This is my view of where US Aid--either by the USAID or the US MCC/MCA has gone wrong:
A General Overiew of US foreign assistance:
In terms of quantity, US contributions bilaterally and multilaterally increased from $29.4 billion in 1985 to $58.3 billion in 2002. However, proportionately this has dropped from 0.35% of Gross National Income (GNI) to 0.23% of GNI respectively, much less than the affirmed target of 0.7% GNI. In recent years, the proportion has declined by 26% between 2005 and 2007 with smaller shares of funding going to the poorest African countries.
US Aid during the Clinton years:
The Bush Adminstration's Foreign Assistance:
For the War on Terror rather than development:
After 2000, the US was faced with the Millennium Declaration/Millennium Development Goals (MDGs) and the War on Terror with the latter having a larger influence on US policy and the USAID. With geopolitical interests in mind, US increases in ODA in 2002 and 2003 were mainly in response to the War on Terror, while agricultural aid fell. This trend continued in 2004-2005 with the major recipients including Iraq, Afghanistan and Egypt. Furthermore, the USAID was made to work much closer with the US State Department in 2006, signalling a permanent alignment with national interests and moving beyond development assistance. The agency thus turned its focus towards promoting democratic governance and security. This was seen in civil affairs efforts in Kenya, where the ultimate aim was to allow US troops into the country for anti-terror efforts. Development aid became controversially linked to extremism as seen in Kenya; however its activities were largely unsuccessful. The USAID has turned into a "quasi-security" agency which blurred its poverty efforts despite its claim of success. In Iraq and Afghanistan, aid was more through other means such as the Economic Support Fund, aid which was not counted as ODA and saw little use in poverty reduction efforts. This showed that US aid has altered in aid provisioning, but it was not orientated towards the first MDG (halving poverty by 2015).
The US still could be said to have appropriated aid towards poverty reduction with the introduction of the Millennium Challenge Corportation (MCC) and its fund the Millennium Challenge Account (MCA) in 2004. The MCA has set down a range of criteria for developing countries such as corruption control, investment in the training of people and targets for inflation and trade for them to qualify for foreign assistance. The MCC seems to have stopped the falling US ODA; however it was not without problems. First, the MCC was created under the 2002 National Security Strategy (NSS) of the United States which saw a linkage between poverty and placed development into the framework of US international policy. This framing of developing was akin to the USAID's posture in the post September 11 environment.
Second, the MCC was plagued with a lack of appropriation of funds held back by US political actors. Although fifteen countries have signed Compact agreements, the funding disbursed was only $150 million by 2007 and the US House of Representatives appropriated $2 billion short of the requested $5 billion. Furthermore, the MCC was in any case unable to assist "failed states" such as Afghanistan as it did not meet the organisation's criteria and the raising of the GDP eligibility of countries excluded many low income countries from the MCC funds. More importantly, this new organisation was more an institution for the promotion of US democracy and bringing states into the free market system, especially "excluded" states. It was, in the final analysis, another institution to foster US and not actual development interests.
Neo Liberalism embbeded within US foreign assistance
The above institutions again held on to neo-liberal ideas which were part of an effort to align countries with the US economic empire. As noted, nearly 70% of US ODA was tied and must be channelled by US flagged planes and ships. These conditions include that of economic growth and trade. USAID was given a boost after the September 11 attacks where US security was justified as also having a liberalised economic system "and democratic capitalism as the preferred model of governance". The USAID perceived that states not in the globalised system could face conflict and fall into the classification of "anti globalisation". The foreign assistance framework was thus built around neo-liberal themes and further influenced by the security concerns. The framework also advanced the idea of the state as the main social controller to safeguard against anti-neoliberal resistance. The defining of globalisation and aid in this manner ultimately reduced the effective use of aid and created an unequal community in peripheral states. This was similar in the case of the MCC and MCA Compacts. As with the PRSPs, Compacts were supposed to include consultations with civil society; however the main "universal" economic indicators layout by the MCC were to be followed. The sources of the indicators were US neo-conservative institutions holding on to an American or "Washington Consensus" view that there is no negative impact from these conditions. Rather the MCA has been a punishment tool that withholds aid unless countries embrace "neo-liberal globalisation" and become part of the American order.
US aid has been large in volumes, but small in its efforts to fight global poverty. While other countries such as the United Kingdom and the Nordic states place poverty reduction as a key part of their foreign policy goals, the US has such aid as a cover for its own means. In the present economic crisis, the possibility of even more cutbacks in aid will be likely, despite the Obama Adminstration's promise of meeting the first MDG. US politicians have to thoroughly review and reconsider their approaches towards foreign aid if they ever want to make it effective.