131 – USAID Revisited

[00:00:00] Santiago: Hi, and welcome to the IDEMS Podcast. I am Santiago Borio, currently a collaborator with IDEMS, and I’m here with David Stern, one of the founding directors of IDEMS. Hi David.

[00:00:22] David: Hi Santiago. Nice to chat again while you’re still officially on leave. What are we discussing?

[00:00:28] Santiago: What are we discussing? You had an episode on USAID.

[00:00:36] David: Oh yes, with Kate.

[00:00:38] Santiago: Yes, you discussed with Kate the executive order, Donald Trump signed cutting off USAID, except for two countries that they’re still supporting. I, of course, edited that episode and listened to it carefully and I was at the same time surprised and not surprised by your positivity. You always, bring a silver lining to everything. You brought a positive approach or perspective as to, well, this could be the shot that the system needed.

[00:01:16] David: Okay. I want to be clear here. I was not trying to be positive about it. I was, exactly as you say, trying to say that it’s happened, now what? And, as you say, one of the things which I believe very strongly is to find that silver lining, to find how to move forward in a positive way.

I hope I said clearly that this is not something which I would in any shape or form consider as a good idea. The damage it’s done in so many contexts, and I think Kate and I did discuss this, this is unimaginable to me in many ways.

[00:01:59] Santiago: Yes, of course and I thought it was worth having this discussion because you did almost a pragmatic analysis of what’s next, as you said, trying to find the silver lining, suggesting how it could change things for the better.

I am not hugely informed on this, but from following the news, there is one case, for example where USAID had committed to support a couple of whole items in Jordan’s budget, including the whole education budget, and from one day to the next, it stopped. And it pretty much bankrupted Jordan. I don’t know the implications in terms of bankruptcy, I’m using the word bankruptcy a bit loosely, but having all the money for one item in the budget stripped out from one day to the next is devastating.

[00:03:06] David: No, agreed, and this is not an isolated case. There are many countries and places where the hole this leaves, if USAID was not playing a useful role in many countries, then in some sense this would have been rather different. But it is something which across the world, the support USAID has given to important programs at national level, and in many other ways, means that this is going to have huge impacts in specific contexts in specific ways.

So I do not want to in any way diminish the important role USAID was playing, and I hope that was clear in the previous discussion that I have a lot of respect for USAID and what it’s done in the past and what it does. And one of the key things that we discussed was the fact that this is not something which can be rebuilt afterwards in the same way. That was one of the key points. What will be rebuilt will be different.

[00:04:23] Santiago: Yes, that I think came out quite clearly in the episode. The long term impact and the U. S. has spent decades building this system where through their aid, they not just supported projects, countries, communities, but also created a sense of international cooperation and made itself a sort of soft power to be able to foster international collaboration in many ways.

[00:05:00] David: Yeah.

[00:05:01] Santiago: And that, as you said, it’s lost. Would you trust if they rebuild it, if USAID comes back, as a country, would you trust that that will possibly not happen again and start relying on USAID or whatever comes back after it?

[00:05:22] David: I think the point is that it couldn’t come back into that same trusted role within a short period of time, because it now is shown to depend on local politics. What I think is so shocking about this is that the global U. S. politics is now so tied in with the local U. S. politics.

And that’s something which for better or for worse over a long period of time, U. S. global politics has had a form of consistency which has put it in a sort of world leading position. And that position is now one which has been shaken before, but I think this is really changing that global position in a way which I think will be hard to come back from. And so that role, I believe, is one where in the years to come, this will be a defining moment.

I’m not trying to diminish the impact of this decision and how it goes against what I believe is in U. S.  interests and valuable for stability in the world. However, to repeat the point I was making with Kate, this is basically a moment in time where what comes next could be all sorts of different things. And so therefore it is a moment where how this is built from is critical.

And not just internationally, also within the U. S., what the next steps are over the next five, ten years, whatever it may be, to rebuild something new after this. There is a moment where certain things can be reimagined. And that is always a moment of opportunity. Not to say that it’s desirable to create those moments of opportunity, because the price that’s going to be paid by many is so high.

[00:07:49] Santiago: Yes, and I think you made that point quite clearly with Kate there’s no point repeating the conversation again, and I think it’s a wonderful point. My concern was the, as you said, devastation in so many places was not perhaps highlighted enough.

[00:08:08] David: And to understand that is to understand the vital role USAID has played over the years in supporting nations. I do talk about nations because a lot of their work is at that national level. It’s not all at the national level, but a lot of it is at the national level, to enable nations to develop and to grow in certain ways.

And you mentioned Jordan with I believe it was education and maybe healthcare as core infrastructure. I mean, the fact that such a program existed to enable a country to focus its resources on other things, while those core functions are supported for a period in time is so obviously a step in terms of development that highlights the role USAID has played.

I’m not saying all USAID is brilliantly spent, but I am saying it has played huge, important roles in many nations that I’m aware of, where whole parts of the local society have been built out in conjuncture with USAID supporting advances in education, in health, in so many areas.

[00:09:31] Santiago: Yes, I cannot agree more with that. And, I’m glad that we clarified that just in case the last episode on this got misinterpreted.

I wanted to also question you on another aspect that you mentioned in the episode which is UK’s equivalent, it was DFID, what happened with DFID, please correct me if I’m wrong is that rather than stopping, they cut the budget quite significantly, but they still continued to work internationally with a lower budget reevaluating what projects they would fund. And we were somewhat affected by that.

[00:10:19] David: You missed out the key point because DFID stopped, did no longer exist. But that budget was now controlled by I believe it was the Foreign Commonwealth office. And so it assumed into another function. The reason that was so significant and really had such a big impact wasn’t just the fact that this cutting of the funds did lead to projects, programs, stopping in the middle, which had very serious negative impact, but it also led to the fact that there was no longer the independence of purpose.

And this was what was so important and lost. And the Foreign Commonwealth Office is about promoting the UK’s interest aboard. And DFID had built an important culture of distinguishing itself and being seen as being more objective about its role in supporting the development of others. And that is an incredible change in perspective.

And there was a criticism, for example, in the past, and this goes back quite a long way, so I don’t know how valid it is, but there were times at which DFID had this very visible independence, whereas USAID was not as clear about its independence of the sort of purpose of state and the lines of control.

Now, I must admit I don’t know the full history within USAID of what that independence was, how much it was. But there were areas where I was aware of certain USAID funding which would have elements of the procurement chain of how you used it, which had to go back to the U. S. And, these are the sort of things where DFID would never have that, it was independent and it was then an open competition.

Now I have to confess, my knowledge of this is very limited. These are things where I have observed from very low down. And it’s something where the sentiment of that independence or not is one that was felt in projects that I was part of.

So that important change, which was for me, so devastating in the UK context of essentially removing that independence of purpose, was something which having experienced different forms in the past when I was on the ground, it really hit me hard. And so I reacted very negatively to DFID being disbanded, if you want, and that role being assumed within the Foreign Commonwealth Office.

And so that’s something where these are instances of years and years of hard work building strong institutions where it just takes a moment to undo that. You can’t, in a moment, build good institutions. Building institutions takes time, you have to build the culture, and so on. But you can in a moment destroy an institution.

So that’s what’s happened in these two contexts, in destroying DFID and destroying USAID, and these are institutions that have been, disbanded in an instant, and you can’t build the institutions in an instant, but you can destroy them in an instant. That’s what’s so…

[00:14:23] Santiago: Devastating.

[00:14:25] David: So devastating and so much an element where in no way do I ever believe that tearing down institutions is the best way to proceed. I’m much more a fan of evolution than I am of revolution. I believe that it’s a much safer way to proceed.

[00:14:47] Santiago: Yeah, I cannot agree more with that sentiment.

Now, just comparing the two changes in the U. S. and in the U. K.: my understanding is that in the U. K., the institution was stopped and that shift happened. But a lot of the projects that were happening, continued. Some of them were re evaluated and some of them lost everything. What I’m trying to say is that yes, things changed, the institution was as we said, destroyed in an instant. But the effect, perhaps, was somewhat more gradual.

[00:15:39] David: No, I don’t know the full details of this from all perspectives. And certainly, DFID, as important as it was, didn’t have the same place in national budgets that USAID does in scale. It was never at the same scale. And so it wasn’t, I believe as devastating globally. It wasn’t as big a news item.

But my experience of it is it was similarly drastic, that the particular project we were part of, which was so severely affected by this, basically from one day to the next broadly stopped, it then had a little bit of money, which then reappeared. But it was a mess. It was a real mess. From one day to the next, it did totally destroy that project.

[00:16:36] Santiago: And for us as an institution, as a business, it was one of the main sources of income, that project, if I’m not mistaken.

[00:16:43] David: It was 20 percent I believe at that time of our revenue, was roughly where we were reliant on that. But what was interesting for us is we were very fortunate in this, that in some ways, because we were so flexible and so agile, we were able to readapt. It happened at a time when other sources of funding for the work we were doing were appearing.

And so we didn’t have to suddenly fire people, or let people, our partners in Kenya or elsewhere go because of this. We were able to absorb some of the shock and then flatten it out with other opportunities that were around and that were appearing at that time. And so part of our role in general is to try and soften these blows and flatten out the experience for our partners.

[00:17:38] Santiago: But for many organisations that are doing projects or were doing projects from USAID or from DFID funding, that level of adaptation is not easy and we are fairly unique in that sense.

[00:17:54] David: It wasn’t easy for us. It’s never easy. What I should say is that we, as an organisation, are built on this idea of diversity, not just diversity in terms of internal capabilities but also in terms of the sort of work we work on in terms of where the revenue is coming in different ways.

And so that means that’s part of our long term strategy to be able to absorb these shocks. Because it’s one thing for them to happen from one funding source and it’s another for it to come from the global situation. Although that did happen recently, after COVID there was this global sort of recession and tightening on this. And we suffered from that quite a lot.

But the key thing is many organisations, once they’ve got a funder who is a good and sensible and reliable partner, then they actually often have a large proportion of their funding coming from a single donor like USAID. I know organisations who have built themselves up around USAID as an organisation that continued to fund them because they were well aligned. And this would be devastating for them, there’d be no way back.

This would be just as you mentioned for countries, but it’s also for organisations. So it’s not just that USAID as an organisation no longer exists. Many of the organisations it has helped to build up over time will probably not be able to survive this shock.

And that’s going to be a great loss as well, because those organisations that have been built up around a stable funder like USAID, they’ve often been built up to serve critical, and I want to say public services, but of course they’re not public services, they’re private services.

[00:20:02] Santiago: Yes, you made that distinction in the discussion with Kate, where these organisations are private sector organisations in the countries where they work. But there are also organisations that are part of the public sector, like in Jordan, for example, it was public sector. But from the private sector perspective, it’s devastating, not only because of the projects that will not be able to continue, it’s also the organisations that will have to shut down, the jobs that are going to be lost, the impact on local economies of having that funding coming in. The impact on local economies is also going to be huge.

[00:20:47] David: Absolutely. One of the things which I want to restate is that I’m not saying USAID got everything right, but it was a very good organisation. It was a very careful funder. It tended to identify talent and good people, and it helped them to build organisations.

And so a lot of the organisations it was supporting, these aren’t organisations that were poorly run, bad affairs. These are often high performing local institutions which have been built up, but they won’t be able to pivot. They haven’t been built up to withstand a shock like this.

So it’s not that you’re losing organisations that don’t have value. You’re losing organisations that are extremely, or were almost by definition because USAID was trusting them and was working with them, these were highly performant institutions.

[00:21:47] Santiago: Yes, indeed, and let’s be hopeful and see in what way, as you were suggesting, things re-emerge from the devastation and this shock to the system. Hopefully, as you were saying in the episode with Kate more stable, more resilient solutions might come out of this. I don’t want to end on a negative note on the devastation and so on. So let’s be hopeful about the future.

[00:22:20] David: And maybe let me reinforce one of the aspects of that because this comes back if you go one level down from the institutions and you actually look at the people, these institutions were employing highly talented people, because USAID was demanding in ways which required a certain level of talent.

You might now, if you’re an organisation looking to recruit talent, now might be a good time to recruit. Because there might be actually a sort of flooded market of people with skills that are of value. And this is something where, in general, it’s very difficult to find, in many contexts, this sort of talent, whereas right now there may be interesting people available looking for opportunities which will excite them and interest them. Be this private foundations, be this other aid organisations from other parts of the world, this might be an interesting time to recruit.

[00:23:22] Santiago: Indeed. On that note let’s leave it there and be hopeful about the future and watch this space.

[00:23:33] David: Absolutely. These are things which are way out of our control and it’s the world we live in right now. This instability is something which is becoming more visible.

[00:23:45] Santiago: Yes.

Thank you very much, David.

[00:23:48] David: Thank you.