Unsung Hero Resurrects US Tied Aid Reporting

Official US aid policy is to slow down emergency aid as much as possible when people are dying. Well, they probably wouldn’t put it like that, but that is the consequence of a practice known as aid tying, whereby US aid must be spent on products from US companies. For emergency food aid, this causes huge delays in food shipments as the food has to come from the American Midwest rather than from easily available sources close to the emergency site. Bloomberg.com reported in December 2008 on the six-month journey of a bag of dried peas from Nebraska to Ethiopia, while in Ethiopia a grandfather watched seven of his grandchildren starve to death, victims of a famine foreseen for months.

Everyone from aid cheerleaders to aid skeptics decries aid tying. The US was reputed to be one of the worst offenders, but we didn’t know for sure, because the US government brazenly stopped publicly reporting how much of its aid was tied back in 1996 (unlike all other rich country donors). In 1996, when the US stopped reporting complete tied aid statistics to the OECD, 28 percent of its aid was untied, while the donor country average was 71 percent.

But now for some good news. USAID has finally restarted gathering and reporting data on how much US foreign assistance is tied. As far as Aid Watch can find out, this did not reflect any change in official policy at the top. One working level USAID staffer simply took the initiative on their own to do the right thing and report aid tying (apparently there are Searchers and not only Planners at USAID). Transparency is the first step to accountability for aid. Alas, incentives for transparency are weak (as far as we can tell, Aid Watch is the first to notice the end of the 9-year hiatus in US aid tying reporting).

The USAID official responsible for this change in 2006, who preferred to remain anonymous in our blog, said that the general trend in the US is towards less tied aid across the board, citing new programs under the MCC, HIV/AIDS activities, and aid to sub-Saharan Africa which are not subject to tied aid requirements. The new statistics now show 69 percent of US aid to be untied (as of 2007), compared to an average for all OECD donors of 85 percent.

“I developed a methodology for the identification of tying status based on solicitation notices, blanket untying, and other factors,” the USAID official said in an email message. Calling for a more transparent form of reporting for all donor countries, he said that reporting from other donors is at times “not supported by actual open bidding at the prime contractor level…so I wanted to perform the identification as correctly as possible.”

Hopefully, more transparency will lead to more accountability for reaching the poor. As recently as 2003 a document on the USAID website shamelessly stated: "The principal beneficiary of America's foreign assistance programs has always been the United States. Close to 80 percent of USAID's contracts and grants go directly to American firms" (source). As the international campaign for untying aid has gathered force, such self-interest has become less acceptable (the 2003 document is no longer on the USAID web site.)

There is still a ways to go. Virtually all US food aid is still required to be produced and packaged right here in the US (according to the original text of the mammoth, much-amended and much-maligned Foreign Assistance Act of 1961—that's PL 87-195 Sec 604(c) for anyone who wants to look it up).

Going back to even more dusty and remote legislation, it is the 1936 Merchant Marine Act that requires 75 percent of US food aid to be shipped on US-flag carriers. That’s money in the pocket of the US shipping industry, a blow to fair and free markets, and a failure for aid efficiency: a 2007 report by the GAO found that a major challenge continuing to hinder the efficiency of US food aid programs was “legal requirements that result in the awarding of food aid contracts to more expensive providers and contribute to delivery delays.”

In early 2008, with global food prices on the rise, the Bush administration tried to convince Congress to allow 25 percent of US food aid to be sourced locally—to allow aid agencies to buy food closer to where people need it and get it to them more quickly, cutting out the slow, cross-continental journey of the Nebraskan dried peas. But Congress quickly voted this down.

Last June, a remarkably diluted version of the Bush proposal was finally passed, creating a pilot program to “test” the results of local and regional food aid purchases. While the Bush plan would have allocated $300 million, this program is capped at $25 million per year (about 1 percent of the US food aid budget). An article in Business Week quoted former USAID administrator and Georgetown Professor Andrew Natsios’ reaction to this bill: “We don’t need a pilot like this. It works, we know it works.”

While the political coalition that funds international aid continues to prefer US shipping and farm interests over saving poor people’s lives, today we can count one small victory for aid transparency. In order to reform destructive aid practices, we need to know what those practices are. Thanks to the efforts of one unsung USAID staffer, we are a little bit closer to that goal.