PRESS CONFERENCE BY UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT

"Foreign Aid in the National Interest:  Promoting Freedom, Security and Opportunity", a new report issued by the United States Agency for International Development (USAID), laid out the empirical data for the challenges the United States would be facing over the next 10 years and the adjustments the Agency needed to make to meet those challenges in the development field, USAID Administrator Andrew S. Natsios said this morning.

Joining Mr. Natsios at today’s press conference were Carol Adelman, Susan Raymond and Larry Diamond, who were among the scholars and development professionals who wrote the report.

President George Bush, noted Mr. Natsios, was committed to improving people's lives and reducing poverty in the developing world.  He had backed that up with $5 billion in new funds proposed in the President's Millennium Challenge Account -– the largest increase in foreign assistance in 40 years.  As President Bush stated in the recently released National Security Strategy, "the United States will deliver greater development assistance through the Millennium Challenge Account to nations that govern justly, invest in their people and encourage economic freedom".

The report noted considerable progress in the developing world over the past 50 years, documenting progress such as reducing infant mortality, increasing literacy, increasing life expectancy and reducing hunger.  For example, the number of deaths among children under five was half of what it was in developing countries 20 years ago. 

At the same time, he continued, the HIV/AIDS pandemic was having disastrous consequences in Africa and increasing in India, China and Russia.  Many other countries were not making progress because they had chosen corrupt leadership and had poorly executed political and economic decisions.  Some were also mired in armed conflict.

Without equitable, long-term economic growth, development was ultimately not sustainable, he said.  When economic growth did take place, many other development problems were addressed without any international programmes or donor assistance.  Governments must generate tax revenues to support public services. 

While one of the best investments was in improved agricultural productivity, almost all of the international banks, bilateral donor assistance and institutions had disinvested dramatically in agriculture in the last 15 years.  With the exception of countries such as Singapore and Mauritius, no country had risen to developed country status without first investing heavily in agriculture.  That was an area in which the Agency was reinvesting in heavily.

Another critical factor was trade, he continued.  The report noted that globalization had been a boon for countries willing and able to integrate with global markets, particularly developing countries that had adjusted prevailing conditions and mindsets.  Economic freedom was also important.  Unless developing countries established transparent regulations, predictable laws, honest judicial

systems and low trade barriers, the funds they needed for development would go elsewhere.

Also important was microeconomic policy, an area not focused on sufficiently by any of the donor governments or banks, he said.  While the international community had worked on macroeconomic policy reasonable well, it was not sufficient.  Without an improvement in the microeconomic environment, economies would not grow.

There were several principles that would play a central role in the Agency's work in the next decade, he added.  The first were partnerships between the public and private sector, which had been dubbed the "global development alliance".  Secondly, there was no substitute for political leadership in a developing country.  Also, investing in people through education and health programmes created a long-term foundation for political, economic and social development.

Ms. Adelman said that the notion that the United States was "stingy" with its foreign aid was misleading.  Official United States government aid in 2000 was $9.9 billion, the number by which Americans were judged.  It was true that the United States was last in terms of official government aid as a per cent of gross national product (GNP).  However, there was a large amount that was not represented in that figure, including aid to countries such as those of the former Soviet Union and Israel ($12.7 billion), as well as private assistance from foundations, civil groups and individuals ($33.6 billion).

She added that United States universities and colleges gave private scholarships to foreign students in the amount of $1.3 billion, which was the equivalent of Norway's entire official development assistance (ODA).  Also, the amount given by religious groups ($3.4 billion) was the same as the foreign aid of the Netherlands.  In other words, official government assistance was only part of total foreign aid.

Ms. Raymond's role had been to examine what the world would look like in

15 years, what that future said about the content of the foreign assistance portfolio and how that portfolio was pursued in the area of health.  The future would see greater health problem complexity in the developing world, she said, which would generate a need for greater health programme flexibility.

As for trends, she said that the developing world was splitting in two.  Among the least developed countries, only a few nations would climb out of the historic problems in health care that were denominated in communicable diseases and infant mortality.  For the rest, the future was much different.  Fertility was declining, infant and child mortality had plunged, and life expectancy would continue to increase.

Consequently, new disease patterns were emerging, she said.  Non-communicable diseases, such as diabetes, were displacing communicable diseases as the most important causes of death.  Even now, that was true everywhere except in Africa.  Also, younger age onset of disease and longer life expectancy meant rising disability.

The implications of those trends for health portfolios in foreign assistance were several, she continued.  There would no longer be a simple age or gender litmus test for programmes.  The targets would change and become more diverse. 

Solutions would be equally complex.  There was, unfortunately, no vaccine for ageing.

The combination of an older population and more sedentary lifestyles, she added, made chronic disease-prevention complex yet essential because costs would rise rapidly.  Chronic disease cost more to deal with than immunizations and put increased pressure on pension and social security systems.  Therefore, among other things, assistance programmes would need to reflect the increased diversity of the health-care problem.

On democracy and governance, Mr. Diamond said that for the past several decades there had been an assumption that countries were poor because they lacked resources and infrastructures.  While no one denied the importance of such inputs, they were not enough, and in isolation they could not deliver development.  No amount of resources or infrastructure could compensate for or survive bad governance.  Corrupt and unaccountable governance was the fundamental bane of development.

The components of good governance, he continued, included the capacity of the State to function in the public good, the commitment of public officials to use public resources to advance public welfare rather than their own personal interests, transparency and accountability, the rule of law and public participation.

There was a profound link documented in the report between democracy and good governance.  Among other things, democracy required leaders to explain and justify their decisions and allowed the public to participate more broadly and more frequently to identify priorities and correct mistakes.  The goal then was to generate stable and effective democratic governance.

The report, he added, offered 10 principles for generating the political will to improve governance.  Among them was that overall levels of foreign assistance must be linked more clearly to a country's development performance and its will to reform.  Also, demonstrated good performance should be tangibly rewarded with aid, as well as trade liberalization and debt relief.

Responding to questions, Mr. Natsios said that the focus of the report    had suggested that actual performance be rewarded as opposed to placing conditionalities, in which aid was usually given on the promise that certain things would be carried out in the future.  There were several accounts through which aid was disbursed, and each one had its own factors on which the amount of aid given, and to whom, was based.

Asked about reports that USAID was distributing fewer condoms, one of the most valuable preventative and cost-effective health measures, Mr. Natsios noted that while he had actually ordered the Agency to double condom distribution, that had not happened.  There would be an increase this year, but probably not by much.  The empirical evidence showed that the most powerful factor in lower population growth rates was the education of girls.

Also, the Agency's population programmes had not been reduced, contrary to media reports.  The largest family-planning programmes in the world were run bilaterally by the United States Government through the Agency.