Over the past decade the way the U.S. delivers foreign assistance has undergone a quiet transformation. Large government-to-government assistance programs are making way for nimble and deft investments that target specific development goals while simultaneously advancing American interests abroad. Public-private partnerships—cooperation between the U.S. government, foreign governments, businesses and non-profits—are the engine of this recent transformation. These strategic partnerships catalyze development and strengthen relationships abroad.
The move toward integrating public-private partnerships (P3s) in American foreign policy started in part by growing fiscal austerity in Washington. It also was also propagated by the changing landscape of the source of America’s foreign assistance. Fifty years ago official development assistance accounted for nearly three quarters of U.S. financial aid to developing countries. In 2010, that number had dropped to 9 percent, while funds from businesses, investors, foundation, non-profits and other non-governmental organizations represented 91 percent of the $326 billion flowing to developing countries.
Just has important to this shift in strategy was the recognition that partnerships with the private sector showcase America’s strongest assets abroad—its business, scientific and cultural capabilities. These aspects of America’s soft power are remarkably well regarded around the world, even where the U.S. is not seen very positively. More than half of Jordanians and Egyptians indicate they like the way America does business, even though overall favorability toward the U.S. in both countries is below 20 percent.
One of the latest examples of America’s new partnership driven economic diplomacy can be found snaking across the Jordanian desert. There, the Overseas Private Investment Corporation (OPIC) is funding a 200-mile pipeline that will soon pump over 25 billion gallons of water a year from Jordan’s southern desert to its capital city Amman.
At $1.1 billion, the Disi Water Conveyance Project is an ambitious attempt to ease Jordan’s water crisis. Today, Jordan suffers from the fourth lowest availability of water per capita in the world, forcing the government to place strict restrictions on the usage of water. In Amman, government water trucks deliver household water only once a week, forcing many to pay expensive private water companies to supplement their supplies.
This water crisis has led to some of the worst protests the country has experienced in decades. During the hottest months of 2012, protestors shut down entire neighborhoods in Amman calling for a reform of the country’s water management. Outside the city, protestors were illegally tapping into government wells and pipelines, forcing the Water Authority to hire armed guards to protect the country’s water supply.
Plagued by these chronic budget deficits the Jordanian Government decided to build the pipeline with Diwaco, a joint venture between a Turkish energy company and General Electric. The structure of the build-operate-transfer concession contract left it up to Diwaco to secure funding, construct the pipeline and operate the system. Diwaco would keep any revenues generated and transfer ownership to the Jordanian government after twenty-five years.
OPIC initially extended a $250 million loan to Diwaco, which allowed the company to raise an additional $550 million from the French Development Agency, the European Investment Bank and its own investors. With three government development banks and Diwaco on board, the Jordanian government allocated $300 million to finalize construction. This partnership model, driven by the U.S. and G.E., was critical for the Jordanian government to secure the $1.1 billion financing at a time when the global financial markets were frozen in 2009.
The Disi pipeline exemplifies the larger shift towards partnership seen in U.S. foreign policy over the past ten years. President George W. Bush’s campaign against AIDs in Africa (Pepfar) helped save over 1 million lives during his administration thanks to strategic partnerships forged with host governments, foundations and non-profits, including the Global Fund to Fight AIDs, Tuberculosis and Malaria and the United Nations Program on AIDs.
In 2008, the Global Partnership Initiative (GPI) was created as a direct report to the Secretary of State to recruit private partners for various State Department initiatives around the world. In its first four years the initiative engaged over 1,000 partners and mobilized $650 million in public and private capital toward American foreign policy objectives such as climate change mitigation and women’s empowerment.
Initiatives like the Disi Pipeline, Pepfar and GPI bring together the best and the brightest from across all sectors and help drive innovation and new solutions to stubborn challenges like water security, AIDS, and other issues. They tap into positive global sentiment regarding American soft power and help build mutual, long-term relationships.
Secretary of State John Kerry believes that P3s are “a new model for how we’re actually providing help” to allies abroad. He made his point when he announced an initiative in Palestinian Territories in April “to bring to bring major corporations to the table who are looking for places to invest where they can make a difference, where it may not be that today the bottom line on a spreadsheet tells them this is the best investment in the world, but where they can also be persuaded that they’re investing in the future and in peace, in changing the lives of people, and in opening up doors of opportunity.”
The question now is how the State Department will translate the opportunity that P3s present into broader, strategic U.S. foreign policy gains in the Middle East and beyond.
Christopher Maroshegyi is the Founding Director of P3 Intelligence at The Concordia Summit, a non-profit organization dedicated to building sustainable public-private partnerships. Prior to joining The Concordia Summit, Chris was an adviser to the UNESCO office in Iraq and the co-founder of Al-Noor, a research journal that builds an understanding about the Middle East and the Islamic world.
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Public-Private Partnerships: The New Paradigm of American Foreign Policy
September 25, 2013
Over the past decade the way the U.S. delivers foreign assistance has undergone a quiet transformation. Large government-to-government assistance programs are making way for nimble and deft investments that target specific development goals while simultaneously advancing American interests abroad. Public-private partnerships—cooperation between the U.S. government, foreign governments, businesses and non-profits—are the engine of this recent transformation. These strategic partnerships catalyze development and strengthen relationships abroad.
The move toward integrating public-private partnerships (P3s) in American foreign policy started in part by growing fiscal austerity in Washington. It also was also propagated by the changing landscape of the source of America’s foreign assistance. Fifty years ago official development assistance accounted for nearly three quarters of U.S. financial aid to developing countries. In 2010, that number had dropped to 9 percent, while funds from businesses, investors, foundation, non-profits and other non-governmental organizations represented 91 percent of the $326 billion flowing to developing countries.
Just has important to this shift in strategy was the recognition that partnerships with the private sector showcase America’s strongest assets abroad—its business, scientific and cultural capabilities. These aspects of America’s soft power are remarkably well regarded around the world, even where the U.S. is not seen very positively. More than half of Jordanians and Egyptians indicate they like the way America does business, even though overall favorability toward the U.S. in both countries is below 20 percent.
One of the latest examples of America’s new partnership driven economic diplomacy can be found snaking across the Jordanian desert. There, the Overseas Private Investment Corporation (OPIC) is funding a 200-mile pipeline that will soon pump over 25 billion gallons of water a year from Jordan’s southern desert to its capital city Amman.
At $1.1 billion, the Disi Water Conveyance Project is an ambitious attempt to ease Jordan’s water crisis. Today, Jordan suffers from the fourth lowest availability of water per capita in the world, forcing the government to place strict restrictions on the usage of water. In Amman, government water trucks deliver household water only once a week, forcing many to pay expensive private water companies to supplement their supplies.
This water crisis has led to some of the worst protests the country has experienced in decades. During the hottest months of 2012, protestors shut down entire neighborhoods in Amman calling for a reform of the country’s water management. Outside the city, protestors were illegally tapping into government wells and pipelines, forcing the Water Authority to hire armed guards to protect the country’s water supply.
Plagued by these chronic budget deficits the Jordanian Government decided to build the pipeline with Diwaco, a joint venture between a Turkish energy company and General Electric. The structure of the build-operate-transfer concession contract left it up to Diwaco to secure funding, construct the pipeline and operate the system. Diwaco would keep any revenues generated and transfer ownership to the Jordanian government after twenty-five years.
OPIC initially extended a $250 million loan to Diwaco, which allowed the company to raise an additional $550 million from the French Development Agency, the European Investment Bank and its own investors. With three government development banks and Diwaco on board, the Jordanian government allocated $300 million to finalize construction. This partnership model, driven by the U.S. and G.E., was critical for the Jordanian government to secure the $1.1 billion financing at a time when the global financial markets were frozen in 2009.
The Disi pipeline exemplifies the larger shift towards partnership seen in U.S. foreign policy over the past ten years. President George W. Bush’s campaign against AIDs in Africa (Pepfar) helped save over 1 million lives during his administration thanks to strategic partnerships forged with host governments, foundations and non-profits, including the Global Fund to Fight AIDs, Tuberculosis and Malaria and the United Nations Program on AIDs.
In 2008, the Global Partnership Initiative (GPI) was created as a direct report to the Secretary of State to recruit private partners for various State Department initiatives around the world. In its first four years the initiative engaged over 1,000 partners and mobilized $650 million in public and private capital toward American foreign policy objectives such as climate change mitigation and women’s empowerment.
Initiatives like the Disi Pipeline, Pepfar and GPI bring together the best and the brightest from across all sectors and help drive innovation and new solutions to stubborn challenges like water security, AIDS, and other issues. They tap into positive global sentiment regarding American soft power and help build mutual, long-term relationships.
Secretary of State John Kerry believes that P3s are “a new model for how we’re actually providing help” to allies abroad. He made his point when he announced an initiative in Palestinian Territories in April “to bring to bring major corporations to the table who are looking for places to invest where they can make a difference, where it may not be that today the bottom line on a spreadsheet tells them this is the best investment in the world, but where they can also be persuaded that they’re investing in the future and in peace, in changing the lives of people, and in opening up doors of opportunity.”
The question now is how the State Department will translate the opportunity that P3s present into broader, strategic U.S. foreign policy gains in the Middle East and beyond.
Christopher Maroshegyi is the Founding Director of P3 Intelligence at The Concordia Summit, a non-profit organization dedicated to building sustainable public-private partnerships. Prior to joining The Concordia Summit, Chris was an adviser to the UNESCO office in Iraq and the co-founder of Al-Noor, a research journal that builds an understanding about the Middle East and the Islamic world.
