The Jackson School’s Blue Center for Global Strategic Assessment continued its Co-Lectures in the Theory and Practice of Statecraft series on January 30 with a lecture on “International Development.” Two experts — David Engerman, the Leitner Interdisciplinary Professor of History at Yale, and Naz El-Khatib, the former senior advisor to the Deputy Secretary of State at the U.S. State Department and former deputy chief of staff for policy in the U.S. International Development Finance Corporation (DFC) — led the discussion.

Charting the evolution of aid as a form of containing the Soviet Union, Engerman noted that “development aid means selling a future.” In the 1950s and 60s, this future was split along ideological lines, with the U.S. mainly offering agricultural aid like plows and fertilizer, while the USSR offered capital and machinery for industrialization.

“Of course, you need both. But much of the aid debate is about choosing which aspects, or simply, which of these futures to embrace,” Engerman explained.

Both speakers emphasized that the recipients of aid are never inert — often the sender must adjust its projects to satisfy them. Engerman illustrated the point with examples of Indian development during the Cold War, in which Indian views about their own development trajectory played a major role regarding which “future” they bought.

El-Khatib explained how the negotiation between senders and recipients works in practice today. Most present, he stressed, is the geopolitical competition between the U.S. and China and the two development models they offer.

In 2013, China launched the Belt and Road Initiative, which trumpeted an integrated world based on a new Silk Road. Massive loans and construction projects financed by China began to pop up across the Global South. El-Khatib noted that the scale of both the projects and rhetoric “captivated the imagination of many countries around the world.”

This challenge forced the U.S. to “rethink what we’re offering,” said El-Khatib, and to create the DFC, which aimed to combat China’s growing influence and promote a better model of international development.

Unlike the Chinese approach of financing mega-projects, the DFC focuses on making loans and investments that spread across a recipient country, flowing to profitable and impactful firms with the help of local banks and basic guidelines. So far, El-Khatib noted that 98.5% of the DFC’s loans have been repaid in full with their interest directly benefiting the American people.

The DFC’s model of loans and equity investments together enabled the institution to do more than $12 billion in development financing in fiscal year 2024, having appropriated only about $1 billion from Congress. El-Khatib described the DFC’s investment model as fundamentally “demand driven.” As he explained, “We don’t come and say, ‘You need a massive port,’ but here’s the financing you need to realize what you want to achieve.”

The lecture closed with a discussion of the sweeping changes being implemented in the world of U.S. development efforts, particularly at the U.S. Agency for International Development (USAID). El-Khatib emphasized that the development professionals he has worked with throughout his career “get up every day and try to advance the interests of the United States.” The speakers both expressed concern that dramatic actions of the second Trump Administration to restrict international development funds would place those interests at risk across the globe.

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