Building Markets

Back to all blogs
0

Banditry in the US Congress? USAID vs. Contractors.

In the coming days the US Congressional Committee on Oversight and Reform is going to hear arguments for and against USAID efforts to reform how it distributes US taxpayers’ international aid dollars.

Its a twisted case of Robin Hood in reverse: whereby the rich are looking to nick the goodies from the poor, to give back to rich. It would be a great comic opera if it were not so serious.

US aid contractors (sometimes referred to as the Beltway Bandits) under the guise of the political action group named the “Coalition of International Development Companies” have hired Washington DC insider lobbyist Podesta Group to kickstart a process that sees USAID reforms killed.

Why the rumpus?

The “bandits” have made billions of dollars off the US taxpayer in the last decade, and frankly not much value has been achieved. Easy dosh in Iraq is drying up, and to be cynical – the Kabul party is coming to an end. Most importantly, USAID Administrator Rajiv Shah has announced a change in policy.  Simply put he recently stated “This agency is no longer satisfied with writing big checks to big contractors and calling it development“.

I should know. In 2006 I was once offered 25k/month by a contractor to educate Afghans about democracy. I did not speak any relevant language. I had no relevant Afghan experience. And all this after a 30 min telephone interview, in which I was told that they had no idea who a national partner would be.  I said, “no thanks.” I know a few people who said yes, and were either killed or badly hurt for their troubles.

What is USAID’s reform all about? It wants to do three things to get better impact:

1. It wants to provide direct assistance to governments in the developing world;

2. It wants to provide more assistance directly to local civil society in the developing world (NGOs, media, watchdogs); and

3. It wants to procure more goods and services from local business in the developing world, cutting costs, driving wealth into host communities and creating jobs.

All of these actions will either partially or largely cut out the middle men inside the Beltway. All of these ideas could see some well off people in the “bandit” community getting less of the gravy train. They are not happy.
What is the “bandit’s” response?
  1. They argue that they have achieved great things. (Well not really. No one in the aid community has achieved great things–especially those that have cost the most. They have been building capacity for decades but they argue we still need to keep paying for their stellar capacity building activities – decades in – ad infinitum?)
  2. They argue that they, and they alone, can disburse large amounts of US taxpayer dollars in a transparent and accountable manner. (Are they saying that poor black and brown people have a monopoly on waste, graft, corruption and fraud? The”bandits” themselves are just as culpable in this regard–costing the US taxpayer a bomb. See here, here, here, here, and here, for just a few samples.)
What do other people think? The United States Department of Defence, believing in bypassing middle men and costly foreign contractors, even went so far as to institute an Afghan First policy. CIA boss retired General David Petraeus was an early and strong proponent of using aid and operational funds to build local economies using local contractors. The Australians are going to use government systems, and local businesses and NGOs after a major review of aid policy. I myself was in Dili, Timor-Leste when news came out that aid workers, working for Australian versions of the “bandits“, were in many cases pocketing 200-700k / per annum tax free for providing “advice”.  They were making more than the Australian Prime Minister, and not getting results.  The Timorese called them on it, and its been reversed. In fact pretty much every rich and “civilised” country in the world is into the new approach, as seen by the OECD effort to reform the delivery of aid. Meanwhile the “bandits” pine away claiming that only they can deliver aid properly.  They claim that they have a marvelous record. Well if its is so marvelous why it is that the governments of 18 fragile states around the world, representing 350 million people are calling – if not shouting – for reforms in line with Rajiv Shah and USAID’s vision of the future.  The G7+ founded in Dili, Timor-Leste a few years ago has grown from a small idea into a big movement, right under the unwitting nose of the “bandits“.  They consist of the governments of Afghanistan, Burundi, Central African Republic, Chad, Côte d’Ivoire, The Democratic Republic of the Congo, Guinea Bissau, Guinea, Haiti, Liberia, Nepal, Papua New Guinea, Sierra Leone, The Solomon Islands, Somalia, South Sudan, Timor-Leste (Chair), and Togo. Are these governments perfect? No. Are they clean as a whistle? No. But then again was public procurement in the US 100 years ago a spotless affair? No.

The governments and people of these countries ask to be allowed to build capacity by “doing” rather than “listening” to expensive and questionable advice from westerners making 15-30k USD/month.

We need to:

1. fund local governments so they can do things,

2. fund local civil society so they can hold their governments accountable,

3. and use local business to implement projects so they they can create wealth, jobs and build private sector capacity.  By doing so the West will actually create new markets, and new opportunities.

  • Mr. Issa - please ask the Marines at Camp Pendleton.

However California Congressman, Darrell Issa who’s Chair of the Oversight and Government Reform Committee of the House does not agree and wants us to keep using pricey advisers and foreign contractors. He is threatening to personally stop USAID reform. He is a California Republican – ok he hates Aid.  I do too, its a totally weird and dysfunctional industry and it needs reform not stasis.

But does he know better than California based oil and gas major, CHEVRON?

Chevron works almost everywhere in the world, it dwarfs USAID in size, levels of risk, and reward.  It has in the past two years launched a global effort to try and use more local businesses in its overseas projects.  Chevron says “Global companies should support local companies“.  US mining company Newmont thinks the same.  As does another major US petro giant ExxonMobil. Why?  Its cost effective, creates stability and markets, and it minimises political risk.  I suppose Mr. Issa is into higher costs, keeping markets closed to US trade through lack of development, and ongoing instability.

Perhaps Mr. Issa who tweets here, knows better, or maybe its the “bandits” that have his ear who know better?

Finally, and most importantly Mr. Issa should go to US Marine base Camp Pendleton. Its in his own congressional district in southern California – and ask them. I would wager, that after a decade of reconstruction efforts in Iraq and Afghanistan, and countless other foreign tours, they would agree with me, and not the “bandits”.

Tags ,

Comments are closed.


Rss Feed Tweeter button Facebook button Youtube button