Sequestration and its Impact on U.S. Foreign Aid


On March 1st, the financial nightmare known as “sequestration” was signed into effect by President Obama. Despite negotiations on the “fiscal cliff” being resolved in the first few hours of 2013, the real task was postponed to March. Even with an extra two months to hash out an agreement, Congress unsurprisingly failed again to compromise. The result: $85 billion worth of budget cuts across government agencies, and a devastating impact on U.S. foreign aid.

The State Department and the U.S. Agency for International Development (USAID) are facing $2.6 billion in funding reductions, with the budget for foreign assistance being slashed by $1.7 billion. According to Devex, some of the hardest-hit areas include international peacekeeping, embassy security and construction, contributions to international organizations, migration and assistance, and international narcotics control and law enforcement. Although the funding cuts from these areas make up only about 5 percent of sequestration, the effects will be noticeable across the board.

In particular, USAID is taking action to soften the blow. The organization is expected to instate a hiring freeze, meaning development job seekers will likely be turned away, and new contracts with other organizations will only be signed if they are necessary. The agency will also have to cut back on current programs, and people who depend on these services will either have to search for aid elsewhere, or go without. USAID has not yet released information on cuts to its flagship programs—Feed the Future, the Global Health Initiative, and USAID Forward—but it is likely that they will take a hit as well.

Several development civil society organizations had already taken action prior to the threat of sequestration. In January of this year, Oxfam launched an ad campaign series to demonstrate the success of U.S. foreign aid when leveraged with local capacity building led by community leaders in the developing world. The ads bear bold buzzwords that are considered everyday jargon to the D.C.-insider and apply them to developing country contexts. They are a smart and effective way of linking two different worlds to demonstrate the reality and significance of U.S. assistance abroad.

Oxfam is no stranger to the importance of U.S. support in the lives of people around the world: “Many people’s futures depend on less than 1% of the US budget that supports poverty-reducing foreign aid. These programs give the world’s poorest people the tools they need to help lift themselves out of hunger and poverty, help build a stable, inclusive global economy with new sources of prosperity and advance democracy and human rights. Strategic and effective aid investments also help make a safer world today and avert costlier interventions and humanitarian emergencies tomorrow.”

Unfortunately, with sequestration activated and further cuts possible in unpredictable economic times, there is a chance for the private sector to become a key player in the international arena. With the ever-increasing presence of multinational corporations (MNCs) and evolving standards of corporate ethics and social responsibility, business must step up to the plate and fill in the gaps that governments have left behind. The private sector can sustainably provide financial assistance and resources to keep development progress moving forward.

In spite of these austere times, the U.S. Government should remember its duty not only to the American people, but to all those who benefit from American assistance abroad. It is our international responsibility, our common humanitarian and moral obligation to do so.

8 March 2013

This post is one of a series that I contributed to The MIDCM Column, a blog written by students in the Minor in International Development and Conflict Management at the University of Maryland.


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