Foreign Assistance Transformed?

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By Geneve Mantri – The recent departure of Randall Tobias, the former Director of Foreign Assistance, has compounded the Bush administration’s difficulties in reforming US foreign aid. In January 2006, the Secretary of State announced the reorganization of foreign assistance under a Director, who was charged with coordinating assistance programs across both the US Agency for International Development and State Department, as well as offering guidance to other agencies. Many applauded the initiative, but more than a year later there are still

serious doubts about the nature, the pace, and the direction of the reform.  

The announcement was the culmination of a year long review conducted by State Department Policy Planning Staff into the shape and structure of assistance in the administration. At the outset Secretary Rice rightly stressed the need for greater policy coherence and better coordination of US assistance, as a way to utilize all the elements of national power in concert. The new Director was dual hatted as both Director of Foreign Assistance, at the level of a Deputy Secretary, and Administrator of USAID. This dual responsibility was intended to overcome the previous limitations of authority between the two agencies, stovepiping, and overlapping priorities. The new Director was to sit at the head of a structure known as F Bureau, inside State Department.

In his Hill testimony the newly appointed Administrator, Randall Tobias, identified several key challenges in addressing US foreign assistance including: a miss match between ends, ways and means; weak management and poor oversight – balkanized between departments; with each engaged in multiple overlapping efforts. In response he proposed to centralize budgeting, planning and management under a central staff of around 100 people, drawn from both USAID and State, to enhance coordination and improve accountability. Secondly he proposed a new strategic framework laying out goals, objectives, and performance indicators. The framework was designed to help country teams design programs that will further these objectives, and facilitate a more efficient tracking of funds.

A year later what effects have the reforms had? The administration deserves considerable credit for trying to embark on a much needed set of reforms on a key area, which for too long has been seen as the weak link of foreign and national security policy. The initial goal had been to conduct more fundamental reforms, which would have required a new foreign assistance act, but given the constraints of limited time and political capital, this idea gave way to competing priorities. The result has created an office which promises much, but is in danger of being able to deliver little. There are some key reasons why, some are structural and some operational.

The first issue is authority-the establishment of the office was a compromise, between those who advocated much more fundamental reform and those who advocated merely for more funding of the existing structure. The thrust of the reform has left the Director in charge of about $13 billion, or 53% of foreign assistance funding, but a large percentage remains outside his purview. DOD controls about 24% through it’s funds for reconstruction in Iraq and Afghanistan such as Commander’s Emergency Relief Program, CERP, which if anything is set to increase. The rest is split through a variety of other agencies, from the Department of Energy, Health and Human Services, Agriculture, to Treasury, to mention just a few. The two largest and most important outliers are the Millennium Challenge Corporation, and the President’s Emergency Plan for Aids Relief, neither of which are controlled by F Bureau at all.

Both USAID and State remain badly under-funded in comparison to DOD. Unfortunately, neither are likely to get more funding from Congress unless they display an ability to do more with what they have. In truth, the proliferation of spigots and agencies is a reflection of the small faith Congress has in either State or USAID. But a crucial limitation remains in the congressionally earmarked funding for what often amounts to pet rocks with little or no development value.

The Foreign Assistance strategic framework that was put in place was designed to place policy rigor over a mass of incoherent efforts and programs. While the reforms were supposed to align programs with strategic priorities, it is in danger of accomplishing the reverse, with old programs retrofitted in new frameworks. The new office is less a marriage of minds than one of convenience. State officers generally have little experience in managing programs and are both ill-suited and out numbered by the established aid hands in the new office, who have vested interested in protecting existing programs. Without critical assessment, and clear guidance, bureaucratic inertia has a tendency to produce the same established answers to new questions. A much more fundamental set of reforms of the agencies themselves are required to achieve the transformation that Secretary Rice highlighted.

If the structure is one problem, then perhaps outcomes are another. Namely, that there are few indicators which allow aid professionals to point to clear successes. With few, if any, domestic constituents, foreign assistance remains on a fragile base of support with many critics arguing that it remains a poor investment-or “money down a rat hole” as Senator Taft once colorfully put it. The reorientation of aid under a strategic framework was supposed to align it with the other pillars of security and foreign policy, and set it on a stronger footing.

But the aid community has in turn rebelled against the notion of aid being subordinated to national interests, instead preferring to focus on what are often loosely termed as “good development outcomes.” This disguises the fact that there is little consensus about what these outcomes are, or whether aid can genuinely have any impact on them. It is unclear whether the focus should be on economic growth, or poverty alleviation or some amalgam of the two, with each having vocal supporters. When Secretary Rice announced the creation of the F Bureau there was an outcry from the development community that she did not even list poverty alleviation as one of the goals of the Bureau.

However, the creation of the office does offer a key opportunity to instill a greater vigor and discipline in the assistance structure. Reforms are often personality driven, but they can be institutionalized. There is a need for established processes for setting goals and targets at regular intervals across agencies focused on development, with set processes for thrashing out differences of opinion and apportioning roles and responsibilities. In an environment where the average political appointee lasts only an average of 22 months, the energy of a bureaucracy is often driven and sustained by processes and focused by a principal’s time and energy. Just as one example, the Defense Department is still essentially using the PBBS planning process put in place by Robert McNamara in the 1960’s, which continues to shape defense outputs more than 40 years later.

Despite these limitations, the reforms are a potentially useful and important step. The creation of the F Bureau offers a crucial opportunity to harness soft power in a clear strategic framework, based on US strategic priorities-albeit ones which reflect enlightened long term interests as opposed to tactical advantages.

Geneve Mantri is a Congressional Fellow at the Stimson Center working on the Security for a New Century (SNC) Project. This project is designed to inform and expand the dialogue within Congress on security issues across political lines.

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