Middle East Adjusts To Trump’s Foreign Aid Game

Donald Trump took to Twitter on 7 February: “After so stupidly spending $7 trillion in the Middle East, it is now time to start investing in OUR Country!” sentiment echoed throughout his “America first” presidential campaign. Days later, the White House released its draft budget for the 2019 fiscal year (from 1 October 2018). This cuts $17bn from State Department and USAID funding a 29% decrease from the 2018 budget.

But developments on the ground tell a more nuanced story. Two days after the draft budget was released, US Secretary of State Rex Tillerson announced a five-year $6.38bn assistance package to Jordan, hailing the “strategic and indispensable relationship” between the two countries. The deal amounts to a $275mn annual hike to the already sizable assistance the US provides to Amman. Jordan is the most aid-dependent country in the Middle East, with foreign grants comprising about 10% of budgeted revenues this year (MEES, 1 December 2017), and the US is Jordan’s single biggest donor.

Israel, the region’s second biggest recipient after Iraq, is likely to receive more aid from the current administration too. In 2016, the Obama administration signed an agreement to provide Israel with a hefty $38bn in military assistance over 10 years from 2018. But this week, Senate Foreign Relations Committee announced that the $3.8bn annual figure should be seen as merely a baseline for further potential increases.

Despite his denunciation of overseas spending, Mr Trump is more willing than his predecessors to use foreign aid as a policy tool in the region rewarding stable allies while punishing the less cooperative.

In January, the US suspended $65mn in humanitarian aid to UNRWA the organization responsible for assisting Palestinian refugees claiming the US receives “no appreciation or respect” for its assistance. Washington typically gives about $370mn a year to UNRWA: the suspended $65mn was to have been the first installment for 2018. The US also suspended around $1bn to Pakistan in January. Mr Trump, in his inaugural Tweet of 2017, cited Islamabad’s “lies & deceit” in giving “safe haven to the terrorists we hunt in Afghanistan.”

The administration’s biggest move in Middle East foreign aid diplomacy occurred in August 2017 when it announced the US would cut $96mn in aid to Egypt and suspend another $195mn citing concerns over President Sisi’s lousy human rights record. This came a mere four months after Mr Trump praised Sisi’s “fantastic job” as leader, affirming strong US backing.

Since the 1978 Camp David accords, the US has given Egypt an average of $1.6bn/year in foreign aid, with the lion’s share, an average of $1.3bn going to the Egyptian military. The US slashed aid to Egypt by $1.4bn in 2014 following the coup d’état carried out against Muhammad Mursi’s democratically elected government, but aid levels rebounded the following year (see chart). Egypt’s upcoming election, in which Mr Sisi will likely stand uncontested, will provide bad optics in DC and possibly jeopardize aid moving forward.

MILITARY MONEY

The distinction between economic and military aid, which USAID makes in its official data, is crucial to the current administration’s strategy. US foreign aid is funded and implemented on an agency basis, meaning the Department of Defense allocates military aid from its budget and other agencies allocate economic and humanitarian aid from their budgets. The Republicans’ Pentagon-friendly budgets will likely increase military aid as a share of the total, with Iraq a clear example.

The GW Bush administration allocated about 38% of total aid from 2003 to 2008 toward the military. But the fight against Islamic State (IS) necessitated an increased emphasis on the Iraqi military. In 2016, Iraq received $5.3bn in foreign aid 90% of which was allocated toward the Iraqi military for its campaign against IS. 2017 aid should increase due to further US involvement in the campaign. The US provided minimal pledges at last month’s Iraq reconstruction conference (MEES, 16 February), signaling a move away from the nation-building model in Iraq.

US aid to Israel is entirely military; for Egypt the military share has averaged 84% of the total for the last five years. The Trump administration pledged $120mn in military aid to the Lebanese army in December 2017, with the share of military aid to Beirut ticking up over the last five years.

Mr Obama moved away from the Bush administration’s nation-building model, but Mr Trump’s administration appears to be using foreign aid on an unprecedented scale, cutting humanitarian assistance while rewarding allies’ militaries.