Let Them Eat Subsidies

The Obama administration could revolutionize aid and save billions -- if only Congress would stand up to the farm lobby.

With massive, senseless cuts to the U.S federal budget looming, it is the rare kind of deal that should unite Republicans and Democrats. After all, with fairly minor changes to how we deliver food assistance abroad, we could achieve hundreds of millions of dollars of efficiencies (cue applause from budget hawks), while actually saving far more lives abroad (cue applause from humanitarians.) You would think this was a no-brainer, but then you wouldn't know Washington very well. A fleet of well-connected lobbyists linked to large agribusiness and the shipping industry is already scrambling to strangle sensible food aid reforms before they even see the full light of day.

The kerfuffle began several weeks ago, as rumors spread that the Obama administration planned a major restructuring to the $1.45 billion that falls under Title II of its Food for Peace program, budgeted through the U.S. Department of Agriculture, but implemented through the U.S. Agency for International Development. The Food for Peace program is used to support both emergency food aid during humanitarian crises and to serve as a source of funding for NGOs to carry out development work. For example, Food for Peace programs in Yemen last year helped target more than 550,000 people displaced by internal unrest, while trying to blunt a growing food crisis exacerbated by rising fuel prices that have undercut agricultural production.

For all its good deeds, the Food for Peace program has also long supported some of the most obviously ridiculous practices in the entire international development portfolio. Like most ridiculous practices in Washington, these customs came with names that made them either difficult to decipher or oppose, such as ‘cargo preference' and ‘monetization.'

To understand both concepts, it is important to underscore the degree to which America's food aid programs, by far the largest in the world, have also served as corporate welfare over the years. Let's start with the concept of ‘cargo preference.' In the mid-1950s, Congress legislated that 75 percent of all U.S. food aid be shipped aboard U.S. vessels. The law was originally passed based on a justification that these cargo ships and their crews could help serve as a reserve for the U.S. Navy in times of war. Such a military justification is now completely anachronistic, and indeed many of these ‘U.S. flagged vessels' are actually foreign-owned. All that cargo preference restrictions now achieve is to make U.S. food aid slower and more expensive to deliver, while giving these shipping firms a huge entitlement. The General Accounting Office has suggested that the law annually adds some $200 million to the budget in unnecessary transportation costs, and USAID has estimated that up to half of its spending on food aid goes to transportation costs.

Not surprisingly, both Republicans and Democrats have long believed that simply buying food for humanitarian crises closer to where it is needed makes a great deal of sense. Let's say there is a crisis in South Sudan and the United States wants to deliver food assistance. Currently, the U.S. government buys excess crops in Kansas or Iowa. These crops are then transported overland, let's say to New Orleans. The food is then put on a U.S.-flagged ship that may or not actually be owned by an American company. This ship then makes the arduous journey around the tip of South Africa or through the Suez, and then offloads, probably in Tanzania. The food is then shipped overland through Kenya and into South Sudan where it is distributed.

Now let's consider what almost every other country and multilateral organization on Earth does when it needs to deliver food aid to South Sudan. It finds a local or regional market where appropriate food is available closest to South Sudan. It purchases the food directly in Kenya, Tanzania, or Ethiopia, and moves it with minimal transportation costs to where it is needed. It is faster, cheaper, and saves more lives. It makes sense.

Buying food closer to where it is needed is not a new idea. President George W. Bush tried in four successive budgets to direct up to one-quarter of the Food for Peace program to local and regional purchases, as did his proposed Farm Bill in 2008. Lobbyists were able to largely defeat that effort, only allowing for small-scale pilot programs to be implemented. Renewed efforts to reform these practices stalled last year as the broader Farm Bill bogged down on unrelated issues.

But for the height of foolishness, one need only to look at the current U.S. practice of ‘monetized aid.' Ostensibly designed to fund development projects, monetized aid looks more like a Rube Goldberg drawing come to hideous life. U.S. taxpayer dollars are used to purchase farm commodities, usually in the American midwest. Again, they are shipped extraordinary distances at extraordinary costs on U.S.-flagged vessels. Then, the food is given to an international NGO, the NGO sells the food on the local market, and the NGO is allowed to keep the proceeds of the food sales to use for local development projects.

As the former chief of the World Food Program Catherine Bertini and former Secretary of Agriculture Dan Glickman have noted, "monetized U.S. food aid typically generates only fifty to seventy cents of revenue on each taxpayer dollar spent." So the sale of about $400 million in food aid through the monetization effort generates only between $200-$280 million for the NGOs. The U.S. government could simply write a check for $280 million a year to these groups, save at least $120 million a year, and put a bunch of unneeded procurement specialists out of business.

So that brings us to the current imbroglio. Although details remain gauzy, the administration seems to have decided that the much of the Food for Peace program is simply broken beyond repair. (Anyone familiar with these programs or who has watched Congress try to handle the recent Farm Bill would probably reach the same conclusion.) So it appears the administration is simply trying to zero out much of the funding directed to USDA for the Food for Peace program and shift such funding directly to USAID, where it can be managed without the absurd rules governing monetization and cargo preference.

Lobbyists being lobbyists, they have reacted with mock outrage, suggesting that cutting the funding to USDA amounts to some sinister effort to slash international food assistance, when in all likelihood the administration is simply trying to introduce common-sense reforms that mean not one single less person actually receives U.S. food aid. Indeed, it is almost impossible to find anyone opposed to food aid reforms who is not richly benefitting from the current ludicrous system. The most vocal opponents of food aid reform have included the likes of ‘USA Maritime' and ‘The Alliance for Global Food Security,' and both appear to be serving as very active mouthpieces for vested interests -- like the Maersk shipping line -- that are making big dollars off of programs to help the world's poorest and hungriest.

The administration needs to get the full details of its plans for food aid in the 2014 budget on the table quickly, or all those companies who are taking both the U.S. taxpayer and a bunch of poor refugees for a ride are going to make sure it is all business as usual.

Scott Olson/Getty Images


What Is Egypt?

As America's new secretary of state arrives in Cairo, it's still not clear the United States knows what it's dealing with.

When Secretary of State John Kerry sits down with Egyptian officials during his trip to Cairo this weekend, he will no doubt drag out an old talking point: The United States and Egypt, leaders from both countries are fond of saying, enjoy a "strategic relationship."

Yet for all the talk of common interests and close alignment, few can define what this actually means. President Barack Obama has worked hard to keep relations between Washington and Cairo on track as Egypt has lurched from one political crisis to another over the last two years -- but where exactly is that track supposed to be leading?

It is not at all clear that the president knows. When Hosni Mubarak visited Washington in 2009 after a five-year absence, Obama fell back on platitudes, praising the Egyptian dictator as "a leader and a counselor and a friend to the United States." The substance of ties were almost as empty as the words: Almost three years to the day later, Obama averred that Egypt was neither an ally nor an enemy.

If Egypt is not an ally and it is not an enemy, then what is it? No one knows. To get around the question, American officials have engaged in remarkably consistent circumlocution. In late 2004, as President George W. Bush's administration was ramping up its "forward-leaning strategy of freedom in the Middle East," a group of Washington-based journalists and think tankers asked a senior American official in Cairo to describe what the United States wanted in Egypt. He replied, "We want whatever Egyptians want."

Such a statement was disingenuous -- the Egyptian government at the time clearly did not want U.S. efforts to promote democracy, even if some of its citizens welcomed it. And what if Egyptians want to break the peace treaty with Israel? Or develop close ties with Iran? But more than that, given the impossibility of determining what the Egyptian people -- clearly not a monolithic group -- really want, it was essentially meaningless.

Fast forward to 2013, and Americans are still groping when it comes to Egypt. After a trip to the Middle East -- which did not include Egypt -- Florida Sen. Marco Rubio said that it would not be Washington that defined the future of the U.S.-Egyptian relationship: At a gathering at the Washington Institute for Near East Policy on Feb. 27, he noted the strength of ties was "up to the Egyptians."

This muddle did not always characterize U.S.-Egypt relations. Ever since the early 1950s, when Amb. Jefferson Caffery was cultivating Gamal Abdel Nasser, Egypt has been a strategic prize for the United States. To cold warriors, Egypt's strategic position, the Suez Canal, and its political influence in the Arab world were valuable assets for containing the Soviet Union in the Eastern Mediterranean, and North and East Africa, and making sure the oil kept flowing from the Persian Gulf.

Caffery's efforts to woo Nasser came to naught, however, over congressional opposition to a large military aid package and Egyptian nationalist reservations about becoming a leading member of a new Western security system in the Middle East. Yet what didn't work out while President Dwight Eisenhower and Nasser were in power became reality under Richard Nixon and Anwar Sadat. Cairo had grown weary of Moscow by the early 1970s, and Sadat had come to believe that only Washington could provide the resources Egypt needed in its ceaseless quest for modernization. The U.S.-Egypt strategic relationship was born.

A bulwark against the Soviets. The end of the state of war between Egypt and Israel, as embodied by Sadat's trip to Jerusalem. A key pillar of the Western security system in the Middle East. These are concepts belonging to an era that came to an end more than two decades ago, yet continue to serve as the foundations of U.S.-Egypt relations. They were outdated even before the uprising that toppled Mubarak. Washington could always tell itself that the aging autocrat was an asset because he kept the Suez Canal open, maintained the peace with Israel, and kept the Islamists down. But following the political turmoil of the past two years and the rise of the Muslim Brotherhood, that faulty logic is even clearer -- President Mohamed Morsy, after all, hasn't moved to overturn the regional political order or challenge the peace treaty with Israel.

As the Cold War has receded from memory, American policymakers have had a hard time articulating the rationale for an increasingly outmoded relationship. They have been left sputtering about "wanting what Egyptians want," or leaving well enough alone because the relationship "worked." In a narrow sense, it does -- but toward the end of the Mubarak era, it began to seem that a "strategic relationship" was just something American and Egyptian officials said publicly while they haggled over money. The military aid went to weapons systems that the Egyptians would either never use or had a hard time mastering, and the economic aid was too little to do much good against the vast backdrop of Egypt's economic struggles.

Muddle will not serve either country well. Inside the Beltway, there is an odd disconnect about Egypt. Among one group, there are officials who understand how much has changed in Egypt -- but nevertheless talk about doing business with Egypt as if it were 2010, or 1999, or 1989. It's all about aid and access to Egypt's airspace and the Suez Canal, which are byways to places of more intrinsic importance to the United States.

Still another group of policymakers -- in this case, members of Congress -- recognize the changes in Egypt and want to penalize it for straying from American interests. As one Capitol Hill insider described this one-dimensional view, the Muslim Brothers are Islamists and Islamists are terrorists, thus Egypt should not get aid from the United States. Everyone else, meanwhile, is simply stymied by the complexity of the "new Egypt" and are just hoping the country does not collapse under the weight of its mounting economic problems and surreal politics.

The problem with defining a strategy is that Washington is not much interested in Cairo. To be sure, policymakers and analysts discuss the importance of promoting democracy in Egypt, but American policy in the region is geared toward larger goals -- ensuring the flow of oil from the region, helping to protect Israel, and making sure no single country dominates the Middle East (other than, of course, the United States).

In other words, Egypt -- whether it is a democracy or not -- is a means to some other end. Washington is interested in Egyptian stability because it is interested in Saudi security, or the Iranian challenge, or Israel's well-being.

Now, as a new secretary of state prepares for his visit to post-Mubarak Egypt, there is hope for a renewal of ties. But once again, Americans are hard-pressed to articulate the underlying rationale for strategic alignment apart from the familiar formulations about peace and stability in the Middle East. Proposals to transform the relationship to "trade not aid" have never gotten much traction, and are hardly the bases for strategic ties. Likewise, explicit threats to cut aid in return for reform have had minimal impact on the trajectory of Egyptian politics.

Perhaps clarity of purpose in U.S. policy is impossible at a moment when Egyptian politics are so unsettled. It seems that sunk costs -- a total of around $75 billion since the mid-1970s -- bureaucratic inertia, and the fact that the Egyptians need the United States right now all account for the current loveless marriage.

It may just be that strategic alignment between Egypt and the United States represented a moment that has now passed. The U.S. investment in Cairo has brought benefits to Washington -- but now the best thing for the United States is not to try to mend the old strategic ties, but start anew. Obama got it right in May 2011 when he stated that Americans must look at what has happened in the Arab world with humility, but without abdicating their values. That means, in part, recognizing that Egyptians want a relationship not necessarily of equals -- that is impossible -- but one that is more respectful of the way they define their national interests.

This formulation quite rightly makes some Americans (and Israelis) nervous. But there's good news: Whatever comes to pass, Cairo is unlikely to align with Washington's enemies. Morsy's flirtations with Iran are about showing Egyptians that there is a difference between the Mubarak era and now. It is also about signaling to the Saudis that Cairo plans to be an influential player in the region. In the same way, the Egyptians have proven tougher on Hamas than many expected, refusing the organization's request to open an office in Cairo and flooding the tunnels that run under the Egypt-Gaza frontier, which have served as a critical Hamas supply line. And needless to say, the new Egypt still has no use for Hezbollah or Syrian President Bashar al-Assad.

It is unlikely that there will be a dramatic change in Washington's approach to Cairo as a result of Kerry's visit. That is all right: Egypt is struggling with its own internal demons, and is in dire need of economic assistance. Yet when Kerry and Obama are not dealing with the Egyptian crisis of the moment, they will have accomplished much if they move U.S.-Egypt relations out from the straitjacket of outdated strategic ties to more normal relations, befitting the changes in Egypt and the region around it.

This requires that policymakers take the long view -- an alleged strength of the current administration -- and understand that a bit of distance between Washington and Cairo could be a good thing. And who knows, maybe some time apart will remind the two countries of why they got together in the first place.

Daniel Berehulak /Getty Images