[Senate Hearing 111-354]
[From the U.S. Government Printing Office]
S. Hrg. 111-354
USAID IN THE 21ST CENTURY
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HEARING
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL
DEVELOPMENT AND FOREIGN
ASSISTANCE, ECONOMIC AFFAIRS, AND
INTERNATIONAL ENVIRONMENTAL PROTECTION
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
APRIL 1, 2009
__________
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COMMITTEE ON FOREIGN RELATIONS
JOHN F. KERRY, Massachusetts, Chairman
CHRISTOPHER J. DODD, Connecticut RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin Republican Leader designee
BARBARA BOXER, California BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania JIM DeMINT, South Carolina
JIM WEBB, Virginia JOHN BARRASSO, Wyoming
JEANNE SHAHEEN, New Hampshire ROGER F. WICKER, Mississippi
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
David McKean, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
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SUBCOMMITTEE ON INTERNATIONAL DEVELOPMENT
AND FOREIGN ASSISTANCE, ECONOMIC AFFAIRS,
AND INTERNATIONAL ENVIRONMENTAL PROTECTION
ROBERT MENENDEZ, New Jersey, Chairman
BARBARA BOXER, California BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland ROGER F. WICKER, Mississippi
ROBERT P. CASEY, Jr., Pennsylvania JIM DeMINT, South Carolina
JEANNE SHAHEEN, New Hampshire Republican Leader designee
KIRSTEN E. GILLIBRAND, New York
(ii)
C O N T E N T S
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Page
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement. 3
Lancaster, Hon. Carol J., professor of politics, Mortara Center
for International Studies, Georgetown University, Washington,
DC............................................................. 4
Prepared statement........................................... 6
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening
statement...................................................... 1
Natsios, Hon. Andrew S., distinguished professor, Edmund A. Walsh
School of Foreign Service, Georgetown University, Washington,
DC............................................................. 18
Prepared statement........................................... 22
Responses to questions submitted by Senator Jim DeMint....... 43
Radelet, Steven, senior fellow, Center for Global Development,
Washington, DC................................................. 10
Prepared statement........................................... 13
Responses to questions submitted by Senator Jim DeMint....... 47
(iii)
USAID IN THE 21ST CENTURY
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WEDNESDAY, APRIL 1, 2009
U.S. Senate, Subcommittee on International
Development and Foreign Assistance, Economic
Affairs, and International Environmental
Protection, Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:32 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Robert
Menendez (chairman of the subcommittee) presiding.
Present: Senators Menendez, Casey, and Corker.
OPENING STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM NEW JERSEY
Senator Menendez. The hearing will come to order. Let me
welcome everyone.
Let me first start off, sort of, by saying this is the
first meeting of the Subcommittee on International Development,
Foreign Assistance, and International Environmental Protection,
and Economic Affairs, and I want to say we can't start with a
better issue, and I want to acknowledge and say I look forward
to working with the distinguished ranking Republican, Senator
Corker, who we have the privilege of serving on a couple of
committees together, and one of our very thoughtful members,
and I look forward to working with you throughout, not only
today, but through a series of hearings as we move forward.
We want to welcome all of our panelists, who are here today
to discuss ``USAID in the 21st Century: What Do We Need for the
Tasks at Hand?''
Foreign assistance is something that is of, obviously,
great interest to the members of this committee. While we may
disagree on the overall resources that should be devoted to
development assistance, I think we all agree that the resources
we do provide should be used in the best, most powerful way.
Congress needs to see results. The American people need to see
results, and so do millions of people around the world whose
lives literally depend on our ability to carry out these
programs in the smartest way possible.
I have long believed that foreign assistance is a critical
part of our overall engagement overseas, as well as our
national interest, in the pursuit of our national interest and
our national security, and I have been a consistent advocate of
stepping up our efforts in this area. In recent years, I've
focused on building USAID from the inside out. I've called for
building up the staff of USAID in a coherent and strategic
manner, and called for increased accountability of programs,
and clear and tangible results. We have seen some progress, but
we need to move faster, and we need more clarity of purpose in
Washington.
The culture of USAID needs to better adapt to the current
context in which it works. Just as our military had to undergo
a period of transformation after the fall of the Soviet Union,
we can't have a development agency that is building for
fighting the last war.
Now, the USAID is working alongside the Department of
Defense in places like Iraq and Afghanistan, immersed in
complex situations, like those in Pakistan, Sudan, or Sri
Lanka. We need an agency that is nimble, responsive, and ahead
of the curve. From staffing, resources, and training, our
development tools need to be, at the very least, at par, if not
ahead, of our diplomatic and defensive efforts.
First, one way to start us along this path is to focus on
USAID's leadership. It needs credible and high-profile
leadership that can work in partnership with the Congress, the
Department of State, the Department of Defense, and the
National Security Council. The development voice in our
government needs to be a heavyweight voice that commands
respect, both in Washington and around the world. This voice
needs to be counterpart to diplomacy, not a subset. From the
senior leadership of the agency to the resources it controls to
its key staff in the field, we need the best possible advocates
for our programs on the ground.
Second, USAID needs to take back resources and programs
that have slowly been moved over to the Department of Defense.
Having the Department of State or the Department of Defense
control development strategy and resources, with USAID simply
serving as an implementing agency, has caused confusion and
ambiguity. We ask our military to plan and execute a lot of
missions. Development shouldn't be one of them. Civilian
resources should be appropriated to civilian agencies.
And third, the staff at USAID needs to be rebuilt; not just
more people, but we need to make sure we have the right people,
and make sure we are attracting and retaining the best possible
candidates.
So, how do we tackle these challenges? In terms of
legislation, I pledge to work on any legislative components to
advance a joint executive-branch/legislative-branch set of
reforms that will help shape our institutions to carry out
their missions. I stand ready to support President Obama,
Secretary Clinton, and the next USAID Administrator in
reforming and reshaping USAID in a bold and unprecedented way,
not just for the tenure of this administration, but for decades
to come. Such reform is clearly in the national security
interest of the United States.
In this spirit, I look forward to hearing a frank and open
discussion and your ideas for how to shape USAID. I think most
of us in the room today have a clear sense of the problems. I
want to spend today talking about solutions. Let's think about
what we need, rather than what we think we can get. In other
words, let's approach this, not from what we think we are
prepared to supply, but, rather, what we think the challenges
overseas demand.
Also in that spirit, many of us are familiar with the many
questions about the future of USAID. Let's use today to talk
about answers, regardless of whether or not these answers are
ultimately feasible or ultimately adopted. Let's get on record
the options that we think are a necessary part of the debate.
With that, let me turn to the distinguished ranking member,
Senator Corker, for his opening remarks, and then I'll
introduce our panelists.
OPENING STATEMENT OF HON. BOB CORKER,
U.S. SENATOR FROM TENNESSEE
Senator Corker. Well, Leader, I want to thank you--or,
Chairman--for calling this hearing. And I--we couldn't be from
more different places in the world, and yet, I know that we
share the desire to make sure that our foreign aid works in the
most appropriate ways. And I want to thank you, again, for
calling this hearing, and thank our witnesses.
I'm usually very short, to nonexistent, on opening
comments, but I do want to say that it doesn't take many trips
abroad or to other countries to realize that we really do need
to go through the process we're going through right now. You
look at the age of many of our USAID folks, and realize that a
lot of them are going to be retiring. You look at the migration
of effort that takes place. You look at--much of our focus, it
seems, is on the urgent, and not the important for long-term
benefit. And it seems that every administration, on both sides
of the aisle, comes in with a different set of priorities, and
we end up being whipsawed and not dealing with things on a
long-term basis.
The whole of the military becoming involved, I think, was
very positive. Secretary Gates mentioned that we needed to,
certainly, look at this in concert. Obviously, some of the
missions that we perform in military zones have to be done with
strong support from the military. At the same time, I do know,
in many cases, the State Department, USAID plays second fiddle.
I've seen tremendous migration as I look at it--it's kind of
the--I see many of our USAID folks pursuing a sort of where-
the-money-is, OK; and so, changing mission, if you will, to
access money, which is only natural.
And so, Senator, I really do look forward to working with
you on this. I think this is something that, candidly, Congress
has been irresponsible on in not being as focused on. I think
we continue to be, again, whipsawed by new priorities and new
administrations--all of which are good, but it ends up layering
on top of layers, things that cause our foreign aid to be not
as effective as it should.
So, I look forward to listening to our witnesses and to
your question, and hopefully we'll have a few, and I thank you
very much.
Senator Menendez. Thank you, Senator Corker.
Let me introduce our panelists.
The Honorable Carol Lancaster is the director of the
Mortara Center for International Studies and a professor of
politics at Georgetown University. She is a former Deputy
Administrator of USAID, Deputy Assistant Secretary of State for
Africa, and the author of numerous books and articles on U.S.
foreign aid and development.
Steve Radelet is the senior fellow at the Center for Global
Development, a former Deputy Assistant Secretary for Asia and
Africa at the U.S. Department of the Treasury. He is currently
the cochair of the Modernizing Foreign Assistance Network, a
nonpartisan group of experts working to modernize and
strengthen our foreign assistance programs. Dr. Radelet has
conducted extensive academic research on aid effectiveness,
combined with many years of practical experience living in
Africa and Asia, and working on aid effectiveness, debt relief,
and poverty reductions.
The Honorable Andrew Natsios is a distinguished professor
at the Edmund Walsh School of Foreign Service at Georgetown
University, former Administrator of USAID. He was chair of the
U.S. Special Envoy for the Sudan between 2006 and 2007, and
was, for 5 years, vice president of World Vision, the largest
faith-based NGO in the world.
In the interest of time, we ask all of you to, basically,
take about 7 minutes. We're going to include all of yours
statements fully in the record.
And with that, Professor Lancaster, if you'd like to start.
STATEMENT OF HON. CAROL J. LANCASTER, PROFESSOR OF POLITICS,
MORTARA CENTER FOR INTERNATIONAL STUDIES, GEORGETOWN
UNIVERSITY, WASHINGTON, DC
Ms. Lancaster. Thank you very much, Senator Menendez and
Senator Corker, for inviting me to come today and share some
views with you about this important topic, the future of USAID
in the 21st century.
I think the hearing is both timely and fitting, because we
are, I think, all of us in government, out of government, in
the public, very much aware of the importance of development in
U.S. foreign policy. We have heard a great deal about the three
Ds--development, diplomacy, and defense--in the Bush
administration, and now in the Obama administration. And I
think we all probably recognize that foreign aid is one of the
principal tools--the principal tool, in many ways--for
promoting development abroad.
USAID has long been the lead agency in this endeavor. At
present, we need, desperately, a strong aid agency, and at no
time has USAID been weaker in its role. And I'm not talking
about the very qualified staff that are employed by USAID, but
the situation of the agency itself, many conditions of which
you touched on. And I will just touch on a few of them very,
very briefly.
We know the size of the staff is a problem. When I served
in the Clinton administration, and even before, there was
always pressure to do more with less, and it can become a
mindless kind of a pressure that squeezes down the numbers of
staff in agencies. And that's certainly happened to AID, until
the staff was almost in a death spiral.
That's been turned around now, and we see staff being
hired, and being brought on, and the numbers being expanded. We
still need to reconstitute the training programs in AID, which
probably we can't do for a couple of years until the new staff
get to the level where they need the training. Under budget
pressures, we got rid of training in the Clinton
administration. That was a very shortsighted decision.
I think there are some questions in regard to AID's
internal organization which relate to how AID wants to shape
its future mission and its future priorities and strategies.
There have been some very odd organizational changes, which I
don't blame Andrew Natsios for, but for example, why did the
democracy program end up in the conflict bureau, when the
democracy program's impact is obviously much broader than that.
You mentioned the capacity of USAID. And I think here is
one of the most troubling things that's happened. We're all
familiar with the transformational diplomacy reforms that were
implemented in the last administration. There were lots of good
ideas in those reforms, but I think many of us have been very
troubled by where they went and how they went there. I know you
were, Senator Menendez, as well. And I think, with the
departure of Randall Tobias, the reforms were sort of put on
ice, and so, you have a sort of netherworld in which budget and
policy capacities of USAID were moved to the State Department
and, I think, largely remain there. So, the agency does not
have the capacity to develop strategies and its own budget.
That needs to be addressed.
Of course, we don't have any leadership yet, and I think
that's also troubling, because things happen anyway, whether
there's a leader of USAID or the other agencies, or not. And as
they begin to happen, they begin to become institutionalized,
other people start taking responsibilities for what might be,
logically, in the purview of the Administrator, so obviously
that is a big concern.
And finally--you mentioned this--AID has become, I think,
in the eyes of many, more of an implementer than a leader. And
that's how it's seen abroad, from what I hear, as well as
within the administration.
These are all serious problems, but they need to be
addressed after two basic issues are resolved. And one of them
is the relationship of USAID to other aid programs in the U.S.
Government, which I think we've all talked about a great deal.
But, the second and really big issue is its relationship with
the Department of State. And I think that becomes really
crucial.
As I see it, AID is partially integrated into the
Department of State. Planning and budgeting are pretty much
integrated with the Department of State. Personnel is not. But,
in my view, that undercuts the ability of the agency to operate
as an agency with its own mission, which is a rather different
mission from the Department of State. And this is a very
important source of concern.
AID has lost even the small measure of autonomy that it had
in previous administrations. When the Ambassador wanted to use
development assistance moneys for things that may not have been
in AID's mission or purview, there was always the opportunity
to appeal to Washington. When AID came under pressure from the
Department of State, there was always the opportunity to appeal
to the White House. And, ironically, the current Secretary of
State was one of USAID's key partners, if you like--quiet
partners in the Clinton administration--and from my own
observation and experience, we probably wouldn't have a USAID
right now if she hadn't, on repeated occasions, stepped in and
slowed the effort that was underway in the Clinton
administration to merge the two agencies. She, better than any
other Secretary of State I've observed or served with,
understands the development issues. The only problem is that
she's a very busy person right now, and she's not going to be
there forever. So, there is an institutional relationship here
that needs to be sorted out.
USAID is neither fully in, nor fully out, but it has lost
its autonomy. I don't think USAID people can appeal for help,
when they're under pressure, to other agencies, because it is
now much more firmly in the State Department command structure.
And so, that autonomy issue is one that needs to be
decided, needs to be worked on, needs to be explored, and I'm
hoping that Congress will do so. And it's particularly
important, in terms of the next USAID Administrator.
Now, it may be that this administration does not wish to
expand the autonomy that USAID has, but, rather, leave it
partially merged into the State Department. If that should be
the case, then I think we have another issue before us, and
that is, How do we arrange a full merger, including the
personnel system, of USAID into the Department of State? And
that's a big piece of, if you like, bureaucratic material to
swallow. How do we do that and maintain the development mission
of USAID? That requires a more fundamental rethinking of AID
and the State Department and the relationship between the two.
But, right now I fear that AID is in a situation where it has
neither autonomy nor protection, and does not have the capacity
to lead in the way that we all wish it to do so.
To conclude, let me just say that I think the Congress has
an enormously important role in keeping these issues on the
agenda, where I think there may be a tendency for them to slide
off, given all the other things that the U.S. Government and
the Congress are facing, in terms of financial crises, and
budgetary pressures, and the very uncertain relationship that
still exists between USAID and the State Department. And I
haven't mentioned the Defense Department relationship, but I
think my colleagues will take a look at that.
I hope and trust that this will be in your competent hands
to keep us attentive and moving forward.
Thank you very much.
[The prepared statement of Ms. Lancaster follows:]
Prepared Statement of Carol Lancaster, Professor of Politics, Mortara
Center for International Studies, Georgetown University, Washington, DC
Chairman Menendez and committee members, thank you for the
invitation to testify this morning on the future of USAID. It is a
fitting and timely topic; there has never been a time when the U.S. has
needed a strong voice and leadership in development. And, I fear, there
has never been a time when that voice has been more uncertain.
THE IMPORTANCE OF DEVELOPMENT IN THE 21ST CENTURY
There is more consensus today than ever before among our political
leadership, public officials, scholars, and policy analysts and the
American public that promoting development abroad should be a key
element in U.S. foreign policy--along with diplomacy and defense.
Helping the 2 billion people in the world to help themselves emerge
from poverty and deprivation is not only the right thing for the U.S.
to do--even in this time of financial crisis at home and abroad--but it
is very much in the U.S. interest to do so. Poverty is often associated
with instability, conflict, environmental stress, the spread of
infectious disease, and other ills that in our globalized world can
race across borders and meet us not just in our living rooms but in our
lives and affect our well-being and our future. We need a strong U.S.
Government development agency to lead our government's efforts to
promote development abroad, both as an end and as a means to other ends
of U.S. foreign policy.
THE CHALLENGES OF DEVELOPMENT IN COMING DECADES
But helping to further development abroad is no simple task;
indeed, it has never been more complex and changing. We have seen
greater volatility in world economic conditions than at any time in
recent memory with not just a financial crisis with ramifications for
world production, consumption, incomes and employment but also an
energy crisis and a food crisis in which rapidly rising and then
falling prices greatly complicated the challenge of development. How,
for example, can small farmers in Africa--or farmers anywhere--plan for
the next planting if they see the prices of their inputs as well as
their products rise and fall and rise again?
The impact of the financial crisis and a drastic slowing of
worldwide economic growth are not the only challenges of supporting
effective development in the world today. Several others are longer run
and equally important. One involves the relationships between
development, terrorism, drugs and crime. Many believe that stable and
prosperous economies with effective states are the best insurance
against terrorists establishing training and operations. It is clear
from a look just south of our borders to Mexico and Guatemala that it
takes especially strong states to resist the threats and blandishments
of narcotraffickers. I fear we are moving close to the establishment of
two narcostates very near the American heartland. These problems are
not solely about development as traditionally conceived. But they are
big and very threatening problems that involve development as well as
the effectiveness of states. We need to be far better positioned to
address these problems than we are today. An agency with not only a
strong development mission but one that can connect that mission with
other U.S. interests is essential.
A further set of challenges and opportunities confronts USAID in
the 21st century: There are many more agencies and organizations in the
development business today than there were just a decade ago--NGOs
which have mushroomed in number; philanthropic foundations large and
small; corporate foundations; major corporate enterprises themselves;
venture capitalists looking for double and triple bottom lines (doing
good as well as doing well with their investments) and even internet
portals that now make it possible for individuals to provide private
aid directly to worthy causes abroad.
In addition to all these new and not so new actors in the
development scene, we are now observing new governments becoming
sources of development aid. All the new members of the European Union
are required to undertaken aid programs. Formerly (and still) poor
countries like India and China--not to mention Korea, Thailand, and
Turkey--are also in the aid-giving business. China has become a
significant source of aid in Asia, Africa, and Latin America--though we
remain unsure of just how large Chinese aid actually is.
Finally, there is the technology factor, especially the spread and
rapidly evolving uses of information and cell phone technology. We have
all seen the pictures of Masai warriors in the African bush standing on
one leg talking on their cell phone. That is not just something
imagined by clever advertising executives. Even the poor are
increasingly part of the global information highway. The information
now available to almost everyone informs the fishermen off the coast of
India or the cotton farmers in Mali what the daily prices are for their
products and empowers them as never before. The Chinese have found ways
to connect with one another and share information that allows them to
organize and put pressure on their government for reforms. We can now
bank, do medical consultations, organize demonstrations in support of
political change with these cell phones. Ultimately, the greater
knowledge available will empower the poor as well as others to be more
productive, have more control over their lives and be better informed
and educated. (I can imagine young people in rural areas in poor
countries eventually being able to gain high and college degrees
through distance education obtainable through cell phones.) The IT
revolution and the cell phone that increasingly utilizes it may be the
most important revolution in human history.
We need a strong aid agency that understands the details and
implications of these changes and is agile and flexible enough to
respond to them to realize its mission of furthering development and
reducing poverty in this 21st century.
USAID: THE CURRENT STATE OF PLAY
USAID suffers from several problems that in my view prevent it from
providing the leadership needed in U.S. development policy in the 21st
century. These problems, I should emphasize, do not exist because of
USAID's staff which is committed and experienced but despite its
excellent staff. They are structural problems that I very much hope
will be addressed soon by the Obama administration and Secretary of
State Clinton.
1. USAID's staff has been severely reduced over the past decade and
a half, with the training so necessary to rise as effective managers
and leaders also much constrained. At the same time, the Agency has
taken on the management of much larger amounts of assistance. This
situation is not sustainable. These problems were recognized at the end
of the Bush administration and Secretary Rice together with partners in
Congress supported an expansion of USAID's staff. This expansion should
continue but should be keyed to the future organization and functions
of the Agency. For that, we need a sense of the future direction of the
Agency. I have students who ask me frequently whether it is worth
working for USAID given the uncertainties facing it at present.
2. USAID has become little more than an implementing agency for
programs decided in the Department of State (the ``F'' Bureau and
elsewhere). During the reforms associated with ``Transformational
Diplomacy'' in the Bush administration, most of the policy and
budgetary expertise in USAID was relocated to the F Bureau, taking away
from the Agency the capacity to analyze and develop U.S. development
policies and link budgets to policies. Apart from a few policy staff in
the office of the Chief Operating Officer dealing mainly with process
issues, USAID today is no longer the administration's lead ``thinker''
on development. This deficiency limits U.S. leadership in development
abroad and at home. This must change if USAID is to have any role in
U.S. development policy in the future and if the U.S. is to regain its
past position as a leader in the international development field.
3. Somewhat related to the previous point USAID is now one of three
major bilateral aid programs that also include the Millennium Challenge
Corporation and PEPFAR. There is a notional division of labor between
them but also some overlap regarding what they work on and where they
work. There are many more U.S. Government agencies with their own
(mostly relatively small) bilateral aid programs and responsibility for
U.S. contributions and policies vis-a-vis the international financial
institutions located in the Treasury Department. There is no reason why
all aid should be managed in the same place--indeed, there are
arguments against such an arrangement. But the many U.S. Government aid
programs makes the U.S. the world leader in fragmented aid programs--
even surpassing the French Government (and probably the Chinese) which
are also highly fragmented. There needs not only to be greater
coherence and collaboration among all these programs but a clear
division of labor among them. USAID should be the leader in shaping
development policies with input and collaboration with other programs;
it should also identify its particular functions--including but not
limited to taking an overview of development needs in recipient
countries and providing advice on economic and political reforms to
willing governments; working directly with poor communities and civil
society organizations on projects and programs involving education,
health (not including HIV/AIDS, TB and malaria which are addressed by
PEPFAR and not including infrastructure which is part of MCC's remit);
working on food security and agricultural development--essential to
economic progress in many poor countries; providing humanitarian
assistance and post-conflict reconstruction; and developing an
expertise on helping to strengthen weak governments with potential
security problems (in collaboration with the Department of Defense).
4. If USAID is to be a truly 21st century development agency, it
needs the funding and the staff to permit it to be agile and flexible
in collaborating with other development agencies and programs, private
and public alike. It is no longer possible for the U.S. Government to
lead by fiat; it must lead by finding the opportunities to collaborate,
sometimes to follow others' initiatives, to innovate and leverage where
possible resources to address common problems. The Global Development
Alliance created by the Bush administration was an admirable effort in
this direction. That effort needs to be extended into other innovative
directions. The Agency needs flexible funding to be the innovator and
leader it must become, either from fewer earmarks on its development
assistance moneys or an earmark for flexible funding. It also needs
funding to support research in areas important to development but not
funded by private enterprises--for example, in agriculture. The
pressures within USAID, from other parts of the administration and the
Congress are to allocate funding to service delivery abroad, preferably
with visible, direct impacts on people. This is an important function
for an aid agency. But expenditures on research can make enormous
differences in growth, poverty reduction, and the quality of lives for
everyone--the Green Revolution in agriculture is but one example.
However, the results of investment in research are often long term and
uncertain; it is thus important but often very hard to preserve funding
such expenditures. I hate to recommend another earmark--there are too
many already--but I wonder if funding for research might not warrant
one.
5. My greatest concern about the future of USAID is not about any
of these internal challenges or about interagency collaboration. It is
about where USAID is now located--integrated into the Department of
State in most essential ways (planning and budgeting) except for its
personnel service. Secretary Clinton understands the nature and
importance of development better than any other Secretary of State I
have observed or worked with. But Secretary Clinton is only one person
and she will not be Secretary of State forever. The pressures within
the Department of State--where I have served as a Deputy Assistant
Secretary of State for Africa--are on dealing with immediate issues and
crises, usually in U.S. relations with other governments. There is
seldom the luxury of taking the long view, of withholding development
aid from governments whose cooperation we need but who are incompetent,
corrupt, or uncommitted to the betterment of their populations, or of
working with pesky NGOs who can drive our allies abroad to distraction
by their criticisms. These latter functions are all part of USAID's
work abroad with development assistance. (USAID also implements other
aid programs for State--for example, Economic Support Funds--which are
intended to support U.S. diplomatic efforts and are very important in
that regard.) The danger is that the more USAID is drawn into the State
Department orbit, the more its development assistance programs and the
more all U.S. aid programs become tools primarily of diplomacy. One key
reason for this tendency is that not only USAID's autonomy but its
development voice will be lost. Indeed, its autonomy is already lost.
When I served in the Agency, we could always appeal to the White House
for help when State wanted U.S. to do something we thought ill advised.
Ironically, we avoided being merged into State during the Clinton
administration because we were able to appeal to then-First Lady
Hillary Clinton for help. And I have every reason to think we got that
help.
That channel of appeal to others outside of State is now
extinguished. The USAID administrator reports directly and only to the
Secretary of State. (The Administrator reported both to the Secretary
of State and the White House in the past.) USAID directors in missions
abroad report to ambassadors and these arrangements, I fear, are a
recipe for the eventual loss of USAID's development mission in the 21st
century. There is at present a letter circulating urging the
administration to create a seat on the National Security Council for
the USAID Administrator. But how long will it be before someone points
out that at present that will likely give the Secretary of State two
votes on the NSC--for what USAID administrator will openly oppose and
even vote against policies favored by the Secretary of State in such a
body?
There is considerable support for combining MCC, PEPFAR, and USAID
in some form in the Obama administration. This makes a lot of sense--
but not until USAID's relationship with State is clarified. If USAID
gains control over these other agencies but has no autonomy of its own,
these agencies will also be moved into State's orbit. And this
decision--whether made consciously or as a result of other decisions--
will be potentially momentous for the future of U.S. development aid.
Finally, should USAID remain partially merged with State in the
future, is there anything that can be done to preserve the development
mission and ensure that it is truly a strong element in U.S. foreign
policy generally? This is an issue that the development community has
avoided tackling but it is time to consider it now. If USAID is not to
have a measure of autonomy from State, it must have a measure of
protection for its mission within State. Its personnel system should
become a new cone for State Department officers with appropriate
training, rotation, promotion and other elements of an effective career
system. There should be a new Deputy Secretary of State in charge of
development--the post of Administrator of USAID is at the Deputy
Secretary level and needs to have that degree of status and clout if
development is to be an important pillar of U.S. foreign policy.
Ideally, there should be legislation that preserves the development
mission of U.S. aid and oversight that ensures the mission is followed
and realized.
The current relationship between USAID and state is confused and
unsustainable if USAID and the U.S. Government generally are to be
leaders in development in this century. The most urgent task facing the
administration in the area of development is to clarify this
relationship and strengthen USAID itself. I hope this committee will
keep this issue on its agenda until we have the strong development
agency we need, the strong voice for development within the
administration, and the expertise to back up that voice. We are in
great danger of losing it at present.
Senator Menendez. Thank you, Professor.
Dr. Radelet.
STATEMENT OF STEVEN RADELET, SENIOR FELLOW, CENTER FOR GLOBAL
DEVELOPMENT, WASHINGTON, DC
Mr. Radelet. Good morning. Thank you, Chairman Menendez and
Ranking Member Corker, for holding this hearing and for
inviting me to participate.
With all of the challenges that we face in the world today
in the immediate issues that we have to confront, it may seem a
little odd to spend time thinking about the rather, what might
seem, the mundane issue of USAID reform. But, actually it's
directly because of those challenges that it is so important
that we get the foundation correct and strong, in terms of how
we engage with countries around the world. We face many issues
around the world, from hunger to disease, to instability in
Pakistan and Afghanistan, to piracy off the coast of East
Africa, and many other issues, and we cannot achieve our
objectives of our own strong national security and in
encouraging and stimulating prosperity around the world and
stable governments around the world, without a strong and
robust development agency that can lead the way in how we
engage with these countries.
People around the world, especially because of the crisis,
are looking to the United States for leadership. Whether we
like it or not, whether it's accurate or not, they blame the
United States for the crisis. And whether it's accurate doesn't
matter; they do. And they're looking for us to step up and to
help out. And we need to do so, for our own good, but also
because if we don't, someone else will. There are lots of
others that are willing to step up and take the lead if we're
not willing to do it. So, we're at a very critical time.
As we think about AID reform, it's important to put that in
the context of broader development capacity. Foreign assistance
is only one tool, and only one approach, in how we engage in
supporting development. Our trade policies, our migration
policies, our policies on international finance, remittances,
many other things, relate to the development challenge.
And, more broadly, before I speak about AID reform, it's
important to think about the steps we need to strengthen our
broader development capacity. And I think there are four broad
ones that we need to think about:
First, we need a development strategy to work in parallel
with our national security strategy and other strategies. We
don't really have a strategy for this important tool of how we
engage. So, first we need a strategy, led by NSC, an
interagency process to strengthen the way that we engage to
support the development process.
The second piece is legislative reform, the Foreign
Assistance Act, relative to USAID, but others, as well. We need
the legislative basis to think about our development, not just
foreign assistance, but development process.
Third is funding. Not only the amount of funding, which is
crucial, but how we allocate that funding to our bilateral
programs, to our multilateral programs, and across the
different agencies, and to which countries do we allocate.
And fourth is the organizational piece. AID, which is the
focus of our attention today, but also the MCC, PEPFAR, and
also the relationships between these agencies and the
Department of Defense.
So, we have this broader set of issues that we need to keep
in the back of our mind as we talk about one specific issue
here, which is strengthening USAID.
Let me focus now specifically on USAID. We all know that,
over the last many years, it has become increasingly weakened
and does not have the capacity, at the moment, to really step
up and take the lead on development issues. Let me suggest five
steps that can be taken to rebuild USAID in the coming years:
No. 1, put someone strong in charge. We want to urge the
administration to name a new, strong leader at USAID as quickly
as possible. As Carol Lancaster pointed out, things happen. We
have our strategy, going forward, on Pakistan and Afghanistan,
and we do not have someone at USAID, at this moment in time. We
need a strong leader that can lead the charge, not only on the
day-to-day issues for USAID, but to lead the reform issues,
going forward. And that person needs to have a seat at the NSC.
It needs to be part of those broader debates of government
policy and how we engage with developing countries. Senator
Menendez pointed out that development is not a subset of
diplomacy. We need a separate person at the NSC to give that
input with the professional development perspective. So, No. 1
is strong leadership.
No. 2 is that smart power requires a smart division of
labor between State and USAID, in particular. Over the last few
years, more and more of the responsibilities have moved toward
State. And, while our development programs need to be aligned
with diplomacy efforts at State, they are separate from and
require a degree of autonomy and a distinct set of skills. The
skills and expertise required at State for diplomacy, foreign
policy, and communications are quite different from the
economic development, poverty reduction, and long-term program
management skills that are needed at USAID. And if that
relationship is too close, with too much of the responsibility
and authority at State, it actually undermines, over time, the
strength and credibility and capacity at USAID. While it might
make sense on an organizational chart, it actually does
undermine and weaken our development capacity over time.
The F process is a good example of that. While well
intentioned, in that there were some good parts to it, in the
end it further weakened USAID by further taking away some of
its responsibilities.
A couple of things in particular, I think, that need to
move back to AID. One is the budget responsibility. You can't
have a strong USAID unless the direct reporting relationship
from USAID to OMB is restored, and that USAID actually has
direct responsibility over its budget.
In addition, the capacity for developing strategies for
strategic thinking and policy formulation on development issues
need to reside at USAID, not at State. That's where the
capacity should be. It should be done in cooperation and
consultation with State, but those main responsibilities need
to be at USAID. In recent years, they've moved to State, and
they need to move back. So, that division of responsibilities
is key.
Three, you need to build the right team. The professional
capacity at USAID has been weakened considerably, and we need
both the right numbers and the right technical skills for USAID
to function as a premier development agency. The goal should be
for USAID to be the premier development agency in the world.
And it used to be that. And it's not anymore. But, you need
more staff--a lot more staff--and you need staff with the right
skills--in economics, in finance, in agriculture, in agronomy,
in education, in health--skills that, again, are not going to
be found in Foreign Service officers, who have wonderful and
specific skills in other areas, but they don't have the
specific development skills.
Fortunately, in the last couple of years, this has begun to
turn around, and there is the beginnings of bringing back that
capacity to AID, but that needs to be supported and
stimulating, going forward. So, that's the third piece.
Fourth is the legislative foundation. The Foreign
Assistance Act is weak and largely out of date. It was meant
for a different set of challenges that we faced nearly 50 years
ago, at the beginning of the cold war. And over the years, it's
been burdened with more restrictions, earmarks, and multiple
objectives that really make USAID's job much more difficult. It
is really a burden on the agency, and it undermines its ability
to respond effectively in the field to the most important
issues that it faces at hand. So, if we're going to strengthen
AID, we need a strong legislative foundation for that, which
would rebuild the relationship between the executive branch and
the legislative branch, providing the executive branch with the
authorities it needs, but, at the same time, giving a rightful
oversight and effective oversight role to Congress. So, that
relationship needs to be rebuilt.
Fifth, and finally, is more money, better spent. More
money, by itself, will not solve these problems. But, more
money, better spent, is a big part of the challenge, going
forward. These steps that I've outlined earlier, and others
that my colleagues will lay out, are important steps to making
sure that every dollar we spend is spent as effectively as
possible. And we need to focus, as much as possible, on doing
that. But, it's also a matter of more money. There's been
increases in the last few years, and those are welcome, but
they're off a small base, and they are not sufficient to
address the big challenges that we face around the world.
In terms of making sure that we spend our money more
effectively, two specific steps. One is that we need to
strengthen our monitoring and evaluation capacity. It's far too
weak. We don't have a good handle on what activities are
effective and what activities are not effective. And if we're
going to be serious about spending our money more effectively,
we need a much stronger monitoring and evaluation capacity. And
second, we need to streamline and reform USAID's procurement
process, which adds to the bureaucracy and ensures the money is
not spent as well as it could be.
Taking on these reforms is not going to be easy,
particularly in today's context of building USAID into a modern
development agency is going take time, resources, and effort.
But, the challenges we face require a strong development
agency. It's time to take advantage of the opportunity that we
have and the consensus that is formed around the importance of
development to modernize and strengthen our U.S. foreign
assistance programs, particularly USAID, so that it can serve
as a critical pillar of our foreign policy and our national
security.
Thank you very much.
[The prepared statement of Mr. Radelet follows:]
Prepared Statement of Steven Radelet, Senior Fellow, Center for Global
Development, Washington, DC
Thank you, Chairman Menendez, Ranking Member Corker, and other
members of the subcommittee. I am honored that you have invited me to
offer some perspectives on the role of USAID in the 21st century.
I. INTRODUCTION: WHAT HAPPENS THERE, MATTERS HERE
Today we find ourselves at a critical juncture. The challenges our
country faces at home and abroad are serious and emblematic of a new
era. An era where the world's challenges--disease, human and food
insecurity, climate change, financial crises--do not respect borders
and are truly global problems requiring global solutions. Trade,
remittances, and private investment tie rich and poor countries
together, creating shared opportunities for prosperity in plentiful
times, but also shared instability and strain in times of financial
crisis. Outdated and inefficient policies, instruments, and
organizational structures must be brought into the 21st century. The
new Obama administration is confronting a perfect storm of domestic
economic concerns at home and multiple challenges overseas: Continued
wars in Iraq and Afghanistan, escalating instability in Pakistan,
emerging sanctuaries for terrorism and piracy in unstable regions of
Africa, and, in the wake of the global economic downturn, deepened
poverty and threats of heightened political instability in countries
across the world.
All of these global threats pose direct and grave challenges to our
national security at home and to fighting disease and poverty around
the world. In each and every case, cutting-edge development policy and
an empowered development agency are critical to an effective solution.
As President Obama outlined in his administration's new strategy for
Pakistan and Afghanistan, stability in these crucial areas will remain
elusive unless development outcomes are achieved. Part and parcel of
the administration's strategy in these countries are core development
activities: The delivery of basic health and education services,
efforts to bolster the capacity of both states to govern effectively,
the introduction of alternative sources of livelihoods for Afghan poppy
growers, building infrastructure, and stimulating robust economic
growth in the impoverished border regions of Pakistan that are home to
extremists, to name a few.
For these reasons, President Obama has pledged his commitment to
elevate development as one of the three ``D's'' of our national
security--alongside defense and diplomacy--and to leverage development
and foreign assistance as key ``smart power'' tools of statecraft. So,
too, have a host of public officials across government:
Secretary Clinton, in her Senate confirmation hearing, said
``Investing in our common humanity through social development
is not marginal to our foreign policy but integral to
accomplishing our goals.''
Retired Marine Corps General Anthony Zinni has said ``We
know that the `enemies' in the world today are actually
conditions--poverty, infections disease, political turmoil and
corruption, environmental and energy challenges.''
Defense Secretary Gates said ``It has become clear that
America's civilian institutions of diplomacy and development
have been chronically undermanned and underfunded for far too
long--relative to what we spend on the military, and more
important, relative to the responsibilities and challenges our
nation has around the world.''
Former Secretary of Agriculture Daniel Glickman urged this
committee just last week to strengthen U.S. development
leadership and USAID to address the global food crisis.
Furthermore, global development was part of the political discourse
in the 2008 Presidential elections, spurred by an informed, supportive,
and growing constituency of Americans who asked Republican and
Democratic candidates alike how they would strengthen U.S. development
programs. There has been no greater moment in recent history to
modernize and strengthen our development programs to address the
challenges and opportunities of the 21st century.
II. INVESTING IN A MODERNIZATION AGENDA: WHAT ARE WE TRYING TO ACHIEVE?
As the Obama administration, Congress, military leaders, and
American voters have recognized, strong development policies and
programs are critical to enhancing the U.S. image in the world,
achieving our foreign policy goals and increasing our national
security. To reap these benefits from development, however, we must
have a greater impact on the ground and demonstrate that we are
reaching our key objectives in developing countries: Stimulating
economic growth and poverty reduction, promoting political stability,
and responding to humanitarian crises.
Our current development programs deserve more credit than they
usually receive. PEPFAR has put 2 million people on life-saving
antiretroviral treatment through PEPFAR; the MCC has spurred policy
reforms and paved the way for supporting economic growth in 18
countries through investments in agriculture and essential
infrastructure; and USAID has many examples of large-scale successes,
from the substantial reductions in deaths from maternal and child
mortality and diseases like river blindness and polio, to efforts to
bring peace and security to countries such as Bosnia and Liberia.
At the same time though, the U.S. development voice is more like a
choir, without a conductor. We have 20-some different agencies with
different policy objectives, structures, and bureaucracies and little
strategic oversight and coordination. And that is just our foreign
assistance. Policies affecting trade, migration, climate change,
capital flows, governance and others also influence America's standing
in the world and our relationship with other countries, and at present,
these policies often contradict each other and undermine our
development objectives.
We can, and must, do better. Getting a bigger bang for our
development bucks requires being smarter about our development
strategy, legislation and organizational apparatus.
III. STEPS TOWARD MODERNIZING FOREIGN ASSISTANCE
While it may be tempting to consider partial changes that make
small improvements in our current development architecture, marginal
reforms will only lead to marginal improvements, which will fall short
of achieving our objectives and may not be sustained over time. More
fundamental changes are needed to meet our foreign policy objectives.
In particular, four broad steps should be taken to modernize our
foreign assistance programs:
Craft a development strategy. The administration should
prepare, under the leadership of the NSC, a National Strategy
for Global Development, distinct from but consistent and
coordinated with the National Security Strategy. A strong
strategy is essential for clarifying goals and objectives,
coordinating development-related activities spread across the
government, and increasing the efficiency and effectiveness of
key programs.
Rewrite the Foreign Assistance Act. The FAA is unwieldy and
outdated, and adds significantly to the costs and
inefficiencies of many of our programs. While using the
authorities in the current act more strategically is a good
first step, it is no substitute for reaching a new
understanding and alliance with Congress on the goals,
objectives, and modalities of foreign assistance programs.
Increase funding for and accountability of foreign
assistance. While foreign assistance funding has increased in
recent years, it is still a tiny share of the budget, and very
small relative to the amounts needed to meet today's
challenges. As our HIV/AIDS program has shown, relatively small
investments can pay big dividends for both showing strong U.S.
leadership abroad and effectively fighting disease and poverty.
Build a strong, consolidated, and empowered development
agency. Our programs are spread across too many agencies, and
USAID has been significantly weakened over the last decade.
President Obama had it right during the campaign: To meet
today's challenges we need an elevated, empowered,
consolidated, and streamlined development agency.
Action on all four fronts is needed to elevate development and
modernize U.S. foreign assistance programs. Our discussions today focus
on the fourth area, and in particular the next steps for USAID, but
these discussions should be seen in the context of the need for other
complementary steps to truly make our programs more effective.
IV. AN AGENDA FOR BUILDING A 21ST CENTURY DEVELOPMENT AGENCY
The five most important action steps to rebuild USAID include the
following:
1. Put Someone in Charge, With a Seat at the NSC
To concretely signal President Obama's commitment to elevate
development as a ``smart power'' national security approach alongside
defense and diplomacy, the administration should name a strong, capable
leader as USAID Administrator as soon as possible to exert leadership
on development policy and transform USAID into a 21st century
development agency. Over time, USAID would be strengthened and
reprofessionalized to serve as the base for consolidation of other
major foreign assistance programs such as MCC, PEPFAR, and perhaps even
the multilateral development bank programs currently housed at
Treasury. The ultimate objective would be to have the USAID
Administrator be the one voice of the U.S. Government on development
policy and development assistance, the one point of contact for the
field for questions on development impact of programs and of other
government policies (trade, migration, investment, etc.), and the one
person accountable to Congress for delivering the development and
development assistance agenda.
As a real signal of the importance of development in national
security, the USAID Administrator should be included as a member of the
National Security Council and other high-level interagency deliberative
bodies. At a minimum, the administrator should be invited to all NSC
Principals Committee meetings dealing with international economic
issues. This will provide professional development perspectives and
policy input at the highest policy-setting table, independent from but
complementary to diplomatic and defense.
2. Smart Power Requires Smarter Division of Labor
For our development policies and programs to contribute to the U.S.
smart power agenda, we need to be smarter about who sets our
development policies, how they inform the decisionmaking process and
where they sit within the U.S. Government. Over the last 15 years, we
have seen a consistent and substantial reduction in USAID technical
staff, a sharp rise in the reliance on private contractors and overall
decline in the agency's ability to fulfill its development mission. The
creation of the MCC and PEPFAR outside of USAID was viewed as an effort
to work around USAID dysfunction instead of rebuilding its capacity.
And in 2006, USAID's budget, planning, and policy functions were
transferred into the State Department through the creation of the
Director of Foreign Assistance (DFA) further relegating USAID to the
status of a contract manager and pass-through for foreign assistance
funds. Although the F Bureau was created in part to better coordinate
and elevate foreign assistance, it has come at the expense of a
weakened USAID and has divorced on-the-ground implementation of
programs from the important policy and budgetary decisions that
underpin them. As a result, we now know better where and for what our
foreign assistance dollars are going, but the ability to better plan
for the most effective use of those resources to meet U.S. objectives
have been diminished.
Building a strong and effective development agency will require
providing our development programs with a certain degree of autonomy
from our diplomatic and defense efforts alongside distinct authority
and responsibility over the development budget and policy.
Autonomy. While development programs should be closely
aligned with our overarching foreign policy objectives--
diplomatic and defense--development is a distinct set of issues
requiring very different professional skills and background to
address economic development, poverty reduction, and long-term
management of development programs. Too close of a relationship
between State and USAID runs the risk of confusing the two
skills sets and not necessarily doing better at either. Some
separation between the two objectives will help attract the
right experts for each institution and strengthen the core
technical development skills required to be more effective with
our development dollars. Moreover, direct oversight by the
State Department of foreign assistance programs raises the
concern that the development mission will be subordinated to
the short-term political pressures and diplomatic objectives of
the State Department, which could undermine the achievement of
key development objectives over time.
Budget. A strong development agency must have budget
responsibility to enable the agency to provide a meaningful
voice for development (and contribute field perspectives)
during the budget preparation and interagency budget
negotiations, currently managed by the Office of the Deputy
Secretary of State. Many broad budget responsibilities may
appropriately lie within the State Department--including
responsibilities for reviewing and coordinating budgets across
many foreign affairs agencies, reviewing proposals for reducing
inefficiencies and nonperforming programs, consulting with
Congress on the need to rationalize earmarks, and mobilizing
financial resources. But USAID's authority over its own budget
should be restored, including control over the final allocation
of development resources across countries and programs based on
input from country teams.
Policy. Development assistance strategies, including
sectoral and country strategies, should be developed at USAID.
The policy function (formerly PPC) currently resides in the F
Bureau and should be transferred back to USAID to facilitate
long-term thinking and planning on development policy. Capacity
should also be restored to USAID to enable it to design its
programs in-house to best meet strategic objectives, ending
over time the current practice of outsourcing program design to
contractors.
3. Build the Right Team
One of the key resources needed at USAID is people: Both the right
numbers of staff and the technical skills required to function as a
premier development agency, as well as the capacity to hire and train
staff. Over the past 15 years USAID's professional capacity has been
weakened, not only compared to the past, but also compared to the
Departments of Defense and State. In recent years, administrative
resources and staffing for USAID have been slashed, at the same time
that responsibilities and budgets have grown. Today USAID faces a
critical shortfall of experienced career officers and a dearth of
technical expertise within USAID in such areas as science, economics,
and agriculture, rendering the institution ill-equipped to address the
myriad development challenges of the 21st century. This combination of
staff reductions and scarcity of technical expertise has weakened
USAID's capacity to provide strong development input in policy
formulation and decisionmaking, adequately manage projects, and provide
appropriate technical oversight.
Fortunately, during the last year this trend has begun to change,
with commendable efforts underway to rebuild USAID's staff. But there
is still a long way to go. To fill this gap, it will be important to
ensure that net increases at field posts are significant, above and
beyond conversions of Personal Service Contracts (PSCs) and Foreign
Service Limited positions (FSLs). To pave the way for an increase in
permanent staff hires, it is critical that the constraint on Operating
Expenses (OE) be relieved. Other important measures include filling
USAID's management gap with an increase in permanent staff, including
mid-level managers, possibly through the expansion of the Development
Leadership Initiative into civil service and FSN positions, and
shifting the balance of USAID human resource from an overwhelming
concentration of general management experts to a larger percentage of
technical experts.
4. Provide a Strong Legislative Foundation
USAID's legislative foundation is the Foreign Assistance Act of
1961. But that foundation is weak and largely out of date. The FAA is
nearly 50 years old, grounded largely in cold war threats, and not
focused on meeting today's challenges. Over time hundreds of amendments
have added multiple objectives and priorities that in some cases
conflict with one another, rendering it ineffectual as a rational
policy framework. It has become laden with multiple earmarks that are
administratively burdensome, undermine USAID's ability to respond
effectively on the ground to greatest needs, and weaken its ability to
achieve strong results. The foreign assistance authorization process,
which once reviewed and modified the FAA nearly every year, has not
functioned in over 20 years.
Rewriting the FAA is central to building a strong and capable
development agency. Although several critical pieces of foreign
assistance reform can be achieved without legislation--creating a
national development strategy, strengthening monitoring and evaluation
system, improving procurement and contracting procedures, building
human resource capacity--no broad-based foreign assistance
modernization initiative can be fully implemented without major
legislative modifications.
Rewriting the FAA will require a ``grand bargain'' between the
executive branch and Congress, reflecting a shared vision of the role
and management of U.S. foreign assistance, providing the executive
branch with the authorities it needs to respond to a rapidly changing
world, and ensuring rightful and effective legislative oversight. Done
purposefully, inclusively and transparently, this bargain would
reestablish confidence in the foreign assistance system among the U.S.
public and nongovernmental development organizations and reduce the
ability of special interests to secure self-serving earmarks. Partially
amending the FAA, rather than rewriting it, would run the risk of
exacerbating the fragmented and incoherent nature of the existing act,
continuing to layer modernized legislative provisions on top of
outdated and irrelevant policy authorities. As part of this process,
the administration and Congress should consider renaming USAID to
signal a break from the past and its intention transform it into a 21st
century development agency, perhaps naming it the Development
Investment Agency to emphasize our investments in the development
process.
The bottom line is that without a restructuring of authorities and
a rationalization of restrictions, whether they be congressional
earmarks or Presidential directives, all the personnel and
organizational reforms undertaken will not make a truly material
difference in the effectiveness of U.S. foreign assistance programs.
5. More Money, Better Spent
More money by itself will not help the U.S. to better achieve its
foreign policy goals. But more money, better spent, is an important
part of the answer. In today's difficult economic times, we must ensure
that every dollar we spend is used as effectively as possible on the
ground, and the steps outlined above are central to spending U.S. funds
more effectively. So, too, is allocating our funds more wisely, with
more funding going to low-income countries with the biggest needs and
to better governed countries that can use it well. We can also allocate
funding toward promising new innovations, such as Advanced Market
Commitments (AMCs) for vaccines and other applications, and cash-on-
delivery programs that provide payment only after the provision of
goods and services has been verified.
But additional funding also will be necessary. President Obama's
commitment to doubling foreign assistance is critical for the U.S. to
meet some of its most important foreign policy and national security
goals. The increased funding of recent years is a good start, but it
was on top of a very low base, and is inadequate for the United States
to fight poverty, state failure, and instability in low-income
countries around the world. If we invest in solving global problems
early--like halting the spread of new infectious diseases before they
reach the U.S., and easing the suffering and indignity that foster
anger and violence--we save both lives and money.
To ensure stronger accountability for funds spent, we must
establish much stronger monitoring and evaluation (M&E) and impact
evaluation processes aimed at keeping programs on track, guiding the
allocation of resources toward successful activities and away from
failures, and ensuring that the lessons learned--from both successes
and failures--inform the design of new programs. USAID--once a leader
in this area--has lost much of that capacity, and is behind MCC and
PEPFAR in terms of transparency.
One important step would be to establish an independent office for
monitoring and evaluating foreign assistance programs. This office
should be responsible for setting M&E standards, training, conducting
external studies, and collecting and making public all evaluations for
the sake of transparency and learning. The MCC model is a best-practice
in this regard and could be applied more broadly to USAID and other
agencies. It is crucial that measures of ultimate impact be conducted
independently of the designers and implementers of the programs. For
that reason, the United States should support and ultimately join the
International Initiative for Impact Evaluation (3IE), which brings
together foreign assistance providers from around the world to provide
professional, independent evaluations of the impact of development
initiatives.
Finally, a key component of ensuring that funds are better spent
will be streamlining and reforming USAID's procurement processes and
capacity--both in Washington and in host countries. To promote local
ownership, procurement management capacity of host countries should
also be bolstered. USAID should prioritize regular publishing of
procurement plans, as well as program implementation to apprise
partners of USAID's achievements and best practices. The timeframe of
contracts should be long enough to achieve sustainable results. An
expansion of contracts to 5 years would help reduce transaction costs
and create incentives for implementing partners to focus on longer
term, complex challenges. The establishment of a unified set of rules
and regulations for foreign assistance funds would help reduce the cost
of regulatory compliance and risk of noncompliance. To the extent
possible, these rules and regulations should be harmonized with other
bilateral and multilateral donors.
V. CONCLUSION
Taking on these reforms will not be easy. Rebuilding USAID into a
strong, modern development agency capable of addressing the myriad
challenges of the 21st century requires investments in resources,
organizational change, and real reforms. Yet change we must, and delay
we cannot. The impact of the financial crisis--on our budget at home,
and on escalating poverty abroad--reminds us of the imperative of using
each and every one of our foreign assistance dollars with the maximum
effectiveness, to achieve the greatest possible impact in poor
countries. Likewise, the national security threats posed by fragile
regions abroad--in Pakistan and Afghanistan and in unstable countries
that tomorrow might be at the top of the U.S. agenda--point to the
imperative of bolstering our ability to deliver development on the
ground, and along with it stability and peace. It is time to take
advantage of this unprecedented opportunity to modernize and strengthen
U.S. foreign assistance and to deliver on the promise of development to
serve as a critical pillar of our national security.
Senator Menendez. Thank you, Doctor.
Ambassador Natsios.
STATEMENT OF HON. ANDREW S. NATSIOS, DISTINGUISHED PROFESSOR,
EDMUND A. WALSH SCHOOL OF FOREIGN SERVICE, GEORGETOWN
UNIVERSITY, WASHINGTON, DC
Ambassador Natsios. Thank you, Mr. Chairman. I would like
to thank the committee for the invitation to speak this
morning.
Two former USAID Administrators, Brian Atwood and Peter
McPherson, in two different administrations, and I wrote an
article on foreign aid reform which appeared in Foreign Affairs
in December of last year. I stand behind the analysis and
recommendations we made in that article, which has been widely
circulated in the development community and in the State
Department, but I want to cover a few of those issues that are
in that article.
I am convinced no great power can maintain its preeminence
without a robust foreign aid program. Given what defense
intellectuals call the asymmetrical threats facing American
vital national security interests since 9/11, we are likely
entering a period in international affairs where foreign aid,
humanitarian assistance, and long-term development may be the
most important instrument of national power available to our
policymakers, more important than diplomacy or military power.
And I served as a diplomat for a while, and I was a military
officer for 23 years; I retired as lieutenant colonel. My son
is in the military. I'm very pro-military. The Defense
Department is not a development agency, and neither is the
State Department.
President Bush accomplished three important tasks in
foreign aid. He increased funding from $10 to $23 billion; he
placed heavy focus in foreign aid on our foreign policy; and he
made changes in doctrine and theory. However, the
organizational structure is a different matter. It remains
dysfunctional and very confused.
Let me begin by talking about mission and mandate. Some
will argue, in Europe and in the national system, that poverty
alleviation should be the only mission of our assistance
programs. I think that would be a mistake. While poverty
reduction must be one of its central objectives, it is
insufficient, as a mission alone for AID, given the threats
facing America and our other friends around the world. The
need, particularly of developing countries, to move away from
aid dependency requires us to move beyond poverty reduction as
an exclusive focus. We must also be engaged in state-building,
and that is helping countries build the public and private
institutions necessary to keep order, administer justice,
provide public services, such as schools, health services, and
roads, facilitate and encourage economic growth, and improve
democracy to protect human rights and democratic principles.
I want to just add, here--this is not in my testimony--we
actually reorganized AID in 2001, prior to 9/11, to create a
bureau focused on fragile and failed states. And when we did
that, we made a whole series of reforms. If anyone's
interested, either of you Senators, I'd be glad to, in the
questions and answers, to go into the details of that. Much of
that is still in place, and it's becoming more enriched.
We moved democracy and governance--I moved democracy and
governance--Carol, you know, wanted to be polite here--to the
conflict office, which we created. There was no conflict office
in AID before I was there. We created an Office of Conflict
Mitigation because of this fact: We did a survey of the 70
USAID missions in the field, and we asked them how many had had
civil wars or major conflicts that traumatized the country in
the preceding 5 years. I thought maybe five, six, seven, eight.
Sixty percent of USAID missions were in countries that had
civil wars in the preceding 5 years from 2001. Many of them had
destroyed the countries. That needs to be a central focus--
state fragility and state failure--of what AID does. And that
bureau was designed to do that, and people in the bureau know
that. We moved democracy and governance there because
governance is the reason for state failure, and it's the major
threat to national security interests. The State Department and
Defense Department call this ``ungoverned spaces.'' Ungoverned
spaces mean state failure.
Where was bin Laden's headquarters before he went to
Afghanistan, a failed state? It was in Sudan, another failed
state. And before that, in Somalia, another failed state. We
are threatened by failed states. We must deal with this from a
developmental standpoint, because it's a failure--essentially,
a failure of governance.
Because AID has been traditionally associated with the
State Department organizationally, development and diplomacy
somehow have become conflated. They are alike in every
unimportant way, to paraphrase Wallace Sayre. While diplomacy
is all about managing our relationships with other countries,
development is about changing and transforming countries
internally. That's not what diplomacy is about. USAID is a
program management organization that hires, promotes, rewards,
and trains staff to develop their skills as technical leaders
in their disciplines, as good program managers, and highly
operational people who get things done.
The State Department is an information collection and
analysis foreign policy coordination institution which values
good writing, interpersonal political and negotiating skills.
It hires and promotes generalists, not technical specialists,
which is what AID does. Most career people in AID privately--in
my own observations as a political appointee--would tell you
the agency has far more in common with the Defense Department,
in terms of organizational culture, than the State Department.
The current gradual absorption of USAID by stealth, a term I
borrowed from my friend Carol Lancaster, into the State
Department to the merging of the agency's budgeting system,
procurement system, which they're trying to get a hold of now.
I hope they don't do that; it'll be very destructive to AID if
State takes control of that. The electronic e-mail system--its
logistics in the field, its office space in the field, its
motor pools in the field, reduction of AID's field presence and
warehousing capacity in the fields--all have been merged in the
embassies. There's a whole focus on downsizing AID in the
field. You cannot win a war by withdrawing from the
battlefield, which is what we're doing now. And it's been done
through three administrations. It is, in my view, a disaster.
If this continues, it will paralyze the agency and we will not
have a development function.
This has nothing to do with political party or ideology. If
you want a functional aid agency, you have to put them in the
field, where they belong, and that's not what's happening.
AID and the State Department are like oil and water. This
is not an attack on the State Department. I served as a
diplomat for a year and a half. I have great respect for our
diplomats; they do excellent work. The two institutions do
completely different things. State is now managing development
programs that, I have to tell you--the only Federal agency,
when I left AID, that did not do program audits in their IG
office is the State Department. There's a reason for that. If
they did program audits of their programs that they manage out
of State, there would be a lot of very serious problems in this
body. There's a reason they don't do program audits. They do a
terrible job of managing programs. I remember, at one point,
when the--what's that program in the Middle East--Middle East
Partnership Initiative was set up. There was an instruction
from Washington, ``Do not ever let anybody from AID manage the
program. State's going to manage it.'' In one mission, the
Ambassador said, ``I am not allowed to give AID this money. I
must have the embassy mission,'' so they--she called in the
U.S. Embassy nurse--not the nurse for the country, the nurse
for the diplomats--to run the program. She quietly went to the
AID mission director and said, ``I'm going to get in serious
trouble. I have no idea how to manage health programs. I'm a
nurse. Why are they giving me this program?'' Because there's
no one else in the embassy to run these programs. The
instructions to have AID not be involved in the MCC is one of
the reasons the program is so slow in implementation in the
field. These kinds of decisions make no sense, operationally,
at all.
While I support a Cabinet-level position, I am not certain
there is political support for a change in Washington, so I
believe in a good compromise. Senator, you properly said we
need to be politically realistic; I completely agree with you.
Complete organizational independence, with a dotted-line
relationship from the Administrator of AID to the Secretary of
State, not for the whole agency. I used to have desk officers
who were 23-year-olds, trying to give assistant administrators,
confirmed by the Senate, instructions on what to do, because
everybody at State thinks everything in AID is completely under
their control. I've had people--career people at State say,
``It's a wholly owned subsidiary. You do what we tell you to.
And don't make any comments. We know what we're doing.'' They
know what they're doing in diplomacy, they're excellent
diplomats; they do not know anything about development.
I think the statutory responsibility of the AID
Administrator should be, in law, as the chief international
development officer for the United States Government for all
agencies. That is the case, by the way--we already have
precedent in the Foreign Assistance Act--in terms of disaster
response. And it does make a difference. When we have a major
international disaster, like the tsunami, I would say, ``I have
a letter from the President of the United States, under Federal
law, saying, I, as Administrator of AID, am in charge of
disaster response for this,'' and the military carried out
orders. You show that letter, they do what you ask them to. We
didn't used to have fights in natural disasters, as a result of
that. I think giving that authority to the AID Administrator,
in law, would make a great deal of difference.
I might also add that the legal authorities in the Foreign
Assistance Act are to the Secretary of State, not to the AID
Administrator. That's a big problem. If you're going to rewrite
the Foreign Assistance Act, gentlemen, I think you should
seriously consider vesting those authorities with whoever is
the AID Administrator, statutorily. We now have 20 Federal
agencies, like we did in 1961, when Jack Kennedy created AID,
running our AID program. The way in which we're dealing with
this is by having interagency meetings of four different
Federal Cabinet departments coordinating $20 million programs.
I mean, it's one thing to coordinate a $50 billion program, but
$20 million? And the way we used to do it, and it's been done
through several administrations, is lowest common denominator.
If anybody objects to what anybody else is doing, they veto the
program. So, it slows everything down. It means that domestic
agencies that have no experience in the developing world can
veto an AID program.
During the cold war, OMB enforced an administrative
discipline on the Federal system that all program moneys spent
in development projects had to go through, and be managed by,
AID. I asked career people at OMB, ``Did it work?'' They said,
``Yes, it did.'' It collapsed in the early 1990s. If you want
to discipline this properly, go back to the old system. That
did not mean we didn't use other Federal agencies, but it
meant, if the U.S. Geological Survey, which OFDA, the Office of
Foreign Disaster Assistance, which I ran in the early 1990's,
needs help in earthquakes, they contract with the U.S.
Geological Survey, which has expertise in this area, to work
for AID in the field. And so, they would join the technical
teams, but there was never any doubt who was in charge. Now
everybody does their own work with no real coordination.
There's two Federal agencies and two different
administrations that signed 20 to 30 agreements with sovereign
governments in other countries to do development programs, when
they had no resources to do it. And the mission directors would
come back to AID--the ministers in the governments in the Third
World--come back to AID, saying, ``Why aren't you implementing
these programs?'' ``Well, we didn't even know the agreements
had been signed.'' Neither did the ambassadors, I might add.
I'd like to suggest two immediate reforms. PEPFAR office
should be moved from State to AID.
Senator Menendez. If you can wrap up for----
Ambassador Natsios. Yes.
And finally, I think the MCC Board should be kept in place,
but the MCC field presence should be merged into field
missions. And once the contracts--or the compacts are approved,
the implementation should be done with the AID mission and the
ministries in the governments in the countries, not in the
separate--we have all these separate entities implementing
programs; it doesn't make any sense.
Thank you very much.
[The prepared statement of Ambassador Natsios follows:]
Prepared Statement of Andrew Natsios, Professor in the Practice of
Diplomacy, the Walsh School of Foreign Service, Georgetown University,
Washington, DC
Mr. Chairman, I would like to thank the committee for the
invitation to speak this morning. This is a matter of great importance
for the United States. Two former USAID administrators, Brian Atwood
and Peter McPherson, and I wrote an article on aid reform which
appeared in Foreign Affairs in December 2008. I stand behind the
analysis and recommendations we made in that article, but will review
this morning a few of the issues we covered.
I am convinced no great power can maintain its preeminence without
a robust foreign aid program. Given what defense intellectuals call the
asymmetrical threats facing American vital national security interests
since 9/11, we are likely entering a period in international affairs
where foreign aid, humanitarian assistance and long-term development
may be the most important instrument of national power available to our
policymakers, more important than diplomacy or military power, or at
the very least, of equal importance. I know that members of both
parties of this committee for some time have been trying to rewrite the
Foreign Assistance Act to correct the current chaotic organizational
structure, inadequate staffing, and confused mission of our current
U.S. foreign assistance program which is spread out across 20 agencies.
President Bush accomplished two important tasks in foreign aid: He
increased funding from $10 billion to $23 billion, placed heavy focus
on the foreign aid in our foreign policy, and made major changes in the
doctrine and theory of our aid program. The organizational structure
is, however, a different matter: It remains confused and dysfunctional.
Let me begin by talking about the mission and mandate. Some will
argue that poverty alleviation should be the only mission of our
assistance programs. While poverty reduction must be one of its central
objectives, it is insufficient alone as a mission given the threats
facing America and our allies, and the need of developing countries to
move away from aid dependency. We must also be engaged in state-
building, that is, helping countries build the public and private
institutions necessary to keep order and administer justice, provide
public services such as schools, health services, and roads, facilitate
and encourage economic growth, and improve governance to protect human
rights and democratic principles. This goes beyond an exclusive poverty
focus.
Because of the demand in this city (which has grown stronger over
the past 15 years) for quicker, measurable, and quantifiable results
our aid program has gradually moved away from institution-building,
program sustainability, and capacity-building toward the delivery of
services directly to poor people in developing countries. The HIV/AIDS
PEPFAR program is one example of this. Building institutions takes a
long time and a great deal of patience, requires local political will
and leadership, and sustained funding, but it ought to be the ultimate
objective of aid programs. Progress in building states can not be
easily quantified as required by Federal law, OMB, GAO, and IG audit
requirements. One of the major reasons that OMB phased out funding for
USAID scholarship programs, one of the most successful programs in
doing institution-building, is that its outcomes can not be easily
measured, particularly over the short term. The focus on measurement is
now mandated under Federal law, called GYPRA (Government Performance
and Results Act). This is also one reason USAID programming has become
increasingly risk averse, avoiding experimentation and innovation,
because new approaches increase the risk of project failure which the
regulatory apparatus in Washington was designed to minimize.
We can correct some of these problems through reform. The
grantmaking portion of USAID's portfolio should be redefined and
overhauled to encourage new nontraditional partners, more indigenous
organizations and institutions, and new experimental approaches to
development, a clear exemption of grants from results measurement
requirement for all aid programs (allowing that there will be failures
sometimes), with a more lenient standard for IG audits, GAO
evaluations, and OMB oversight (so long as there is no malfeasance).
Much of what people say is wrong with our aid program regardless of
which agency is running the program is more a problem with the Federal
Government broadly and this has to do with the regulatory environment
in which all Federal agencies must do their work. Our aid programs must
conform to the 1,982 pages of the Federal Acquisition Regulations which
govern all Federal procurements. It has no control over the
contradictory demands made on it by the Congress, State, OMB, IG, and
the GAO. I found the most frustrating element of my job was getting
agreement among overseers to do anything complex took a very long time
and this was because stakeholders and overseers often disagree with
each other even on mundane matters. As the committee, I am sure knows,
unlike most other Federal departments the work of our aid agencies is
not done in the United States but developing countries of very
different culture, norms, and worldviews which do not always see things
exactly the way people do in countries contributing the funding. If we
are to undertake successful development programs they must be tailored
to the local circumstances or they will fail.
Because USAID has been traditionally associated with the State
Department organizationally, development and diplomacy have somehow
become conflated. They are alike in every unimportant way, to
paraphrase Wallace Sayre. While diplomacy is all about managing our
relationships with other countries, development is about changing and
transforming countries. The State Department focuses on managing
external relationships and short-term crisis management; USAID focuses
on long-term transformational change inside other countries through its
development portfolio. Certainly over the past 15 years USAID has
become much more skilled at assisting our military officers and
diplomats in crisis management, but at the heart of it the three D's
are very different instruments of national power. The tools of the
development professional in USAID are technical expertise in
development sectors, country strategy papers, procurement instruments,
assessment and evaluation tools, financial spread sheets, and
implementation plans. USAID is a program management organization which
hires, promotes, rewards, and trains staff to develop their skills as
technical leaders in their disciplines and as good program managers.
Conversely, the State Department is an information collection,
analysis, and foreign policy coordination institution which values good
writing, interpersonal, political and negotiating skills. The current
gradual absorption of USAID by stealth into the State Department
through the merging of the agency's budgeting system, procurement,
electronic mail system, its logistics, office space, motor pool,
reduction in USAID field presence, and warehousing capability in the
field, is gradually eroding the Agency's capacity to carry out its
mission. OMB has been facilitating this merger using the argument of
efficiency, ignoring the program consequences of this merger. I believe
the result will be organizational failure. Unless this trend is
reversed the foreign aid program of the U.S. Government will end up the
way our public diplomacy program did when State absorbed USIA. USAID
and State are like oil and water. This is not an attack on the State
Department. I served as a diplomat for a time and I must say I have
great respect for our diplomats and for the fine work the State
Department does around the world, but that work should not be confused
with development. If the Congress intends on having a competent
international development agency, its independent policymaking
authority over the allocation of its budget with a direct-line
relationship to OMB should be restored and its business systems made
once again independent. Structurally a reformed foreign aid agency
should be organizationally independent of the State Department.
While I support a Cabinet-level position I am not certain there is
political support for such a change in Washington, and so I believe a
good compromise would be organizational independence with a dotted-line
relationship to the Secretary of State for the Administrator of the
Agency with an independent statutory seat on the NSC, statutory
responsibility of the USAID Administrator as the chief U.S.
international development officer, as the coordinator of international
disaster assistance for the U.S. Government, and independent legal
authorities for the Agency under the Foreign Assistance Act.
Having foreign aid programs run by 20 different Federal agencies
embarrasses the U.S. Government abroad with contradictory programming,
endless transactional costs in program implementation, time delays,
interagency fighting, and unclear decisionmaking. For example, over the
past 12 years two Federal departments have written Memos of
Understanding with dozens of countries to provide technical assistance
without funds to carry out the programs, no staff, no field presence
and no coordination with the embassies or USAID missions. None of the
agreements have been implemented which has been an embarrassment to the
U.S. Government. Inevitably the country Cabinet Ministers who signed
the agreements end up in the USAID mission director's offices asking
why the program hasn't started, which the USAID mission were not party
to. During the cold war, OMB enforced an administrative discipline on
the Federal system that all program money spent in development projects
had to go through and be managed by USAID, a discipline which ended
with the cold war. We should restore the discipline now that we have a
new war on our hands. One of the principles of war I learned as a
military officer was unity of command; that should be equally true for
aid programs with the U.S. Government as well.
I would like to suggest several organizational changes to improve
the structure of our aid program. One immediate change would be for the
PEPFAR HIV/AIDS Office in State to be moved to USAID where it properly
belongs. The independent MCC board should be kept in place, along with
the indicators and central staff to review proposals and do
evaluations, but the field presence of the MCC should be merged into
the USAID mission abroad and have a reporting line back to Washington.
The sector earmarking by both the executive and legislative branches of
all development spending outside the MCC has come at the cost of local
ownership, local leadership, and decentralized decision making. The
World Bank, U.N., and European aid agencies are now generally moving to
much greater degree of decentralization, while our aid program, which
had been for decades the envy of the development community because of
its high level of decentralization and heavy field presence, is being
centralized in the State Department through the F process. This has
been further aggravated by the sector earmarks of OMB and
appropriations process which now absorb any remaining discretionary
funding in the accounts. I think the abolition of sector earmarks is
unlikely, and thus I would suggest this committee consider giving USAID
mission directors transfer authority of up to 10 percent (or more) of
the country budget allocation out of one or more earmarks to another
priority demanded by the local situation, with full disclosure to
Washington. This would mean total sector earmarks spending levels would
not be exactly the same as required by law. I would urge Congress to
support the tripling of the size of the USAID Foreign Service to 3,000,
which would require a relaxing of embassy restrictions on the size of
USAID field staffs, the rewrite of the embassy security statute to
allow more flexibility to get staff to the field and then let them
leave the embassy compounds more regularly. The Embassy Security Act is
now a serious impediment for USAID getting its work done.
Finally I would add that USAID did its job exceptionally well
during the cold war and was regarded as the preeminent development
agency in the world 20 years ago. When the bipartisan coalition behind
foreign aid ended with the collapse of the Soviet threat, the base of
support eroded and led to the current weakened agency. If the United
States is to have a robust development agency to match its diplomatic
and defense capability, a bipartisan coalition is needed to sustain the
program over the long term. My hope is that the Congress will move to
form the bipartisan coalition support base once again.
Senator Menendez. Thank you. Thank you all.
Let me start a round and then turn to Senator Corker, and
we'll go from there.
I think it was a very thoughtful beginning, here. And, Dr.
Radelet, I know you started off with a broader view, and I
think that the chairman of the full committee will, hopefully,
be holding a hearing soon that will start there, and we'll
continue to work with him on these other issues. But, we wanted
to start with AID.
And in the context of so many varying opinions, I had my
staff do a little chart for me about various organizations and
significant individuals who have made key recommendations for
foreign assistance reform. So, I did a little chart. And, you
know, it varies. There are some that are fundamental across-
the-board common views, but with so many studies having so many
varying opinions, I'd like to ask all of you, for starters, on
the best--you know, on those overall studies, on the best way
to reform foreign aid's structure. What, in your opinion, are
the two top reforms? And how would they affect USAID in that
context?
You have had several--several of you have listed several,
but if I were to say to you, ``What are the two top reforms, in
priority order, and how will they affect USAID in that overall
structure?'' what would you say? Any one of you who choose to--
--
Professor Lancaster.
Ms. Lancaster. Yes. Well, I am of the opinion, both from my
scholarly background, but also, importantly, from my many years
in the U.S. Government, that organization is politics. Where
you put something organizationally has a great deal to do with
how it functions and what its mission is, no matter what's
written down on paper. The most pressing concern I have is the
relationship between AID and the State Department. That has to
be, as both of my colleagues have said, a relationship that is
compatible, but leaves enough autonomy for USAID to protect its
development mission.
I remember, just as an anecdote, when I was hired as the
Deputy Assistant Secretary of State for Africa, the Assistant
Secretary--then-Assistant Secretary said, ``Your job is to raid
the aid budget.'' And--in those words--and I tried. And often I
failed.
Senator Menendez. To what? Raid?
Ms. Lancaster. Raid the aid budget.
Senator Menendez. Raid the aid budget, OK.
Ms. Lancaster. I tried, and often I failed.
Senator Menendez. Like the pirates off the----
Ms. Lancaster. Sorry?
Senator Menendez. Like the pirates off the coast----
Ms. Lancaster. Yes, that's right. Except that they're more
effective than I was. [Laughter.]
And the reason I was so often ineffective was that there
was enough space, if you like--bureaucratic space--between
USAID and the State Department so that when I had to go out on
a particularly stupid mission, I could be resisted. The only
way I could make a real dent was if I could engage the
Secretary of State. That's a lot harder--it would not be a lot
harder to keep me contained if, ultimately, everything is under
the same chain of command. So, that has always been a concern
for me. That's No. 1. Where that ends up is going to make a
huge difference into what we do with foreign aid funding.
The second thing is the capacity of USAID. Even an
autonomous agency cannot do the job we needed to do if that
capacity isn't greatly, greatly strengthened. And AID needs to
be able, not just to implement and evaluate--and I so much
agree with Steve, that's an important thing--but, to think, to
be able to engage in policymaking.
The relationships with the other agencies are very
important, but I think these two are my top priorities.
Mr. Radelet. I would suggest, as No. 1, the legislative
reform with the Foreign Assistance Act, for a variety of
reasons, on the restrictions and earmarking; but, as a key part
of that foreign assistance reform, to get the relationship
between USAID and State correct, as part of that legislation.
So, I completely agree on the core issue of the division of
responsibilities between State and AID, and my concern that,
over time, as things move toward State, that that is
fundamentally weakening. So, that's No. 1.
And second is the capacity issue of getting the right
numbers of staff and the right kinds of skills at AID, which
has been so significantly diminished over the last 15 years,
and needs to be very seriously rebuilt.
Ambassador Natsios. Mr. Chairman, I completely agree with
my two colleagues, but let me add one other thing, and that is
the staffing levels. We cannot run AID with 1,000 Foreign
Service officers and 1,000 civil servants. The budget doubled
and our staff declined. This doesn't make any sense. If you
want AID to do the work itself, you need to increase the size
of the career service--and that's happening now.
But, there's something else that has to happen. And
unfortunately, I'm not sure it's in the control of the
committee--the Senate Committee on Foreign Relations--I wish it
were. And that is, there is an act which has told the embassies
to downsize the U.S. Government presence in the field. After
the 1998 embassy bombings, the Government--the Senate--the
House and Senate committees that deal with government
operations wrote an Embassy Security Act, which basically
creates huge walls around the embassies, puts the AID compounds
inside the embassy. By the way, that's isolating us from civil
society, which is the lifeblood of AID in the field. People are
afraid to go see AID now, because they--I mean, people from
local civil societies see all of the security barriers, they
don't even want to come into the compounds anymore. We used to
have separate buildings. And I might add, they were secure
buildings, too. And our staff has been reduced in size. If you
increase the number of Foreign Service officers, they're all
going to stay in Washington unless that law is changed.
And there's another problem, and that's the merger of the
business systems that is happening in the field and in
Washington. OMB is pushing this, under the guise of efficiency.
Let me tell you what really happens. AID motor pools are
being merged into State's all over the world--or was abolished.
So, we must now wait in line for five other bureaus within the
State Department--that always have priority, because they're
within the State Department--for the drug-control people, the
economic counselor--to get out to see a project. We used to
have our own motor pools. We don't have those anymore. They are
being gradually phased out.
We used to have our own warehouses run by Foreign Service
nationals. It costs very little to run this. They're being
merged into State. We don't even have control over our
warehousing. That's a serious problem; and unless that's
corrected, it seems to me, the operational capacity of AID to
get stuff done is already compromised; is going to be
compromised further.
Senator Menendez. Let me ask one quick followup question,
Dr. Radelet. You've mentioned the rewrite of the Foreign
Assistance Act several times. And I think that is a very worthy
goal. I also think it is a significant challenge to ultimately
achieve. So, as--and I know that Congressman Berman, on the
House side, is very much focused on this, and we share his
desire. But, while we seek to attain that goal, you've all
mentioned that the train is already leaving the station in some
critical issues, of which AID is not there at. So, how does
one--does not one need to move on this now? While we seek the
greater aspirational goal of having a rewrite of AID, do we
need to seek to create certain authorities now within that
context? Otherwise, I think we're in trouble. That's one
question, specifically to you.
And all of you have mentioned capacity. Ambassador Natsios
actually quantified it. I wondered if you both would quantify
for me, and, to some extent, qualify it, as well, and then I'll
turn to Senator Corker.
Mr. Radelet. On the first question, I think you're
absolutely right, and I think the answer is to move as quickly
as possible on the things that can be done today--and there are
many things that can be done with the current legislation--but,
at the same time, to set the foundation in to work, over the
time required, which will be a while, to move forward on the
Foreign Assistance Act. But, we've been waiting for 48 years,
so if it takes another few months or a year or two, that will
be OK.
But, there are certain things that can be done. Staffing,
for example, can be increased. A stronger monitoring and
evaluation capacity can be rebuilt, within the legislation.
Although there are restrictions, there are ways that those can
be used more flexibly. Some changes can be made on procurement.
There are a number of things that can be done now, while the
foundation is laid to move forward on the deeper reforms. So,
it should absolutely not wait, it cannot wait, it should not
wait.
But, at the same time, to only do the rather modest reforms
that can be done without the broader legislative reform will
only lead to modest improvements. And those modest improvements
can be easily reversed by whoever--in the future. So, I think
we need to take advantage of this opportunity that we've had,
which last for decades to really make the fundamental changes
that will last for decades to come. Modest changes won't do it,
in the long run.
Senator Menendez. Professor.
Ms. Lancaster. At great risk to my reputation, I'm going to
disagree with Steve a little bit, here. I think it's a very
good idea to rewrite the Foreign Assistance Act. But I think
it's going to be a huge political lift, both in the Congress
and on the part of the White House. And I hope it happens, but
I realize the world we're living in. I think we can do more
than modest reforms, otherwise. We did not rewrite the Foreign
Assistance Act to create the Millennium Challenge Corporation.
And I think some of the things we're talking about here can be
done in other ways, whether it's a small piece of authorizing
legislation or, God forbid, through the appropriations process.
On capacity I think it's very hard to put numbers on
capacity, at this point. I think we can identify functions. The
policy function ought to be in AID for AID. The same for
monitoring and evaluation. But, the size of those functions, I
think, will depend on resolving some of these other issues.
What is the role of AID going to be? Where is its strategy
going to take us? A lot of that, we'll have to sort out as a
result of some of the organizational issues, because they're
all wrapped up together there.
So, numbers, if that's what you are seeking, are hard to
estimate at this point, until we sort out the fundamental
questions.
Senator Menendez. Senator Corker.
Senator Corker. Thank you, Mr. Chairman. And I thank each
of you for your service and testimony.
Mr. Natsios, I know, mentioned that the mission of USAID
ought to be more than poverty alleviation, it ought to also be
state-building, and I'd love to--neither one of you, I don't
think, specifically mentioned that in your testimony, and I
guess, before we move down the path of how to organize USAID,
is there an agreement, I guess, among the three of you, that
that dual mission is what USAID ought to be about?
Mr. Radelet. I agree, I actually think of three missions.
One is economic growth and poverty reduction. The second is
state-building, building capacity, including encouraging
democratic governments, over time, to emerge. And the third is
responding to humanitarian crises, which is a little bit
different from the other two. But, I think those three, I would
put at the top as the core objectives.
Senator Corker. Professor.
Ms. Lancaster. I'd just like to add one thought--two
thoughts, actually. I would add another priority, which is
already there, and we need to----
Senator Corker. They're sort of getting watered down,
aren't they?
Ms. Lancaster. There are only four. Only four, not 50.
[Laughter.]
And that's addressing global issues, which I don't think we
can avoid. I think it's already a great deal of what we do.
Things like the spread of infectious disease--HIV/AIDS is led
by PEPFAR, but USAID inevitably comes in behind to help that
work. And, of course, I think we're moving into an area where
we're going to be concerned about adapting and mitigating
climate change. So, I wouldn't put those off the table. And
there may be more of a coordinating function than an aid
function, but I think it needs to be there.
I just have one other thought with state-building. I think
it's great to put state-building in there. I think we have a
lot of work to do before we figure out how to do it right.
Senator Corker. So, on that note, there was a recent long
op-ed, I guess, in the Wall Street Journal by a lady named Ms.
Moyo, talking about our foreign aid to Africa has actually
helped corrupt many governments there. Again, I say this--I'm a
very strong supporter of foreign aid. I think we have got a
long ways to go to get it right. So, we talk about, you know,
USAID being involved in state-building, and we talk about it
being separate from the State Department. And yet, there is a
conflict, I think, there between the relationship of State
Department to these foreign governments and the work that USAID
might build--might be involved in, within these states, in
trying to build a government that is less corrupt, is more
transparent, and builds on democratic principles. So, I'd love
for you all to sort of help us understand how that conflict,
which would be major conflict, could be resolved, and also any
editorial comments you might have about the op-ed itself.
Ambassador Natsios. If I could just make a comment about--I
haven't read her book yet. I'm writing my own book now. And I
need to read it. But, there is a series of books, that Bill
Easterly has sort of encouraged, that is the opposite of
Jeffrey Sachs' sort of utopianism. I think they're both wrong.
I've read reviews of her book. She seems to be talking more
about aid programs that go through the governments of sub-
Sahara Africa. AID does not do any budget support in sub-Sahara
Africa, so there's very little corruption in aid programming in
Africa, because it doesn't go through the governments that she
says are corrupt. There is criticism that AID has built a
parallel structure of contractors, universities, and NGOs to do
their programming. We do work with the governments, but we
don't put the money through them, because we had a lot of
problems of the kind she talked about.
She's more criticizing the European budget approach, which,
instead of doing their own programming, they go through the
government ministries, through just giving them a check. And
the World Bank, of course, always goes through governments,
because they are dealing with sovereign debt, in most cases.
I actually agree with her that, in countries that have very
weak institutions, it's very unwise to put large amounts of
budget support. We stopped doing that, 15, 20 years ago. So, I
think some of her criticism is misplaced. It's making
generalizations about all aid programs, when they're not all
alike. They're very different from each other, depending on the
country running the program.
Mr. Radelet. Ms. Moyo has an opinion that is shared by some
in Africa, but it is a decidedly minority opinion. As on just
about any issue in the world, there are people with a range of
wide reviews. I spend a lot of time in Africa these days,
mostly working in Liberia or working with President Sirleaf and
many others there, and this is a very--Ms. Moyo's views is
decidedly a minority.
I have read the book. I think it is very weak analysis. And
I think it does not do justice to the facts. The idea that aid
has not worked as effectively as possible is absolutely right.
The idea that aid is the cause of Africa's slow growth over the
last three decades, which is her thesis, just has no--I don't
think there's any academic, intellectual, or other support for
that view.
Mr. Natsios is right, these extreme views, as with extreme
views on any issue, are not particularly helpful to moving
forward.
There is a challenge----
Senator Corker. But, let me--I mean, I expected that you
might say that, and I understand the difference between
budgetary support and----
Mr. Radelet. Right.
Senator Corker [continuing]. And direct aid to citizens.
But, the conflict also that exists between USAID and State
Department still seems to be an--and that was not addressed; if
you could also speak to that as you're answering.
Mr. Radelet. Yes. There is the conflict between the two,
and I think that this requires the real development expertise
that can balance the objectives of needing to work with weak
states that are not perfect, that do have corruption problems,
that do have weak governance; but, at the same time, they are
places where we have goals and objectives, where we need to
work. I think what this means is that we need a development
agency that can--that has more flexibility to work with
different kinds of countries in different ways, and getting
away from kind of a one-size-fits-all. The MCC is a terrific
first step in that direction, where, in the better-governed
countries, where there is less corruption, we give longer term
commitments, we give those countries more say in making sure
that what we're doing is consistent with their objectives, and
we're working with their systems to try to build those systems
up. That kind of approach would not work in a Zimbabwe or other
places, where there's a completely, not functional, or
government that's creating many problems, where we would never
give the President of Zimbabwe or leaders in other countries
the say in where our U.S. funding should be allocated. There we
would work through NGOs and nongovernment types of agencies,
try to address the immediate needs, as we can, have a shorter
term perspective, and work in a very different way. And then
there are countries in between.
We need to have a different set of approaches for different
countries, based on their level of governance, their commitment
to strong development and poverty reduction; and, in countries
that are moving in the right direction, we need to give them
stronger support, longer commitments, and more scope to work on
it; whereas, countries where there is greater corruption, we
need to work around the governments and try to support NGOs and
nongovernment actors that can meet more immediate needs.
Ms. Lancaster. Senator, could I just take another----
Senator Corker. Sure.
Ms. Lancaster [continuing]. Shot at this question? Because
I see your question in bit of a different light.
Pakistan is actually the interesting case right now, but
you could take Egypt, as well, where there is a potential
conflict between how much aid we give and what we do with it
for diplomatic purposes and for development purposes. And I
think we have to recognize that it's absolutely essential that
the Department of State have funding that backs up its
diplomacy. I don't think anybody contests that. And sometimes
that money goes to countries whose governments are not the
best. Zaire was the poster child for poor governance in the
1960s and the 1970s. The volume of aid and sometimes its uses
are decided based on diplomatic purposes, because we are
strengthening an ally or rewarding a country that's obviously
done us a favor even though that aid is often implemented by
development agencies. That kind of money, economic support
funds, ought to be used and identified as something separate
from development assistance funds. What I think worries a lot
of us is when development assistance funds are allocated
primarily for diplomatic purposes.
Senator Corker. My time is--thank you, and my time's up.
And I'm--keep going? Sure. Thank you, Mr. Chairman. [Laughter.]
That's post-partisanship. I thank you so much. [Laughter.]
So, let me follow up a little bit on--I mean, do you think
that, the three of you--you know, we have, you know, an
expanding mission as we move from right to left on the table,
from whence I'm looking--do you think there is a--is it that
same sort of internal discussion that takes place between State
and USAID that sort of drives us to end up having 20 different
organizations that are carrying them? And how--what--the three
of you have a sort of a different vision. I know that they're
little microdivisions, but do you think the three of you could
quickly--and I'm not asking you this, but--come up, in a day or
so, with a mission that you all agree upon, the three of you,
coming from different backgrounds? So----
Ambassador Natsios. The mission that Steve mentioned, I
agree with. I ran the humanitarian aid functions for many
years. I've written many books about it. I didn't intend to
leave that out. I was adding in state-building to poverty
reduction and economic growth, because it's not discussed
enough in the literature. But, Steve is correct. AID is the
preeminent emergency response agency in the world. I mean, 60
percent of all of the emergency response funding for the
disaster in Darfur comes from AID. So, we don't want to
compromise that. It works very well.
Senator Corker. And then--so, we'd move on out into, you
know, issues--climate change, the effects, adaptation issues--
we'd move on out into PEPFAR and all--we would all agree that
those things would come under the same umbrella.
Ambassador Natsios. Well, I believe--Carol and I would
disagree on this--I think the notion of global issues--global
issues are dealt with in countries. There's no such thing as a
PEPFAR program, except in the countries in which people have
HIV/AIDS. And we use the health ministries, we use the church
community and Muslim groups to help us. We use civil society
and private hospitals, but we work in the context of the
institutions of the country. That's state-building.
So, I think--state-building includes the Ministries of
Health, it includes civil society in those societies. So, I
think you can include those global issues, in terms of building
up the state structures to deal with these global issues. It's
not that we should ignore them, it's the context in which we
deal with them.
Ms. Lancaster. Yes, I think that Andrew and I are probably
differing on packaging rather than anything else.
I think that all of us, probably would share those goals.
Mr. Radelet. I think so. There's no way that we can ignore
global issues, like HIV/AIDS and climate change, but those
need--our support for those issues need to be developed in the
context of specific countries and, I think, come under part of
the rubric of poverty reduction, frankly, because if we don't
address those kinds of issues, that gets right at the heart of
poverty.
What the global issues call for is coordination across our
different programs in different countries, particularly
neighboring countries, but sometimes even beyond neighboring
countries, to make sure that the approaches that are being
taken in one country on endemic disease are consistent with the
approaches taken in the country next door, because disease does
not honor international boundaries.
So, I think it is--I think we are consistent.
Senator Corker. Mr. Chairman, thank you for the time. I
know Senator Casey has arrived. I have a number of other
questions. I don't know how long the hearing will last, but I
know it's time for Senator Casey.
Senator Menendez. We'll--depending upon members, we'll
see--we'll see if we can stay a little longer.
Senator Casey.
Senator Casey. Thank you, Mr. Chairman. I appreciate you
calling this hearing.
This is a topic that so many people who care about how the
United States conducts its foreign assistance have been
concerned about for an awful long time, and are worried about
how we deliver that and the reforms that need to take place.
I wanted to, first of all, thank each of the witnesses for
your testimony, for the perspective that you bring to this
issue from long years of experience. And I guess I wanted to
start with the issue of organizational reforms. And some of
this, I know you've covered in your statements and you may have
responded to by way of answering questions of my colleagues,
Senator Menendez and Senator Corker. But, it doesn't hurt to
repeat yourself, if you have to, on this.
First of all, with regard to the suggestions as to how to
streamline Federal agencies that currently handle our foreign
assistance, I wanted to--first of all--refer to Ms. Lancaster's
opening statement. You said there's only a notional division of
labor between USAID, the Millennium Challenge Corporation, and
PEPFAR, and the latter two programs, obviously established
under the Bush administration, and work on different
development models than that of USAID. How would--the basic
question I have is, How would coordination between these three
major bilateral aid programs work? What's the balance that we
need to strike, here?
Ms. Lancaster. Well, there is a little bit of a crossover
between USAID and PEPFAR in dealing with international health
issues. And in particular, I see PEPFAR as facing a challenge
to its effectiveness if some of the elements that are needed to
make HIV/AIDS campaigns effective are not there, including
nutrition and adequate food and so on. So, there is a notional
division of labor there. I am a little concerned, though, that
the enormous size of the PEPFAR budget could really absorb a
lot of the development budgets in the countries where PEPFAR is
operating, because of its gravitational pull.
There has been a little bit of a division of labor between
AID and MCC. AID is doing some of the threshold work in
countries teeing up for an MCC compact. However, I think there
are still places where two or three of these agencies are still
working. I would think, together, they might be able to find
synergies that would make each of them a little more effective.
Senator Casey. Yes?
Ambassador Natsios. If I could just add. PEPFAR does not
exist in the field. There are only two agencies, basically,
spending the money--the Center for Disease Control and AID. And
HHS got into this, with CDC, using the same AID contractors,
the same AID health experts, the same AID partner NGOs, doing
the same thing in the same countries. It actually makes no
sense, organizationally, and there's constant conflicts in the
field. The ministries of health don't know who to go to
sometimes, and there's all these turf wars. It's useless.
PEPFAR is simply a coordinating office in the State Department.
It has no business being in the State Department. What does the
State Department know about disease prevention and program
management? Those functions belong in AID.
You know, the three functions that AID still is a leader
in, intellectually, in the world are the ones Steve mentioned.
If you ask European aid agencies or the World Bank, Where is
AID preeminent? It's in disaster response, civil wars,
conflicts, natural disaster; it's in economic growth and
poverty reduction from a private-sector point of view; and it's
in international health. The preeminent international health--
bilateral or multilateral--is AID.
This was done for political reasons. PEPFAR could be moved,
with no effect in the program, simply into the International
Global Health Bureau in AID.
In terms of MCC, the MCC board, the way the Congress
designed it, is protecting the program from use of the money
for other nondevelopmental purposes. Let me put it in a
diplomatic way. I've watched attempts to raid the budget,
because I used to sit on the board. And the fact that you have
all these people making these decisions on which countries get
their compacts approved makes great sense. I would not touch
the board. It protects the integrity of the program. The local
control of this makes sense. What does not make sense is having
an education program in the country where AID has an education
program and there's a compact program in the same country.
And you know who's hiring--being hired to run the AID
program--the MCC programs in the field? Retired AID officers.
When they started the MCC, they said, ``We want nothing to do
with AID. AID's the problem.'' Then everything got all screwed
up and people were removed from positions, and now the rule
is--``we want retired World Bank people and retired AID
officers.'' If you look at a current roster, they're mostly
retired AID officers. So, it's not as though there's a culture
conflict, because they're the same officers who ran both
programs.
So, putting the AID--the implementation of the program in
the AID--as a separate division in the USAID missions in the
field would not be any kind of a stretch, organizationally. And
in many countries, do you know where the office space is and
the technical support for the MCC, informally, is? It's in the
AID missions. They physically sit there.
Mr. Radelet. The Office of the Global AIDS Coordinator and
the MCC were set up as separate entities from USAID because of
the belief that USAID did not have the institutional strength
to take on these responsibilities. The better solution would
have been to address that problem several years ago, but that
wasn't taken on. Now we have the opportunity to do that.
It is exceptionally odd that we have an HIV/AIDS program at
the State Department. It has nothing to do with diplomacy. It
is a technical health problem with much broader implications,
beyond HIV, into nutrition, into health systems, into
agriculture and livelihoods, that affect people's capabilities
to prevent HIV and to deal with it, if they happen to contract
it. That needs to be moved back into AID. And the MCC, as a
fundamental economic growth program, also obviously, properly
belongs in a strong development agency.
The right way forward is not to merge those in, today, but
to rebuild AID and give it the capacity and the strong
professional--the leadership and the professional capacity that
it needs, and then, at the appropriate time, move those back
in, as separable entities within a strong development agency,
so they can continue to do the great work that they are doing,
with the special characteristics that the MCC and PEPFAR have,
but under a strong leadership so that they can be better
coordinated and better integrated with the other development
programs that will make them, ultimately, more successful.
That's the right way forward. It'll take us a couple of years
to get there, but having them as separate entities with
everyone stepping on each other's toes and poor coordination
doesn't make sense and won't work in the long term.
Senator Casey. Well, thank you very much, that's very good
advice. Thank you.
Senator Menendez. Let me indulge the panel just for a
couple more questions, here. I don't know if Senator Corker
will have some more, but--you all listed--when I asked you
about the two major reforms, and how they would interface with
AID, pretty much came up with a consensus view that
independence and capacity were important. Let me ask you a
broader question, Which agency should take the lead on
coordinating all U.S. foreign aid?
Mr. Radelet. Let me answer that in terms of development,
more broadly, because it's a slightly different answer, here. I
think, in terms of development, more broadly, and U.S.
engagement to support development, I think the NSC has to play
a strong role in developing a strategy that brings together
agencies that talks--that brings together, strategically,
foreign assistance, trade, migration, other development
policies. So, at that development level, NSC.
In terms of foreign assistance, AID should be the premier
organization under which many of our foreign assistance
programs are consolidated. Whether we bring all of those
together, one can debate whether every little thing should be
brought together, or not. But, certainly what is now in AID,
much of which is what is now done by the Defense Department,
the MCC and PEPFAR should be brought under the umbrella of a
strong development agency. And also, arguably, our multilateral
development policy, which is at Treasury, which, therefore, is
somewhat divorced from our bilateral programs that are
elsewhere. So, I think those core things should be brought
together under a strong agency. It can't happen now, but if AID
is strengthened in the way that all of us would like to see it
strengthened over the next couple of years, that should create
the opportunity to bring at least those core programs together.
Senator Menendez. Anyone else, or you all agree on that?
Ambassador Natsios. Let me just add one comment about the
notion of the use of foreign aid for diplomatic purposes. Carol
has spoken to it, and I agree with what she said. But, the
Defense Department--I, you know, lecture a lot at the National
Defense University, and read their journals, and publish in
their journals, so I know the Defense intellectual world a
little bit. And they have an interest in this that's very
direct. You know, my son is training to become an officer, and
he will be shortly, and I'm a little worried. And I know that
what we do in development is going to affect him in the field
when he goes--and he's going to go into combat, I'm sure.
So, we can't say to the Defense Department, ``It's none of
your business.'' We created an Office of Military Affairs. It
was very controversial when we created it. State didn't want me
to do it. They said, ``You go through us to get to Defense.''
We put Foreign Service offices, for the first time, in all the
regional combatant commands, which we never had before. There
are 66 AID officers or staff on the PRTs, Provincial
Reconstruction Teams, in Afghanistan right now, including 18
professional Afghans working for AID. So, we're involved in
doing planning all over the world on this.
I think the Defense Department actually has something we
need, which is--when I talk about the $3 or $4 billion they're
spending on development, they don't know how to spend it. They
privately admit to me they don't want to spend it, but they
want it spent in the countries. For example, there's no AID
mission in Mauritania, in Niger, or Chad. There are serious
terrorist threats to those countries. They want programs there.
And State Department does, too. The Defense Department has an
account, the 1206 account. It says they can't spend the money,
but they can give the money to another agency.
I think what they should be allowed to do is decide which
country to spend the money in, and the overall level of
spending out of those accounts, but the programming of the
money, the management of the money, the policy decisions on how
it's spent in the country should be done by AID.
And the British have a system where they have people from
the foreign ministry--one person from the foreign ministry, one
person from the development agency, one person a military
officer--sit and decide, in these special funds that focus on
counterterrorism and on conflict zones, where there are
national security issues, how to allocate those funds. And that
makes a lot of sense to me. In fact, frankly, it's going on
now--no one knows it--at an operational level.
Senator Menendez. One of the--I understand what you're
saying, Ambassador--one of the concerns I have, I just read
Secretary Clinton's comments in the Post about development
assistance in Afghanistan. She said there are so many problems
with them that there are--problems of design, problems with
staffing, a problem of implementation, problems with
accountability, go down the line, I think was her quote, and
then she ended up referring to the amount of money spent
without results there is heartbreaking. And, you know, I get
concerned--and she went on to talk about that there's very
little credibility among Afghans. And I know that Oxfam had a
report that charged that much of U.S. aid in Afghanistan is
wasted on consulting costs, subcontractor fees, and
duplication. So, my concern, here, is that, in fact, so much
has been shifted to the Department of Defense. Also, to
Secretary Gates's credit, he has talked about how, in fact,
he--you need a robust, you know, foreign diplomacy, as well as
a foreign--foreign assistance, so I give him all the credit in
the world. Transforming--making that shift from those words is
going to be, you know, one of the things that we need to see
happen.
But, I don't even think that we have the same
accountability or scrutiny for those funds as we do, for
example, AID. I think scrutiny is good, by the way. I'm not
suggesting there should be less for AID. But, I also think that
that type of scrutiny should be looked at, in terms of what's
been happening in the use of these funds at the Department of
Defense. So, I'd like to see this transition out to, you know,
what is, in essence, a civilian agency, working in
coordination----
Ambassador Natsios. Yes.
Senator Menendez [continuing]. Working in coordination.
But, you know, I think that when a civilian agency goes to a
population somewhere else in the world, since we, as Americans,
are here to be a partner--I think when the Department of
Defense goes someplace in the world and, you know, tries to do
the same thing, it is much more suspect as to what the purpose
is. You may be winning hearts and minds for the moment, but I
don't know that you're winning hearts and minds for the long
term, at the end of the day. That's just a personal reflection
that I have.
Senator Corker, do you want another round?
Ambassador Natsios. Could I just add one comment about----
Senator Corker. Sure, sure.
Ambassador Natsios [continuing]. What you're talking about,
Senator? Because I think you're right. I am not suggesting the
Defense Department should be spending any of that money. And
they shouldn't be. And I've said, repeatedly at NDU, ``You
should not be engaged in this, but we need to plan with you and
talk with you.'' And so, that's what I'm proposing, here.
But, if you want some strategic reforms that don't require
massive rewrites of anything, make the USAID IG responsible for
auditing all spending of all foreign assistance for all Federal
agencies. You'll see a huge change, because Federal agencies
will not want to spend this money. Most of the other Federal
agencies have no audit people abroad. Most of the IG for AID,
their people are all over the world. They live in the Third
World, doing audits. Make them be placed in charge of all the
Defense Department spending, particularly if it goes through
AID, by statute. Do it even for the State Department. That
would shock the State Department, because there's no real
auditing going on, from a programmatic standpoint, now.
Let me just--I should probably say this publicly, because I
don't think most people know this. Do you know who the Defense
Department sent to oversee the AID reconstruction program in
Afghanistan? The former chief operating officer of General
Motors, who had never been a Third-World country or a war zone
or done reconstruction. We were told that they had skills from
the industrial sector that would be useful in reconstruction,
which is utter nonsense, with all due respect. And I'm a
Republican, I love the business community. Government and
business are alike in every unimportant way.
Some of the most stupid decisions I have ever seen were
made by people who have never been to a war zone, never done
reconstruction in Iraq and Afghanistan. I mean, they weren't
malicious, but they didn't have any expertise.
This is a separate discipline. It requires professional
career officers to run it. And if we had made some of these
allocation decisions in both countries, I don't think we'd have
had some of the issue we've had. We did what we were told, as
best as we could under the circumstances, but the structure
needs to be changed so we are no longer subordinated.
No one should be sent to run--the AID mission director's
supposed to be in charge of these reconstruction programs.
Senator Menendez. I think you should be more passionate
about how you feel. [Laughter.]
Senator Menendez. Senator Corker.
Senator Corker. It's very good testimony, and I'm really
glad you're having this hearing, and you can see that, walking
through all of these issues, we're just beginning. It's going
to take a lot of tough sledding, if you will, to actually come
to an end that makes sense.
But, let me just follow up on the whole issue of the
Defense Department and aid, and the rub that's there, and some
of the suggestions that have been made.
In visiting Iraq and Afghanistan--and, I think, soon,
Pakistan's going to be in similar situations, in some parts of
the country--but, in visiting there, there seemed to be--the
reason the Defense Department subsumed this, was the urgency of
getting money out. OK? And I realize that sometimes urgency
doesn't lead to the long-term benefit. But, there were also
some cultural issues, it seemed. Look, the military basically
can tell people where they're going and when they're going to
be there, just like they will with your son, soon. The culture
at USAID and State is different than that, to some degree.
And so, as we talk about aid, especially aid during a time
of conflict, and security needing to be provided, which seems
to me an incredibly difficult task, no matter who's carrying it
out, are there not some built-in issues that make it difficult
to do exactly some of the things that you all have said about
USAID in these conflict zones? I'd just love to hear your
response.
Mr. Radelet. There are some things that are built in, but I
think they can be changed, on both counts. What your point is--
both on the money and the people, is the flexibility that
Defense has that AID does not have, and the ability to respond
very quickly. Partly, AID can't respond very--it doesn't have
the flexibility, for the reasons around the Foreign Assistance
Act and the heavy restrictions, and that every dollar is
determined, how it's going to be spent, long in advance. So,
when something happens quickly, mission directors don't have
the flexibility and the resources to move, just on the money,
to allocate money to an urgent crisis.
Second, on the personnel issue, you're right, but that's
partly because AID's professional capacity has been so
decimated over the last 15 years that they're not able to move
people quickly. That's beginning to change, because they're
hiring people, and they're also, my understanding is,
developing a rapid-response capability with a staff of people
that will be available for exactly this purpose, that when
something comes up, that they can move people quickly to the
field, that have the background, that have the experience doing
this in other countries, to address these problems.
So, at the moment, Defense filled the void because AID
couldn't do it, but there are steps that can be taken to give
USAID both the resources and the flexibility so that they can
adapt, with professionals with the right background, to address
these issues in the future.
Ambassador Natsios. Well, let me--I understand what you're
talking about, Senator, and you're right. This is not written
down, but I'll tell you the story. I used to ask, annually, of,
not just the career staff, the 2,000 people, Civil Service, but
our 6,000 Foreign Service nationals, in a confidential survey--
we'd ask a set of questions. And we got huge response rates--
like, 60 percent of the workforce would respond. At the end, I
would say, ``Do you have advice to say to me?'' Fifty of the
career Foreign Service citizens would ask me to resign, because
I was ruining the agency by dealing with the military, being in
conflict zones, your--and the career--the senior people running
the agency said, ``You know, they're from the old order, and
they just don't get it.'' They all retired. They got sick of me
and that I wasn't going to change where I was moving the
agency.
We created a specialty in the Foreign Service, Backstop 76,
for dealing with emergencies. Out of the 1,000 Foreign Service
officers, 130 officers, including very senior people,
volunteered to change their specialization into this field to
deal with reconstruction, conflict, and civil wars dealing with
the military. I was stunned, because I thought no one would
join it. Everybody wanted it. We had to actually cut back the
number of volunteers to get into these positions. We're not
having any problem getting people. In fact, when we created
OMA, I thought no one in the career service would join. They
had a waiting list of career people who wanted to join the
office.
So, there is--there was, in the old order, a bunch of
people from the 1960s who couldn't take the--and they left,
they retired, and they were angry when they retired. They were
angry at me. They kept asking, every year, for me to resign.
So, by the time I left, no one asked me to resign, in these
surveys, and I thought maybe I converted them. They said, no,
they just retired.
So, the agency made the conversion--both of you, Senators,
at the beginning, asked--already; and they're doing this issue,
and they're doing a very good job. And the military respects
them much more now.
One, just, quick question. At the beginning of Afghanistan,
the military sent e-mails to Colin Powell, saying, ``Oh, AID
takes forever to build a school. We can build it in a month. It
takes them 6 months.'' Because we have a rule, we never build a
school unless the Ministry of Education agrees where it's going
to be built, how big it is, and whether they will put teachers
in it. There were a dozen military schools built that are now
barnyards, because the Ministry of Education was never
consulted, had no intention of sending teachers there, sent no
textbooks, and, in fact, there weren't even enough kids to go
in the school. Some of them are police stations now.
When they had those disasters, one good thing about the
military is, they're very flexible. If they make a mistake,
they shift. Right now, in the field, DOD funds cannot be spent
unless the AID officer approves them. It's not a DOD edicts but
a practice of field commanders. All the commanders said,
``We're not making any of those mistakes again.'' The AID
officers know what they're doing. They have to approve
everything that's done in the PRTs, even if it's DOD funds,
because they know what they're doing.
The military respects our officers in the field. That is
being dealt with operationally. You know why? Because they want
to survive, and they want to get the mission done. All of our
employees are dedicated to doing this right--including our
diplomats.
Senator Corker. Professor.
Ms. Lancaster. I just have a footnote. I watch young people
coming through master's programs, interested in doing
development. And I am seeing an uptick in master's students who
have some military background and want to shift into the
development field. They will span those two cultures.
There is a very can-do military culture, which makes you
feel really good, when things can be done quickly and
expeditiously. I think the AID culture is one that sees more
complexities in the world, because, in fact, that's what they
have to face. Those two cultures exist.
There are actually two cultures in USAID right now. I think
Andrew might have touched on it. The humanitarian response,
which is a real can-do culture, and, again, the longer term
how-do-we-do-this-right, let's-take-enough-time-to-do-it.
But, I don't think that the cultural differences are
insuperable, and I think Andrew's sense is that they are being
bridged.
I do think there are real issues, though, with the
involvement of the Defense Department. And, again--we've talked
about it already--what is that relationship going to be with
AID and with State, and how directly involved will they be in
delivering assistance? I say to people, I wouldn't want to
drive a tank down Pennsylvania Avenue, the military is not my
profession. There is also a profession that involves
development work. And I think somehow we have to--and hopefully
you all will take a lead to sort out those difficulties there.
Senator Corker. Mr. Chairman, I know my time is up. I just
want to make a statement about PEPFAR. I think many of the
statements made were dead-on. You know, what I've seen in
PEPFAR that--you know, look, that's where the money is, right?
And so, as you watch USAID and, just, in-country teams dealing
with PEPFAR, there's this migration of mission creep. I mean,
all of a sudden everything is about HIV. Everything. I mean,
economic development--I mean, you can--there's a chain of--
there's a progression that says that everything in the world
contributes to HIV, and the reasoning is there, because that's
where the money is and that gives us access to money.
So, I think the comments you made about MCC, and being able
to separate out those moneys so they're actually spent exactly
in that area, is applicable to PEPFAR, also. OK? And I think we
have this undefined creep that's taking place. I don't
criticize the people in the field, because they're being
entrepreneurs. I mean, they're figuring out a way to get their
hands on money to do things that they think are important. But,
I think as we move through this, we've got to figure out a way
to, again, have people working together, but actually stovepipe
the money in such a way that it's being spent on those things
that we are allocating to be spent on. Otherwise, I think we
come back, in a decade, and we're going through this all again,
because there's not specificity, if you will, in these
programs.
So, I'll stop there. And, Mr. Chairman, I may leave, but I
really do thank you for your leadership. I look forward to
working with you and Senator Casey and others, and truly
believe, as you stated in your opening comments, that this is
something that's very important to the security of citizens in
this country, too. I know that we do focus a lot of domestic
issues, as the professor mentioned, because that's what our
constituents call about, and that's what is on their minds, but
somehow or another we've got to elevate the consciousness in
this country that the things you're working on indirectly are
equally important to their well-being. And I thank you for what
you do.
Senator Menendez. Thank you, Senator Corker.
Senator Casey.
Senator Casey. Thank you very much.
I wanted to just focus on one bill, one issue. Senator
Lugar and I introduced the Global Food Security Act, and it was
just moved out of committee yesterday. As many of you know,
it's really focused on a couple of areas. One is improving or
enhancing the coordination between USAID and the Department of
Agriculture, as well as other agencies. We're attempting to
expand U.S. investment in the agriculture productivity of
developing nations. The bill also is an attempt to make food
assistance programs more flexible. And we have authorization
language for a $500 million fund for U.S. emergency food
assistance.
I was wondering if you could put that in the context of
your own experience on aid, generally, just in the context of
food aid, some of the problems you've seen, and react to the
bill, as well. I'm not sure I'm looking for a lot of
amendments, at this point, but we're always open to listening.
But, to put that in perspective, the problems you've seen with
food aid and how this or other legislative remedies could help.
And anything, in addition, that you would have, based upon your
own experience.
And, Mr. Natsios, I know that you haven't been shy today,
or bashful. [Laughter.]
Ambassador Natsios. Well, sir, I ran----
Senator Casey. My wife's a Massachusetts----
Ambassador Natsios [continuing]. The food aid program.
Senator Casey [continuing]. Native, by the way. So----
Ambassador Natsios. Pardon me.
Senator Casey. My wife is a Massachusetts native.
Ambassador Natsios. Is she really? Where is she from in
Massachusetts?
Senator Casey. From Belmont.
Ambassador Natsios. Belmont, not too far from Hollister,
where I come from. Yes.
Senator Casey. Yes. So, we're--I'll tell her about our
meeting today.
Ambassador Natsios. OK. [Laughter.]
I ran the food aid programs 20 years ago, in AID, and when
I was at World Vision, I was in charge of World Vision's food
programs, funded by the U.S. Government, so I know them, I've
written articles on food aid issues.
We proposed, in AID, an amendment, which didn't get
through, to allow local purchase of food aid. Food aid now has
to be purchased in the United States. And about 30 to 40
percent of the cost of food aid is transporting it from the
United States to Ethiopia or Afghanistan. We put a lot of food
aid in Afghanistan. And I don't want to have the whole program
local-purchase, but I think a portion of it needs to be
flexible.
Now, I'll tell you a story, and it's--this is a true story.
We had, in Afghanistan, after 2001--after we took control, we
defeated the Taliban, Karzai took over--we introduced a new
seed variety of wheat. It's actually not that new, but it's
drought-resistant, high yield, and we tripled production in
many areas of Afghanistan in early 2002; so much so, they had
the biggest wheat crop in history. Farmers stopped harvesting
it, because the price dropped to 20 percent of the normal
level. And it started to rot in the fields. Meanwhile, we
introduced 200,000 tons of wheat from our Food for Peace
Program. My economist said, ``Andrew, you know, if we could
purchase the 200,000 tons in Afghanistan, the price would have
gone back up again.'' You know what happened the next year?
Those farmers who lost money in wheat, moved to poppy
production for heroin, because they said, ``We can make more
money, we won't have this happen.'' And our staff said,
``Andrew, why can't we local-purchase the food that we grew in
Afghanistan for the Afghan people?''
Dr. Norman Borlaug, who probably saved more lives than
anybody in human history--he got the Nobel Peace Prize in 1970
for the Green Revolution--he and I wrote an article, for the
Wall Street Journal, on the local purchase of food aid. If
there's one change I would make in the Food for Peace--the
agriculture--the farm bill, which just went through, it would
have been to allow this. Congress allowed a $12 million program
over 5--$60 million program over 5 years as a test, run by
USDA, overseen. Now, I have to say, USDA has a little different
interest than AID in this. Their view is they market American
products abroad. I was troubled that it was structured this
way. But, it's a plus.
I don't know what's in this bill. Senator Lugar, who I have
great respect for--I understand there's more flexibility for
our officers in that bill, to spend this money. If that's the
case, it would be a big boon, because we can marry, then, the
food programs with the agricultural programs and stimulate
local production that we then purchase for our emergency
programs. It makes great sense, developmental sense.
Senator Casey. We'd invite your comments on it, thank you.
Mr. Radelet. If I can add to that, I applaud your efforts
and Senator Lugar's efforts. And Andrew has spoken on the food-
aid side. I just want to underscore--and I'm--I know he would
agree, and I think Carol would agree, as well--the emphasis on
agricultural productivity. It is remarkable and distressing how
there has been a drop in funding--from all donors, not just the
United States--for supporting agriculture, in the last 20
years, which is just at the core of so many development issues,
from rural poverty to food, nutrition, to, frankly, mitigating
HIV/AIDS, both in terms of prevention, to give people a
livelihood, but also to strengthen people's nutrition and their
ability to withstand the virus. Funding has dropped enormously,
and it's time that we get back into it. We have such tremendous
expertise in our land grant universities and other places,
where we can move both on the technological front, but also in
terms of getting those technologies out to the field.
Now, we can't do this alone. And here is a great place
where we need to coordinate our bilateral assistance with our
multilateral assistance, because one of the keys to
agricultural productivity and fighting rural poverty is
infrastructure, is roads, is getting roads out to the rural
areas to connect people to markets, both to make their inputs
cheaper, but also to give them markets so that they can sell
their goods. I'm not sure it makes sense for USAID to get back
into major road-building, but the World Bank and the African
Development Bank and the Asian Development Bank should have
those kinds of expertise. And it's--I think it's a good example
where--but, they don't have the expertise in developing new
agricultural technologies, which we do. So, there are
opportunities here to work together.
And a great example of the beginnings of this is with the
MCC and the Gates Foundation. I happened to be at a reception
last week where Bill Gates was there and was talking about the
beginnings of their partnership, the Gates Foundation
partnership with the MCC in Tanzania on, particularly, this
score. Here, the MCC is actually building the roads, but
doesn't have the technological capacity. The Gates Foundation
is working on ag technology, and they're working together. We
can do that more broadly to really try to address, much more
significantly, the problems in agricultural production.
Ambassador Natsios. I agree with everything that Steve
said.
Ms. Lancaster. Yes, can I just----
Senator Casey. Thank you
Ms. Lancaster [continuing]. Say a word?
Senator Casey. Sure.
Ms. Lancaster. Just two quick points.
U.S. support for agriculture used to be very high. It was
in the 1980s that it came down, down, down. And the reason is,
the world food crisis that we talked about, in the 1970s,
vanished. And so, the interest in it diminished, and the
political support for putting efforts into promoting
agricultural production in poor countries diminished. And I saw
it happening when I was in AID, too.
I don't want to be an advocate for congressionally mandated
programs, but I think interest in Congress in this issue is
important.
The one piece that I don't think anybody quite mentioned
was agricultural research. It's probably had the biggest payoff
of any aid moneys anywhere, but it's often a long-term
investment, and sometimes it's risky.
I think we came close to eliminating U.S. contributions to
international agricultural research, a year or two ago, just
before the recent food crisis, broke. There needs to be some
more attention to that, because it's an ongoing problem. You
solve one agricultural problem, and you've got another one
right behind it for further research. I hope there will be a
piece in that bill that talks about that.
Thanks.
Senator Casey. Thank you very much.
Senator Menendez. Well, thank you, Senator Casey.
Thank you all. Let me thank the witnesses for their
testimony. I think it's a great start to our work. It was very
thoughtful.
Ambassador Natsios, on behalf of all of us, thank your son
for his service to our country.
The record will remain open for 2 days so that committee
members may submit additional questions to the witnesses. And
we ask the witnesses to respond as expeditiously as they can to
these questions.
Senator Menendez. And seeing no one else seeking
recognition, the hearing is adjourned.
[Whereupon, at 11:18 a.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Responses of Professor Andrew Natsios to Questions Submitted by Senator
Jim DeMint
FOREIGN AID ADMINISTRATION
Question. It has been suggested that USAID should be elevated to an
independent Cabinet Agency, as in Great Britain. But the result there
indicates that such a step would make it more difficult to shape
development programs in a way that would advance the national interest
and make for a coherent strategy. What are your views?
Answer. I believe that development is an instrument of national
power, soft power, with profound implications for U.S. national
interest and that its subordination to the State Department means the
necessary development voice of USAID is not being heard. Some of the
worse mistakes made by the USG in Iraq and Afghanistan were because the
USAID policy voice was never heard (because we weren't in the meetings)
or went through State or DOD and became hopelessly muddled and
emasculated before it got to the White House for decision. I could give
many practical examples of why this is the case. The DFID model would
avoid that. The early years of the DFID reorganization in 1998 led to
the agency trying to stay independent of the British foreign policy
apparatus, but the past 3 or 4 years it is much better integrated. I
think the way to organize the U.S. system is to put a much stronger and
larger USAID at the policy table with a seat at all national security
council meetings involving developing countries. That would ensure
their views and expertise are used properly, but also that they are
held accountable for carrying out the aid portion of a national
security strategy. But to make this work USAID would have to be
independent of the State Department Diplomacy and development are
completely different from each other, while they both need each other
to be successful one should not be subordinated to the other.
Question. What are your thoughts on the F Bureau and the Director
of Foreign Assistance position, and how would you optimize the
relationship between USAID and the State Department to ensure an
appropriate balance between priorities and resources for development
and diplomacy?
Answer. The F Bureau did some very damaging things and some very
good things. The Bureau was created by cutting the policy and budgeting
head of USAID off--the PPC Bureau within USAID was gutted and all the
staff moved to State to the F Bureau which deprived the agency of its
intellectual and strategic nerve center. This was a disaster for the
development function in the U.S. Government as the F Bureau is not
being used for strategic purposes but for budgeting. The F Bureau did
build a new budgeting system (which I had started the year before I
retired as Administrator) and management information system which is
excellent and badly needed. In any reorganization these new budgeting
and information management systems should be kept in place--but
transferred to USAID. Gordon Adams, who I believe teaches at American
University and may have helped design the new system, but certainly is
a defender of the system, has spoken and written widely about it. He is
a fine scholar, but no development expert, and has written some deeply
flawed things about the F Bureau. The things he likes most about it are
the most destructive. For example, the decentralized nature of the
USAID program which allowed us to have a very influential role in the
development of poor countries has been compromised by this new system
of highly centralized decisionmaking. All development like all politics
is local, having people in the State Department making decisions on
what should or should not be done in rural Tanzania is crazy and
violates all of what we know about good development practice. What in
heaven's name does the State Department know about food security in
India or rural Africa, and yet they are making profound decisions about
resource allocation that are completely outside their technical
expertise. In this respect the F process is a disaster. That does not
mean the new budgeting and management information system should be
eliminated, it is the one good thing that came out of an otherwise bad
experience.
Question. How should the President organize the administration to
support the three pillars of national security, defense, diplomacy, and
development to best support U.S. interests abroad?
Answer. Recentralize all foreign aid programming and resource
allocation back into a much better staffed USAID as it was during the
cold war. Separate USAID and its business systems from the State
Department as it was during the cold war. Put USAID on the national
security council, and create an interagency coordinating committee of
DOD, State, and USAID to decide on resource allocation by region and
country for the geostrategic portion of our aid budget. Much of what
USAID does by law and practice is not supposed to be driven by DOD or
State. For example, the HIV/AIDS program, polio eradication, famine
relief budget allocations are decided by a need-based formula based on
infection rates or mortality rates in the case of famine relief. Why
DOD or State would be involved with this makes little sense to me. It
ought to be a clinical and quantitative measurement matter, not
diplomatic or defense driven. But we clearly have situations where
foreign aid is essential to implementing a peace agreement, or stopping
the spead of terrorist networks, shoring up friendly governments under
attack by terrorist or narcotics syndicates. In these cases clearly
there is a need to have State and DOD drive the broader process of
resource allocation, but not the management of the program in the
country itself. This should be based on the account (ESF in the case of
State and the section 1206 in the case of DOD) out of which the money
is being spent, as it was during the cold war. Aid is allocated based
on four criteria: Need (of the people or society we are trying to
help), performance (how productive is the aid and how reformed is the
country we are assisting), risk (are their future risks we are trying
to protect against such as an Avian flu pandemic) or interest (the
foreign and strategic policy interest of the U.S. Government). It is in
the last area State and DOD must be involved in aid decisionmaking.
Question. It has been demonstrated that our U.S. ambassadors have
the ability to distribute only 5 percent of U.S. aid in their
respective countries. Do you believe that our ambassadors, in close
coordination with regional experts at the State Department and USAID,
should have control of a larger percentage of assistance?
Answer. I don't know what you mean by this question. What do you
mean by the word ``control''? If you mean should ambassadors decide how
much money the country they are posted to should get, this makes no
sense since every ambassador would ask for massive increases in their
aid budgets. If you mean the allocation by sector of aid money once it
gets to the field, that would require OMB and the Congress to end all
sector accounts and earmarking (HIV/AIDS, child and mother health, food
aid, education etc.) and leave these decisions to be made in the field
which is unlikely to happen (we could abolish much of the F Bureau if
we did this). I would support a process by which developing countries
(if they are governed reasonably well) once they knew how much their
country was getting in over all aid would negotiate with the USAID
mission how the money would be allocated by sector and by strategic
objective, and then get the ambassador's approval for this. That would
be the ideal process, but it is unlikely to happen because of the F
process (which has centralized whatever local decisionmaking discretion
existed in the old system). The only aid program like this is President
Bush's MCC which leave decisionmaking to the countries getting the aid
(with some limitations of course), which is the best system. If you
mean of ambassadors controlling aid, that they should decide how aid
money is spent in terms of partner organizations and implementation
mechanisms it would probably lead to serious abuse of funds, it would
mean we would not achieve strategic development objectives
(congressional oversight committees, the GAO, OMB, and the inspector
general's demand that aid be managed based on country strategic plans).
Most ambassadors are reactive, that is local groups come to them asking
for a grant or financial help and they like to say yes. This is hardly
a way of making aid decisions.
Question. USAID and DOD Provincial Reconstruction Teams fall under
different rules of engagement complicating and sometimes preventing
partnership in development and reconstruction efforts in Iraq and
Afghanistan. Ambassador Crocker, under the advice of General Petraeus,
adjusted some of the rules of engagement enabling USAID and FSOs to
accompany DOD teams on patrols. Despite USAID and FSOs volunteering to
participate on the patrols, mid-level management prevented their
participation. How should the government transform the culture of the
State Department and USAID to address the 21st century environment and
eliminate barriers to cooperation with the DOD?
Answer. The culture of State and USAID is driven by Federal law,
and congressional demands to minimize risk to our embassies and aid
missions abroad. The Federal law passed after the Embassy bombing of
1998 makes security, not getting the job done by our aid officers and
diplomats, the first priority. USAID officers refer to the USAID
mission in Kabul as the prison because it is so difficult for officers
to leave the compound and as a result they can't get out to see the
projects in the provinces. The law needs to be completely overhauled as
it is a major impediment to restaffing our aid programs and embassies
abroad and getting aid work done in insecure environments. Ryan Crocker
and General Petraeus were right in what they did. The law is being used
to downsize our diplomatic and aid presence abroad, when we should be
increasing our presence. The notion that every time an aid or state
officer is murdered abroad there has to be a commission of inquiry is
crazy--if we did that to DOD we might as well withdraw from the
battlefield. The world has changed since 1998 and the law is caught in
a time warp.
FOREIGN ASSISTANCE
Question. President-elect Obama made commitments to ``elevate,
empower, consolidate, and streamline'' U.S. development programs. With
foreign assistance programs scattered across more than 20 different
Federal agencies, how should the government address inefficiencies and
incoherence within the current structure in order to help maximize the
impact of U.S. assistance and instability that threaten prosperity and
security globally and at home?
Answer. During the cold war, OMB and the White House enforced a
standing rule that no aid money could be spent abroad unless it was
controlled and managed by USAID. If USAID needed a technical expert on,
say, seismology from the U.S. geological survey to help with earthquake
monitoring they would sign a PASA interagency agreement (in fact USAID
has had such an agreement for 30 years). I would return to the old
discipline which worked quite well from what OMB career staff told me.
Question. What metrics should the U.S. Government use to gauge the
success of U.S. foreign assistance programs? If the metrics are not met
would you advocate for the elimination of a program?
Answer. The F process has created metrics for every item in the aid
budget, so the metrics exist. I do not like them myself. This is not
the place to critique the use of metrics as it would take pages. I have
a chapter in a book I am now writing on the very damaging affect
metric-based management of aid programs has on innovation, creativity,
and new thinking. Some of the best aid programs are not easily measured
by metrics. Some of the worst aid programs have very appealing metrics
but are developmentally very unsound and counterproductive. Metrics is
seriously overrated and yet the aid community is moving toward them.
Question. Over the past five decades, the Foreign Assistance Act of
1961--which was originally written and enacted to confront the cold war
threats of the 20th century--has swelled into a morass of rules,
regulations, objectives, and directives. Foreign policy experts on both
sides of the aisle--including former USAID administrators from both
Democratic and Republican administrations--have said writing an
entirely new Foreign Assistance Act is central to clarifying the
mission, mandate, and organizational structure for U.S. foreign
assistance. The Project on National Security Reform also recently
recommended a ``comprehensive revision of the Foreign Assistance Act of
1961.''
How do you propose we redesign the foreign assistance of the
U.S.? Who do you believe are the key players that could ensure
reforms meet the needs of the 21st century?
Answer. The Foreign Assistance Act should be rewritten, but I think
it will be politically very difficult to get through the Congress.
USAID has the most expertise in the area, but State and DOD clearly
have a major role as well. The NGOs, contracting firms, and think tanks
have some expertise that should be used.
Where do you believe the Millennium Challenge Corporation
fits into any new restructuring?
Answer. The chair of the MCC Board should be the USAID
administrator, but the board should be kept as an entity. The field
offices of the MCC should be merged into the USAID missions where many
of them sit physically anyway. Many of the MCC field directors are
retired USAID officers, so this could happen without a big culture
conflict in the field. I think the MCC Washington staff should be more
narrowly focused on reviewing compacts for presentation to the board
for approval and then conducting independent evaluations of how the
compacts are doing. The technical assistance to local governments to
prepare compacts, implementation and coordination with local
governments in the field should be transferred to the field USAID
missions.
Question. Do you think the government should link U.S. foreign aid
to human rights conditions? For example, Egypt, the second largest
recipient of U.S. aid since 1979. They persist in major abuses of human
rights and religious freedom. Should the government consider
conditioning aid to Egypt based on the government meetings certain
benchmarks like the release of political prisoners, lifting of media
restrictions, etc.?
Answer. Our U.S. Ambassador to Egypt, DOD, and the State Department
would strenuously object. The Egyptian Government will simply not
accept the funding and the aid program would be shut down. I think a
better way would be to put into the new Foreign Assistance law that any
government abusing human rights using some objective measurement should
not get any budget or sector support from the U.S. aid program (money
that goes directly into the local government's treasury), which means
the aid program would be completely run through NGOs, contractors, and
private universities not through the local government.
FOREIGN AID REFORM
Question. Senator Clinton committed President Obama to ``enhancing
our foreign assistance architecture to make it more nimble, innovative,
and effective.'' What specific ideas and actions do you believe are
necessary to achieve these goals?
Answer. We would have to completely overhaul the very onerous
regulatory apparatus in Washington set up to control the Federal
bureaucracy run by OMB, GAO, IG, and congressional oversight committees
which micromanage every aspect of our aid program. I am writing a
chapter in my book on foreign aid on the consequences to innovative and
effectiveness of this regulatory system which is a gotcha culture which
penalizes risk taking, experimentation, and innovation. And has created
an extremely complicated system of controls to avoid any problems--if
you innovate you will have problems and failures which is in the nature
of innovation.
METRICS
Question. In addition to what metrics we should use to gauge
success, what criteria should the government use to determine
elimination or reduction of foreign assistance programs?
Answer. I am a conservative, but I believe in the new world of
threats this country faces cutting the aid budget makes as much sense
as cutting the defense (I am a former army officer) budget. We should
be talking about making aid more effective, not cutting it. It is a
best defense against the darker forces of globalization (90 percent of
globalization is very productive and good, but it has a very dark side
of terrorist networks, drug cartels, human trafficking, illegal arms
markets, money laundering, smuggling, etc.).
Question. Some of the largest criticism regarding foreign aid
regards distribution monitoring and management. What do you believe is
the proper balance between rapid delivery of aid and accountability and
oversight to ensure aid does not find its way to terrorist
organizations? How can we build a monitoring-and-evaluation capability
at USAID that is independent, rigorous, and reliable across U.S.
foreign assistance activities, that will contribute to restoring the
United States as a credible partner, and that will ensure U.S. taxpayer
funds are invested well? Is there any way to leverage low-cost
technology to track aid distribution?
Answer. The State of the art in monitoring and evaluating the
quality of aid programming according to many aid professional around
the world was the CDIE in USAID which has been strangled by budget cuts
and personnel losses from the mid-1990s on. I tried to revive CDIE but
we could not get funding to do it. The monitoring of aid programs to
ensure money is not stolen or falls into the wrong hands (which is
different than the monitoring and evaluation function which is about
the quality and productivity of aid programs) is already built into the
aid system, which has probably less leakage than any aid program in the
world. This function may be so developed it is reducing innovation and
experimentation in programming aid funds. If you look at the more than
100 audits done of recontruction in Iraq USAID did much better than any
of the other Federal departments involved. You might also want to look
at the SIGIR final report which again complements USAID on what it did
right in Iraq under very difficult secure conditions.
______
Responses of Steven Radelet to Questions Submitted by Senator Jim
DeMint
FOREIGN AID ADMINISTRATION
Question. It has been suggested that USAID should be elevated to an
independent Cabinet agency, as in Great Britain. But the result there
indicates that such a step would make it more difficult to shape
development programs in a way that would advance the national interest
and make for a coherent strategy. What are your views?
Answer. Currently, U.S. foreign assistance programs are spread
across nearly 20 agencies with different objectives and implementing
procedures. There exists widespread agreement that this fragmented
organization undermines the ability of the U.S. Government to implement
a coherent strategy and to shape development programs in a way that
advances the national interests. Moreover, USAID, our lead development
agency, has been significantly weakened over the years through a loss
of professional staff and a shift toward contracting out services
rather than directly overseeing and implementing programs.
As a result, there is a clear need to build a strong, consolidated,
and streamlined development agency to elevate our development programs
and make our foreign assistance programs as efficient and effective as
possible. There are several options that could help achieve this goal,
including a serious effort to rebuild and re-professionalize USAID and
fold into it other programs, create a strong successor agency that
consolidates programs, or over time create a Cabinet-level agency for
development, similar to the way in which the EPA consolidated many
disparate programs and became a strong Cabinet agency over time. The
key objective should not be a particular institutional form, but to
build a strong and professional agency that consolidates programs,
reduces redundancy and duplication, enhances coordination, and makes
every dollar we spend more effective. Such an agency--with the
budgetary authority and mandate to lead policy formulation, coordinate
with programs and policy that remain in other departments, and to
manage foreign assistance programs in the field--would help reduce
bureaucracy, eliminate waste, increase efficiency, and streamline
decisionmaking.
A critical first step toward a longer term agenda of consolidation
of the major foreign assistance programs is the strengthening and re-
professionalization of USAID. For USAID to serve as the ultimate base
of future consolidation, its capacity must first be bolstered so that
it can lead as the preeminent development voice of the U.S. Government.
Question. What are your thoughts on the F Bureau and the Director
of Foreign Assistance position, and how would you optimize the
relationship between USAID and the State Department to ensure an
appropriate balance between priorities and resources for development
and diplomacy?
Answer. The creation of the F Bureau and the Director of Foreign
Assistance position in 2006 were well-intentioned first steps toward
the goal of better coordinating our foreign assistance programs.
Despite some achievements in framing and reporting of foreign aid,
however, the creation of the F Bureau came at the expense of a weakened
USAID and has divorced on-the-ground implementation of programs from
the important policy and budgetary decisions that underpin them. As a
result, we now know better where and for what our foreign assistance
dollars are going, but the ability to better plan for the most
effective use of those resources to meet U.S. objectives has been
diminished.
Building a strong and capable development agency will require the
provision of autonomy of development from our (distinct) diplomatic and
defense efforts; the restoration of USAID's authority over its own
budget; and shifting the policy function from the F Bureau back to
USAID, to enable long-term thinking and planning on development policy.
Question. How should the President organize the administration to
support the three pillars of national security, defense, diplomacy, and
development to best support U.S. interests abroad?
Answer. President Obama has expressed his commitment to elevate
development as a ``smart power'' national security approach, alongside
defense and diplomacy. As a real signal of the importance of
development in national security, President Obama should name a strong,
capable leader as USAID Administrator as soon as possible and name the
Administrator as a member of the National Security Council and other
high-level interagency bodies. At a minimum, the administrator should
be invited to all NSC Principals Committee meetings dealing with
international economic issues. This will provide professional
development perspectives and policy input at the highest policy-setting
table, independent from but complementary to diplomatic and defense.
Question. It has been demonstrated that our U.S. Ambassadors have
the ability to distribute only 5 percent of U.S. aid in their
respective countries. Do you believe that our Ambassadors, in close
coordination with regional experts at the State Department and USAID,
should have control of a larger percentage of assistance?
Answer. Currently, our foreign assistance is unable to respond
flexibly to the priorities and changing conditions in country and on
the ground. This lack of flexibility and adaptability undermines the
effectiveness of our foreign assistance programs. Part and parcel of
our efforts to make our foreign assistance programs more context-driven
and effective should be the granting of more discretion of foreign
assistance dollars to country missions and embassies. Such reforms
would enable USAID missions to respond more effectively and swiftly to
crises--whether they be violent conflicts, natural disasters, or health
pandemics--and to evolving priorities on the ground. These reforms
should also build in accountability measures to assure that funds spent
are used effectively and help achieve broader U.S. goals.
Question. USAID and DOD Provincial Reconstruction Teams fall under
different rules of engagement complicating and sometimes preventing
partnership in development and reconstruction efforts in Iraq and
Afghanistan. Ambassador Crocker, under the advice of General Petraeus,
adjusted some of the rules of engagement enabling USAID and FSOs to
accompany DOD teams on patrols. Despite USAID and FSOs volunteering to
participate on the patrols, mid-level management prevented their
participation. How should the Government transform the culture of the
State Department and USAID to address the 21st century environment and
eliminate barriers to cooperation with the DOD?
Answer. There is little doubt that civilian-military partnerships
are an important reality in the efforts to bring stability and
development to countries such as Iraq and Afghanistan, and increasingly
Pakistan as well. The military's tremendous logistical, transport, and
human resource capacity make it a natural partner in some global
development initiatives, and in particular in immediate post-conflict
and natural disaster situations. However, problems can arise in this
partnership. When the line between military and civilian personnel
becomes blurred, for instance, civilian development workers can be
endangered. Coordination problems can also arise, as pointed out in the
example of cultural barriers. To strengthen civil-military partnerships
on the ground in countries on the ground will require a bolstering of
civilian capacity and more active coordination in-country by the
ambassador.
FOREIGN ASSISTANCE
Question. President-elect Obama made commitments to ``elevate,
empower, consolidate and streamline'' U.S. development programs. With
foreign assistance programs scattered across more than 20 different
Federal agencies, how should the Government address inefficiencies and
incoherence within the current structure in order to help maximize the
impact of U.S. assistance and instability that threaten prosperity and
security globally and at home?
What metrics should the U.S. Government use to gauge the
success of U.S. foreign assistance programs? If the metrics are
not met would you advocate for the elimination of a program?
Answer. A key component of revamping the way the United States does
development must be the establishment of a good system to evaluate the
real, long-term impacts of our development investments. To ensure
accountability for funds spent, a much stronger monitoring and
evaluation (M&E) and impact evaluation process must be established,
aimed to keeping programs on track, guiding the allocation of resources
toward successful activities and away from failures, and ensuring that
the lessons learned--from successes and failures alike--inform the
design of new programs. At the performance level, a monitoring and
evaluation system should be designed in close coordination with State,
USAID, MCC, and PEPFAR to aggregate to top-line objectives and
standardize indicators across foreign aid agencies to both effectively
report on the impact of foreign aid and to reduce unnecessary data
collection and reporting requirements from the field. Programs that do
not meet objectives should be revamped and adjusted, using feedback
from the evaluation process. Programs that continue to fail to meet
objectives, even after efforts to adjust the program, should be
discontinued, with funding instead going to programs that are achieving
success.
Question. Over the past five decades, the Foreign Assistance Act of
1961--which was originally written and enacted to confront the cold war
threats of the 20th century--has swelled into a morass of rules,
regulations, objectives, and directives. Foreign policy experts on both
sides of the aisle--including former USAID administrators from both
Democratic and Republican administrations--have said writing an
entirely new Foreign Assistance Act is central to clarifying the
mission, mandate and organizational structure for U.S. foreign
assistance. The Project on National Security Reform also recently
recommended a ``comprehensive revision of the Foreign Assistance Act of
1961.''
How do you propose we redesign the foreign assistance of the
United States? Who do you believe are the key players that
could ensure reforms meet the needs of the 21st century?
Answer. Rewriting the FAA is central to building a strong and
capable development agency. Without a restructuring of authorities and
a rationalization of restrictions, whether they be congressional
earmarks or Presidential directives, no broad-based foreign assistance
modernization initiative can be fully implemented without major
legislative modifications. Fundamentally, rewriting the FAA will
require a ``grand bargain'' between the executive branch and Congress,
reflecting a shared vision of the role and management of U.S. foreign
assistance. The executive branch must be provided the requisite
authorities to respond to a rapidly changing world, while at the same
time the rightful and effective legislative oversight is ensured.
To be successful, creation of a new FAA will require significant
leadership and investment from the executive branch, where the
legislation should originate, but only in active partnership with
congressional champions of foreign assistance modernization.
Responsible and interested parties in both branches must own this
process if it is to succeed. It should also help forge a more positive
and constructive relationship through which Congress will be more
willing to extend greater flexibility to the Executive, while receiving
greater administration attention to their priorities and better tools
for exercising policy and program oversight.
Where do you believe the Millennium Challenge Corporation
fits into any new restructuring?
Answer. The Millennium Challenge Corporation (MCC) was described by
Secretary Clinton in her Senate confirmation hearing as ``a very
creative and innovative approach to foreign aid.'' Launched 5 years
ago, the MCC is one of the U.S. Government's most promising ``smart
power'' national security tools, and its innovative approach to foreign
assistance complements other key U.S. development programs, including
USAID, PEPFAR, and the Multilateral Development Banks. The MCC has made
considerable progress since its inception, and is showing great
potential toward fulfilling its mission of supporting poverty reduction
through sustainable economic growth.
In the absence of significant reforms to USAID and the Foreign
Assistance Act, the MCC should remain where it is. However, a
restructuring of foreign assistance programs could lead in the medium
to long term--under the right circumstances--to a consolidation of
foreign assistance programs, including the MCC, into a significantly
empowered and strengthened USAID, or a successor agency. At the heart
of this consolidation would be efforts to improve coordination, reduce
bureaucratic costs, and provide cross-fertilization of ideas and
innovations. To preserve the integrity of the MCC's innovative approach
to foreign assistance and to ensure its effectiveness, the unique
components of the MCC model (including country ownership, predictable
financing, policy-based selectivity, and public-private governance
model) should be maintained.
Question. Do you think the Government should link U.S. foreign aid
to human rights conditions? For example, Egypt the second largest
recipient of U.S. aid since 1979. They persist in major abuses of human
rights and religious freedom. Should the Government consider
conditioning aid to Egypt based on the government meeting certain
benchmarks like the release of political prisoners, lifting of media
restrictions, etc.?
Answer. Since the launch of the Millennium Challenge Account 5
years ago, we have seen already a shift in our foreign assistance
dollars being awarded to those countries with sound governance and a
clear track record of investing in people and respecting human rights.
In that sense, many of our development dollars are already being
directed to those countries with proven performance in areas like
control of corruption, sound governance, and human rights. In other
instances, foreign assistance money is distributed by the State
Department for purposes other than strictly development objectives, and
often to countries with less sound human rights and governance records.
In these situations, a different political calculus is made and issues
like human rights are considered alongside other political and economic
objectives. On ongoing challenge that must be considered on a case-by-
case basis is our support to countries that may not fully adhere to all
of our principles, but at the same time provide vital actions in
support of other key foreign policy objectives.
FOREIGN AID REFORM
Question. Senator Clinton committed President Obama to ``enhancing
our foreign assistance architecture to make it more nimble, innovative,
and effective.'' What specific ideas and actions do you believe are
necessary to achieve these goals?
Answer. Other than actions already described above on strengthening
USAID, possible restructuring of our foreign assistance agencies,
rewriting the FAA, and strengthening our monitoring and evaluation
programs, there are many promising innovations in foreign assistance.
One such innovation is the Advanced Market Commitments (AMCs) for
vaccines and other applications. Through an AMC, donors could make a
commitment in advance to buy vaccines if and when they are developed,
which would create incentives for industry to increase investment in
research and development. New commercial investment would complement
funding of research and development (R&D) by public and charitable
bodies, accelerating the development of vital new vaccines for the
developing world.
Another promising innovation is cash-on-delivery programs, a new
form of aid in which donors would commit ex ante to pay a specific
amount for a specific measure of progress. In education, for example,
donors could promise to pay $100 for each additional child who
completes primary school and takes a standardized competency test. The
country could then choose to use the new funds for any purpose: to
build schools, train teachers, partner with the private sector on
education, pay for conditional cash transfers, or for that matter build
roads or implement early nutrition programs. This innovative approach
would place full decisionmaking about the use of funds in the hands of
developing country governments, letting them determine the best way to
achieve the outcome recipient and donor both want: a quality education
for all.
METRICS
Question. In addition to what metrics we should use to gauge
success, what criteria should the government use to determine
elimination or reduction of foreign assistance programs?
Answer. A stronger monitoring and evaluation (M&E) system would
enable the Government to assess whether foreign assistance programs are
achieving their objectives and impact on the ground, and make decisions
on redesigning, refocusing, eliminating, or reducing funding
accordingly. In addition to the evaluation of the impact of a program,
the U.S. Government has begun to apply an additional set of criteria in
determining eligibility and elimination of foreign assistance programs.
Since the launch of the MCC 5 years ago, for instance, the United
States has applied a very rigorous and objective set of criteria to
determine eligibility and also elimination of MCC compact and threshold
program assistance. These include 17 indicators that measure a
country's commitment to promote political and economic freedom, invest
in education and health, the sustainable use of natural resources,
control of corruption, and respect for civil liberties and the rule of
law. In several instances, the MCC has terminated program funding for
countries that have failed to meet these objective indicators.
Question. Some of the largest criticism regarding foreign aid
regards distribution monitoring and management. What do you believe is
the proper balance between rapid delivery of aid and accountability and
oversight to ensure aid does not find its way to terrorist
organizations? How can we build a monitoring-and-evaluation capability
at USAID that is independent, rigorous, and reliable across U.S.
foreign assistance activities, that will contribute to restoring the
United States as a credible partner, and that will ensure U.S. taxpayer
funds are invested well? Is there any way to leverage low-cost
technology to track aid distribution?
Answer. Quality monitoring and evaluation (M&E) are critical
components of effective development assistance, paving the way for
achieving better results, bolstering transparency, and sharing
knowledge and learning. M&E informs program managers whether a desired
result is or is not being achieved and also why.
To pave the way for stronger, more rigorous, and more reliable M&E
at USAID, an independent office for monitoring and evaluating foreign
assistance programs should be established. The office should be
responsible for: setting M&E standards, training, conducting external
studies, and collecting and making public all evaluations for the sake
of transparency and learning. The MCC model is a best-practice in this
regard and could be applied more broadly across other agencies. An M&E
system should be built that enables the aggregation to top-line
objectives and standardizing across foreign aid agencies. All data and
evaluations should be made public, including budget process data at
each stage--request, passback, 653a, and final appropriation.
It is crucial that measures of ultimate impact be conducted
independently of the designers and implementers of the programs. For
that reason, the United States should support and ultimately join the
International Initiative for Impact Evaluation (3IE), which brings
together foreign assistance providers from around the
world to provide professional, independent evaluations of the impact of
development initiatives.
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