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Trump and development: aid, migration and the Beijing Consensus

Picture of Professor Stephen Howes

Professor Stephen Howes

Robin Davies and Professor Stephen Howes

Picture of Robin DavisRobin Davis

Martin Gillens in his 2012 book, Affluence and Influence, examines the link between public opinion and policy in the United States, and finds that public policy more closely reflects the opinions of the rich than the poor.

He writes that if policy “more equally reflected the preferences of all Americans … in the economic domain we would expect a more progressive tax system, stricter corporate regulation, and a higher minimum wage; foreign policy would reflect a more protectionist trade regime and less foreign aid; policies on “religious” or “moral” issues such as abortion and gay rights would be more conservative.”

Although Gillens doesn’t mention migration, he could have also added that if policy more equally reflected the preferences of all Americans, surveys show that there would also be less migration.

Trump’s economic and social policies do not in general seem to reflect those of the traditionally disempowered low-income voters, but his foreign and migration policies do. He promises protectionism, less aid and less migration. This essay reflects on the impact of Trump’s foreign and migration policies on global and Asian development prospects. Since trade is covered elsewhere, the focus is on foreign aid, migration and, briefly, models of development.

Aid cuts

The United States has been a global leader in development assistance ever since the Marshall Plan. Measured as a proportion of national income, United States aid has never ranked very highly. However, in dollar terms, the United States is typically well out in front. In 2015, United States aid was about one-third higher than that from any other source, at $31 billion (Figure 1).

Trump’s 2018 budget proposal would put an end to United States global leadership on aid. He has signalled an intention to reduce United States aid by approximately one-third, or $11 billion, in a single year. If enacted, this cut would put United States aid volume on a par with that of Germany and the United Kingdom, countries one-sixth its economic weight. It would reduce United States aid to about 15 per cent of the global total, a low that has only been seen before in the late 90s, during the ‘end of history’ period in which the United States cut aid following the end of the Cold War (Figure 2).

Of course, budgets are determined by the Congress not by the President and the United States Senate Majority Leader has already spoken out against aid cuts. However, given how aid has been singled out by Trump, the need to find savings to support an increase in defence spending, and the negative view of aid among his voter base, it is hard to believe the United States aid budget will not be diminished greatly, even if perhaps over several years. Some other donor countries might follow suit with proportional aid cuts, though this is perhaps unlikely unless we see the election of more nationalist governments in Europe. However, some smaller copycat cuts are likely in at least a few countries, and other countries will certainly be reluctant to make compensating increases in their own aid budgets.

Aid cuts and Asia

Aid to Asia from all sources, bilateral and multilateral, has been on an upward trajectory since the late 1990s, in line with aid generally. It now stands at about $25 billion per annum, of which about $18 billion comes in the form of bilateral aid from OECD donor countries. United States aid to Asia dried up in the mid-1990s, but has since re-emerged, and the United States has provided the largest share of bilateral aid to Asia since 2005, as it did in an earlier era. (Figure 3)

However, the countries within Asia that are now receiving most of the United States aid are quite different to those of earlier decades. Afghanistan and Pakistan, which were earlier relatively minor recipients of aid, were the main beneficiaries of the scale up since 2000 and accounted for around 60 per cent of the US 4 billion in aid to the region in 2015. The next biggest allocation was to its traditional aid partner, the Philippines, followed by Bangladesh, Nepal, Indonesia and Myanmar. The United States has at times provided substantial amounts of food aid to North Korea, but not in recent years. Aid to previously important recipients, such as Indonesia, which peaked at $1 billion in 1971 (in 2014 prices), is now very limited (Figure 4). 

In general, the Trump administration’s stated intent to focus aid on countries of strategic importance will likely cause Asia to bear a disproportionate share of the aid cuts. Middle Eastern countries – Egypt, Jordan and Lebanon, and perhaps Iraq as well – are all likely to figure above Asian countries in any strategic calculus.

United States aid to Afghanistan, though still important, was running at around $3.2 billion per annum in the 2009-11 period, and had already fallen by 50 per cent to $1.6 billion in 2015. It is hard to guess how far Afghanistan might be considered to be of ‘strategic importance’ by the Trump administration, but it seems unlikely that it will fall squarely into this category. Reductions in United States aid to Afghanistan and Pakistan (around $800 million per annum) will harm both countries and increase poverty, but it is unlikely that it will change either countries’ problematic development trajectories.

Aid cuts and multilateralism

Trump’s announced cuts include substantial reductions in funding for international organisations. Funding for the multilateral development banks would be reduced by 10 per cent per annum. While cuts in funding for other organisations have not been specified, various leaks indicate they could be in the order of 40 per cent or more for many organisations, with some contributions cut in their entirety. International climate change spending would be cancelled, as Trump pledged in his 100-day plan. Only global health programs would be maintained at current levels.

The United Nations will be particularly hard hit. The United States provides 20–30 per cent of UN funding, depending on whether that funding is measured by compulsory or voluntary contributions (with more actually provided under the latter category). The United States is usually the first- or second-largest contributor to any international organisation. As most of this funding is voluntary, it is easily withdrawn. United States cuts have the potential to cripple major UN organisations like the World Health Organization and the UN Refugee Agency.

United States cuts to multilateral agencies will not only result in fewer or smaller humanitarian and development programs, but also make global cooperation more difficult. Aid is one of the few lubricants available to further global deals. The prime example is that of climate change.

Trump’s budget proposal indicates that the United States will not provide further funding to the Korea-based UN Green Climate Fund, to which the previous administration pledged $3 billion but paid only $1 billion. Developed countries’ willingness to put up funds for financing adaptation and mitigation in developing countries has been critical in getting developing countries to the climate change negotiating table ever since the initial breakthrough came in Copenhagen in 2009 when, led by the United States, developed countries pledged to mobilise $100 billion per annum in climate financing by 2020. The decision not to honour the United States climate change funding pledge, and the controversy around burden sharing that will result, will impede, if not block, further progress on the implementation of the 2015 Paris Agreement on climate change.

The World Bank is another example. The organisation is currently seeking a capital increase, but the US has the power to derail this and likely will, judging from Trump’s initial budget proposal. This will handicap the bank in any competition with its emerging rival, the Asian Infrastructure Investment Bank.

The ‘global gag plus’ rule introduced by Trump, which prevents the United States aid program from funding any organisation which performs or promotes abortion, deserves special mention. Given that the United States is currently the world’s largest bilateral donor in family planning, this will have widespread and negative impacts on reproductive health. Returning to Gillens’s point, it is also an example of how it can sometimes be easier to signal a change in social priorities through foreign policy rather than domestic policy.

Migration policy

In recent decades, the United States' immigration roots have been reasserted. As Figure 5 shows, the share of the population born overseas has increased again to 13 per cent, a share not seen since 1910.

Asian countries represent an ever-increasing proportion of the overall flow of all immigrants, now second only to the Americas (Figure 6).

Surveys show that immigration is unpopular with the working class, and Trump campaigned on an anti-immigration policy under the slogan ‘Put American Workers First’. He has signalled a preference for tilting migration in favour of skilled workers, using a ‘merit-based’ system of the kind found in Australia and Canada, and this might benefit Asia. However, actions to date suggest a clampdown on skilled as well as unskilled migration. The United States Citizenship and Immigration Service recently introduced a six-month halt starting in April for premium processing of the H1B temporary skilled visa. This visa is used primarily by large IT contractors and Silicon Valley companies to sponsor workers, mainly from India. This will remove the option to have a visa processed within 15 days, meaning approximately 15,000 visas will incur an additional three- to six-month wait for processing.

The United States runs the largest refugee resettlement program in the world. Indeed, its dominance of resettlement, at least among developed countries, makes its dominance of aid pale by comparison (Figure 7). In 2015, 118,000 refugees were resettled through the official UN-sponsored system. Of these, the United States took 66,500. Even if one compares countries with respect to total refugee acceptance numbers, which cover both resettlement and recognition of asylum seekers under local determination processes, the United States ranks fourth in the world (Figure 8). In 2015, a total of 1.1 million people were resettled or recognised as refugees in situ, and of these the United States accepted 90,000.

Trump’s migration Executive Order suspends the the United States resettlement program for 120 days, bans refugees from Syria, and also reduces the size of the intake to 50,000. Even if the revised version of the order is ultimately ruled unconstitutional by the Supreme Court, it is unlikely there will be any legal impediment to slashing the intake of refugees. Critical United States funding for the Asian operations of the UN Refugee Agency and the International Organisation for Migration, for example in the Pakistan-Afghanistan border regions and in Indonesia, is now also at very high risk.

One-third of the refugees the United States accepts are from Asia, mainly from Burma but also Bhutan (Figure 9). Some of the Middle Eastern refugees whom the United States accepts come to the States via Asia. For example, there are about 14,000 refugees and asylum seekers in Indonesia, mostly Muslim, and mainly from Afghanistan, Myanmar (Rohingyas) and Somalia. The United States has reportedly been the single largest resettlement destination for refugees hosted by Indonesia, accepting about 800 refugees in 2016.

Overall, the projected decline in migration will be bad for the residents of developing countries, especially bearing in mind that the benefits of migration are greatest to the unskilled and those fleeing persecution.

Development models

The Washington Consensus, a fairly mild articulation of pro-market economic policy from the 1980s, has long since failed to hold widespread popular or intellectual support. The author of the Washington Consensus, John Williamson, has recently summarised what he sees to be the key components of the Beijing Consensus, namely incremental reform, innovation, export-led growth, state capitalism and authoritarianism.

With China’s rapid economic progress, the Beijing Consensus is in the ascendency. Trump’s presidency is likely to accelerate this trend. First, his election and the deep divides in American society that it has revealed seem to cast further doubt on the pro-market policies and democratic values traditionally championed by the United States. Second, Trump’s mercantilism and his professed admiration of authoritarian leaders seem to validate key aspects of the Beijing Consensus. It is early days, but the greatest developmental impact of the Trump presidency may be to cement the Beijing Consensus as the pre-eminent global development model.

Updated:  24 April, 2017/Responsible Officer:  Dean, ANU College of Asia & the Pacific/Page Contact:  CAP Web Team