WASHINGTON, D.C. — Building on the Foreign Aid Transparency and Accountability Act, Senator Ben Cardin (D-MD) has presented a new foreign aid bill on the Senate floor. The bill, S.3210, was introduced on July 14, 2016. It proposes the adoption of a tier system to evaluate corruption in countries that receive aid from the United States.
The hope is that implementation of this new foreign aid bill, currently called the Combating Global Corruption and Ensuring Accountability Act, will help the State Department, USAID and the Millennium Challenge Corporation (MCC) better assess corruption in recipient nations.
A key objective of the Foreign Aid Transparency and Accountability Act is to reinforce public trust in foreign aid spending. This legislation focuses on defining foreign aid, calling on the president to establish spending guidelines, and making all collected data public.
The passage of this act is a massive achievement. However, there is room for improvement. The Combating Global Corruption and Ensuring Accountability Act is predicated on the idea that transparency leads to accountability. By taking detailed records of U.S. foreign aid spending and making that information public through ForeignAssistance.gov, accountability is sure to follow.
Senator Cardin’s new foreign aid bill takes accountability a step further. The goal is to ensure that U.S. foreign aid spending strategies are implemented in a way that gets funding to the programs that need it without bolstering corrupt regimes. In that sense, Senator Cardin’s approach to accountability is less conceptual and more concrete.
A four-tier system is an integral part of the Combating Global Corruption and Ensuring Accountability Act. This system would rank government corruption based on criteria presented in Section Five of the bill.
The bill outlines several standards to which governments would be held upon enactment. In order to receive aid, the governing body should have developed laws and established practices to prohibit corruption. Officials must punish any person who has violated such laws through a fair judicial process. Perpetrators are met with commensurate punishment for their crimes. The government must show evidence of making sustained anti-corruption efforts.
Nations that receive aid from the U.S. would then be ranked based on how they comply with those standards. Ranking would be determined as follows:
- Tier 1 Country: Any nation that is making strong progress in developing anti-corruption policies and doing more than the bare minimum to meet criteria.
- Tier 2 Country: A country would be classified as such if it is making a good, sustainable effort to meet the minimum standards.
- Tier 3 Country: This is a nation in which minimal efforts are being made to weed corruption out of government policy and practice.
- Tier 4 Country: A country with this ranking makes little to no effort in combating corruption.
Under the new foreign aid bill, Tier 3 and Tier 4 countries would be subject to assessment before further aid is offered. That is not to say, however, that assistance would be halted completely.
To determine the best course of action in Tier 3 and Tier 4 countries, the State Department, USAID and the MCC will carry out certain procedures. They will create a mitigation strategy to deal with corruption in a country for all programs funded by the U.S. Anti-corruption clauses will be required in all contracts, grants and agreements and would allow for termination if breached. Clawback clauses will be included in all agreements and will allow recovery of misappropriated U.S. taxpayer funds. It will be required to disclose the beneficial ownership of all subcontractors and agreement participants. Cases of misappropriation will allow for investigation.
While a more systematic approach could be a viable road toward greater accountability, Senator Cardin’s new foreign aid bill poses some problems.
According to Casey Dunning, Jonathan Karver and Charles Kenny from the Center for Global Development (CGD), the World Bank’s Worldwide Governance Indicator has similar standards concerning corruption. In a 2014 report, the researchers point out two major issues with ranking corruption as a way to determine foreign aid spending.
The first criticism is that the use of fixed standards as measures of governmental corruption could over-simplify the matter. Over-simplification could then lead to a generalization that keeps funds out of deserving hands.
Secondly, such assessments are “not strongly related to progress in development outcomes.” Government activity is not always an accurate gauge of aid efficacy.
According to Kenny, proposals set forth by the Combating Global Corruption and Ensuring Accountability Act could also face these complications. However, the bill shows great promise, Kenny states, with its emphasis on disclosing beneficial ownership.
A beneficial owner is anyone who experiences the benefits of ownership over an asset without being the legal owner. Keeping a log of beneficial owners profiting from programs funded by the U.S. will give data collectors a complete view of how funds are being spent.
Potential drawbacks aside, the fact that Senator Cardin has his sights set on foreign aid strategies that help U.S. taxpayers and people in developing nations sends an important message to policymakers. Reciprocal relationships between nations giving and receiving aid can be built on the basis of anti-corruption policy and global development.
– Madeline Distasio