This is how President Obama described the role of foreign aid in our geopolitical relationship with the world.  Today on All Things Considered, NPR had a segment on Obama’s speech to the United Nations on America’s changing approach to aid:

President Barack Obama on Wednesday defended U.S. aid to impoverished people even during sour economic times at home yet promised a sterner approach, favoring nations that commit to democracy and economic revival.

Addressing world leaders, Obama offered no new commitments of U.S. dollars, but rather a blueprint of the development policy that will drive his government’s efforts and determine where the money flows. His message was that the United States wants to help countries help themselves, not offer aid that provides short-term relief without reforming societies.

“That’s not development, that’s dependence,” Obama said. “And it’s a cycle we need to break. Instead of just managing poverty, we have to offer nations and people a path out of poverty.”

This isn’t necessarily revolutionary thinking, but it is still significant.  People have been talking about redefining the way we give money to developing countries, and it has always been a tool of foreign policy.  In the past decade USAID has been funding projects that shore up the private sector economy in countries around the world, even if government-to-government aid is still alive and well.  And just a few months ago, a memo titled “A New Way Forward on Global Development” was leaked, detailing this radical change in strategy and approach for foreign aid.

Obama talks about favoring countries that are committed to the principles of democracy and economic revival, though this is only partly true.  We have been known to give money to countries that are not exactly democracies in a traditional sense, and have have withheld money from other countries that are democracies.

Development, like diplomacy and defense, is just another component of statecraft.  In an article titled “Banned Aid” in Foreign Affairs, Jagdish Baghwati explains this principle:

Foreign aid rests on two principles: that it should be given as a moral duty and that it should yield beneficial results. Duty can be seen as an obligation independent of its consequences, but in practice, few are likely to continue giving if their charity has little positive effect.

We give the most money to countries in which we have a strategic interest, either in region or country itself.  The neighboring country effect says that a volatile or failed state can destabilize an entire region (think of Somalia or Zimbabwe).  Creating opportunities and reducing desperate poverty in an underdeveloped country can pay dividends by improving the region as a whole, empowering the neighboring populations, and decreasing the likelihood that the country will become a haven for terrorists, which is what has happened in Somalia, Yemen, and Pakistan.  This is the same reason why China and multi-national oil companies build roads and dams in Africa – they have a strategic interest in accessing the continent’s natural resources.  But they also recognize that it is important to get value for the investment, so infrastructure projects by the Chinese government are generally well-executed.

So it is good that the United States and the Obama administration are going to push for ROI in the future approach to aid and development.  A while back, a memo was “leaked” discussing this sea change in policy position and I wrote a post about it.  Here is what I wrote then:

This is why I voted for Obama.  He is pragmatic and forward-thinking.  This is a strategy that will not pay off immediately.  It is a long-term approach not just to development, but to ensuring our national security in the future.  We have retooled our defense spending to focus on small-scale guerrilla-type wars and counterterrorism strategies, buying Predator drones instead of F-22?s.  Why?  Because it is practical and smart.  And this memo reflects that mode of thinking.  Build capacity and improve the economy of the regions that seek our destruction.  Educate children so that they won’t fall into the hands of manipulative jihadists and gangs of pirates.  And do it by increasing accountability, investing in programs with proven results, and restructuring the inefficient government bureaucracy.

I think Obama is a practical and pragmatic president when it comes to this sort of thing.  Having read a lot about development theory and aid policy over the last year, I can tell you that this reflects an enlightened approach and one that shows he is taking advice from the right people.  I am confident that he is doing the same thing for areas of government with which I am less familiar.