The U.S. foreign assistance budget may have dodged a bullet last week in the 2017 State, Foreign Operations appropriations bill approved by the Senate. There were only minor cuts to the U.S.’s diplomatic and foreign aid budget with the deepest cut in the region coming from a $95 million drop in the multi-year budget for the Central America assistance package. But the Trump administration’s first volley in the budget process of 2018’s Fiscal Year (FY) includes deep cuts to foreign assistance, including for Latin America and the Caribbean aid programs.
To be sure, the original FY 2018 “skinny budget” set forth by the Trump administration is only a negotiating starting point. There will be a lot of back and forth before any final budget is approved by the U.S. Congress and signed by the president. Congress’ leadership on the budget discussions for the FY 2017 spending bill—reported on by The New York Times and others—was instrumental in protecting the foreign aid budget. That included the activism of Democrat Senator Ben Cardin (MD), the ranking minority member on the Senate Foreign Relations Committee, who met with various religious relief agencies and Republican Senator Marco Rubio (FL) who spoke out on the Senate floor calling “foreign aid and the international affairs budget” key to the U.S.’s “national security and economic interests and to our very identity.”
But, even with a more activist congress and bipartisan support for foreign assistance, starting points do matter. In the months ahead, the skinny budget is going to form the basis for negotiations. So, what was in that first volley regarding U.S. foreign aid to its southern neighbors? Thanks to a leaked document we have a picture.
Overall, the Trump White House is asking for 38.9% reduction in the U.S. development assistance to the Western Hemisphere from all of the different source of aid, from $1,083,580,000 in FY 2016 to a proposed $662,081,000 for FY 2018. For Central America it means all Development Assistance (DA) money is zeroed out, leaving only the funds allocated under what are called Economic Support Funds (or ESF). DA money is what typically supports the broad array of traditional development programs—from education to agriculture to economic development to democracy—where the other funding streams—ESF and Global Health—tend to be more tied to political objectives (in the case of the former) or health (in the case of the latter).
El Salvador’s overall development assistance allocation drops by 30 percent by the zeroing out of the $65 million of DA money and only leaving $45.5 of ESF funding. Guatemala suffers a greater cut of 36.1%, with it’s FY 2016 DA funding of $112 zeroed out and the loss of $10 million in support for health programs. Honduras and Nicaragua are also proposed to lose all of their DA support, amounting a reduction of U.S. assistance to two of the poorest countries in the hemisphere by 27.8% and 100% respectively. And the general Central American Regional development fund is proposed to be cut by 74.8 percent, through the zeroing out of DA and USAID’s Global Health funds and a 16.4% reduction of the State Department’s Global Health fund.
The Caribbean countries fare even more poorly. The Caribbean Development program, which had $4 million in DA funds in FY 2016, is zeroed out. The Dominican Republic is proposed to lose 52% of its assistance in the new skinny budget; poor Haiti would suffer a 16% cut; Jamaica would lose all its USAID assistance; and Barbados and the Eastern Caribbean would see 41.7% of their development aid cut.
Given Secretary of State Rex Tillerson’s written confirmation testimony expressing doubt about the Trump administration’s support for the Colombia Peace agreement what does the skinny budget say about U.S. support for the Colombian government’s pace plan? It’s not as bad as feared. The proposal is for only a 21% decrease in FY 2016 funding—perhaps not the boost that President Juan Manuel Santos and many Colombians had hoped for to reintegrate the former 7,000 FARC combatants and build functioning state and economy in rural areas—as we detailed here—but not as drastic as it could have been.
And, of course, with candidate and later President Trump’s threats to garnish remittances or hold assistance to Mexico to make the government pay for his “beautiful wall” what is in the skinny budget for the U.S.’s southern NAFTA partner? As with the Central American countries—and almost all of the USAID budget—DA money has been zeroed out for Mexico, and ESF support is proposed to be cut by 35.9% from $39 million to $25 million, for a total reduction of $24.5 million or 49.5%—still not enough to pay for the border wall.
Other zeroed-out DA accounts are the USAID regional office (a loss of $20.5 million), USAID’s Venezuela and Cuba programs (though with Senator Rubio don’t expect that to stand) and USAID’s regional South American budget. Even the State Department’s Western Hemisphere ESF account is on the chopping block, with a proposed cut of 42 percent. Those funds have typically served as “walking around” money to support diplomatic initiatives and respond to opportunities and crises as they occur.
What are the potential consequences should these to-the-bone cuts become reality? Well, first they won’t. Again they are only a starting a point. But even if the reality is close to these numbers, it could mean a serious weakening of our relations and leverage in the hemisphere. And that’s what we’ll be analyzing next week.