Sophia Murphy, IATP

In the three years of planning for the United Nations conference on development held last month in Monterrey, Mexico, U.S. negotiators steadfastly insisted that the conference was not about more public aid. U.S. negotiators argued that aid had, at best, a mixed record, and that the benefits of international trade revenues now dwarf any conceivable level of public aid. But what was the big announcement from the Bush Administration in Monterrey? More aid.

The President initially proposed an increase of 15% over 3 years (starting in 2004) and then, after a lot of criticism that the gesture was inadequate, by a much more impressive 50%. The sums involved are quite large: from a current baseline of $10 billion a year, the Bush proposal will request an increase to $15 billion by 2006.

The aid package proposed by President Bush is clearly a step in the right direction after years of relative neglect. But the way in which the Administration will dispense the money threatens to undermine the intentions and spirit of the UN meeting.

The administration has declared it will have its own criteria for granting the funds. Criteria are, of course, essential. No one supports payments to corrupt leaders -- that is why UN agencies have set strict criteria for distributing development aid. The U.S. puts considerable time and energy into the multilateral process that defines international standards for aid in the UN system. Why turn around and ignore that work to set up another set of standards? It is time for the U.S. to show that it wants to stand with the world community. We need to end this Lone Ranger approach and support the United Nations as the legitimate forum for channelling support for development.

The administration’s insistence on open markets as a pre-condition for receiving assistance also stands out as problematic. There are two issues: first, the administration has failed to build domestic support for opening its own markets (see the current farm bill or Bush’s latest decision on steel tariffs), making such conditionalities very attractive to US-based exporting firms, but of little use to the developing countries seeking to increase their exports. Second, the countries that have been able to use exports as a tool for development have done so in systems that manage trade liberalization (see Taiwan, South Korea, Hong Kong) rather than introduce it across the board. Such nuances are not part of the current multilateral trade negotiations, and are not encouraged by US policy (although it is an essential part of the practice at home).

The history of US overseas development assistance is at best patchy. Too often money has been tied to political objectives that ignore human rights and fail to meet basic human needs -- objectives that should guide all aid disbursement. Any government, acting alone, faces real political pressures that distort its aid program despite clearly articulated and well-meaning objectives. Perhaps as important are problems of perception. A superpower, acting alone, will always be accused of self-interest no matter how rigorously it tries to adhere to transparent criteria.

Equally troublesome was the Bush Administration’s dismissal of a number of creative solutions that sought to tackle the really big problems that undermine resource flows for development. For example, proposals to cancel at least some of the debt that cripples poor countries -- an idea supported by countless governments, non-governmental organizations, and celebrities like Bono from U2. Or the idea from the High-Level Panel, which included former Mexican President Ernesto Zedillo and former US Secretary of the Treasury Robert Rubin, to create a scheme to manage commodity price risk in developing countries.

The UN Conference in Monterrey was a truly historical event. High-level panels of experts provoked debate, engaged with governments and made proposals; working groups brought together staff from the World Bank, IMF, World Trade Organization with the UN; and business and non-profit organizations were included in almost every step of the preparations and discussions.

This approach of global cooperation is the type the U.S. should be supporting, not undermining. Perhaps Congress, who after all still has to approve the Bush proposal, can reintroduce a sense of collective action and purpose to the administration’s plan by insisting that at least a proportion of the money be spent on UN selected initiatives. That helps us overcome parochial politics here at home. And we can add value to our $10 billion increase in aid if other countries are supporting the same development projects. When we go it alone, it looks too much like we’re trying to buy markets, rather than give aid.

Sophia Murphy is the Director of Trade Programs at the Minneapolis-based Institute for Agriculture and Trade Policy. She spoke at a UN roundtable discussion on trade at the Monterrey meeting.