← This Week in Global Development
This Week in Global Development
Inside EIB’s critical meetings and USAID’s controversial shutdown
00:24:49
This week, we are reporting from the https://www.devex.com/news/devex-invested-at-eib-meetings-big-money-in-a-tiny-duchy-111983 to better understand the direction in which the institution is heading. We dig into the agenda as Europe continues to...
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- [00:00]
A
Foreign My name is Rimby Chakamba and you're listening to this Week in Global Development hosted by myself, Agra Saldinga and David Ainsworth. And I'm joined by our reporters Jesse and Michael. And this week we're talking about the EIB annual meetings as well as USAID closeout. Jesse, I'm going to start with you because Jesse is joining us from Luxembourg. So you're at the EIB annual meetings this week and I think the first thing I read in your newsletter was that these are focused on sort of like defense and competitiveness. And for me, whenever I think about like defense spending, I look at it as a zero sum game. If we're spending more on defense, it means there's less money for development. But the EIB president, he spoke to the EIB president and she says this is not the case for eib. They are very much still in the business of development. Can you take us through some of the things that she's told you?
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B
Yes, absolutely. So, yeah. Joining you from my hotel room in Luxembourg for now, and I've been at the conference for the last two days and I think it's really important just to set this up, set the context of the bank up a little bit. EIB is the European Investment bank and it's largely a financier for European countries. They have this one program called EIB Global and that is what we're mainly talking about here. That's what goes to the, the countries outside of the eu, including neighbors to the eu, as well as countries in Africa, Latin America, that kind of thing. However, the money that goes to EIB Global is much less than what goes to Europe. European countries, about 90% or more goes to European Union countries and the rest goes to EIB Global. So I just think that's important to kind of set this up. The result of that is that a lot of this conference was about, you know, what, what, what they're doing within the European Union. And that is where defense really fits in. I was, I came into the meeting with a similar question as, as you just asked, with less, with more on defense, is there less for development? And really everybody said there's really no trade off here. I talked to the president, but I also talked to, to the Director General for EIB Global, that kind of defense, that smaller portion, defense side, development side of things. And he said that there less money is not going towards development as a result of more going towards defense. It's hard as far as kind of breaking down the numbers. I'm not sure if there's more to investigate there. But as far as the EIB is concerned, they're not pulling back on development overall. There was a much different tone here than I think we've all been hearing in the development world. The President said it was a roundtable where I spoke. I was able to ask her a question directly at a roundtable that she responded to and she said that EIB is really carrying the flag of development. I heard a lot of people saying that they're staying the course, that Europe is stepping up in the development world. Really like positive, kind of encouraging phrasing going on. They said they're not shying away from climate gender inclusivity. None of those words are kind of bad words on their books, which is really interesting. And several of the speakers who were more on the development side, we had the CEO of Gavi, WTO is there and they explicitly framed Europe as kind of a champion of development and a champion of the rules based order. So I think that's just fascinating because when everyone else is stepping back, they're at the very least they're not shying away from it. They don't have the US as a stakeholder, but that's still not necessarily enough to kind of keep them from speaking more about it.
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A
And they've kind of backed this up with some new announcements. Right, New announcement at these meetings in particular, what are some of the new things that they'll be investing in?
- [03:42]
B
Yeah, so they, they announced yesterday and today. I'm not sure exactly which was which because we heard about it all yesterday, but they're putting 1 billion euros into Mission 300, which is the AFDB led program to bring energy access to 300 million people in Africa. So that's pretty new and exciting. And they're also financing a new manufacturing vaccine center in South Africa. I think they already have done so in Senegal, Rwanda and Ghana, but that seems to be increasing. They also put out a new gender action plan that runs through 2030 for women's equal access to economic security and stability in and outside Europe. And then they're also talking a lot today about a new partnership between the EIB and the WTO to enhance some of that kind of international financial trade. I'm not entirely sure what that will mean. I haven't dug into, I haven't had a chance to dig in deeply to that. But they're framing it as kind of a win win situation. So at the same time as we're hearing a lot of this positivity, we're also hearing like Competitiveness and European corporations are the most important thing right now. And we can still provide development assistance while improving European companies kind of stakeholding in development. So they increasingly want European companies and European corporations to be a part of this.
- [05:05]
A
A little bit from the American playbook, I'm hearing a lot of this language around like the business case for development as well and like how it can serve, how it's like a service to Europe and why they should be doing it. And I'm wondering if that language actually like helps in this to make sure that they support for actual development funding. But another interesting thing that I found in some of the investments that they announced is this focus on priorities that also seem to be important to Africa. There's always this discussion around who sets the agenda and how countries are receiving aid, should be able to set the agenda. And it seems when you look at things like Mission 3000, vaccine manufacturing, those are all things that are sort of like on the top of the list for the African Union. Are you seeing that as well?
- [05:48]
B
I mean, it was interesting because Nadia Cabinho, the president, said that she'd spoken to the, to the AFTB president yesterday. So clearly there's, I don't know if it's more interaction between them, but there is definitely a lot of interaction there. And I think like, in general, what we heard when, when I was at the Munich Security Conference is if Europe cares about defense, they have to care about development, they have to care about the countries just outside their borders. Because if they, if they want to curb migration, then you need to make it, make it so that people are able to stay in the countries that they actually want to stay in and make food accessible and water accessible and healthcare accessible. So I, I didn't hear it super explicitly as far as, as far as like, you know, we want to make sure that African voices are here. This is a very, very European centric conference. But I do think that there's a clear connection between the two. And I just also wanted to add on the sort of like business, commercial interest side of it, there are companies here representing big oil and big, big kind of fossil fuel companies, lobbyists. That's also a part of this. It's very much a chance for them to make their case to the EIB as far as investments go. I did speak to someone at the EIB who said, you know, these are, we have to engage with this side too. We can't leave them out of the conversations. And they do have interest in investing further in some of the kind of green solutions that EIB is very proud of.
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A
So.
- [07:14]
B
So I don't know, some civil society orgs have said, you know, commercial interests are really predominant here and this sort of win win situation that I mentioned earlier, that can create some concerning trends or potential as well. When it comes to, you know, are you going to prioritize the strategic and commercial interests of Europe or are you going to focus on kind of the core development priorities of poverty eradication and healthcare and stuff like that. So, you know, sometimes win win, the win win sounds great and I think they do need to sell it that way at a time when a lot of people don't want to support development. But there can also be a downside and potentially not enough room to truly win on both sides.
- [07:52]
A
I was going to say that's like one of the main criticisms of cop and I'm sure like a lot of people are probably quite unhappy with that kind of inclusion, but I think it'll be interesting to see how this plays out in the long run as people are looking for alternative ways to fund development. How do we bring that money in and manage sort of the negative aspects of it? Thanks so much, Jesse for this update from eib. I'm actually curious, when is the, when are the meetings ending?
- [08:18]
B
Tomorrow morning is really the end. Today's the last full day and interestingly, the EIB Global portion of it only started this afternoon. So yesterday and this morning were all, I mean, there were some topics that obviously hit on the development side of things, but the EIB Global specific discussions have only been this afternoon and I think there's like one or two tomorrow morning and then it closes at like two or something.
- [08:48]
C
Are you interested in the intersection of business and social impact? Do you want to know how corporate sustainability, ESG impact investing and more can contribute to development finance? My name is Adva Saldinger. I'm a senior reporter at devex and I've been reporting on these issues for nearly a decade. I'm the author of Devex Invested, our free weekly newsletter dedicated to development finance. Every Tuesday we explore how companies, investors and market mechanisms are reshaping the world of development finance. Visit devex.com newsletters and join us on Tuesdays.
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A
And Michael, I want to jump to you because, you know, I think one of the annoying things I do as an editor and probably reporters could attest to this is each time we write about USAID shutdown, I'm always like, is it technically shut down? Should we be using this thing language? And I don't know if it's just Me being a little bit hopeful. But then you're actually looking at this process of kind of shutting it down and not really an easy process to go through. Can you take us through? And I think it mainly involves paying out people who are still owed by the agency. Can you take us through the steps that the agency still needs to go through to shut down?
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D
Yeah, absolutely. And, Rembe, it's a good editor's question and one that opens up a big can of worms right now. Has USAID been shut down or not? The answer on paper is, you know, I think probably a number of folks would be surprised to hear that the U.S. agency for International Development technically still exists in law and in, you know, actual reality. What remains of the agency is, as you said, basically focused on shutting itself down. That's sort of the broad scope of operations that are going on there now.
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A
Sorry, I just want to highlight. That was actually supposed to happen this week, Right. Like the official shutdown was supposed to end this week, but from your reporting, I'm assuming that's impossible.
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D
Yeah. So, yes and no. Well, let me just back up. So the sort of components of this are, as you said, like a big piece of it is paying out money to former partners that are owed sort of compensation for the expenses that came along with terminating their awards. So you can imagine, you know, you're running a. A project in wherever in Senegal. You get a notice from the US Government that we're terminating this project. It's not like you just sort of, you know, close your doors and walk away. There's a number of things that have to happen. You have to provide severance for people. In some cases, you have to make sure you're. You're adhering to local labor laws. You've got, you know, you have to get people back to the United States if they're expats. There are all kinds of things that, that still cost money after you shut down a project. So now you've got all of these former partners of USAID who are submitting termination settlement proposals, and the very small crew that remains at the agency has this sort of unprecedented challenge of sorting through all of that and coming up with an equitable and legal keyword solution to all of this. And so you're right, initially. Well, the story just gets more and more complicated the more you get into it. But at first, this was the responsibility of the State Department, which makes sense, right, because usaid, its remaining programs and functions have been folded into the State Department. And then Secretary of State Marco Rubio is sort of overseeing all of that. But then the State Department handed that off to the White House Office of Management and Budget. It was not a foreign affairs agency. It's the, the part of the, the federal government that sort of controls spending. And so that's the team that has been the political team that's been leading this process. And back when they took over control in August, September, they told the staff that, yes, this needed to be done by March. So that's this Saturday. When you talk to anybody who's been inside the world of US Aid contracting for a long time, they will tell you that that is not a feasible timeline, that closing out these projects takes months, if not years. And something at this scale where you terminated 5,000 awards at once, you know, just the unprecedented scope of that challenge makes that March 7th date, made that March 7th date from the beginning seem really impossible to a lot of the folks who are working on it. But for a while, the OMB leadership sort of kept that as the target said they were driving towards it. And there have been a few things that have happened recently that suggest that timeline is slipping. And I'm happy to talk about some of those. But let me pause in case you have any questions about this massively complex situation that is unfolding right now.
- [13:25]
A
I was just actually going to note that what makes it even more difficult is that the staff themselves who are in charge of this process are now just down to couple of dozen people. Right. And so if you look at the timeline, look at the staff involved, it definitely looks impossible. But sure, please take us through the processes that are involved now.
- [13:45]
D
Sure, you're exactly right. So USAID writ large was an agency that employed about 10,000 people. Now we're down to like several dozen who are focused on this particular task of dealing with sort of the human resources remaining pieces. We could talk a little bit about that sort of severance in pensions, payments to former officials, and then the project closeout termination settlement process. So the reason that we believe that the political leadership is starting to understand that this is going to take much longer is that they're bringing in new people. They've put out this contract which we reported on first that says that's it's called an institutional support contract. Basically you hire people to serve in sort of functions that are similar to a US Government employee, but they're, they're employed by an outside contractor. The weird thing about this contract was that it specifically barred anyone with former USAID experience from being part of it. That's a very unusual thing to do. And raised a lot of eyebrows because, you know, one might think that the people that you want doing this are people with USAID experience. But a memo that accompanied that, that we reported on, said that the reason for this was they, the sort of political leadership was skeptical of the objectivity of folks who'd been previously associated with usaid. In other words, they didn't really trust them to do this job. And so they were bringing in outside people without that sort of background or experience or relationship with the agency. Doing that now, you know, is like, it's a whole other step. So this is pushing the process months. In the meantime, the career staff who are still there, the actual, like, USAID officials, I'm told they've had their contracts extended from this March 7th date, when they were all expecting to be let go, to September 30th. So the broad point here is that this is a process that is taking longer than OMB wanted it to at the outset, you know, and as all of the USAID people were saying, like, this is not. It's not possible to do this by March 7th.
- [15:47]
A
And you touch on the tensions that are kind of involved in this process. And one thing that I found fascinating about your story is the people that are involved, because I think it kind of leads to, like, this memo that you talk about. But one of the former staffers or staffers that she spoke to, one of the sources that she spoke to had a very interesting quote. She say, he or she says, I sincerely wish I knew why they hated us so much. And this is in reference to the political leadership. And I think when you look at the. Maybe I'm being kind. I don't know if it's hate necessarily, but maybe I'm being kind. But I think when you look at the people involved, like, if you look at these staffers, they've been involved in this. This agency for such a long time and probably have, like, a deep sense and belief that foreign aid matters and the work that they did for all these years matters. Then you have people who probably are very skeptical about foreign aid as a concept to begin with, and they don't really believe in this at all. So I can imagine, like, when I looked at, like, the two sort of groups of people that are involved, I actually just saw the tension. I just thought, okay, this probably won't work out really well. Can you take us through some of, like, the. The characters that are involved in this?
- [16:54]
D
Yeah, no, you're right. I mean, it's a massive sort of clash of worldviews and experiences. But what I would say is like the official. So I spoke to, like, four people who are working on this process and have since left the agency. And they all told me that the reason that they agreed to stay on at USAID, despite, you know, the Trump administration effectively dismantling it and, you know, shifting all of its authorities to the State Department, is that they, they felt a responsibility to the agency's former partners to make sure that they were treated fairly and received equitable payments from the US Government. So, you know, I think it is true that the folks at the White House Office of Management and Budget and some of the other political appointees involved here probably think that those officials are still kind of pushing a foreign aid agenda or something like that. What they all told me was that that is not the case. They're not trying to, you know, do anything sort of untoward. They're just trying to make sure that the former partners get paid. So I think that's a really important point because there are sort of like, there's a lot of deep seated mistrust and suspicion. You know, we heard back in the spring last year, like, there was a real sort of vilification of USAID staff, a lot of sort of misinformation about them. And so I think that has sort of like, really poisoned the atmosphere in a lot of cases in terms of the specific people involved. You know, at the very top of this process right now is the OMB director, who is Russell Vogt. If folks in this community have heard his name before, it's probably been in the context of his efforts, his repeated efforts to cut massive amounts of foreign assistance funding. So he's the person who has driven the foreign aid rescissions over the last few years, which is, you know, money that's already approved by Congress. OMB has tried to claw that back and has done so successfully to the tune of billions of dollars. So at the top, that's who we're talking about. The person who's now in charge of this process, or at least the one that everybody answers to, is the same person who's repeatedly shown a massive dislike for foreign assistance and tried to cut it at every turn. And then under him, you've got sort of a combination of slightly more political appointees and then kind of folks who are a little bit more operational and are just trying to get this thing done. And then on the flip side is this sort of remaining group of USAID contracting officers, foreign service officers who know how projects work and know how the contracts are structured and are trying to process those termination settlement proposals, packages in a really difficult context. And let me just make one more point. So, you know, as you noted, usaid, like the vast majority of staff are gone. That's a real problem in this process because like, there's nobody at a USAID mission in a country that was implementing a project that you can go to and say, hey, what was this project all about? Did they actually do the work? You know, can you verify that this took place so that we can make sure we're compensating them for something that that was actually done or that was, you know, a justifiable expense or something like that. Like all the people who knew about the projects are gone. And so these contracting officers are just kind of there trying to sort through, you know, pages and pages and pages of, of award information and verifying this stuff in sort of like a vacuum. So it's, it's a huge challenge.
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A
I think in years to come we'll probably have an assessment of this process and see the ways that we probably would have made it easier and probably the financial implication of doing it this way. But one thing I want us to zone in on is you also did a separate story looking at the pension process and that's also had its difficulties. And it also seems like it is like a multi layered process for ex staffers who are actually, who can actually get benefits, because not everyone can. Can you take us through that as well?
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D
Yeah, sure. So the irony here is that in my reporting on the overall USAID closeout process, folks point to this pension thing as actually something that's, I wouldn't say going well, but at least moving forward. And so, yeah, I wrote a story about how this has been subject to a lot of delays. It's actually going probably better than the termination settlement process. So that's just a sort of broader framing, but basically, yeah. So there are eligibility requirements for the Foreign Service and Civil Service that vary in terms of who is eligible for retirement. It's a combination of like years in service and age with a few other sort of like, technicalities in there. And so a subset of USAID officials, when they were forced into retirement by the reductions in force, were eligible for retirement benefits for a, for a pension. And so there's a fairly complex process that has to take place in order for them to start receiving those payments. But back in the old world where USAID just sort of functioned and did its thing, they would expect to get a pension check relatively quickly after retirement. In this case, I talked to one Former USAID official, worked at the agency for 20 years. He was the former deputy mission director in Afghanistan. He was actually stuck in Kabul for nine months during the COVID pandemic. Lives in Paraguay now. He hasn't gotten any money since, you know, leaving the agency in July. He's been without any income whatsoever. And you know, that would be one thing if like folks had been able to plan ahead for that. But this all happened so suddenly that officials who had years of government and government service under their belts and felt like that was a real source of kind of like retirement security are now just sort of dropped off this cliff with no paycheck coming in. And again, it's a really difficult situation for them. But they also acknowledge that they're the ones who are in the best situation, which is that they will be at some point receiving a pension, whereas a lot of USAID officials who are let go were not eligible for retirement. I mean, I've heard stories about people who were like six months from the birthday that would have made them eligible to receive a pension, you know, and then that all just sort of vanishes. So it's, it's a difficult situation, but they're all very sort of self aware of the fact that it's in the grand scheme of things better off than a lot of folks.
- [23:07]
A
Yeah, I found that interesting that some of the sources you spoke to are like, we don't even want to mention this because we understand that so many of our ex colleagues are in a worse situation. But I'm assuming all this is going to be included in your Saturday newsletter. Is there anything more that we can look forward to?
- [23:22]
D
Yeah, so I'll have a story coming out shortly on the, the termination settlement process that, that side of things. And then I think the newsletter this week I believe is coming out on Thursday instead of Saturday because I guess we're feeling spunky. So folks can, can look for that. And yes, it will include a lot more details on kind of like where the closeout process stands that's been keeping me busy recently. I can throw a wrench into the conversation as well, just on my way out, which is that I'm also digging into sort of the fallout and implications for the Gates foundation and its partners of some of the recent revelations related to Jeffrey Epstein.
- [23:58]
A
Very interesting. And obviously if any of our listeners have got something to add, please feel free to contact Michael and Jesse. I know that the conference will be ending tomorrow and we should also expect a special newsletter from you, I'm assuming.
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B
Yes. Yeah, I'll I'll be writing that up tomorrow and should expect it on Friday, I think. And then I'm actually heading quite a lot of travel. I'm heading to to Paraguay for the Inter American Development bank meetings on Monday. So I'll be updating you from that one on what that bank is up to. Lots of bank conferences, exciting times.
- [24:30]
A
Thank you both so much for joining me.
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B
Thank you so much.
- [24:33]
D
Thanks, Rimby.