How USAID influences PH national policy: Technical aid to advance US interests

Posted on 28 October 2016

IBON International Feature Series #1

The United States Agency for International Development (USAID) exerts a surprising amount of influence over Philippine policymaking process through technical assistance. One aim of this technical assistance has been to refocus government attention and resources on bolstering key areas of the Philippine economy. This refocusing has been done in part through the use of public-private partnerships (PPPs) for targeted infrastructure construction.

Its influence is perhaps expected, given the fact that the combined five-year operating budgets for two of its projects—COMPETE (US$22.5 million) and TRADE (US$12.8)—is already greater than the 2016 budget for the National Economic and Development Authority (NEDA), which amounts to ₱1.286 billion or US$27.7 million. These and other USAID projects are part of the Partnership for Growth (PFG), a White House initiative, through which the US and Philippine government officials jointly set development priorities for NEDA’s Midterm Philippine Development Plan. All of this implies a level of policymaking influence far beyond whatever might be conjured up by the neutral-sounding label “technical assistance.”

The USAID COMPETE team occupies institutional space as a member of the secretariat of the Technical Working Group (TWG) of the Convergence Program between the Department of Tourism (DOT) and the Department of Public Works and Highways (DPWH). From this position, it has wielded significant power to shape agendas. Among its accomplishments in 2013, for example, COMPETE highlighted the technical assistance provided to DOT and DPWH for the identification of tourism road projects. Budget revisions followed, resulting in a 37% increase in the allotment for tourism roads (from US$279 million in 2013 to US$381 million in 2014). [1]

While infrastructure needs are certainly dire, it is questionable whether tourism roads should be such a national budget and development priority if the goals include equity and sustainability. There are also implications for governance. Given that USAID’s policy framework remains explicitly tied to the US national security agenda, [2] and guided by powerful US corporate interests, [3] it is alarming that it was allowed to exert such influence in identifying and setting priorities for viable infrastructure projects and key industries. Also, the fact that PPPs figure so strongly in its prescriptions is cause for alarm since there is little clear evidence for the efficacy of PPPs in achieving positive development outcomes, and much evidence to the contrary. [4]

Both academic and institutional researchers have pointed out that the cost of PPP infrastructure projects often exceeds the costs of comparable public projects. The reasons include higher private sector borrowing costs relative those of the public sector, and incentives for governments not to reveal PPP-contingent liabilities. There have also been many reports of deteriorating service, particularly where PPPs involve social services. The famous case of the Lesotho hospital PPP has been an important reminder of both. [5

The World Bank, IMF and European Investment Bank (EIB) have all released studies identifying cases where governments have borne increased burdens as a result of PPP projects. This is in contrast to proponents who claim that PPPs reduce risk. Yet, USAID has continued to maintain a startling degree of confidence

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