Thursday, January 20, 2011

US AID proposes cuts, but asks Congress not to cut any more

One political tussle in the US will have major implications for international development aid. President Obama has made development aid a big part of his strategy in foreign policy. Republicans recently voted into the House and Senate want to make big budget cuts and are eying development aid as a target.

In an interview with Reuters, head of US AID Rajiv Shah says he has made changes to the organization that will save taxpayers $65 million dollars. He is presenting the changes to Republicans in order to keep going with future plans to expand. Writer Andrew Quinn interviewed Shah on the changes and the hard sell he has to make to Congress.

"We're making those hard decisions and tough changes," Shah told Reuters in an interview, saying skeptics on Capitol Hill must be persuaded that overseas aid is an essential part of U.S. security strategy for coming decades.

"We need our partners on the Hill in both parties to recognize that, done well, development saves lives and improves economic opportunities, and needs to be elevated and not cut."

Republicans took control of the U.S. House of Representatives in November and some, including the new chair of the House Foreign Affairs Committee Ileana Ros-Lehtinen, have promised to take a tough new look at President Barack Obama's plan to nearly double the U.S. aid budget to $52 billion by 2015.

By contrast, the Pentagon's budget request for fiscal 2011 was more than $700 billion -- although U.S. military planners are also looking at spending cuts in the future as U.S. political leaders grapple with the ballooning deficits.

The administration has sought $52.8 billion to cover both State Department and foreign assistance in the 2011 fiscal year, about two-thirds of which is earmarked for aid spending, chiefly in Iraq, Afghanistan and Pakistan.

Shah, in a speech on Wednesday, outlined steps USAID is taking to improve its balance sheet, including moving costly senior jobs from places such as Paris and Tokyo, reducing its real estate portfolio and doing more work with in-house experts rather than expensive contractors.

Administrative changes alone can save about $65 million in operating expenses, Shah said, adding that the "leaner, meaner" aid agency he is trying to create will ultimately be a more effective tool of U.S. foreign policy.

USAID is accelerating plans to "graduate" countries from U.S. assistance packages. The first of these, Montenegro, can expect to see U.S. development support end in 2012 and at least six others are also likely to see U.S. money dry up, he said.

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