Tables 1 & 2a (September 13, 2007); UN Statistics Division, Millennium Indicators Database (August 28, 2007)

The U.S. provides less multilateral ODA than other DAC donors… Multilateral institutions pool resources from many donors. Funding these institutions is, therefore, one way of increasing and improving donor coordination. U.S. multilateral ODA declined from 26 percent in 2001 to eight percent in 2005 (See Figure 5, page 60).5 This amount is far less than would be expected of a country that places such a high value on leveraging aid and influencing other donors.

... and “ties” a significant portion of bilateral aid. U.S. law “ties” most bilateral aid to the procurement of goods and services from the United States. Because the U.S. has not reported to the DAC on tied aid since 1996, current data on the amount of bilateral aid that the U.S. ties is unavailable. According to a recent report by the OECD, however, in 2005 the United States tied 93 percent of its bilateral aid to 29 countries (which represented 20 percent of country programmed aid that year).6 The possibility of waiving the law (to allow some untying of aid to the poorest countries) has existed since January 2002. This provision excludes food aid and technical cooperation and is, therefore, unlikely to have a substantial impact on the overall level of tied aid. 58

Figure 4. Donors Ranked by ODA as a Percentage of GNI in 2005 Source: DAC Online – Table 1 (September 13, 2007)

MDG8 ODA

NORWAY

0.94

SWEDEN

0.94

LUXEMBOURG

0.86

NETHERLANDS

0.82

DENMARK

0.81

BELGIUM

0.53

AUSTRIA

0.52

FRANCE

0.47

UNITED KINGDOM

0.47

FINLAND

0.46

SWITZERLAND

0.44

IRELAND

0.42

GERMANY

UN TARGET: 0.% OF GNI

0.36

CANADA

0.34

ITALY

0.29

JAPAN

0.28

NEW ZEALAND

0.27

SPAIN

0.27

AUSTRALIA

0.25

UNITED STATES

0.22

PORTUGAL

0.21

GREECE

0.17

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Percentage of gross national income

U.S. aid: Does it go to the poorest countries and regions? The 2006 DAC Peer Review Report noted that the United States:

Does not have a tradition of targeting its ODA only on the basis of country poverty levels although USAID uses a poverty index, among other parameters, for country screening processes.7



Targets middle-income and lower-middle income countries more than low-income countries.8

59

Figure 5. U.S. Aid to Multilaterals as a Percentage of Total ODA Source: DAC Online – Table 1 (June 20, 2007) and InterAction calculations

40%

% of Multilateral ODA

35% 30% 25% 20% 15% 10% 5% 0% 2000

2001

2002

2003

2004

2005

United States Other DAC Countries

An examination of foreign aid allocations from FY 2001 to FY 2006 supports these statements:

60



Although aid to sub-Saharan Africa, which has the highest concentration of people living in extreme poverty, has grown significantly, it still received less than a quarter of U.S. aid in FY 2006.9



South Asia has the largest number of poor living in poverty, but U.S. aid to this region was 7.04 percent in FY 2006.10



As Figure 6 illustrates, the poorest countries in the world combined received less than 40 percent of FY 2006 foreign aid.



Figure 7 (pages 62 and 63) compares a listing of the twenty top recipients of U.S. aid in FY 2006 with the twenty poorest countries. Only four of the poorest countries are among top aid recipients; at least one of them likely made the list for “strategic” reasons. With the exception of Mozambique, the other poorest countries receive small amounts of U.S. aid. Appendix D provides a listing of all U.S. aid recipients listed by income category.

MDG8 ODA

Figure 6. U.S. Aid to Recipient Countries by Income Level in 2006 Source: U.S. Department of State

18% 3%

27%

11% 41%

Least Developed Countries Other Low Income Countries Lower Middle Income Countries Upper Middle Income Countries High Income Countries

61

Figure 7. U.S. Aid in FY 2006: Top Recipients versus Poorest Countries Source: U.S. Department of State

20 Top Recipients of U.S. Aid Listed by Aid Amount (US$ millions) 1. Israel 2. Egypt 3. Iraq 4. Afghanistan 5. Sudan 6. Pakistan 7. Colombia 8. Jordan 9. Ethiopia 10. Kenya 11. Uganda 12. South Africa 13. Haiti 14. Nigeria 15. Zambia 16. Indonesia 17. Liberia 18. Tanzania 19. West Bank & Gaza 20. Peru

$2,495.3 $1,779.3 $1,636.8 $1,010.8 $906.1 $762.9 $580.3 $512.4 $329.4 $322.2 $246.2 $227.6 $225.7 $180.4 $168.9 $157.2 $156.0 $154.0 $153.3 $144.3

1. Burundi 2. Congo, Dem. Rep. 2. Ethiopia 4. Liberia 5. Guinea-Bissau 5. Malawi 7. Eritrea 8. Niger 8. Rwanda 8. Sierra Leone 11. Nepal 11. Chad 11. Uganda 14. Mozambique 15. Tajikistan 15. Gambia 17. Madagascar 18. Central African Rep. 18. Togo 20. Tanzania

$25.5 $92.7 $329.4 $156.0 $0.1 $50.0 $2.8 $23.2 $95.3 $29.5 $35.6 $30.5 $246.2 $130.8 $40.4 $5.2 $40.7 $0.7 $2.8 $154.0

20 Poorest Countries Listed by Poverty Ranking with Amount of U.S. Aid (US$ millions)

62

Haiti

Colombia

Peru

MDG8

ODA

Tajikistan

West Bank & Gaza Strip Israel

Afghanistan

Iraq Jordan

Nepal Pakistan

Egypt

Eritrea

Niger Chad Gambia Guinea Bissau

Top recipients of U.S. aid Poorest countries (by GNI per capita) Poorest countries that are also top recipients of U.S. aid

Sudan

Nigeria

Sierra Leone Liberia

Togo

Ethiopia

Central African Republic Dem. Rep. Of Congo

Uganda

Kenya

Burundi

Rwanda

Tanzania

Zambia Mozambique

Indonesia

Malawi Madagascar

South Africa

63

Non-official aid flows Some have argued that private flows – as a means of financing development – are more significant than aid. That is certainly true in terms of absolute volume (See Table 8). Much less clear is the role of the most discussed of these flows – foreign direct investment and remittances – in promoting development.

U.S. foreign direct investment is not reaching the poorest countries U.S. foreign direct investment is highly concentrated, with only 14 percent of these dollars going to developing countries in 2006 (compared to 86 percent to high-income countries). Upper and lower-middle- income countries received 94 percent of FDI to developing countries (See Figure 8). Figure 9 paints the starkest picture: three countries – Mexico, China and Brazil – receive more than half; seven countries divide 22 percent; and more than 100 countries receive the remaining 24 percent. This suggests that, at least in the short-run, FDI cannot meet all of the development needs of the world’s poorest countries. Appendix D also presents the amount of FDI that individual developing countries received.

Remittances from migrants are also highly concentrated … In 2005, remittances reached $167 billion, up 73 percent from 2001.11 Altogether, remittances dwarf ODA and in many countries exceed the value of the leading exports. In 2004, remittances accounted for more than 10 percent of GDP in the top 19 remittance-recipient countries.12 In general, remittances are the second-largest source of external funding for developing countries, after FDI.13 In some countries in Latin America and the Caribbean (LAC), however, remittances amount to more than ODA and FDI combined.14 Remittances are also highly concentrated. In 2004, for example, five countries – India, China, Mexico, the Philippines and Morocco – received almost 48 percent of remittances to developing countries.15 Within the development community, there are opposing views on “remittances and development.” A World Bank study, for example, concluded that there is “compelling evidence” that remittances contribute significantly to poverty reduction, and that they may lower the depth and severity of poverty.16 But according to the OECD, attempts to link remittances to wider development initiatives have met with limited success. The OECD goes on to make – from our perspective – an extremely important point: “remittances are neither a substitute for ODA nor for FDI flows” because remittances cannot be relied upon as a strategy to assist the world’s poorest regions and countries.17 Why? The poorest of the poor are not typical migrants. Countries with the highest poverty levels are not producing large numbers of international migrants. These countries are, therefore, receiving fewer remittances.18 64

Figure 8. Share of U.S. FDI to Developing Countries in 2006, by Income Level

MDG8

Source: U.S. Department of State

ODA

2% 4%

47%

Table 8. U.S. Non-Official Flows to Developing Countries in 2005 (in US$ billions)

47%

Private Investment

$69.20

NGOs

$13.40

Foundations

$2.20

Corporations

$0.80

Least Developed Countries

Religious Organizations

$5.40

Other Low Income Countries

Universities and Colleges

$4.60

Lower Middle Income Countries

Remittances

$41.10 Total

Upper Middle Income Countries

$136.70

Sources: USAID, Global Development Alliance; IMF

Figure 9. Top Developing Country Destinations of U.S. FDI in 2006 Source: U.S. Department of Commerce, Bureau of Economic Analysis

OTHER (24%)

MEXICO (26%)

THAILAND (2%) INDIA (3%) CHILE (3%) INDONESIA (3%)

CHINA & HONG KONG (18%)

VENEZUELA (3%) MALAYSIA (4%) ARGENTINA (4%)

BRAZIL (10%)

65

1

Development Assistance Committee. 2006. DAC Peer Review of the United States. Paris: Organization for Economic Cooperation and Development, 25.

2

Ibid.

3

Congressional Research Service. Foreign Aid: Understanding Data Used to Compare Donors (RS22032), by Larry Nowels. (Washington, DC: Updated May 23, 2005), 4-6.

4

Ibid.

5

Development Assistance Committee. 2006. DAC Peer Review of the United States. Paris: Organization for Economic Cooperation and Development, 29.

6

OECD. 2007. 2006 Survey on Monitoring the Paris Declaration: Overview of the Results (pre-publication copy). Paris:

7

Development Assistance Committee. 2006. DAC Peer Review of the United States. Paris: Organization for Economic Cooperation and Development, 34.

8

Ibid, 27.

9

Congressional Research Service. U.S. Foreign Aid to East and South Asia: Selected Recipients (RL31362), by Thomas Lum (Washington, DC: Updated August 22, 2007), 5.

Organization for Economic Cooperation and Development, 120.

66

10

Ibid.

11

These figures include workers’ remittances, compensation of employees and migrant transfers. See the World Bank, Global Economic Prospects 2006: Economic Implications of Remittances and Migration, 87.

12

Ibid, 99.

13

Dilip Ratha. “Workers’ Remittances: An Important and Stable Source of External Development Finance,” in Global Development Finance, (Washington, DC: World Bank, 2003), 157.

14

Inter-American Development Bank. Remittances 2005: Promoting Financial Democracy, (Washington, DC: March 2006), 5.

15

Based on World Bank estimates. World Bank, Global Economic Prospects 2006: Economic Implications of Remittances and Migration, 88-90.

16

Ibid, 86.

17

OECD. 2005. Migration, Remittances and Development. Paris: Organization for Economic Cooperation and Development, 9-11.

18

Deans, Lönnqvist, and Sen. “Remittances and Migration: Some Policy Considerations for NGOs”. In INTRAC Policy Briefing Paper No. 8. (Oxford: INTRAC, 2006), 4.

MDG8 ODA

Photo: courtesy of Darcy Kiefel

67

Trade Goal 8: Developing Developing a Global a Global Partnership for Partnership for Development Development – The U.S. has yet to live Trade up to its commitment to building a trading system that is open, rulebased, predictable, nondiscriminatory, and that accounts for the special needs of least developed countries.

68

MDG Goal 8 seeks a global trading system that is open, rule-based, predictable and non-discriminatory, and addresses the least developing countries’ special needs, including by providing tariff- and quota-free access for their exports. Since 2000, the U.S. has had many opportunities to put these commitments into practice, particularly through the World Trade Organization’s (WTO) Doha round of trade negotiations, the new farm bill, bilateral trade agreements, trade preference programs and aid for trade.

Dismal Doha The U.S. and other members of the WTO committed themselves to a “development round” of multilateral trade negotiations in their November 2001 meeting in Doha, Qatar. Still devastated by the events of 9/11, the U.S. and others boldly promised to focus the new round of trade talks on ways of increasing the gains from trade for the developing world and strengthening the links between trade and poverty reduction. Six years after 9/11, the Doha round has stalled and its development agenda dissipated. The U.S. and EU have held fast to their original agendas, maintaining their subsidies and protections while demanding greater market access that could further weaken many developing countries with high levels of poverty and inequality. It is still unclear whether the latest unofficial U.S. offer to cap trade-distorting domestic farm support at $13-$16.4 billion per year would restrict actual U.S. spending on trade-distorting subsidies. The EU’s offer to reduce tariffs would likewise mean little because it is demanding leniency for heavily protected “sensitive products” that represent important exports for developing countries. Cumulatively, the U.S. and EU are undercutting the spirit of the Doha round by demanding significant concessions from developing countries and giving little or nothing at all in return.

Box 5. Market Access Indicators Proportion of total developed country imports (by value and excluding arms) from developing countries and least developed countries, admitted free of duty Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries Agricultural support estimate for OECD countries as a percentage of their gross domestic product Proportion of ODA provided to help build trade capacity

Meanwhile, the U.S. has focused on negotiating bilateral and regional free trade agreements (FTAs). Despite some welcome progress (in May 2007, the U.S. agreed to ease protections on intellectual property in three FTAs that otherwise would have delayed the entry of generic medicines in foreign markets), U.S. FTAs tend to further reduce developing countries’ policy options to effectively promote their own agricultural and industrial development. FTAs also include new rules on services, investment and intellectual property that far exceed what could be agreed at the WTO. And the uneven balance of power between the U.S. and each individual developing country – even the larger ones – tends to result in measures that disproportionately favor the U.S., often at great expense to the developing country “partner.”

A trade-distorting farm bill Every five years, Congress debates a new farm bill, the law that governs federal farm, food and conservation policy. The second largest budget item in the farm bill (following food stamps for low income individuals and families) are commodity subsidies, that is, payments to producers of corn, wheat, cotton, soybean, rice and a few other crops. Between 1995 and 2005, these commodity payments averaged about $12 million per year and have been highly concentrated, with the top 10 percent of recipients accounting for 75 percent of payments.1 Not only do these subsidies not benefit rural communities in the U.S., they actually distort trade in ways that hurt poor farmers abroad.2 In the case of cotton for instance, U.S. subsidies generate overproduction that lowers the world price of cotton by six to 14 percent. Reforming these subsidies could single-handedly increase the incomes from cotton of one million West African households eight to 20 percent.3

MDG8 TRADE

U.S. trade preferences are promising, but the U.S. has yet to live up to its commitment to building a trading system that is open, rule-based, predictable and non-discriminatory, and that accounts for the special needs of least developed countries. By committing to a global trade round, reforming the farm bill, and improving trade preferences, the U.S. can take important strides in helping poor farmers.

Congress now has the opportunity to reduce trade-distorting commodity subsidies in the new farm bill. Reform in this direction remains elusive, however, with the House bill passed in July 2007 preserving the status quo. Whether the Senate can introduce real reform remains to be seen.

U.S. trade preferences are promising … Overall, the U.S. remains one of the world’s most open economies. In 2006, two-thirds of imports to the U.S. were duty-free.4 For over three decades, the United States has extended preferential, duty-free market access to imports from developing and least developed countries as a means of stimulating economic growth and poverty reduction (See Table 9, page 70). These preference programs provide unilateral tariff benefits for specific products from select developing countries.5 Businesses in the U.S. have also benefited from preferences, relying 69

on goods imported duty-free for use as inputs in products that are manufactured here. As a result of these preferences, the U.S. has gradually increased its share of duty-free imports from developing countries. More recently, however, renewal and extension of trade preference programs have become more controversial in Congress, as some members have argued that countries opposing U.S. interests at the WTO or unwilling to negotiate an FTA on U.S. terms should no longer benefit from preferential access to the U.S. market. For example, a trade package passed by Congress

Table 9. U.S. Trade Agreements Giving Preferential Access to Imports from Developing Countries Preference program

Dates

Generalized System of Preferences (GSP)

Established by the Trade Act of 1974 for 10 years, Duty-free access for over 4,650 renewed periodically, most recently for 2 years in products from 143 designated Dec. 2006. beneficiary countries and territories. Set to expire at the end of 2008.

Caribbean Basin Initiative Caribbean Basic Economic Recovery Act (CBERA) / Caribbean Basin Trade Partnership Act (CBTPA)

Established in 1983, renewed and made permanent in 1990, and substantially expanded in 2008 through CBTPA.

Andean Trade Promotion Act (ATPA) / Andean Trade Promotion and Drug Eradication Act (ATPDEA)

Established in 1991, renewed for 5 years in 2002, renewed for 6 months in December 2006, renewed for 8 months in June 2007.

Established in 2000, expanded in 2002, and further extended in 2004 and Dec. 2006. Set to expire in Sept. 2015; third country fabric provision expires in Sept. 2012.

70

Permanent duty-free access to a range of products from 24 countries in Central America and the Caribbean.

Access for expanded product list set to expire in Sept. 2008.

Set to expire in February 2008.

African Growth and Opportunity Act (AGOA)

Provisions

Duty-free access to certain goods from Colombia, Peru, Bolivia and Ecuador to promote development and combat illicit drug production and trafficking.

Quota- and duty-free entry for certain goods from eligible SubSaharan African countries.

in December 2006 extended Andean trade preferences for only six months and GSP for only two years, with limits for certain products.6 At the same time, the package extended muchneeded preferences to Haiti, the poorest country in our hemisphere. It also expanded AGOA and extended until 2012 the ability of African producers to use non-African fabric for apparel production while still qualifying for duty-free status in the U.S. market. Letting this provision expire would have meant even more difficult times for African garment producers, whose business would certainly have been jeopardized if cost-effective textile inputs from cheaper sources were no longer allowed.

MDG8 TRADE

… but fall short of helping the poorest. Despite promising steps, U.S. trade policies fail many developing and least developed countries in at least four ways: 1.

U.S. preference programs exclude many goods that are particularly important to developing countries, including agricultural products, textiles and clothes. For Bangladesh, these exclusions mean that only two percent of its exports to the US receive preferential treatment. For Nepal, it is five percent.7

2.

U.S. tariffs are highly regressive. U.S. tariffs are highest for those goods produced by poor countries and lowest for goods produced by industrialized countries. As a result, the average tariff on dutiable exports to the U.S. from extremely poor countries is over three times higher than the average tariff on dutiable exports from all countries (See Figure 10, page 72).8

3.

U.S. tariffs have barely moved for those products that matter the most to the poor. Although the total amount of goods allowed duty-free has increased, the average tariffs for textiles and clothing have fallen by only two to three percent since 1996, and those for agricultural products have actually increased slightly.

4.

U.S. preference programs fail to promote much-needed, long-term investment due to their temporary nature. Regional preference programs and special provisions are often allowed to relapse or are only renewed for short periods of time, instilling uncertainty that can have a chilling effect on new investments in developing countries.9

71

Figure 10. Average Tariffs on Dutiable Exports to the U.S. in 2006 Source: Kimberly Ann Elliott (2007), “Trade Policy for Development: Reforming U.S. Trade Preferences.” CGD Brief. Washington, DC: Center for Global Development.

Average tariff on dutiable exports to the U.S.

U.S. tariffs have barely moved for those products that matter the most to the poor – textiles, clothing and agricultural products.

20%

15%

10%

5%

0% UK

France

All countries

134 developing countries eligible for GSP

43 least developed countries eligible for GSP plus

U.S. aid for trade: In search of results Finally, aid to address the supply constraints faced by developing countries was a key promise of both the Uruguay and Doha rounds, but efforts to date remain wanting. The Doha round was founded on the premise that further liberalizing trade in agriculture, goods and services would lift millions out of poverty in developing countries. Yet WTO members soon conceded that gains would be far less than initially expected and that many countries would actually be worse off, including many developing countries. The U.S. and other developed countries thus committed to help fund improvements in the capacity of developing country members to take advantage of the opportunities from trade, including through efforts to modernize customs systems, build roads and ports, improve agricultural productivity, and promote export diversification. For its part, the U.S. has more than doubled its commitments for building trade capacity since the Doha round began: from $618 million in 2000-2001 to $1.4 billion in 2005-2006.10 Though a promising trend, U.S. aid for trade has actually fallen as a share of total aid (ODA), from about seven percent in 2001 to less than five percent in 2005.11 Data on actual disbursements or results are unavailable. 72

Table 10. U.S. Progress on Market Access Indicators 2000

2001

2002

2003

2004

2005

65.4% 54.0%

67.1% 49.9%

66.0% 55.0%

75.5% 59.1%

78.1% 69.4%

78.6% 76.7%

Average tariffs imposed by the US on agricultural products from: Developing countries -MFN - Preferential

5.7% 4.2%

5.8% 4.1%

5.7% 4.1%

5.4% 4.0%

5.3% 3.8%

5.2% 3.8%

Average tariffs imposed by the US on textiles from: Developing countries -MFN - Preferential

9.5% 8.7%

9.3% 8.5%

8.4% 7.7%

8.1% 7.4%

7.9% 7.2%

7.9% 7.2%

Average tariffs imposed by the US on clothing from: Developing countries -MFN - Preferential

13.7% 12.4%

13.6% 12.4%

12.8% 11.6%

12.5% 11.3%

12.3% 10.9%

12.2% 10.8%

0.98%

0.97%

0.86%

0.84%

0.88%

Proportion of US imports (by value and excluding arms) admitted free of duty from: Developing countries Least Developed Countries

Agricultural support estimate as percentage of GDP

Proportion of ODA to help build trade capacity

MDG8 TRADE

0.88%

(provisional)

-

6.8%

5.7%

4.2%

3.4%

4.8%

Sources: UN Statistics Division, Millennium Indicators Database (August 28, 2007); UNCTAD, WTO and ITC, The Millennium Development Goals, Goal 8: Market Access Indicators (August 28, 2007)

73

Making U.S. trade policy consistent with the MDGs Improving U.S. trade policies could help millions of poor households abroad earn more from trade.

74

By committing to a global trade round, reforming the farm bill, and improving trade preferences and aid for trade, the U.S. can take important strides in helping poor countries make the most of the global market in improving their livelihoods. Developing countries face other hurdles in making the most of trade beyond those related to U.S. policies. But improving U.S. trade policies could help millions of poor households abroad earn more from trade. This additional income could mean more kids in school, better access to health care and higher yields, all of which could take these families a bit closer to the development goals enshrined in the MDGs.

1

See the Environmental Working Group’s Farm Subsidy Database (2006), http://farm.ewg.org/farm/.

2

Oxfam America’s “Fairness in the Fields” 2006 report discusses how US subsidies do not support struggling small family farms or sustain rural communities in the U.S. Oxfam America. Fairness in the Fields: A Vision for the 2007 Farm Bill (Boston: Oxfam America, 2006).

3

Alston, Sumner and Brunke. Impacts of Reductions in Us Cotton Subsidies on West African Cotton Producers, report prepared for Oxfam America (2007).

4

Kimberly Ann Elliott. CDG Brief : Trade Policy for Development: Reforming U.S. Trade Preferences. (Washington, DC: Center For Global Development, 2007).

5

John Wainio et al. Agricultural Trade Preferences and the Developing Countries, ERS Report no. 6 (Washington, DC: Economic Research Service, May 2005).

6

For a discussion of the debate on GSP extension, see the Congressional Research Service. Generalized System of Preferences: Background and Renewal Debate, by Vivian Jones (Washington, DC: updated May 22, 2007; RL33663).

7

Women’s Edge Coalition et al. “Duty-free Quota-free Market Access for Least Developed Countries,” joint memo to the Office of the U.S. Trade Representative (March 15, 2007) http://www.cgdev.org/doc/commentary/Market_ Access.pdf.

8

Kimberly Ann Elliott. “Trade Policy for Development: Reforming U.S. Trade Preferences,” A CDG Brief (Washington, DC: Center For Global Development, 2007).

9

Ibid.

10

Two-year averages from the U.S. Agency for International Development. “Trade Capacity Building Database,” http:// qesdb.cdie.org/tcb/index.html.

11

MDG Indicator #41. See the UN Inter-agency and Expert Group on MDG Indicators. “Millennium Indicators,” United Nations Statistics Division (2005) http://millenniumindicators.un.org/unsd/mifre/mi_worldregn.asp.

MDG8 TRADE

Photo: courtesy of Jon Warren

75

Goal 8. Developing a Global Partnership for Development – Debt Relief

Since 1996, 22 countries, including 18 in sub-Saharan Africa, have received full debt cancellation through various debt relief initiatives. A total of 31 countries have or will receive $69 billion of debt relief in 2006 net present value terms, freeing resources for poverty reduction efforts. Indeed, countries receiving debt relief have been able to increase spending on poverty-reducing measures by $17 billion since 2000.1

Removing debt as an obstacle to development Since the early 1980s, U.S. and global civil society organizations have been raising the issue of unpayable debt as an obstacle to development among the world’s poorest countries. In 1996, the World Bank, International Monetary Fund (IMF) and donor countries, including the United States, responded to the burgeoning debt crisis and growing pressure from global civil society with the Highly Indebted Poor Countries (HIPC) Initiative, which created a process for reducing the bilateral and multilateral debt for 41 of the world’s poorest countries. But after three years, only two of the eligible countries had qualified for the program’s modest relief. In 1999, the nations of the world, led by the G-8, adopted the Enhanced HIPC Initiative, designed to move more eligible countries through a more streamlined process and reward them with more substantial relief. Additionally, with the urging of global civil society, the Enhanced HIPC Initiative linked debt relief to the goal of poverty reduction and asked poor countries to consult more widely across their governments and with civil society in determining how best to use resources freed from the constraints of unpayable debt. Since the Enhanced HIPC Initiative required only a partial reduction of multilateral debt, however, most poor countries still faced a substantial debt burden – even after qualifying for relief. Thus, in 2005 G-8 leaders adopted a new agreement, the Multilateral Debt Relief Initiative (MDRI), which requires the IMF, the World Bank and other, regional development banks to cancel 100 percent of the debt owed by qualifying poor countries.

76

Box 6. Debt Sustainability Indicators Total number of countries that have reached their HIPC decision points and number that have reached their HIPC completion points (cumulative) Debt relief committed under HIPC Initiative Debt service as a percentage of exports of goods and services

The U.S. has been a strong advocate for debt relief ... The U.S. has been a leader among the nations of the world in the effort to address the debt crisis faced by the world’s poorest countries. It has offered constructive solutions and worked to build consensus. In the mid-1980s, the United States shifted its bilateral aid programs from loans to grants. In 1999, it canceled 100 percent of the bilateral debt owed to it by poor countries, going even further than the agreements reached by the Paris Club.2 That same year, it led the effort to establish the Enhanced HIPC Initiative and to explicitly link debt relief to poverty reduction in 1999. The U.S. also worked closely with the UK government in 2005 to establish the MDRI. Finally, given the burden imposed by debt service and consequent restrictions on social service spending, the United States has been urging that future disbursements of multilateral bank resources to the poorest countries, especially those in parts of Africa, be in the form of grants rather than loans. In 2001, the United States first proposed that the International Development Association (IDA) provide 50 percent of its assistance to the poorest countries as grants rather than loans. Concerned that its financial stability would be eroded without the reflow of money from loan repayments, IDA donors agreed to convert 18 to 21 percent of IDA assistance to grants. More recently, some countries qualified for as much as 40 percent in grants.3

… and has taken a leading role in providing debt relief. Since 2000, the United States has cancelled $263 million in bilateral debt and contributed $675 million to the HIPC Trust Fund, which is used to provide debt relief to countries that complete the HIPC process.4 It has pledged a full contribution to IDA of $233 million for 200708 and $1.4 billion for 2009-16 to cover the cost of the MDRI, and has pledged a total of $750 million to the HIPC Trust Fund. Overall, the U.S. has provided 23 percent of the funds paid into the program. U.S. government funding for debt relief over the past six years is shown in Table 11 (See page 78).

MDG8 DEBT

The U.S. is on track to meet its MDG commitment for debt relief and has been a leader in removing debt as an obstacle for development. Offering terms more generous than other Paris Club members, the U.S. has cancelled 100 percent of bilateral debts with HIPC countries. Additionally, the U.S. pledged 100 percent of its target contribution to IDA, effectively freeing up much needed resources for development. The U.S. can also exercise its leadership to extend debt relief to include more debt-burdened countries and to ensure money saved in debt service actually goes into needed public investment.

77

Table 11. U.S. Government Contributions for Debt Relief Evidence suggests that countries are substantially increasing their poverty reducing expenditures as a result of debt relief.

(in US$ thousands) FY01

FY02

FY03

FY04

FY04

Debt Restructuring5

$447,000

$229,000

-

$95,000

$99,170

IDA6

$775,000

$792,000

$844,475

$913,200

$842,945

Making progress on debt relief ... The following section takes stock of donors’ collective performance on debt relief as measured by the MDG indicators:

The number of countries at completion and decision point: By July 2007, 22 of 41 eligible HIPC countries had been granted debt cancellation; nine had reached their HIPC decision point and are receiving debt relief. Another 10 are at pre-decision point.7 Eleven additional countries could be eligible for HIPC, but have not qualified for reasons including conflict and poor governance.8



Debt relief committed: By mid-2006, the debt relief committed under both HIPC and MDRI amounted to roughly $60 billion in 2005 net present value terms, reducing the debt stock in post-decision point countries by nearly 90 percent. The net present value of debt for these countries, at the end of 2005, was roughly $11 billion compared to $89 billion before HIPC and MDRI.9



Debt service to export ratio: For countries that are at their decision-point, debt service as a percentage of exports has decreased from 14.9 percent in 1999 to 6.0 percent in 2005.10

The 15th IDA replenishment negotiations are now underway. The outcome of that will reflect donor commitment to ensuring that IDA has the financing it needs to continue to assist the poorest developing countries in meeting the MDGs.

… has freed up resources needed for development. While the MDG targets do not measure how debt relief is being used, some examples suggest that countries are substantially increasing their poverty reducing expenditures: 78

In Burundi, elimination of school fees in 2005 allowed an additional 300,000 children to enroll.



In Zambia, 4,500 new teachers have been hired and fees for rural healthcare have been scraped.



In Tanzania, more than 31,000 new classrooms were built and net enrollment rose by almost 30 percent in 2003.



In Burkina Faso, debt relief savings have been targeted to fight AIDS, improve education and provide access to safe drinking water.11

MDG8 DEBT

It is now up to the U.S. and other donors to ensure that in future appropriation rounds they continue to adequately compensate the World Bank and other multilateral development institutions such as the African Development Bank (AfDB) with firm, unqualified pledges to cover the cost of debt cancellation under HIPC and MDRI. The U.S. should also exercise its leadership to extend HIPC and MDRI to include more debt-burdened countries and to ensure that money saved in debt service actually goes into needed public investments.

1

World Bank. “Debt Relief,” http://go.worldbank.org/KNZR2IIQG0.

2

The Paris Club is an informal group of finance ministries from 19 of the world’s richest countries, established to coordinate solutions to bilateral debt including restructuring and cancellation. See the Paris Club. “About Us,” http://www.clubdeparis.org/.

3

Leo, Searls and Kohler. “Achieving Debt Sustainability in Low-Income Countries: Past Practices, Outstanding Risks and Possible Approaches,” Office of International Affairs Occasional Paper No. 5, (Washington, DC: Department of the Treasury, November 2006).

4

Office of International Affairs. Treasury International Programs, Justification for Appropriations: FY2008 Budget Request, (Washington, DC: U.S. Department of the Treasury, 2007), http://www.treas.gov/offices/internationalaffairs/intl/fy2008/fy2008-budget.pdf.

5

Includes funding for HIPC debt relief and for restructuring the debts owed by other poor countries. The wide annual fluctuation largely mirrors the HIPC process, a function of when the countries enter the HIPC process (decision point) and the size of the specific program. Countries’ debt continues to be carried on the books until the completion point. The appropriations reflect the present value rather than the nominal value, the value of the debt at any given time.

6

Indicates U.S. contributions to IDA, which are agreed to during the IDA replenishment process. Additional payments to cover MDRI and HIPC commitments are not singled out in the US government’s budget for overall IDA replenishment.

7

World Bank. “Heavily Indebted Poor Countries (41 Countries),”http://go.worldbank.org/4IMVXTQ090.

8

UN Inter-agency and Expert Group on MDG Indicators. Millennium Development Goals Report 2007, (New York: United Nations, 2007), 30.

9

Ibid.

10

Ibid.

11

Jubilee USA Network. “Debt Relief Works,” http://www.jubileeusa.org/resources/publications/debt-relief-worksproject.html.

79

APPENDIX

Appendix A. The MDGs, Targets and Indicators

14. Infant mortality rate 15. Proportion of 1 year-old children immunized against measles

Goal 1. Eradicate extreme poverty & hunger Target 1:

Target 2:

Halve, between 1990 and 2015, the proportion of people whose income is less than a dollar a day

Goal 5. Improve maternal health

1.

Proportion of population below $1 (PPP) per day

Target 6:

2.

Poverty gap ratio [incidence x depth of poverty]

Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio

3.

Share of poorest quintile in national consumption

16. Maternal mortality ratio 17. Proportion of births attended by skilled health personnel

Halve, between 1990 and 2015, the proportion of people who suffer from hunger 4.

Prevalence of underweight children under five years of age

Goal 6. Combat HIV/AIDS, malaria & other diseases

5.

Proportion of the population below minimum level of dietary energy consumption

Target 7:

Have halted by 2015 and begun to reverse the spread of HIV/AIDS 18. HIV prevalence among pregnant women aged 15-24 years 19. Condom use rate of the contraceptive prevalence rate

Goal 2. Achieve universal primary education

19a. Condom use at last high-risk sex Target 3:

Ensure that, by 2015, children everywhere, boys & girls alike, will be able to complete a full course of primary schooling 6.

Net enrolment ratio in primary education

7.

Proportion of pupils starting grade 1 who reach grade 5

8.

Literacy rate of 15-24 year-olds

19b. Percentage of population aged 15-24 years with comprehensive correct knowledge of HIV/AIDS 19c. Contraceptive prevalence rate 20. Ratio of school attendance of orphans to school attendance of nonorphans aged 10-14 years Target 8:

Goal 3. Promote gender equality & empower women

Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases 21. Prevalence and death rates associated with malaria

Target 4:

Eliminate gender disparity in primary & secondary education, preferably by 2005, & in at all levels of education no later than 2015

22. Proportion of population in malaria-risk areas using effective malaria prevention and treatment measures

9.

23. Prevalence and death rates associated with tuberculosis

Ratio of girls to boys in primary, secondary, & tertiary education

24. Proportion of tuberculosis cases detected and cured under directly observed treatment short course DOTS (Internationally recommended TB control strategy)

10. Ratio of literate women to men 15-24 years old 11. Share of women in wage employment in the non-agricultural sector 12. Proportion of seats held by women in national parliament

Goal 7. Ensure environmental sustainability Goal 4. Reduce child mortality Target 5:

Reduce by two-thirds, between 1990 and 2015, the mortality ratio 13. Under-five mortality rate

80

Target 9:

Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources 25. Proportion of land area covered by forest

26. Ratio of area protected to maintain biological diversity to surface area 27. Energy use (kg oil equivalent) per $1 GDP (PPP) 28. Carbon dioxide emissions per capita and consumption of ozonedepleting CFCs (ODP tons) 29. Proportion of population using solid fuels Target 10: Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation 30. Proportion of population with sustainable access to an improved water source, urban and rural 31. Proportion of population with access to improved sanitation, urban and rural Target 11:

By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers 32. Proportion of households with access to secure tenure

Official development assistance 33. Net ODA, total and to the least developed countries, as percentage of OECD/DAC donors’ gross national income 34. Proportion of total bilateral, sector-allocable ODA of OECD/DAC donors to basic social services 35. Proportion of bilateral official development assistance of OECD/ DAC donors that is untied 36. ODA received in landlocked developing countries as a proportion of their gross national incomes 37. ODA received in small island developing States as a proportion of their gross national incomes

Market access 38. Proportion of total developed country imports (by value and excluding arms) from developing countries and least developed countries, admitted free of duty 39. Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries

Goal 8. Develop a global partnership for development

40. Agricultural support estimate for OECD countries as a percentage of their gross domestic product

Target 12: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system

41. Proportion of ODA provided to help build trade capacity

Target 13: Address the special needs of the least developed countries

42. Total number of countries that have reached their HIPC decision points and number that have reached their HIPC completion points

Target 14: Address the special needs of landlocked developing countries and small island developing States Target 15: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term Target 16: In cooperation with developing countries, develop and implement strategies for decent and productive work for youth Target 17: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries

APPENDIX

Debt sustainability

43. Debt relief committed under HIPC Initiative 44. Debt service as a percentage of exports of goods and services 45. Unemployment rate of young people aged 15-24 years, each sex and total 46. Proportion of population with access to affordable essential drugs on a sustainable basis 47. Telephone lines and cellular subscribers per 100 population 48. Personal computers in use per 100 population Internet users per 100 population

Target 18: In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

81

Goals and Targets APPENDIX

Appendix B. MDG Progress to Date by Region

Africa Northern

Sub-Saharan

Oceana

Latin America & Caribbean

GOAL 1 | Eradicate extreme poverty and hunger Reduce extreme poverty by half Reduce hunger by half

low poverty

very high poverty

—

moderate poverty

very low hunger

very high hunger

moderate hunger

moderate hunger

moderate enrollment

high enrollment

GOAL 2 | Achieve universal primary education Universal primary schooling

high enrollment

low enrollment

GOAL 3 | Promote gender equality and empower women Equal girls’ enrolment in primary school Women’s share of paid employment Women’s equal representation in national parliaments

close to parity

almost close to parity

close to parity

parity

low share

medium share

medium share

high share

very low representation

low representation

very low representation

moderate representation

GOAL 4 | Reduce child mortality Reduce mortality of under five-year-olds by two thirds

low mortality

very high mortality

moderate mortality

low mortality

Measles immunization

high coverage

low coverage

low coverage

high coverage

Country experiences in each region may differ significantly from the regional average. For the regional groupings and country data, see mdgs.un.org. Sources: United Nations, based on data and estimates provided by: Food and Agriculture Organization; InterParliamentary Union; International Labour Organization; International Telecommunication Unit; UNESCO; UNICEF; World Health Organization; UNAIDS; UN-Habitat; World Bank—based on statistics available as of June 2007. Compiled by: Statistics Division, UN DESA. Photo by: Adam Rogers/ UNCDF * The available data for maternal mortality and malaria do not allow a trend analysis. Progress in the chart has been assessed by the responsible agencies on the basis of proxy indicators.

82

** The assessment is based on a new methodology and therefore not comparable with previous assessments.

Asia Eastern

South-Eastern

Commonwealth of Independent States Southern

Western

Europe

Asia APPENDIX

moderate poverty

moderate poverty

very high poverty

low poverty

low poverty

low poverty

moderate hunger

moderate hunger

high hunger

moderate hunger

very low hunger

high hunger

high enrollment

high enrollment

high enrollment

moderate enrollment

high enrollment

high enrollment

parity

parity

close to parity

close to parity

parity

parity

high share

medium share

low share

low share

high share

high share

moderate representation

low representation

low representation

very low representation

low representation

low representation

low mortality

moderate mortality

high mortality

moderate mortality

low mortality

moderate mortality

moderate coverage

moderate coverage

low coverage

high coverage

high coverage

high coverage

The progress chart operates on two levels. The words in each box tell what the current rate of compliance with each target is. The colours show the trend, toward meeting the target by 2015 or not. See legend below: Target already met or very close to being met.

Target is not expected to be met by 2015.

Target is expected to be met by 2015 if prevailing trends persist, or the problem that this target is designed to address is not a serious concern in the region.

No progress, or a deterioration or reversal. Insufficient data. 83

APPENDIX

Appendix B. MDG Progress to Date by Region

Goals and Targets

Africa Northern

Sub-Saharan

Oceana

Latin America & Caribbean

high mortality

moderate mortality

GOAL 5 | Improve maternal health Reduce maternal mortality by three quarters*

moderate mortality

very high mortality

GOAL 6 | Combat HIV/AIDS, malaria and other diseases Halt and reverse spread of HIV/AIDS

low prevalence

very high prevalence

moderate prevalence

moderate prevalence

Halt and reverse spread of malaria*

low risk

high risk

low risk

moderate risk

Halt and reverse spread of tuberculosis

low mortality

high mortality

moderate mortality

low mortality

GOAL 7 | Ensure environmental sustainability low forest cover

medium forest cover

high forest cover

high forest cover

Halve proportion without improved drinking water

high coverage

low coverage

low coverage

high coverage

Halve proportion without sanitation

moderate coverage

very low coverage

low coverage

moderate coverage

Improve the lives of slumdwellers

moderate proportion of slum-dwellers

very high proportion of slum-dwellers

moderate proportion of slum-dwellers

moderate proportion of slum-dwellers

Reverse loss of forests**

GOAL 8 | Develop a global partnership for development Youth unemployment**

very high unemployment

high unemployment

low unemployment

high unemployment

Internet users

moderate access

very low access

low access

high access

* The available data for maternal mortality and malaria do not allow a trend analysis. Progress in the chart has been assessed by the responsible agencies on the basis of proxy indicators. ** The assessment is based on a new methodology and therefore not comparable with previous assessments.

84

Asia

Commonwealth of Independent States

Eastern

South-Eastern

Southern

Western

Europe

Asia

low mortality

high mortality

very high mortality

moderate mortality

low mortality

low mortality

low prevalence

low prevalence

moderate prevalence

low prevalence

moderate prevalence

low prevalence

moderate risk

moderate risk

moderate risk

low risk

low risk

low risk

moderate mortality

moderate mortality

moderate mortality

low mortality

moderate mortality

moderate mortality

medium forest cover

high forest cover

medium forest cover

low forest cover

high forest cover

low forest cover

moderate coverage

moderate coverage

moderate coverage

high coverage

high coverage

moderate coverage

very low coverage

low coverage

very low coverage

moderate coverage

moderate coverage

moderate coverage

high proportion of slum-dwellers

moderate proportion of slum-dwellers

high proportion of slum-dwellers

moderate proportion of slum-dwellers

low proportion of slum-dwellers

moderate proportion of slum-dwellers

low unemployment

high unemployment

moderate unemployment

very high unemployment

high unemployment

high unemployment

moderate access

moderate access

low access

moderate access

moderate access

moderate access

APPENDIX

85

Goal

APPENDIX

Appendix C. Foreign Assistance Framework

Objectives Accounts within State/USAID

“To help build and sustain democratic, well-governed states Peace and Security FMF, TI, IMET, ESF, INCLE, NADR, PKO, ACI, FSA, SEED

Governing Justly and Democratically DA, TI, SEED, FSA, DF, ESF, INCLE, IO&P, ACI

Other USG Agency Contributions Foreign Assistance Program Areas

Counter Terrorism Combating WMD Stabilization Operations and Defense Reform Counternarcotics Transnational Crime Conflict Mitigation and Response

Rule of Law and Human Rights Good Governance Political Competition and ConsensusBuilding Civil Society

Category Definition

86

Rebuilding Countries

States in or emerging from and rebuilding after internal or external conflict.

Prevent or mitigate state failure and/or violent conflict.

Assist in creating and/or stabilizing a legitimate and democratic government and a supportive environment for civil society and media.

Developing Countries

States with low or lower-middle income, not yet meeting MCC performance criteria, and the criterion related to political rights.

Address key remaining challenges to security and law enforcement.

Support policies and programs that accelerate and strengthen public institutions and the creation of a more vibrant local government, civil society and media.

Transforming Countries

States with low or lowermiddle income, meeting MCC performance criteria, and the criterion related to political rights.

Nurture progress toward partnerships on security and law enforcement.

Provide limited resources and technical assistance to reinforce democratic institutions.

Sustaining Partnership Countries

States with upper-middle income or greater for which U.S. support is provided to sustain partnerships, progress, and peace.

Support strategic partnerships addressing security, CT, WMD, and counter-narcotics.

Address issues of mutual interest.

Restrictive Countries

States of concern where there are significant governance issues.

Prevent the acquisition/proliferation of WMD, support CT and counter-narcotics.

Foster effective democracy and responsible sovereignty. Create local capacity for fortification of civil society and path to democratic governance.

Global or Regional

Activities that advance the five objectives, transcend a single country’s borders, and are addressed outside a country strategy.

that respond to the needs of their people, reduce widespread poverty and conduct themselves responsibly in the international system.” Investing in People DA, CSH, ESF, IDFA, IO&P, FSA, SEED, GHAI, ACI, Title II

Economic Growth DA, ESF, SEED, FSA, IO&P, ACI, Title II

APPENDIX

Humanitarian Assistance IDFA, MRA, ERMA, ACI, Title II

Macroeconomic Foundation for Growth Trade and Investment Financial Sector Infrastructure Agriculture Private Sector Competitiveness Economic Opportunity Environment

Protection, Assistance and Solutions Disaster Readiness Migration Management

End Goal of U.S. Foreign Assistance

Start or restart the delivery of critical social services, including health and educational facilities, and begin building or rebuilding institutional capacity.

Assist in the construction or reconstruction of key internal infrastructure and market mechanisms to stabilize the economy.

Address immediate needs of refugee, displaced, and other affected groups.

Stable environment for good governance, increased availability of essential social services, and initial progress to create policies and institutions upon which future progress will rest.

Encourage social policies that deepen the ability of institutions to establish appropriate roles for the public and private sector in service delivery.

Encourage economic policies and strengthen institutional capacity to promote broad-based growth.

Encourage reduced need for future HA by introducing prevention and mitigation strategies, while continuing to address emergency needs.

Continued progress in expanding Advance to the Transforming and deepening democracy, Category. strengthening public and private institutions, and supporting policies that promote economic growth and poverty reduction.

Provide financial resources and limited technical assistance to sustain improved livelihoods.

Provide financial resources and technical assistance to promote broad-based growth.

Address emergency needs on a short-term basis, as necessary.

Government, civil society and private sector institutions capable of sustaining development progress.

Advance to the Sustaining Partnership Category or graduate from foreign assistance.

Address issues of mutual interest.

Create and promote sustained partnerships on trade and investment.

Address emergency needs on a short-term basis, as necessary.

Continued partnership as strategically appropriate where U.S. support is necessary to maintain progress and peace.

Continue partnership or graduate from foreign assistance.

Address humanitarian needs.

Promote a market-based economy.

Address emergency needs on a short-term basis, as necessary.

Civil society empowered to demand Advance to other relevant foreign more effective democracies and assistance category. states respectful of human dignity, accountable to their citizens, and responsible towards their neighbors.

Health Education Social Services and Protection for Vulnerable Populations



Achievement of foreign assistance goal and objectives.

Graduation Trajectory

Advance to the Developing or Transforming Category.

Determined based on criteria specific to the global or regional objective.

87

Least Developed Countries Country Afghanistan

APPENDIX

Appendix D. U.S. Aid and FDI to Recipient Countries by Income Level in 2006 (in US$ millions)

FDI

89.29

29

Sudan

906.07

3

Tanzania

154.01

35

23.49

2

2.76

1,010.78

-

Angola

32.17

1,096

Bangladesh

85.28

368

Benin

16.73

9

Tuvalu

-

4

Uganda

Burkina Faso

20.61

0

Vanuatu

Burundi

25.49

-

Yemen

Cambodia

56.01

1

Zambia

Cape Verde

7.01

-

Sub-total

Central African Republic

0.67

(*)

30.54

(D)

Bhutan

Chad Comoros

0.05

-

Congo, Dem. Rep.

92.68

62

Djibouti

11.43

(*)

-

4,238

2.83

1

Ethiopia

329.35

60

Gambia

5.20

-

Guinea

27.14

(D)

Equatorial Guinea Eritrea

Guinea-Bissau Haiti

0.14

-

225.74

154

10.59

60,346

10.59

22,228

Hong Kong

-

38,118

Macao

-

(D)

3

Colombia

580.30

4,897

-

-

Cuba

10.89

-14

246.23

14

Dominican Republic

28.23

896

2.22

56

Ecuador

18.70

749

Timor-Leste Togo

168.88

75

4,276.07

7,202.00

Other Low Income Countries Country

Aid

FDI

47.78

774

2.56

36

Georgia

87.39

88

Guatemala

60.16

347 211

Guyana

23.85

184

Honduras

53.11

517

157.17

10,585

Cote d'Ivoire

33.68

298

Indonesia

Ghana

72.10

237

Iran

20.00

3

India

124.95

8,852

Iraq

1,636.79

(D)

Kenya

322.18

68

17.58

884

-

-

Jordan

Kyrgyz Republic

36.53

2

Moldova

22.03

Mongolia

13.01

Korea, Dem. Rep.

Jamaica

512.43

40

Kazakhstan

33.78

4,893

1

Kosovo

77.80

-

-

Macedonia

43.73

5

-

Lesotho

2.30

2

156.00

289

Madagascar

40.67

(*)

Tajikistan

Malawi

50.05

5

Uzbekistan

0.17

-

Vietnam

42.48

0

Zimbabwe

8.96

1

Sub-total

130.79

7

Lower Middle Income Countries & Territories

Myanmar (Burma)

10.89

(*)

Country

Nepal

35.58

2

Albania

Niger

23.16

-33

Algeria

Rwanda

95.26

-

Samoa

1.37

(*)

Sao Tome & Principe

0.29

(D)

Senegal

51.25

-33

Sierra Leone

29.54

3

Bosnia & Herzegovina

51.02

1

0.17

-

Brazil

13.56

32,601

Solomon Islands

Fiji

461 5,911

231

(*)

Mozambique

El Salvador

32.71 1,779.29

0.94

4.29

Mauritania

Egypt

3.23

1.36

Mali

China

Congo, Republic

Laos

Maldives

China & Hong Kong

Cameroon

Kiribati

Liberia

88

Somalia Aid

50.18

261

Marshall Islands

-

(D)

Nigeria

180.35

339

Micronesia,

-

(D)

Pakistan

762.91

1,232

0.29

Nicaragua

Papua New Guinea

Montenegro

15.00

-

150

Morocco

38.94

311

40.40

-

Namibia

62.40

(*)

17.82

57

40.83

339

Paraguay

17.56

100

1,738.97

12,351.00

Aid

FDI

-

-

13.31

(D)

Peru

144.34

4,979

Philippines

115.95

7,034

Serbia

71.01

22

Sri Lanka

14.53

54 (D)

32.21

1

Suriname

1.88

Swaziland

2.01

64

-

(D)

12.04

8,217

0.82

5,342

76.31

(*)

Azerbaijan

47.87

4,015

Belarus

11.73

(*)

Bolivia

136.68

172

Armenia

Niue

Syria Thailand Tokelau

-

-

Tonga

1.73

(*)

Tunisia

10.29

240

Turkmenistan Ukraine

7.60

22

Venezuela

105.14

505

Sub-total

-

-

High Income Countries

153.29

-

Country

6,355.79

154,460

Wallis & Futuna West Bank & Gaza

5.91

11,556

466.31

156,632

Aid

FDI

Andorra

-

(*)

Upper Middle Income Countries & Territories

Aruba

-

298

Country

Australia

-

122,587

1.75

Sub-total

Aid

FDI

(D) (D)

Spain

-

49,413

Sweden

-

35,938

Switzerland

-

90,085

Taiwan

0.45

16,126

United Arab Emirates

0.96

4,547

-

364,084

2,785.37

1,962,212

15,622.51

2,292,857

13,086

Bahrain

19.01

107

4,756

Belgium

-

52,054

Bermuda

-

108,462

0.02

-12

Dominica

43.23

7

1.71

10,243

Bulgaria

35.18

18

-

-

Canada

-

246,451

1.73

1,573 43

Denmark

20.15

81

5.99

3,090

-

5,753

-

25

0.23

109

Estonia

5.80

22

Grenada

-

7

Finland

-

2,592

Lebanon

49.32

247

France

-

65,933

-

(D)

Germany

-

99,253

Malaysia

2.42

12,450

Gibraltar

-

2,889

Mauritius

1.03

692

0.57

2,073

-

-

68.28

84,699

-

-

Iceland

-

(D)

Ireland

16.83

83,615

2,495.33

9,964

Gabon

Libya

Mayotte Mexico Montserrat

Greece Greenland Hungary

-

(*)

4.80

4,014

Nauru

-

1

Oman

15.40

819

Israel Italy

-

28,936

Japan

-

91,769

Korea, Republic of

-

22,280

Kuwait

0.63

600

Latvia

7.38

36

-

(D)

Palau

-

(D)

10.42

5,728

0.10

(D)

227.59

3,818

St. Helena

-

-

St. Kitts-Nevis

-

(D)

Liechtenstein

St. Lucia

-

117

Lithuania

St. Vincent & Gren

-

(D)

Luxembourg

Panama Seychelles South Africa

6.27

69

-

82,588

0.23

3,848

Malta

0.76

95

18.59

2,088

Netherlands

-

215,715

Turks & Caicos Islands

-

-

New Zealand

-

5,721

Uruguay

-

613

Norway

-

10,280

Trinidad & Tobago Turkey

10,064

1.44

-

16.15

84.33

5.33

1.63

Croatia

Russia

Slovenia

Barbados

Czech Republic

1,021

Slovakia

Argentina

Cyprus

37.36

26,130

Bahamas

Costa Rica

Romania

17,405

Austria

Cook Islands

5,080

4,346

-5

Chile

0.91

60,417

17

Botswana

Qatar

0.14

-

Brunei

3,033

Singapore

-

95

7,190

0.59

1.58

Antigua & Barbuda

2.33

31.84

Portugal

Saudi Arabia

Anguilla

Belize

Poland

United Kingdom Sub-total TOTAL

APPENDIX

(*) A non– zero value between -$500,000 and $500, 000 (D) Suppressed to avoid the disclosure of data of individual companies.

Sources: U.S. Department of State, Congressional Budget Justification for Foreign Operations: Fiscal Year 2008. U.S. Department of Commerce, Bureau of Economic Analysis.

89

NOTES

Notes on Tables and Figures

In many cases, this report uses the OECD’s Development Assistance Committee (DAC) data on U.S. foreign assistance rather than data from the U.S. government. This was done to facilitate comparisons between the U.S. and other international aid donors, many of whom have also prepared reports on their contributions to the Millennium Development Goals. The report focuses on the years 2000 to 2005 for the same reason, and because 2006 data for many MDG indicators was unavailable. The DAC, a forum of major bilateral donors, has developed common definitions and methodologies for the reporting of official development assistance (ODA) and is regarded as the authoritative source for comparing donor data. However, DAC data on foreign aid can differ significantly from that of the U.S. government. This is because the DAC’s measure of ODA: (1) does not include military aid; (2) represents net disbursements (similar to outlays) rather than appropriations; (3) excludes aid to higher income countries such as Israel, a major recipient of U.S. aid; (4) includes some money not counted in U.S. Foreign Operations appropriations; and (5) is reported on a calendar year (versus fiscal year) basis.

Official Development Assistance (ODA) The OECD’s Development Assistance Committee defines ODA as those flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions that are:

Provided by official agencies, including state and local governments, or by their executive agencies; and



Each transaction of which: -Is administered with the promotion of the economic development and welfare of developing countries as its main objective; and -Is concessional in character and conveys a grant element of at least 25 percent (calculated at a discount of 10 percent)

Source: Development Assistance Committee, DAC Statistical Reporting Directives, April 2007, 12.

Table 3. U.S. Spending on Goal 2 As defined in the OECD’s Creditor Reporting System (CRS), basic education includes: (1) primary education; (2) basic life skills for youth and adults, including literacy and numeracy training; and (3) early childhood education. U.S. aid for basic education may actually be somewhat higher than that reported in this table, because some basic education spending may be included in the “education, level unspecified” category reported to the CRS. In addition, the aid amounts reported by the CRS and used in this table only include sector-allocable bilateral ODA, or aid which is susceptible to allocation by sector (e.g. education, health, water, energy, agriculture, trade, etc.).

Table 4. U.S. Spending on Goals 4 & 5 The figures in this table represent USAID allocations to the Child Survival and Maternal Health (CS/MH) and Family Planning and Reproductive Health sub-accounts under the Child Survival and Health Programs (CSH) Fund. Congress established this fund in 1997 to help lower maternal and child mortality rates.

Table 7. U.S. Progress on Official Development Assistance Indicators The percentage of U.S. ODA to landlocked developing countries (LLDCs) and small island developing states (SIDS) was calculated based on the list of LLDCs and SIDS available on the website of the UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (September 13, 2007). The SIDS figures only include aid to SIDS that are UN members.

Figure 5. U.S. Aid to Multilaterals as a Percentage of Total ODA Multilateral organizations include multilateral development banks (such as the World Bank and regional development banks), UN agencies, and regional groupings (e.g. certain European Union and Arab agencies). The OECD categorizes a contribution to such organizations as multilateral if it is pooled with other contributions and disbursed at the discretion of the agency.

90

Figure 6. U.S. Aid to Recipient Countries by Income Level in 2006 Countries’ income levels were derived from the List of ODA Recipients in the 2007 DAC Statistical Reporting Directives, which places countries in one of four income categories: (1) Least Developed Countries; (2) Other Low Income Countries (per capita GNI < $825 in 2004); (3) Lower Middle Income Countries and Territories (per capita GNI $826 - $3,255 in 2004); and (4) Upper Middle Income Countries and Territories (per capita GNI $3,256 - $10,065 in 2004). Any countries not on this list were classified as high income (developed) countries. Although Saudi Arabia appears in the upper middle income category on this list, it was classified as high income because it passed the high income country threshold in 2004. Kosovo was placed in the lower middle income category based on its GNI per capita, although it does not appear on the DAC list.

NOTES

The total foreign aid figure used to calculate the percentage of U.S. aid going to each income category differs from the actual total of U.S. foreign aid reported by the U.S. State Department in the FY 2008 Congressional Budget Justification. The total used includes only aid allocated to specific countries (including in the FY 2006 Supplemental), and excludes any aid channeled through regional programs. For detailed information on the data used to calculate these percentages, see Appendix D.

Figure 7. U.S. Aid in FY 2006: Top Recipients Versus Poorest Countries Foreign assistance totals were obtained from the U.S. State Department’s FY 2008 Congressional Budget Justification for Foreign Operations and include aid allocated in the FY 2006 Supplemental. Actual aid to the West Bank and Gaza is likely to have been considerably less, however, as USAID suspended most of its programs in the territories after the election of Hamas in March 2006. The poverty ranking is based on countries’ GNI per capita in 2004 as listed in the World Bank’s 2006 World Development Indicators.

Table 8. U.S. Non-official Flows to Developing Countries in 2005 Private investment includes FDI, foreign stocks and bonds, and long-term bank loans. The total for foundations does not include grants from corporate foundations, which is included under the corporations total. The figure for corporations does not include in-kind giving – only cash giving. The figure for NGOs includes giving by religious organizations defined as non-governmental organizations. The figure for religious organizations is likely to be an extremely conservative estimate, as it does not include money given by organizations belonging to certain Christian denominations or other non-Christian faiths. The total for universities and colleges is composed primarily of funding going to students from the developing world studying in the U.S.

Figures 8 & 9. U.S. FDI to Developing Countries Countries’ income levels were derived from the List of ODA Recipients in the 2007 DAC Statistical Reporting Directives, which places countries in one of four income categories: (1) Least Developed Countries; (2) Other Low Income Countries (per capita GNI < $825 in 2004); (3) Lower Middle Income Countries and Territories (per capita GNI $826 - $3,255 in 2004); and (4) Upper Middle Income Countries and Territories (per capita GNI $3,256 - $10,065 in 2004). Any countries not on this list were classified as high income (developed) countries. Although Saudi Arabia appears in the upper middle income category on this list, it was classified as high income because it passed the high-income country threshold in 2004. The percentages in these figures are based on a different total of U.S. FDI than that reported by the U.S. Department of Commerce’s Bureau of Economic Analysis. The totals differ due to the nature of the Bureau’s data. In some cases, the exact volume of U.S. FDI to recipient countries is not provided. In other cases, data has been suppressed in order to avoid disclosure of data of individual companies. An approximate total of U.S. FDI was therefore obtained by adding the amount of U.S. FDI to countries for which figures were available. For detailed information on the data used to calculate the percentages in the chart, see Appendix D.

91

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InterAction Member Organizations Academy for Educational Development Action Against Hunger USA ActionAid International USA Adventist Development and Relief Agency International (ADRA) African Medical & Research Foundation African Methodist Episcopal Service and Development Agency (AME-SADA) Africare Aga Khan Foundation USA Aid to Artisans Air Serv International American Friends Service Committee American Jewish Joint Distribution Committee American Jewish World Service American Near East Refugee Aid American Red Cross International Services (ARC) American Refugee Committee AmeriCares America’s Development Foundation (ADF) Amigos de las Américas Ananda Marga Universal Relief Team Association of Private Voluntary Organization Financial Managers Baptist World Alliance B’nai B’rith International Bread for the World Bread for the World Institute Brother’s Brother Foundation CARE Catholic Medical Mission Board Catholic Relief Services Center for Health and Gender Equity (CHANGE) Center for International Health and Cooperation (CIHC) Centre for Development and Population Activities (CEDPA) Children International Christian Children’s Fund (CCF) Christian Reformed World Relief Committee (CRWRC) Church World Service Citizens Development Corps Citizens Network for Foreign Affairs Communications Consortium Media Center

Concern America CONCERN Worldwide U.S., Inc. Congressional Hunger Center Counterpart International Direct Relief International Doctors of the World Educational Concerns for Hunger Organization Episcopal Relief & Development Ethiopian Community Development Council Equal Access Floresta Florida Association of Volunteer Action in the Caribbean and the Americas (FAVACA) Food For The Hungry Freedom From Hunger Friends of Liberia Friends of the World Food Program Gifts In Kind International Global Health Council Global Links Global Operations and Development Global Resource Services GOAL USA Goodwill Industries International Habitat for Humanity International Heart to Heart International Heartland Alliance Hebrew Immigrant Aid Society Heifer International Helen Keller International Help The Afghan Children Hesperian Foundation Holt International Children’s Services The Hunger Project INMED Partnerships for Children Institute for Sustainable Communities Institute of Cultural Affairs International Aid, Inc. International Catholic Migration Commission (ICMC) International Center for Research on Women (ICRW) International Crisis Group (ICG) International Institute of Rural Reconstruction International Medical Corps

International Orthodox Christian Charities (IOCC) International Reading Association International Relief & Development International Relief Teams International Rescue Committee (IRC) International Social Service — United States of America Branch, Inc International Youth Foundation Interplast Intervida Foundation USA Jesuit Refugee Services USA Korean American Sharing Movement Latter-day Saint Charities Life for Relief and Development Lutheran World Relief Management Sciences for Health (MSH) MAP International Medical Care Development Medical Teams International Mental Disability Rights International Mercy Corps Mercy USA for Aid and Development Minnesota International Health Volunteers Mobility International USA National Association of Social Workers National Council of Negro Women National Peace Corps Association National Wildlife Federation Near East Foundation ONE Campaign Operation USA Opportunity International Oxfam America Pact Pan American Development Foundation Partners for Development PATH Pathfinder International PCI-Media Impact Physicians for Human Rights Physicians for Peace Plan USA Population Action International Population Communication

Presbyterian Disaster Assistance and Hunger Program Project HOPE ProLiteracy Worldwide Quixote Center/Quest for Peace Refugees International Relief International RESULTS Salvation Army World Service Office Save the Children SEVA Foundation SHARE Foundation Solar Cookers International Stop Hunger Now Support Group to Democracy Trickle Up Program Unitarian Universalist Service Committee United Methodist Committee on Relief United Way International USA for UNHCR U.S. Committee for Refugees and Immigrants U.S. Committee for UNDP U.S. Fund for UNICEF Veterans for America Winrock International Women for Women International Women’s Edge Coalition Women’s Environment and Development Organization World Cocoa Foundation World Concern World Conference of Religions for Peace World Education World Emergency Relief World Hope International World Learning World Neighbors World Rehabilitation Fund World Relief World Resources Institute (WRI) World Society for the Protection of Animals World Wildlife Fund World Vision YMCA of the USA

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