Influence the New Bush Politics of Aid

Newsweek International, September 17, 2007 | Go to article overview

Influence the New Bush Politics of Aid


Byline: Roya Wolverson Tracy McNicoll Vibhuti Patel Kurt Soller Karen Springen Roya Wolverson Karen Springen

Since 9/11, Democrats and Republicans have increasingly viewed foreign aid as a "soft power" tool that can improve America's image. That's why Secretary of State Condoleezza Rice's vaunted "transformational diplomacy" initiative was supposed to be something everyone could get behind. But a crucial component, to link foreign assistance more closely to U.S. interests, is "decimating" one of the core missions of foreign aid -- to alleviate poverty -- according to Democrats and aid organizations.

The Bush administration's proposed 2008 budget guts the coffers of the U.S. Agency for International Development (which is devoted to areas like health care, education and child welfare) by 31 percent and its operations by 15 percent; meanwhile, it kicks 27 percent more money into the State Department's economic-support fund. That means America will use more dollars to make friends and to compete in the developing world with Beijing.

Important strategic U.S. allies like Uzbekistan, Libya and Pakistan -- and even wealthier ones like Israel and Egypt -- are likely to benefit. But Democrats such as Sen. Robert Menendez say the cost is too high. He says the plan would take "money, power, control and expertise away from the one agency in the U.S. government" devoted to fighting global poverty.

Critics say U.S. aid programs are already in disarray, due in part to a leadership vacuum created by the resignation of foreign-aid czar Randall Tobias due to fallout from a sex scandal. USAID has already lost more than 100 Foreign Service officers and 30 percent of the doctors in its Africa bureau since 2005. Now its child-survival program could shrink by 9 percent and its famine program by 18 percent.

The critics have a fix in mind: a new U.S. administration with a cabinet-level position to oversee all aid programs and more money for USAID. In the meantime, poverty may just have to wait.

-Roya Wolverson

Energy: France's Gazprom

Frustrated by what he recently called the "brutality" Russia's state monopoly shows toward its European natural-gas customers, Nicolas Sarkozy may have a solution; the new hookup between Franco-Belgian electric supplier Suez and publicly owned Gaz de France. The deal creates Europe's biggest gas customer, which should give it the clout to deal with bullying by suppliers like Russia's Gazprom. It also runs counter to both Europe's free-market competition policy and the industry trend toward consolidation in private hands by leaving a very substantial stake -- 35 percent -- under French state control. Some Wall Street types don't like the merger deal for that reason. Others say no matter -- in energy, bigger is better, particularly when dealing with brutal suppliers. After the deal was announced, Sarkozy promised a French crowd that his government would "mobilize every means possible and imaginable" to defend France's industrial might, its markets and its firms. "We'll do like the others: they fight, we'll fight, too!" He did not mention Russia by name. Perhaps he did not have to.

-Tracy McNicoll

Desperate Case

The men (and they are mainly men) of private equity, who buy and sell whole companies on behalf of millionaire investors, have been called many things.

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