Financial Transparency Coalition

US Senator Richard Lugar (R-IN) wrote a good op-ed for the Center for Global Development‘s blog where he discusses the need to improve USAID. From the piece:

As a result of USAID’s diminished strength, foreign assistance programs have diffused throughout some two dozen other agencies and government departments, including the Pentagon, and USAID directly manages less than half our foreign assistance spending. Each of these agencies naturally considers itself the lead agency in its sector, provoking competition among agencies rather than coordination and coherence. We don’t really know whether these programs are complementary or working at cross-purposes.

For development to play its full role in our national security structure, the implementing agency must be a strong one. As Secretary of State Clinton recently said, USAID should “be seen as the premier development agency in the world.” To make that happen, we must start with three important changes that I and my Senate colleagues John Kerry, Bob Corker and Robert Menendez have incorporated into legislation we will soon introduce, the Foreign Assistance Revitalization and Accountability Act.

He’s right; we do need foreign aid reform, and he lays out three positive steps to get us there. However, while these are all positive factors, he does omit one reform that would make all the difference: curtailing illicit flows out of developing countries. Indeed Global Financial Integrity has demonstrated that illicit financial flows out of developing economies reach US$1 trillion per year – a stunning figure meaning that for every US$1 in developing economies receive in foreign aid, US$10 flow out through illicit means.

If we really want to help developing economies, then we need to think outside the box and tackle the bigger issues.