Cash-strapped USAID to focus on skill transferring

Cash-strapped USAID to focus on skill transferring

WASHINGTON (AFP): The U.S. Agency for International Development (AID), reeling from budget cuts, is shifting its focus from major spending on infrastructure to transferring skills and knowledge to developing countries.

AID Administrator Brian Atwood, just back from Japan, Indonesia, and the Philippines, also hopes to step up cooperation with Tokyo in stimulating private-sector investment as a substitute for bilateral or multilateral loans.

Japan and the United States "have now some 200 projects where we're working together around the world," he told reporters here, noting that officials from both countries meet to review these projects twice a year.

Collaborative projects include environmental protection in Indonesia, preservation of Pacific coral reefs, polio vaccinations in Asia and Africa, and population-control and anti- AIDS programs in Indonesia and the Philippines.

But Japanese authorities now estimate the need for infrastructure development in Asia at US$1.6 trillion, mainly power plants, telecommunications, roads, and urban renewal projects.

Aid officials in both capitals know that such large-scale needs exceed available grants and loans, so they plan to write a "concept paper" on how to facilitate private-sector investment in this area.

U.S. and Japanese aid officials will likely discuss these ideas at an annual meeting on common aid projects in November.

After more than a year of congressional threats to dissolve the 35-year-old American aid agency or merge it with the rest of the foreign affairs bureaucracy, Atwood voiced confidence that "AID is here to stay."

The Republican-run Congress, he said, seems at last to recognize that unlimited budget-cutting may not be such a good idea after all.

Focus

But with nearly a quarter of its funding cut this year, AID officials plan to focus now on transferring skills and foreign- aid expertise, in which the United States has a relative advantage, and rely more heavily on non-governmental groups to execute development projects -- and on Japan to help finance them.

That means fewer U.S.-funded airports and seaports and more sharing of management, marketing, and technical expertise -- what one U.S. official described as aid "software" -- with aid recipients.

"During the 1960s, when AID has a lot of money, we did a lot of infrastructure work," Atwood said. But with only about $1.7 billion for aid recipients worldwide this year, the agency now provides more technical assistance in areas such as population, health, economic growth, and democracy.

Aid officials in and out of government say America's growing stinginess with foreign assistance has had a chilling effect around the world, since other countries tend to follow Washington's lead.

Nor can Japan, coping with economic problems of its own, be expected to continue raising its foreign aid spending indefinitely: Tokyo has recently come under domestic pressure to curb foreign aid, the highest in the world at $14.7 billion last year.

The United States has meanwhile slipped into fourth place behind Japan, France, and Germany, in terms of total foreign aid, the Paris-based Organization for Economic Cooperation and Development reported in June.

And among donors, Washington gives the least amount of aid as a percentage of gross domestic product. "These are tough times," Atwood said, citing continued budget-cutting layoffs and demotions.

While U.S. financial backing for large-scale infrastructure projects will be far scarcer in the future, officials cite the growing economies -- and surging U.S. imports -- of Indonesia and the Philippines as evidence that targeted development aid is a worthy investment.

Under its $432 million in aid for Asia, USAID planned to give $157.5 million to India this year, $75.2 million to Bangladesh, $63 million to the Philippines, and $48 million to Indonesia.