Articles / 07.09.2012
A controversial theory within the CD Beltway suggests that conventional aid as a tool of foreign policy – particularly when untethered from the linked restraints of common sense, familiarity with history, and a graduate student’s understanding of geopolitics – inevitably sparks unintended consequences. In most cases, these consequences are manageable. More money, a regime change, a manufactured crisis in a near-by capital… much can be engineered to divert attention until a pear-shaped situation normalizes. In extreme cases, however, these consequences can result in developments that run in direct opposition to the aid itself. Recent adventures abroad provide plenty of examples of both.
With this as a superficial framework, one might be forgiven for missing Secretary Clinton’s February announcement that $800mm in foreign aid would be converted to investment. And given the forum in which I pen these thoughts, it will come as no surprise that State wants to launch an impact investing initiative. “What better way,” one imagines a room full of policy wonks rhetorically asking themselves, “to shift the perception of American-style capitalism than to demonstrate the capacity for capital to generate financial return – and all the benefits this brings – as well as create environmental and social value?” Presuming, of course, that this new-fangled form of foreign aid/investment actually works.
Unfortunately, even ignoring the recent headline-grabbing collapse of Solyndra, the government’s track record in direct investment is… questionable. In this case, I suggest that past experience is very much an indication of future performance.
Hence a conference to which I was invited, convened at the behest of Secretary Clinton, and intended to cross-pollinate those in State who would like to invest that substantial sum into “impact investments” with those in the private sector regarded as leaders in the discipline. A brief review:
The skepticism with regards to government investing taxpayer dollars in for-profit enterprise that I struggled to contain was, unfortunately, confirmed. Seen through the lens of my single, two-day exposure, they simply don’t know what they are doing. Perhaps this is due to the fact that State pursues foreign policy first, and that this lens is a condition for failure. Perhaps. I think that the failure stems from the culture of government itself: a lack of accountability to those who pay the bills, and a subsequent inability to think about the strictures that come with capital allocation decisions. Government is not business, no matter how much we try to make it.
However, some of the people I met at the conference – from the whip-smart head of OPIC to the venture-seasoned CEO of In-Q-Tel, to the young woman screening potential investments for USAID – the people who are drawn to the promise of harnessing Impact Investing in support of the American “Brand” are impressive, compassionate, dedicated and capable. This is the well-spring of my careful enthusiasm.
What remains to be seen is if these individuals, each of whom would be successful in the private sector, will be able to execute Clinton’s vision of a “New Global Economy” within the cumbersome, Byzantine, freighted world of DC politics. In short, and not without caveats, I was surprised to find myself encouraged at the end of the two-day event, and for a broad range of reasons, I wish for them a great deal of success.