A Conversation With USAID Administrator Samantha Power: Building Economic Resilience and Advancing Economic Statecraft

Building Economic Resilience and Advancing Economic Statecraft: A Conversation With USAID Administrator Samantha Power will begin on December 9, 2024 12:30pm EST. Watch live on YouTube HERE.

In response to new fractures and flashpoints in the global economy and heightened strategic competition, the United States and countries around the world are recalibrating their approaches to economic policy. This includes the U.S. government prioritizing economic statecraft  – including affirmative measures that bring mutual economic and security benefits to the United States and our international partners. Building on decades of work supporting inclusive economic growth, USAID is now accelerating its efforts to strengthen economic resilience in low- and middle-income countries to increase debt sustainability, create jobs, and connect with U.S. and allies’ critical supply chains.

Please join us for a conversation with USAID Administrator Samantha Power and CFR President Michael Froman on USAID’s policy and programmatic efforts to meet the moment for U.S. economic and national security interests by delivering responsive development cooperation and a strengthened U.S. value proposition for low- and middle-income countries.  

This meeting is presented by RealEcon: Reimagining American Economic Leadership, a CFR initiative of the Maurice R. Greenberg Center for Geoeconomic Studies.

FROMAN: Well, good afternoon, everybody. Thank you for coming. My name is Mike Froman. I’m president of the Council on Foreign Relations, and it’s a great personal and professional pleasure to welcome Samantha Power to the Council to talk about building economic resilience and advancing economic statecraft.

Ambassador Power is the nineteenth administrator of USAID. Before that she was U.S. perm-rep to the United Nations, as you know. But we really take complete credit for her professional success—(laughter)—because she was an international affairs fellow of the Council once upon a time and had the entrepreneurial spirit to ask for an assignment to some junior senator recently elected from the state of Illinois named Barack Obama, and who she helped very much—I saw firsthand—helped tutor on foreign policy, national security and development issues, having really immersed herself in those issues, including in the Balkans where she won a Pulitzer Prize for her book, A Problem from Hell: America and the Age of Genocide.

I count her as a personal friend. We worked together at the White House during the Obama administration, where she was running democracy- and development-related activities, and I couldn’t be more proud to have her here today.

She’s going to give some remarks on economic statecraft and economic resilience. We’ll have a conversation briefly, and then we’ll open it up to questions from the audience.

Please welcome Ambassador Power. (Applause.)

POWER: Hi everyone. Good to see old friends.

Thank you so much, Mike, and everyone here at the Council. Mike and I have now known each other a long time. I will not repeat to former President Obama the word “tutor.” I don’t think that that would go over well. (Laughter.) I think I was tutored. But I will say that being with Mike Froman in the trenches in the Obama campaign, through the Obama years, watching all he did to do America’s work overseas with what—such energy and impact—it’s just perfect that you’ve ended up here. In between we got to work together actually really trying to expand access to finance in low-income communities. Using the private sector to do that is going to be mission critical if economic development is to accelerate in some of the ways that we know we need, and Mike, you’ve just been such an incredible partner both inside government and out. And so I’m glad to be reunited with you here today.

I want to just start by recognizing the momentous events in Syria. The Syrian people of course endured more than twenty-four years of dictatorship under Bashar al-Assad. As everyone knows, Bashar al-Assad stayed in power using chemical weapons, using torture, using murder, backed by Russia, Iran, Hezbollah. And today Syrians get a chance hopefully to chart their own future.

The United States is the leading humanitarian donor to Syria, and we in the United States are looking now to see how we adjust to new displacement, to new population returns to Syria, and of course to the incredible set of needs that a country that has been through so much over the course of the civil war and is still in such turmoil—the needs that the individuals in those countries have. We continue to call on all parties to refrain from further violence, especially against civilians, and to take meaningful action to preserve institutions. This is going to be critically important.

So major events—perhaps that will come up in the question period, but I want to focus today on the importance of the United States expanding its toolkit, very specifically in the area of economic statecraft and the degree to which USAID is on the frontlines of becoming more nimble and more responsive in this very complex world of ours.

When I travel around the world and meet with foreign leaders in the countries where USAID has partnerships, I hear again and again the same thing. No matter where I go, no matter what continent, no matter what community even, the message is the same: we want trade, not aid. We want to grow our economies; we do not want to be dependent in any fashion on foreign support. And that is USAID’s goal as well, to help our partners reach, as President Kennedy put it at the time of our founding, a “stage of self-sustained growth where extraordinary outside assistance is not required.”

Now, if we are being honest, the last few years have been difficult for that mission. In 2020 for the first time in decades, the number of people living in extreme poverty around the world increased, and it is actually still not back to its 2019 levels. Now, of course that was caused in the first instance by the pandemic, and that subsequently has been compounded by crises ranging from the historic drought in the Horn of Africa to Putin’s full-scale invasion of Ukraine and the wars in the Middle East. These are crises that have snarled supply chains, sent prices soaring, and drove governments to take on more and more debt so that they could respond. But to simply blame this era of crises for the slowdown is to overlook deeper structural issues that had already begun to stall progress even before 2020.

Now, if countries are to strengthen their economic fundamentals and make themselves more independent, they—and we who are their partners—need to do more than just address the crises of the last few years. We really need to change our approach altogether.

Longstanding wisdom held that the formula for strong economies was straightforward: invest in basics like education, health care, and agriculture, and then liberalizing markets would over time take care of the rest. So for the past few decades, USAID sought to fund the building blocks for growth in developing countries. But USAID didn’t focus that much on job creation and macroeconomic issues.

At the beginning of the Biden administration indeed, core economic growth programming at USAID accounted for less than 5 percent of our budget. And I will say, when I was nominated by President Biden to this job and I got my first briefing and I saw the breakdown, it was really one of the most surprising things I learned about the agency, that economic growth—core economic development work had—which I had thought would be really at the center of what USAID did around the world—that that investment had shrunk so much. And we can talk maybe a little bit in the Q&A as to why that is; it’s a pretty interesting story.

But today looking out at, again, the demand signal we get from our partners, the needs we know have arisen, we know that the approach we’ve been taking is insufficient. To build strong and resilient economies in an era where there has been a step change in the likelihood of shocks and the impact of those shocks—again, from pandemics to natural disasters to conflict, but also to disruptions that we know are coming from AI—in light of all of these shocks, we need to think differently.

Our partners need support to access capital on fair and transparent terms. They need support in creating good jobs with burgeoning populations of young people coming online every year, and they need support in connecting to supply chains which are critical to their own economies but also, as we have come to focus on, critical to the United States as well.

If the United States doesn’t offer this support, we know many countries will turn elsewhere; often, of course, to the People’s Republic of China, often with adverse consequences both for those nations over time and for the United States. For decades, as is well known, the PRC has been happy to provide loans, issuing nine dollars of debt to every dollar of aid that it has provided to low- and middle-income countries. These loans, again, as well known, are often negotiated behind closed doors, without public of parliamentary oversight. As a former president of the China Export-Import Bank said at an event at CSIS, “We have a saying: If the water is too clear, you don’t catch any fish.”

As a result, AidData, a development data lab incubated by USAID that does incredible work, found that at least 35 percent of PRC Belt and Road projects were linked with corruption, environmental damage, or labor violations. Take Ecuador, for example, where the PRC built a massive hydroelectric dam at the foot of an active volcano, where 17,000 cracks in its structure forced it to operate at limited power or to risk collapse.

Now, at the same time that the PRC has become the world’s largest debtholder, many of these countries have begun to struggle with those debt burdens. As we speak, 3.3 billion people—four in ten people—live in countries paying more to service external debts than they spend on health and education—health or education, I should say.

When debt payments keep governments from funding basic services or responding to new problems, as we are seeing, it creates not only economic but also often political instability—protests, unrest, sometimes violence. And this is a doom loop, of course, because all of this scares away the private sector investment and the economic activity and ultimately the tax revenue that countries so badly need, particularly when they are debt burdened. They risk entering a spiral of slowing growth and increasing debt, and when this happens in many places at once, it affects even the biggest economies, including our own, as essential supply chains begin to fray, our export markets begin to shrink, and uncertainties in global financial markets increase.

This is also a matter of national security for the United States. The PRC has shown that it is willing to use its economic influence as a tool to coerce countries to go along with its demands. For example, after Guatemala’s foreign minister visited Taiwan earlier this year, the PRC blocked the import of Guatemalan coffee and macadamia nuts.

So bottom line, we need to offer a real alternative to the economic support provided by the PRC. It is not about asking countries to pick a side; it’s about providing more and better choices so that their default isn’t whatever is on offer from the PRC.

The U.S. government already has powerful tools in this area. The Development Finance Corporation, which is celebrating its fifth birthday today—I was at that celebration earlier this morning—is using innovative financial instruments to make investing in low-incoming and fragile countries easier for the private sector. And USAID is very, very involved in the DFC becoming more and more involved in fragile, conflict-affected countries and communities.

The Treasury Department is sharing, and has been for a long time, technical expertise to help countries manage their public finances. The Millenium Challenge Corporation is making sizeable grants to build infrastructure.

What USAID adds to this toolkit is our versatility, our global footprint—which is unmatched; we have about 7,000 USAID staff overseas in more than a hundred countries—and about—anywhere from two-thirds to three-quarters of the USAID teams overseas are constituted by nationals of the countries in which we work. And this is a major superpower for USAID. Former ministers, engineers, professors, economists—we really have incredible local staff innovating and spearheading our work overseas.

We also have decades of investment in trusted relationships that can be called upon. We have a wide range of tools inhouse, from diagnostics to technical assistance to financing. And, although we are not always famous for this, when we put our minds to it, we can work quickly and move quickly, and we’ve tried to make the agency more fit for purpose to be able to be quicker to the scene. I like to think of USAID as the Swiss Army knife of development.

To put those advantages to work, we have set out to deepen and expand USAID’s focus on economic growth, job creation, and the need to escape crippling debt. With huge thanks to Congress—Senator Graham, Senator Coons, Representative Diaz-Balart, Representative Lee, among others who saw how important this was—we stood up a new Economic Resilience Initiative, which is beginning by deploying nearly 100 million dollars—99 million dollars across three core pillars. The first pillar is support to help stabilize macroeconomic conditions, a prerequisite for sustained growth. This means helping countries manage their debts sustainably while accessing the capital they need.

In Ecuador, for example, we are providing technical assistance as the government applies for concessional finance from the IMF. Less than half-a-million dollars of investment from USAID could unlock up to 1.3 billion dollars in financing at favorable below-market terms, a lifeline for an important partner that is currently navigating twin economic and security crises.

We have also launched a new office of the chief economist at USAID, which is now advising our partners around the world on handling macroeconomic issues. And we have created a new internal macro-distress tracker to help USAID staff respond more quickly to early warning signs of macroeconomic problems around the world.

Our second pillar is to support our partners’ efforts to create jobs and boost wages without which countries risk instability and intense migration pressures. Over the next decade, as you all know, 800 million more young people are projected to enter the workforce in low- and middle-income countries—800 million more young people than the jobs that are likely to be created with current—on current trajectories. So we need to invest in people so that they have the skills employers need while also giving employers opportunities to grow their businesses and create new jobs.

In the Dominican Republic, for example, we’re working with the Army Corps of Engineers to help rehabilitate the port of Manzanillo. Port upgrades will connect Dominican businesses to export markets and generate new demand for their products. And to make sure workers are ready to seize those new opportunities, we are also helping train them in industries of the future, like microchip fabrication.

Finally, our last pillar is connecting our partners to critical supply chains for in-demand goods. Along the Lobito Trans-Africa Corridor, we have helped the government of Angola make transparent and cost-effective investments in transportation infrastructure which will facilitate the export of critical minerals from the region. And we’re working with neighboring countries like the DRC to crowd in responsible investment in the mining sector so that they can also take advantage of these new connections.

Through this economic resilience initiative, we have been able to expand and, in some cases, start entirely new programs in eleven countries, including Angola, as I mentioned, the DRC, and Ecuador; but also in Ghana, Kenya, Malawi, the Maldives, Nepal, the Philippines, Sri Lanka, and Zambia.

Later this month we are going to be releasing our new economic growth and trade policy, which crystalizes years of effort and learning at our missions to better respond to rising debt, slowing growth and investment, and supply chain disruptions, while detailing the tools we will prioritize when we work with our partners to support inclusive growth., concentrating our resources, since they are limited, on where they have the highest potential to drive systematic change.

We are also establishing new tools to respond to economic coercion. If what I’ve described up to this point is the affirmative agenda, it is important also to help our partners stand up to what is coming at them. This economic coercion increasingly seeks to exploit the very vulnerabilities that we would wish to reduce. CFR actually just produced I think an excellent report on this.

While the exact response is of course going to depend on the country context, it could include calling out the coercive behavior to pressure bad actors to put an end to it; it could include helping partners qualify to export to alternative markets.

As you all know, I am preparing to transition out of this job, but I believe that there is an urgent need for the U.S. government to do far more in these areas. When we talk about countering PRC influence and providing real options to low- and middle-income countries, this is what it looks like. When we talk about creating stability and security for U.S. Businesses and workers, this is what it looks like.

Today the U.S. economy has proven much more resilient than most, but our economic security over time is interlinked with that of our partners. So as the U.S. seeks coalitions to prevail in an era of strategic competition and an era of interdependence, it will be key to respond to our partners’ needs, answering when they tell us that they need support to build their own resilience, sovereignty, and self-sufficiency.

Thank you so much, and I’m really looking forward to the conversation. Thank you. (Applause.)

FROMAN: Thank you for that very much.

First of all, I should say, this is part of our RealEcon Initiative, our Reimagining American Economic Leadership, which focuses on trade and investment, on development and on economic security, and I think the administrator really just laid out how those issues are very much interrelated here as we think about our competition with China around the world and being supportive to our friends.

Let me start where you left off. Really we have a new challenge over the last several years called the Global South. I mean, I think—I don’t know how long back that term goes. It’s not a term I particularly love, but there certainly is a new dynamic out there that we are in this competition with China, but we also have countries that are not really willing to kind of pick one or the other but are hedging their bets—hedging their bets between us. One thing you often hear from these countries is, China comes and offers to build a port or an airport or a stadium or an office building. The U.S. comes and lectures about human rights and corruption and governance, et cetera. How do you think our—how do we put forward our best value proposition of why these countries should be working more closely with us than they are with China, when China is offering them so much in terms of real dollars and investment?

POWER: Thank you. It’s the trillion-dollar question I guess.

I would say, first of all, that—and I think this is now an open secret—that the appetite and the receptivity to U.S. presence and expansion is more than there. There’s just a huge hunger for it. And I think that what you’ve seen over the course of the last five years is one American tool growing more and more ubiquitous when that appetite is expressed and when countries say, you know, we want—really, you’re our partner of choice; you’re our preferred partner—and that is the DFC. I mean, to look at the number of deals the increase—you know, just in the last four year it’s now—I should have the numbers at the tip of my tongue, but from sixty-one projects to 181 projects operating in parts of the world like Ukraine in wartime even—that OPIC, you know, going to an active warzone—that would not have happened; operating with USAID field teams on the ground as their deal-spotters and taking advantage of that ground-game that I mentioned earlier.

So I think already you’re seeing with the trendlines that DFC has found a way to help a variety of private sector actors on the ground de-risk. They have brought their own capital to bear. They are making it easier for other private sector players from the United States and elsewhere to come in and be involved. And of course the Lobito corridor is exhibit A of that, as you saw with President Biden’s visit last week.

I worry, of course, about those who think that we can take advantage of this inflection point—because I really think it is one—on the cheap. And so, you know, it may be tempting to say, okay, DFC is where the—DFC alone in a way is where the action is; let’s cut back on our Millenium Challenge Corporation accounts, or, you know, USAID. And of course there’s—we don’t know what’s about to happen, but, you know, our indispensability on the ground is helping these countries mobilize their own tax revenue, doing public financial management, doing procurement reform so when DFC and the World Bank and other and private capital come in and want to be investing and building large infrastructure that the infrastructure actually is sound and that, you know, there isn’t self-dealing going on in the procurement process.

So there’s a toolkit that we use as a complement to the DFC and the other institutions that are showing up, but we need not only bipartisan political support for strategic competition; we need bipartisan political support for the resources to make the investments that are going to pay off over time, both in terms of strengthening the alliances as we see in Angola—like a sea change in terms of the orientation of that government because the United States showed up and showed up big, but with a long road ahead—don’t get me wrong. But nonetheless, you already see that strategic pivot occurring there.

But there is somehow a belief that one can call out the aspects of the PRC development model without necessarily really scaling the model that I think we really do now have. I mean, I feel—it is—we can win this argument. (Laughs.) I mean, it’s not even going to be that hard to win this argument, but we have to sustain the trajectories that DFC is on, that our investments in the MDBs and what they are increasingly doing are on—including, by the way, them using fewer PRC contractors and others to do their projects, which the U.S. taxpayers is helping fund. But also we are the—we are the ones who help with the enabling environment, so to ensure that USAID also gets to stay on this trajectory. And this—you know, I almost—I think I heard people sort of gasp when I was saying we were—this ERI, this incredible initiative and that it was $99 million—I mean, what I’ve described also is not that expensive, so that needs to be said because it’s catalytic investments, it’s technical support, it’s job training, upscaling, et cetera. But this is in some ways something that we are testing so as to be able to then, as we did in food security in years past, as we’ve done in global health domains in years past—but Congress and, you know, this town need to go all in I think on this approach, which is not only thinking in terms of economic growth but helping reframe the conversation as well about—around economic resilience, theirs and ours.

FROMAN: Let’s talk about that, because I remember an early Obama administration development strategy that said our goal is economic growth, and it was rather controversial at the time because people would say, no, it’s education or it’s global health or it’s infrastructure; how could you prioritize economic growth over those? Traditionally development has been around global public goods like those issues, and now you’re talking about supply chains, job creation—is there room to do both from a resource perspective? Is one so much more efficient than the other that a modest amount of money can put us into that game? Or do you see us ultimately trading off some of our commitment to global public goods in order to focus on these other macro and micro economic issues?

POWER: Well, first let me give credit where credit is due—I mean, A, to that strategy which Gayle Smith and Raj put out there and I think was really appreciated by our partners. And two—or B—(laughs)—you know, a lot of USAID’s economic growth programming has lived in the agricultural space. I mean, that was the big bet, particularly in Africa, and it’s done tremendous good but it relies in many places on USAID programming, developing proof of concept and then ministries scaling those programs. That becomes much harder now in an age of debt distress. I mean, really, our partners have far fewer resources to put in the game.

But using Feed the Future and other avenues to push for economic growth, which, again, are incredibly important and I could—if we have time I could talk about a new agricultural initiative we have where we’re actually trying to taking our Feed the Future resources that have been spread pretty thin across a lot of countries and make big bets on where breadbaskets could actually be created in Africa. So we have a new initiative called the Africa Accelerator Initiative, precisely to concentrate, which can have outsize benefits well beyond the countries that will get more resources.

But I think part of what is happening is, you know, the jobs, the youth bulge, the jobs for which people need to be trained now and the ways in which countries are going to balance their books and get back on the growth path are in services. They may be in digital. I mean, we worked together, again, on some of this upscaling one year at Mastercard.

We have to shift. The nature of the economy of the countries in which we are working are shifting. Urbanization—I mean, the number of conversations I’ve had with young people who just say, yeah, I know there’s agricultural training and extension service training program available to me, but I’m heading to the city, you know—and so meeting that moment and not creating programming around the world as it was but the world as it is so rapidly becoming.

FROMAN: You rightfully point out the debt sustainability issues putting a real constraint on the ability of local governments to invest in this and the role that China has played in running up that debt, or loan-to-own as the Belt and Road Initiative may be termed. Any progress in getting China to play a more responsible role in debt restructuring? And do you find that there’s a coalition of countries willing to work with us on that in some way that’s effective?

POWER: I mean, I think, look, you have a negotiation that culminated finally after I think more than a year and a half in Zambia that we monitored very closely and offered some technical support to the government. And if I maybe just digress for a second, the—in many of the places facing the greatest debt distress—and this is relevant for people here who either do this kind of work or would—could contemplate, you know, in their careers at some point doing this kind of work—but the capacity, the human capacity on the side of the governments in debt distress to go toe-to-toe in these—in these complicated negotiations, right—it’s not just that China holds the greatest share of bilateral debt; it’s the number of private creditors as well that are involved, the Paris Club, you know, this—you know, multivariable geometry around negotiations—it’s hugely complicated.

So again, small investments by the Department of Treasury, by USAID in technical teams just to kind of level the playing field even in those negotiations so they are well-staffed—that’s—those are the kinds of investments that we have made.

I think that the public pressure and focus on the PRC is—as the world’s largest debt collector has had some important effects. I think the IMF itself has pushed hard for—including at the leadership level—for the PRC to show up ready to negotiate.

But Mike, honestly, all you’re really seeing when—and we don’t have full visibility into the terms of the restructurings that have occurred—you see deferred payments. You don’t—you’re not seeing haircuts, you know. You’re not seeing that at all. And I don’t know in the long term—I mean, you know, the PRC will determine its own interests, but I mean we have situation now where more than forty of the countries in which USAID works, the—are sending more money to the PRC than the PRC is sending back. I mean, you know, I use the health or education statistic—you know, more paying off debt than they’re spending on health or education—but that’s even more—in parallel, I suppose, just a really graphic indication. You know, how can it be that some of the poorest countries in the world are sending more money to the PRC than is coming back?

So a little restructuring here or there, but I think there’s been a lot of disappointment for those who have sat down and had those negotiations. But to your first question, this is the opportunity presented to the United States to show up with an entirely different model, which is all about breeding or inculcating independence and not these kinds of dependencies.

FROMAN: You mentioned Zambia. I recall you had an initiative Democracy Delivers or bright spots—countries like Zambia, Guatemala, Nepal—where things are really heading in the right direction, which we could always use some good news these days.

So how are the bright spots doing? Are they still bright and how durable is the progress that you feel they’re making and the demonstration effect that might happen in other countries?

POWER: Yeah. So the idea here, just to maybe elaborate before answering the question, when I look back after eight years in the Obama administration and looked at democratic backsliding with a little more distance from when I was President Obama’s human rights adviser and then U.N. ambassador, it occurred to me just or I was struck by the kinds of investments we make when a country descends into conflict when there’s a coup, when there’s massive democratic backsliding, you know, supporting frontline defenders and journalists to sort of expose what’s happening. It’s all incredibly important—when there’s, you know, elections, sending election support. But in the rare—fairly rare instances there’s a democratic opening or someone is swept into office on the promise of reform, we had tended collectively not to surge resources.

So in lamenting the, now what are we, Freedom House, seventeen, eighteen years of democratic backsliding—you know, at the time I came into USAID maybe it was fifteen years—we decided to try to meet the moment when a reformer showed up so that there’d at least be some chance of showing visible economic progress, because it attended—you know, you meet a democratic reform opening with, you know, support—more support for civil society. Well, that’s a little bit different than what leaders including here at home, as we’ve learned the hard way as well in the recent election, fundamentally the bread and butter issues are the ones that, by and large, people are judging their leadership by.

So and we decided then to link up our programming, you know, our—for example, our economic resilience programming, making sure that that public financial management support, so they’d have more tax revenue potentially to spend even as many of them were saddled by debt, that that revenue would be coming in.

When we had the food security supplementals that Congress was generous enough to grant associated with the Ukraine supplemental or on the back of the Ukraine supplementals, making sure that since there was a food crisis everywhere we looked to concentrate those resources if the need was there and the vulnerability was there in a manner that, again, would be visible but, again, leveraged for the kinds of reforms that might have been promised in an election but become harder to deliver upon when you’re in office.

So that was the conceit behind the Democracy Delivers initiative. We’ve just added two countries to it: Guatemala, after the recent surprise, upset—relatively recent upset victory there for someone who pledged to combat corruption; Fiji, which has had its—one of its first peaceful transfers of power in the last year.

And then adding to that, Moldova, where President Sandu just won reelection where the referendum to join the EU passed narrowly but passed despite massive Russian election interference; Armenia, which has made a significant strategic pivot toward the United States and has done a ton, again, to fight corruption there.

Zambia, Malawi, Nepal, the Dominican Republic. Any of you who know anything about any of the countries I’ve mentioned can take note of the difficulty taking forward the democratic reform agenda and, indeed, the economic challenges faced by, I think, just about every country I have mentioned. Tanzania—sorry, I forgot Tanzania.

Major challenges in all of them. But as a forcing function for our agency to think about delivery as associated with political reform it’s been terrific and I do think if you talked—if you had the leaders gathered up here as we do at the U.N. General Assembly every year, we try to assemble the leaders for this cross-regional coalition of people who still self-identify as reformers what they would say is that this support has been invaluable.

Has it been enough to offset the Houthis’ targeting of shipping, you know, Putin’s invasion, the COVID hangover? You know, there’s so—the debt distress—there’s so many structural forces that are coming at these countries but they really have felt the United States show up and really dig in behind this aspiration to liberalize politically and economically.

FROMAN: Let me ask one more question—I have a long list but then I’ll open it up to the group.

All of this comes down to resources ultimately and there’ll be pressure here with the incoming administration on these sorts of resources. But there are also pressure in other countries. The debate in Europe about going to .7 (percent) of GDP for foreign assistance seems to be very much in the rear mirror—rearview mirror.

How do you feel the international community is responding to the various crises that you’ve laid out? And then specifically, we’ve just come out of the COP in Baku where there’s agreements that provide $300 billion a year for developing countries and emerging markets for the energy transition and climate change.

What part of that is expected to come from the United States and how do you see that materializing?

POWER: Well, obviously, the U.S.’ trajectory is something that’s going to be defined after January 20. There are, clearly, different voices within the inner circle and within—you know, among the national security appointees that have been named so far.

So I think a lot of the—a significant part of the answer to the question is going to come in terms of the U.S. government’s own investments, not only bilaterally but also the IDA replenishment at the World Bank, you know, having that—those resources that President Biden has committed $4 billion—come through. That’s going to be really important and if Ajay were here he would tell you how far a dollar can be leveraged at the bank and what a good use of taxpayer resources those are.

But, you know, I will say this administration—the Biden-Harris administration, led by John Kerry and John Podesta and Ali Zaidi and the president himself, I mean, as you well know, again, from your past tenure in the private sector the orientation throughout these four years by necessity in terms of the gravity of the climate threat but also knowing that, you know, we live in a country that’s pretty polarized around climate finance questions, but a lot of the investment USAID, has made that EFC has made, the administration as a whole have made, is in being catalytic and using U.S. taxpayer resources as leverage to crowd in the private sector.

We’ve also seen institutions that I think had not performed energetically, let’s say, in their early years like the green climate fund moving very—under new leadership, I think, moving in a similar direction to take the capital that they have and basically leverage it and turn it into more and to move more quickly to meet the colossal needs, particularly in terms of climate adaptation where the private sector has continued to hold back more than is ideal.

So this is all to say we can’t really predict. There is a lot of private sector vested interest in the United States that has grown up over time that will be making its views known, I assume, not only with regard to the IRA and the implementation of that but with the kind of investments that we’ve made overseas together.

So I’m hoping that that will be an influential voice with the incoming team. In addition, whoever the incoming team—national security team and the president elect himself, the president when he becomes president again, what they’re going to hear from other countries is the same thing we heard, which is that this is the number-one issue facing especially developing countries and low and middle income countries, you know, this is existential for us. If you want to talk about strategic competition to leave the field on the issue that is deemed existential by the vast majority of nations on the Earth would be, of course, a grave mistake.

Last point, just on your first question about resources from other countries, you have put your finger on something very worrying, which is very significant budget cuts happening in other places with sort of some similar dynamics but really less about, you know, let’s target foreign assistance and more the COVID hangover, slow growth, you know, basically in countries like Germany. Potentially we could see some of the most substantial cuts that we have seen that will then have a knock-on effect on the EU’s budget.

So we’re very worried about that. But if I could say one not necessarily hopeful thing but, first, I think the Brits are still committed to getting back to 0.7 (percent), so they say, and it’s just a question of the time frame which we, of course, would love to see accelerated but there are economic challenges faced by, you know, all major economies in different ways now.

But we at USAID have embraced this mantra of progress beyond programs over the last three or four years, and I think you and I have talked about this, which is, you know, our impact and our ability to help with economic resilience.

Yes, we need resources. We need the ERI to be scaled and for this to be a substantial part of the American toolkit.

But even absent significant new resources we are development diplomats. We have the capacity in every country we work to leverage the programming we’re doing in the health sector or in education or in Feed the Future in agriculture.

In other words, sometimes we have in the past sort of looked to see what’s our appropriation. OK. This is the sum total of what we’re going to do in a country. I mean, not quite that narrowly, but what I’ve seen unlocked over these last years as we’ve come to recognize that even if we could keep our $30 billion-plus budget this year, even if we got generous supplementals like the Ukraine supplementals, you know, extending into the future for the rest of time we still can’t keep up because that’s the state of the world right now, with that distress, with more conflict than at any time in decades, with the greatest number of internally displaced people since, you know, people started measuring that well before the world wars.

So already we are going to need to think differently, think more catalytically, about, you know, what it takes for USAID to be a derisking, you know, player but also think about the kinds of development diplomacy we do vis-à-vis other governments where they, with our leverage, with our press and that of other countries can actually generate more revenue for themselves.

FROMAN: Thank you. Let’s open it up to questions.

Yes, Meredith? If you can stand up, identify yourself, ask a brief question. There we are right behind you.

Q: Meredith Broadbent, CSIS.

The generalized system of preferences that has been expired for almost a whole administration, I think, and it’s, you know, trade with a hundred and twenty developing countries. I know you’re in the Cabinet. Has there been any discussion in trying to get it over the line here in the lame duck?

POWER: I think I won’t comment on the internal deliberations, but something would have to change very quickly for enough momentum to be generated around getting that across the finish line. Mike sure knows much more about it than I do.

I will say, though, that Haiti HOPE/HELP and AGOA, both of which expire next year and thus have created in some quarters maybe a little bit of a well, we’ll get to it next year. Not in any way to downplay the importance of GSP.

But here are two pieces of legislation that have broad bipartisan co-sponsorship where you’re already seeing in Haiti, which has enough problems, orders now being canceled by major U.S.-based and other manufacturers because of the uncertainty about whether this will—Haiti HOPE/HELP will be reupped, and there’s a golden opportunity to get that done here in the lame duck. Same with AGOA.

We’re already hearing from South Africa, from Kenya, from a really critical part of Nigeria on the continent that the uncertainty, even if it doesn’t expire until, you know, after the midway point next year is really undermining, you know, all of the benefits that have accrued from those pieces of legislation.

I mention them in the context of GSP because it’s been a while. You know, I think it’s really important to break the seal and maybe making progress on these two that already seem to have a pathway if not at the moment a clear—there’s a notional pathway but not—if not a clear path but with such strong Republican support, you know, hopefully those can get done and then, perhaps, that’ll create a different operating environment for GSP.

And just to underscore your point, in so many countries I go to that’s really up there near—certainly, in the top three asks of things we can do to accelerate development.

FROMAN: We’ll take a question from our virtual audience.

OPERATOR: We’ll take the next question from Julie Dorf.

Q: Thank you. Hi, Administrator Power. My name is Julie Dorf. I’m with the Council for Global Equality. I’m also on the advisory committee on voluntary foreign aid at USAID and on the inclusive development subcommittee.

You know, when you first came in as administrator you gave a beautiful speech at Georgetown about inclusive development as one of your top priorities as administrator, and with all this conversation about economic benefit and getting rid of crippling debt and all of the important points you just made in your speech I’m curious how do you know how much of this economic benefit actually reaches the most marginalized folks in countries around the world, you know, particularly in this moment when we seem as a world moving from neoliberalism to global kleptocracy, if you will.

POWER: It’s a great question and I think that is, I think, not only we but the World Bank and all of the development players are seeking to look and examine, you know, basically, how broad based the benefits of economic growth are and then, taking a step back, how broad based are the benefits of the programming we do to improve economic resilience, which is the metrics for which are, you know, a little bit inchoate but also job creation, macroeconomic stability, and so forth.

So I’d say U.S., and this is, again, an example of something that has really broad bipartisan support that I hope not only gets sustained in the next administration but gets expanded, we have created a new office of the chief economist at USAID.

Over the years maybe in parallel to the shrinking of congressional appropriations for economic growth or I should say—let me actually just unpack for a second why the economic growth budget at USAID has shrunk so much over time.

That’s different than this ERI, which is our effort to plus up and to show how we can do it in a select number of countries so that we can try to get our economic growth and economic resilience investments way back up to what they used to be.

The issue is not that any—if we asked anyone on Capitol Hill, I think, if you said did you mean to cut by half the amount of investment that USAID was making in economic growth they’d say, are you crazy? No, because every time we travel, for those that, you know, who are active abroad they’d say, every time we travel we hear, like, jobs, debt, you know, reskilling supply chains. This is what we hear about.

So no, of course not. We would never intend to do that. But the thing is unlike for these really important global health areas and even unlike for democracy and governance where there are really important constituencies including many CFR members who champion earmarks for certain areas of programming, which has resulted in USAID being, you know, more than 90 percent earmarked there is nothing quite like that for economic growth or economic resilience.

So there isn’t that same constituency out there and, as a result, it’s not that anybody wishes for us to dial back but our—what’s happening is as the earmarks go up the amount of discretionary resources USAID has shrinks and that shrunk—it’s at its all-time low in this past budget cycle and all of our economic growth programming prior to ERI came out of that very, very small band of discretionary programming.

So and this is in a world where there are shocks and you want to keep discretionary resources to be able to be nimble and—but in any event, notwithstanding all of this, mirroring the drop off in economic growth investment we have seen a diminishment in attention to the importance of economic expertise at USAID.

And so actually the number of mission economists, for example, out in the world doing the kind of work Julie is asking about shrank from about thirty-five about a decade ago to nine. Every mission—every USAID mission should have an economist right there both to be able to, you know, help on some of these macroeconomic questions but also to bring economic rigor to a cost effectiveness analysis.

So we’ve built out this new office of chief economist. You’re going to see those numbers go up if Congress continues to support the growth of this office and part of our cost effectiveness analysis, which is different than the macroeconomic economic support this office is providing but is actually looking at the impacts of programs like the ones that I’ve described, not only to see, again, what the sort of macro outcomes are but who those programs are affecting specifically.

So I don’t think that we have a great answer yet but part of understanding that our resources have never been greater and have never felt like they were keeping up less with the state of the world meant that in addition to practicing development diplomacy we brought in a team to be much more aggressive in terms of studying cost effectiveness. Because if we have a dollar now that dollar is more scarce, more precious, and we really need to make sure that if it’s going to be spent on education programming the program to which it is being deployed is bringing about the best outcomes per dollar for education.

So, too, the programming that I’ve been describing today we have to be looking at it in terms of the most marginal and whether they are being reached.

FROMAN: I’ll take one last question. The woman in the center in the back.

Q: Hi. Thank you very much. Very fascinating conversation. My name is Amaka Anku. I run Africa for Eurasia Group.

So it’s been very refreshing for me to hear you talk about this shift from what I call value promotion to focusing more on economic transformation in terms of U.S. policy towards a lot of developing countries.

So I focus a lot on Africa so I think about this a lot, and I think you really hit the nail on the head when you talked about the constituencies, right? So especially for Africa because there’s not a lot of U.S. business engagement in Africa the people that tend to control U.S. policy towards Africa is the, you know, governance human rights lobby.

My question for you is what advice do you have for people who want to see that shift continue away from value promotion to focusing on economic transformation, given the fact that there are fewer champions? What advice do you have to, like, you know, really help advocate for continuing that shift away to focus more on business and investment?

Thanks.

POWER: Thank you. Well, let me say a couple things first and then come back to your point about value promotion.

You know, USAID has been fortunate to become the home for Prosper Africa, and if British Robinson were here—and maybe that’s somebody you can connect with at USAID—who has led our Prosper efforts, you know, USAID with the Department of Commerce, with USTR, with Treasury, with the DFC, with those who are thinking a lot about the president’s initiative on global infrastructure, Prosper Africa has been right at the center of facilitating those deals.

Are they keeping up with what we think the potential should be? I mean, I think you saw with the Africa Leaders Summit, you know, an important push and, you know, an awful lot that got announced, most of which I think is moving forward.

But the—I think there are two things. First, the risk appetite holds, you know, certainly, U.S.-based businesses back a lot and I think we think—this isn’t the case everywhere but in some countries an exaggerated risk perception, you know, sort of deviation.

And so, you know, I, even at Davos a year or two ago, you know, sat down with the risk assessors, you know, to talk about these gaps in what we—you know, what others on the ground see as risk reality versus risk perception and so forth.

But simply saying that isn’t changing it and that has really—you know, I think at this point I would have thought that we would have—you would have started to see a little bit of a cascade or a snowball effect, given the ROI, for those who are first movers or early movers.

So, you know, USAID is thinking very creatively about pension funds and Prosper Africa is bringing delegations from Illinois, you know, to actually see what the opportunities are and those are paying off.

And so the communications story, the feedback loop, is going to be really important to over—and Mike, again, would be, I’m sure, much more thoughtful than me on this—but because with Mastercard this is, you know, part of what he was ginning up, and by being a first mover as Mastercard often was, getting other companies, you know, to step up as well.

But having said all of that—sorry, one other happy thought, which is I think if you look also at Ambassador Whitman’s tenure as ambassador in Kenya, that’s, and especially for the incoming administration, like, a really interesting model of how someone goes about using that perch in the interests of U.S. business and in the interests of the Kenyan economy. And if you haven’t watched her talk I think it’s, like, why Africa, why Kenya, why now, it’s just a really compelling account.

I mean, it’s sort of the best advertisement, yes, for Kenya but in some ways for so many of these emerging markets.

But having said all that, I want to push back a little bit on the binary that you’re laying out there because when, for example, we bring private sector delegations to a lot of the countries that I’ve described, even some of the so-called bright spots where the reform arrow is going, you know, in the right direction, you know, the thing that is holding them back it’s not just a distorted perception of risk.

It is corruption. It’s the Foreign Corrupt Practices Act. Like, they don’t want to get fined. They don’t want to—nobody wants to go to jail. Like, it’s not the case that simply doing everything that I’ve described here and pulling resources from programs in public financial management or in governance.

You know, you may be talking about things that are more expressive but even in the training of independent media who are going to be the ones maybe to submit a freedom of information request that then brings to the public, you know, the Entebbe airport deal and the usurious interest rates on the debt that Uganda—you know, the loan that Uganda, you know, took out which then in turn sparked public scrutiny and activism around a deal that was not, I think, most people would agree in the long-term national interest.

So, you know, even on some of these macro questions and the balancing of the books, the idea that that is going to happen just by working narrowly with the executive who are super enthusiastic, of course, about private sector investment but without strengthening the checks and balances that will give investors the confidence to deploy and to know that the rule of law is strong and sound, or even the work we do, you know, in the cyber domain or in terms of digital connectivity which is also, you know, broadly, a form of democratization, you know, all of—this is why I refer to USAID as a Swiss army knife—not only in terms of the economic toolkit but to have under one roof the ability to do the democracy rights and governance work that, in turn, is oriented around strengthening checks and balances and the rule of law such that we will have an easier time in our ERI and our economic growth work driving interest in these communities and in these countries.

FROMAN: We’re so fortunate to have Administrator Power with us today but even more importantly for her leadership over the last four years of such an important agency.

Please join me in thanking her for being here.

POWER: Thanks, everybody. Thank you. (Applause.)

(END)

This is an uncorrected transcript.