Strategic Foreign Assistance Transitions

June 25, 2012

Justifying traditional U.S. assistance to middle-income countries is an increasingly difficult proposition, and refocusing limited U.S. government development resources away from middle-income countries offers an efficient way to identify savings in the foreign assistance budget. This is not the first time that the U.S. government has faced such questions, and it can draw upon past transitions—not all successful—for a variety of valuable lessons for repurposing the United States’ relationship with middle-income countries.

This report begins with a brief introductory chapter on the main issues and themes. Chapter 2 considers the experiences of South Korea, Lithuania, Costa Rica, Portugal, and Tunisia as case studies of countries with relatively successful U.S. assistance transitions. Chapter 3 examines Brazil, India, Russia, and Panama, four middle-income countries with which the United States can shift its assistance relationship toward a focus on bilateral trade and cooperation interests. Chapter 4 offers nine specific recommendations for shifting the United States’ relationships with middle-income countries from assistance to true partnerships. Chapter 5 concludes.

This report and its recommendations are the product of extensive conversations with members of the development and diplomatic communities in the United States and in Brazil, India, Russia, and Panama. More than 200 individuals were consulted through working group discussions, personal meetings, and telephone interviews, all on a not-for-attribution basis. Apart from a few development implementers, no one suggested that the United States should maintain the status quo with respect to its assistance programs in these countries. The overwhelming consensus was that the United States is using inadequate instruments in a changing context, and that it should broaden its bilateral relationships with middle-income countries to reflect mutual interests. These areas of interest are numerous, but in every case include cooperation on strengthening civil society, science and technology, “triangular” cooperation, people-to-people exchanges, and expanded trade. This set of transitions does not imply a larger budget funded by taxpayer money because the vast majority of new bilateral initiatives would not be inherently governmental functions and could be entrusted to nongovernmental entities.