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Appropriators in the U.S. Senate and
House of Representatives have finally agreed on a U.S. budget for the remainder
of fiscal year 2014 which would keep the government running until the end of
September, and in some cases, allow funding to carry over beyond that date.
The bill — which has already passed by
a wide margin in the House on Wednesday and is expected to pass through the
Senate this week — includes a number of noteworthy reforms of international
development cooperation.
So how will these expected reforms
affect U.S. foreign aid? Here are a few things tucked into the 1,582-page
document:
The $1.1 trillion bill provides $49
billion for State and Foreign Operations discretionary spending, which is a
$4.3 billion decrease from enacted fiscal year 2013 levels —but the decrease is
mostly due to cuts in Overseas Contingency Operations, including funding for
conflict zones like Afghanistan, where the drawdown of U.S. troops is leading
to more limited engagement and expenditures.
As always there were winners and
losers, and the real impacts will take some time to shake out.
The bill sets U.S. Agency for International
Development operations funding at $1.14 billion, $215 million
less than fiscal year 2013. InterAction,
a coalition of U.S.-based NGOs, said “it is unclear how difficult this cut will
be for the agency to absorb,” since the amount of funding that will carry over
from fiscal year 2013 is still unknown.
Focus on bilateral over multilateral
Despite the cuts to USAID’s
operational budget, the massive spending bill upholds a recent trend in U.S.
foreign assistance appropriations: relatively strong support for U.S. bilateral
assistance and much more limited engagement with multilateral organizations
such as the United Nations.
The “contributions to international
organizations” spending line lost 9 percent from fiscal 2013, according to
InterAction, and UNESCO will remain without U.S. funding, which it lost after
granting full membership to the Palestinian Authority at the end of 2011.
The Millenium Challenge Corp.
is set to receive $898.2 million — a roughly five percent increase. The Peace Corps’
budget is set at $379 million, up from roughly $356 million last year. Funding
for global health, humanitarian relief and disaster programs all increased.
The GAVI Alliance,
which assists governments with immunization and health services, received a
roughly $30 million bump to record its highest-ever budget total, while the
International Disaster Assistance account gained $251 million — a 16 percent
increase over fiscal 2013 levels.
Clean energy, tax exemptions for
partners
A few policy changes included in the
bill are sure to make waves, and will soon become the buzz among the
Washington, D.C.-based aid community.
The bill paves the way for U.S. funds
to start flowing back to Egypt, by relaxing language that prohibits U.S.
assistance in the wake of coup, despite ongoing concerns that the Egyptian
government has done little to promote democratic reforms or rule-of-law.
The spending package prohibits the Overseas Private Investment Corp.
and the Export-Import
Bank from blocking overseas investments in coal power. Both agencies
help finance foreign investment deals and are involved in President
Barack Obama’s Power Africa initiative to provide greater access to electricity
in sub-Saharan Africa through increased U.S. investment.
Stripping away regulations on the
types of power deals the two agencies can finance means coal and other fossil
fuels could be a bigger piece of the Power Africa puzzle than previously
thought possible.
U.S. aid implementers operating in
Afghanistan will no doubt be happy to see the inclusion of a section describing
penalties for foreign governments who levy taxes against grantees, contractors
and subcontractors of U.S. assistance programs. The issue of supposedly
“illegal” taxation on development programs came to a
head late last year, when a number of U.S. aid partners threatened
to withdrawal from Afghanistan if its government continued to intimidate
foreign aid groups into paying taxes.
“Assistance provided by the United
States shall be exempt from taxation, or reimbursed, by the foreign government,
and the Secretary of State shall expeditiously seek to negotiate amendments to
existing bilateral agreements, as necessary, to conform with this requirement,”
says the omnibus bill. If taxes are levied against assistance implementers, a
200 percent “reimbursement” will be taken out of the country’s fiscal 2015
commitment.
Finally on food aid reform, Devex previously
reported that the omnibus deal includes $35 million to make delivery
of U.S. food assistance more flexible. A large consortium of U.S.-based NGOs,
as well as the Obama administration, and a number of lawmakers from both
parties support robust reform of U.S. food aid policies, but the effort has run
into resistance from U.S. farmers and shippers, as well as some NGOs who
support the current system of food aid “monetization.”
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