Seizing the Moment for Modernizing U.S. Foreign Assistance
Testimony for the House Committee on Foreign Affairs
Steven Radelet
Senior Fellow, Center for Global Development
April 23, 2008
Thank you, Chairman Berman, Ranking Member Ros-Lehtinen,
and other members of the Committee. I am honored that you have invited me to
offer some perspectives on the process of reform in U.S. foreign assistance programs.
I. Introduction
Today the United States and its partners face many complex
global challenges, including new security threats, the spread of virulent
diseases, the opportunities and tensions arising from the process of
globalization, climate change, rapidly rising food and energy prices, and
fallout from the war in Iraq. Meeting these challenges will require a new
vision of American global leadership based on the strength of our core
values, ideas, and ingenuity. It calls for an
integrated foreign policy that promotes our values, enhances our security,
helps create economic and political opportunities for people around the world,
and restores America’s
faltering image abroad. We cannot rely exclusively or even primarily on defense
and security to meet these goals. Instead, we must make greater use of all the
tools of statecraft through “smart power,” including diplomacy, defense, trade,
investment, intelligence, and a strong and effective foreign assistance
strategy.
In today’s world, foreign assistance is a vital tool for
strengthening U.S.
foreign policy and restoring American global leadership. Foreign policy experts
on both sides of the political aisle now recognize the importance of strong
foreign assistance programs. But they also recognize that we significantly under-invest in
foreign assistance programs, and that our foreign assistance programs
are out of date and badly in need of modernization to meet the challenges of
the twenty-first century.
The combination of the recognition of today’s great foreign
policy challenges, the broad agreement on the importance of foreign assistance
as a critical foreign policy tool, the successes we are seeing around the world
in economic and social development, and the upcoming change in administration
creates the best opportunity in decades for modernizing and strengthening our
foreign assistance programs. Taking on the challenge of reform will not be
easy. It will require passion, bold
vision and concerted bipartisan leadership by Congress and the Executive
Branch. But taking up this important challenge
will enhance the leadership role of the United States in the world,
strengthen our ability to forge alliances to achieve our broader goals, enhance
our security, and help fight poverty around the world.
But
as we move forward – and I sincerely hope we do – on this important agenda, let
us remember that foreign assistance is no panacea. Stronger and larger foreign
assistance programs alone will not be enough to achieve U.S. foreign policy goals. Policies
affecting trade, migration, capital flows, governance, and climate change,
among others, all influence America’s
standing in the world and our relationship with other countries, and the most
important factors in the development process are the policies of developing
countries themselves. Stronger, more
effective assistance programs alongside other policy tools can help the United States
further its own interests and help low-income countries at the same time.
II. The Need for
Modernization and Reform
U.S. foreign assistance deserves more
credit than it usually receives. U.S. foreign assistance programs
have been long criticized as being ineffective. However, it is important to
recognize that often the criticisms are unfair or overblown. Many of our
programs, in fact, have been successful. U.S. foreign assistance was central to
supporting the Green Revolution that modernized agricultural production and
provided the foundation for Asia’s economic miracle; for eliminating small pox
and substantially reducing polio, river blindness, maternal mortality and
childhood diarrheal diseases; for helping to secure peace in countries such as
Liberia and Sierra Leone; for helping to save lives by providing
anti-retroviral medicines for over one million HIV/AIDS patients in Africa
today; and for supporting sustained economic growth in Korea, Taiwan, Botswana,
and more recently Mozambique, Tanzania, Ghana, and several other countries.
Nevertheless, there is wide
agreement that our programs can be significantly strengthened. Today’s foreign
assistance structure dates back more than 45 years to the early days of the
Kennedy Administration. It was built in the early days of the Cold War to meet
goals and objectives that were very important at the time, but that differ
significantly from today’s foreign policy objectives. Over the years new
programs, goals, directives and restrictions have been added, typically in an
ad-hoc manner. U.S.
foreign assistance programs are now a hodge-podge of uncoordinated initiatives
from multiple institutions without a coherent guiding strategy. They are
heavily burdened by out-of-date organizational structures, legislation,
procedures, and approaches.
The key challenges include the
following:
·
Lack
of clarity on policies, goals and objectives. There is no overarching policy
for global development or strategy for U.S. foreign assistance. The
rhetoric of elevating global development to standing alongside diplomacy and
defense in the 2006 National Security Strategy was never translated into
policy. The Foreign Assistance Act of 1961,
as amended – the key strategy document for setting foreign assistance
priorities and objectives – is badly out of date and contains dozens of goals,
objectives and priority areas. Executive branch directives add more. These
multiple goals are more than just an administrative burden: they make it very
difficult for the United
States to design
effective programs and achieve clear development results.
·
Heavy
bureaucratic requirements.
Many programs are subject to heavy bureaucracy that ensures that some
funds never get close to their intended recipients. Foreign assistance flows
are heavily earmarked and subject to myriad directives, procedural rules, and
restrictions that add significantly to administrative costs and slow the
delivery process. As a result there is far too little flexibility to respond
effectively to meet the key needs on the ground in recipient countries.
·
Substantial
fragmentation across policy and executing agencies. More than 20 executive
branch agencies administer our foreign assistance programs. Sometimes these
agencies work at cross purposes with each other with different objectives and
techniques. Other times they are aiming to achieve the same goals, but
duplicating each other’s efforts without realizing it. Each agency has their
own different processes, rules and procedures, which can put significant strain
on countries.
·
Weakened
professional capacity. As
programs have spread across agencies, bureaucratic requirements have grown, and
administrative funding has been cut, the professional capacity within USAID has
dwindled. The Departments of State and Defense are playing larger roles in
foreign assistance, but the core objectives and professional capacities of
these Departments are not consistent with long-term effectiveness in our
foreign assistance programs. There is much less capacity within the government
to develop and analyze the range of policies affecting developing countries and
to design, implement and measure the impact of programs and approaches.
·
Poor
and incoherent allocation of funds. Sixty percent of U.S. foreign assistance goes to ten
countries for three objectives: political/military; counter-narcotics and
HIV/AIDS. The remaining forty percent is
spread over 140 odd countries. We provide larger amounts to
middle-income countries than to low-income countries. Only one-quarter of U.S. assistance goes to countries in sub-Saharan
Africa. In recent years the share going to the
poorest and best governed countries in Africa
has declined. While supporting our
immediate geopolitical partners and allies is sensible foreign policy, too
often large amounts go to middle-income and poorly governed countries to meet
short-term diplomatic goals at the expense of longer-term development
objectives. In addition, only 10 percent of our assistance now goes through
multilateral channels, significantly undermining our leverage in these
organizations.
·
Lack
of accountability for achieving results. Monitoring and evaluation systems are weak and
tend to focus on whether funds are spent where they were supposed to be, rather
than whether programs achieved important strategic or development objectives,
which in turn is partly due to the multiple objectives and lack of clear
strategy of our assistance programs. And because our foreign assistance
programs are scattered over so many different agencies, it is often impossible
to hold any one agency responsible for success or failure.
In recent
years foreign assistance has received greater prominence, and there has been
much more constructive debate about how to strengthen our programs. The Bush
administration deserves credit for increasing the amounts of foreign assistance
and beginning to change how it is managed. It increased assistance from $12.6
billion in 2001 to $21 billion in 2007 (in constant 2005 dollars), although the
vast majority of the increase went to Iraq,
Afghanistan,
and other allies in the war on terror. It introduced several new programs, most
prominently the President’s
Emergency Plan for AIDS Relief and the Millennium Challenge Account. And during
its second term, it introduced several organizational changes, albeit with at
best mixed results, through the so-called F process, including naming a new
Director of Foreign Assistance and developing a strategic framework for foreign
assistance.
But these changes were either add-on
programs, or in the case of the F process, attempts at deeper change that did
not involve Congress or the public. In many cases the reforms moved in the
wrong direction and exacerbated more fundamental problems. As a result they
fall far short of what is needed to modernize U.S. foreign assistance programs
and make them more effective.
III.
An Agenda for Modernizing U.S.
Foreign Assistance
Partial reforms are not the solution. Making U.S. assistance programs more effective requires
a bold, ambitious vision for updating these programs for the 21st century and
strengthening America’s
role in the world. There are five key steps that should be taken.
1. Develop a National Strategy for Global Development
Our
efforts to promote global prosperity and
reduce poverty should be treated as a
principal—rather
than subordinate—element
of our global engagement and international policies, alongside defense and
diplomacy. The first step is to develop a comprehensive strategy that
elevates global development in our national interest and lays out the principal
objectives and basic framework for foreign assistance—bilateral and
multilateral--as part of our broader policies for engaging with the world. The
strategy should describe the major programs that will be used to meet these
objectives, and detail strategies for coordinating and communicating across
agencies.
Reaching agreement on the balance of goals and objectives is
critical. Since its origins after World War II, foreign assistance has served U.S.
national interests in three fundamental ways: enhancing national security,
expanding global economic opportunities, and promoting American values by
fighting poverty. In the long-run all three are important and mutually
reinforcing, and when the U.S.
pursues them each strategically and in tandem it positions itself as a
pragmatic and principled world leader. In some individual countries these
interests align even in the short-run. But in other cases these goals dictate
different priorities about which countries should achieve more assistance.
Differentiating between and balancing among these motivations is crucial for
the effectiveness of our assistance. The countries that have strategic
significance to us are not necessarily the ones who are the best development
partners; and other good development partners are not always as strategically
significant.
Since September 11, 2001, foreign assistance has been
dominated by national security interests, with a particular focus on fighting
terrorism. This focus is clearly appropriate, but it risks obscuring the
equally important imperative of fighting global poverty—which is itself a means
to address the causes of terrorism and conflict, as well as a host of other
urgent challenges. Supporting development will help
build a world where capable, open, and economically viable states can act in
concert as allies and partners of the U.S. to build a better, safer
world.
The Strategy should go beyond foreign assistance to
demonstrate how all of the policy instruments for U.S. engagement with
developing countries – trade, diplomacy, defense, immigration, investment, etc.
– work in tandem, and not at cross-purposes, to achieve stated objectives. And
it should summarize the budgetary requirements necessary to achieve those
goals. Developing this strategy should not be a one-time process: each
administration should be expected to renew and revise the strategy as a
Quadrennial Global Development Review, much like the Quadrennial Defense Review
Report of the Department of Defense, charting a course ahead for the next
decade as it confronts current and future challenges.
2. Reach a “Grand Bargain” on
Authorities and Enact a new Foreign Assistance Act.
The Foreign Assistance Act is nearly 50 years old, grounded largely in
Cold War threats and outdated challenges.
It does not reflect current demands confronting the United States. Over time, in an
effort to update without reauthorizing the FAA, 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 administratively burdensome and does
not enable achievement of foreign assistance program results. In addition, as
foreign assistance has increasingly involved multiple government agencies and
actors, often lacking in coordination and a sense of common purpose, these
activities have been authorized by legislation falling outside the FAA with
different and inconsistent authorities. Lastly, the foreign assistance
authorization process, which once reviewed and modified the FAA nearly every
year, has not functioned in over twenty years.
Replacing the FAA would re-invigorate the foreign policy authorizing
committees and provide a strong basis for them to work in concert with the
Administration. It would help to restore
trust and respect both between the two branches and with the interested development,
diplomatic, and security communities. 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.
The
legal and regulatory authorities governing foreign assistance must be brought
more closely in line with streamlined organizational structures and principles
of effective assistance. This will require a
“grand bargain” between the Executive branch and Congress—both play a unique
role in the management of U.S.
foreign assistance. This bargain should
reflect a shared vision of the role and management of U.S. foreign assistance, provide
the Executive branch with the authorities it needs to respond to a rapidly
changing world, and ensure 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 non-governmental 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.
3. Streamline the Organizational
Structure and Strengthen Organizational Capacity
U.S.
foreign assistance cannot be fully effective when programs are spread among
nearly twenty agencies with different objectives and implementing procedures,
and when its key agency (USAID) has been severely weakened over time. There is
broad agreement that rectifying the fragmentation and institutional weaknesses
are at the heart of modernizing and strengthening foreign assistance to meet
today’s challenges And that policy, implementation, and budget authority for foreign
assistance should be consolidated in order to maximize the effectiveness of our
programs in support of economic and social development, humanitarian
assistance, post-conflict reconstruction, security-sector reform, democracy and
governance, and civil society development.
The best way to streamline the organizational structure and
to give real meaning to the rhetoric of elevating development to more equal
standing with diplomacy and defense in U.S. national security strategy is to create a Cabinet-level Department for
Global Development with core organizational capacities that are enabled by a
sufficient cadre of experienced development professionals. The department should have the budgetary
authority and mandate to lead policy formulation, coordinate with programs and
policies that remain under other departments (e.g., Treasury oversight of the
IMF, State assistance for diplomatic purposes, Defense emergency response
programs), and manage the implementation of civilian-led U.S. foreign assistance programs in
the field. Its mandate would be to
protect long-term development oriented assistance from being subordinated to
short-term security or geopolitical objectives. Creating a new Department would
not add to government bureaucracy, as some have suggested. Rather, it would
help reduce bureaucracy, eliminate waste, increase efficiency, and streamline
decision-making. The Agency would complemented by a development coordination
capacity in the Executive Office of the President.
Some argue that the best way
forward is to fold all foreign assistance programs into the State Department.
But this step would be likely to undermine the long-run effectiveness of our
assistance. It would subordinate development to diplomacy, risk
allocating larger amounts of funding to meet short-term political and
diplomatic objectives at the expense of longer-term development objectives, and
place responsibility for development policy in a department with only limited
expertise in development. It would
require a massive transformation of the culture, mission, and staffing of the
State Department to avoid the pitfalls of past experiments of this kind (for
example, the merger of United States Information Agency into State). While the
alignment of development and diplomacy is important, so too is the alignment of
defense and diplomacy and trade and diplomacy, yet no one would advocate
submerging the State Department into the Defense Department, or folding the
Department of Commerce into the State Department.
The reorganization proposed here will take time. While it is underway, more immediate steps must be taken
to staff, rebuild and transform civilian institutions such as State and USAID
so that they can more effectively play their appropriate roles in the
interagency and multilateral arena.
The organization structure is a key piece of a bold,
effective modernization of our foreign assistance apparatus to meet the
challenges and opportunities confronting America today. Much attention gets puts on this individual
issue and it is important to put it in the context of a package of reforms
which, as a whole, will constitute real and effective change. Isolating one issue as distinct and
actionable from the rest is not advisable.
4. Increase Funding for and Accountability of Foreign Assistance
More money by itself will not help the United States to better achieve its
foreign policy goals in developing countries. But more money, better spent, is an
important part of the answer. The steps outlined above are central to spending U.S.
funds more effectively. So too is allocating our funds more effectively, with
more funding going to low-income countries that need assistance, and to
better-governed countries that can use it well. But additional funding also
will be necessary. Although the increases in funding in recent years are
welcome, they were on top of a very low base, and are 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 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. In addition, it
is crucial that measures of ultimate impact be conducted independently of the
designers and implementers of the programs. For that reason, regardless of
organizational structure, the United
States should support and ultimately join
the International Initiative for Impact Evaluation, which would join together
foreign assistance providers from around the world to provide professional,
independent evaluations of the impact of development initiatives.
5. Place a Higher Priority on
Multilateral Channels of Assistance
The United States
provides a very small share of its foreign assistance—just 10 percent in
2006—through multilateral channels; other major donors average 33 percent. This
imbalance is a missed opportunity for the United States to leverage its
funding and to exert greater influence over the programs and priorities of the
major multilateral agencies. The United States
provides 15-20 percent of the funding for the major multilaterals and other
shareholders look to the United
States to take the lead in determining their
own funding levels. Many shareholders feel that the United States has abandoned the
multilaterals. There is no question that the performance of the major
multilateral agencies can be strengthened. But the United States can only play a
diminished role in the debates and efforts to reform these organizations when
it provides such a small share of funding. The next administration should work
more closely with and strengthen multilateral channels of foreign assistance,
and allocate a greater share of funding for these organizations. Responsibility
for the multilateral development banks currently rests with Treasury, and could
shift over to a new Cabinet department (or strong sub-Cabinet agency). There
are pros and cons to such a shift. Moving this responsibility would allow for
stronger coordination between our bilateral and multilateral approaches and
would place authority for multilateral development bank policy in the context
of the full range of development policies affecting low-income countries, but
it would separate it from IMF and debt relief policies, which would remain at
Treasury. Treasury does not have strong expertise in development, but neither
does USAID currently have strong expertise in economic growth and the U.S.
role in multilateral development agencies. Placement of this responsibility
could work either way. But either way, it will require beefing up the expertise
in either Treasury or USAID, and will require strengthening channels of
communication and joint decision-making between the two agencies.
Conclusion
Taking
on these challenges will not be easy. Modernizing development assistance into
an effective instrument for smart and strong U.S. global leadership will require
major organizational and legislative changes and changing bureaucratic
mindsets. Several attempts at modest reorganization or rewriting the Foreign
Assistance Act have been made in the last two decades; all fell short because
of lack of support in either the administration or on Capitol Hill. But today
there is strong backing on both sides of the aisle for elevating the importance
of development, with growing consensus around missions, mandates, and
strategies. It is time to take advantage of this rare opportunity to modernize
and strengthen U.S.
development assistance to more effectively combat poverty, widen the circle of
development and prosperity, fight terrorism, and further other U.S.
strategic interests abroad.