Reforming foreign aid at home
In the wake of the Sept. 11 attacks, President George W. Bush made a sweeping commitment to global economic development. In early 2002, he declared, “We fight against poverty because hope is an answer to terror. We fight against poverty because opportunity is a fundamental right to human dignity.” Development was to be a vital third pillar of national security policy alongside defense and diplomacy, a welcomed elevation after years of trimmed budgets and declining relevance.
Yet despite the enshrinement of international development in the U.S. National Security Strategy of 2002, and the reconstruction efforts in Iraq and Afghanistan, U.S. foreign aid policy has only grown more fragmented, limited, and incoherent in the last eight years. While the Obama administration scrutinizes status quo aid policy, fierce debate swirls among academia, the private sector, NGOs, and think tanks about how to correct U.S. aid’s institutional flaws. But there is little debate about one fact: America’s foreign aid policy is in need of repair.
Aid as We Know it
The framework that governs American foreign aid today was formulated during the Cold War, when aid was primarily used as a tool for supporting anti-communist regimes. President Kennedy pushed Congress to create a long-term foreign aid infrastructure, resulting in the passage of the Foreign Assistance Act of 1961 and the establishment of the U.S. Agency for International Development.
The next and last legislative overhaul came with the FAA of 1973, an effort to reduce reliance on large government-driven aid projects. Since then, however, the recommendations of successive presidential task forces have failed to garner support in Congress. In the 1990s, having lost its anti-communist rationale, American aid fell to its lowest levels.
Only after 9/11 did the Bush administration recognize the development of stable economies and effective democratic states as a key national security priority. Bush expanded the range of agencies dealing with development to include the Millennium Challenge Corporation and the President’s Emergency Plan for AIDS Relief, while overseeing an increase in aid from $10 billion in 2000 to $22 billion in 2008.
Cold War Legislation in a Post-9/11 World
Yet the legislative foundation of America’s aid policy, the FAA, remains oriented around top-down Cold War objectives at a time when the newest actors in development are proliferating NGOs and microfinance initiatives. Noam Unger, a fellow at the Brookings Institution, told the HPR, “Legislation is a key piece of fundamental reform because the FAA of 1961 as amended … has many elements that are obsolete… and overlapping.”
In fact, much of the law deals not with strategies for poverty reduction but with Pentagon assistance to foreign militaries, fragmentary earmarks, and complex aid procurement rules.
Several pieces of legislation moving through Congress now seek to address these problems. Chief among them is the Foreign Assistance Revitalization and Accountability Act, championed by Senators John Kerry (D-MA) and Richard Lugar (R-IN). The bill proposes to make USAID the focal point for aid decisions and create a body called the “Council on Research and Evaluation of Foreign Assistance” to evaluate the effectiveness of all U.S. aid policies.
The economic crisis, however, has made it difficult to obtain widespread support. Given “budget constraints and other concerns,” cautions the Congressional Research Service, “…some Members of Congress may prefer a continuation of the existing foreign aid structure.”
A Crippled USAID
At the same time, the Obama administration has failed to capitalize on early momentum to establish a new direction at USAID. As of the beginning of October, more than nine months after Obama’s inauguration, no one had been nominated to administer USAID.
This first year has presented an unparalleled opportunity for strong leadership to reshape a weak USAID and represent aid interests in major policy-making. The White House is in the midst of an aid policy review and the State Department is undergoing its own Quadrennial Diplomacy and Development Review. But in the absence of an Obama-appointed administrator, there is no champion for a national aid strategy, much less an individual to revitalize USAID.
There is also a growing consensus that USAID is understaffed, having seen a large decline in personnel and capability in the last few decades. Joseph Nye, professor of international relations at Harvard, explained, “USAID as an institution has been decimated over the past decade and has now become something of a contracting agency… The number of skillful and experienced USAID officials has been cut dramatically.” In the 1990s, 37 percent of the agency’s workforce left without replacement, and between 2002 and 2005, direct hires working for USAID in the field fell 29 percent.
The organization has become dependent on private mega-contracting, leaving little room for institutional expertise. “The conventional wisdom is that USAID has become dysfunctional as an organization,” said Lant Pritchett, professor of international development at Harvard.
One Voice for Aid?
USAID’s capacity to formulate and guide a national aid strategy has also been sapped by the proliferation of aid bureaucracy. Unger explained, “Our foreign assistance is fragmented across a range of offices and bureaus and departments in the executive branch.” A recent Oxfam study found that the FAA had come to encompass 33 different goals, 75 priority areas, and 247 directives, stretched over 12 departments and 25 agencies.
Many development aid studies have called for the creation of a new cabinet-level agency to represent the United States in all aid discussion, establish coherent development policy, and balance short-term political and security priorities with long-term development goals. This reorganization would counter the rising “militarization of aid” in the Department of Defense as the military becomes the point organization for aid disbursement in Iraq and Afghanistan.
The U.K. adopted this structure in 1997 with the creation of a minister-level Department for International Development. Yet due to the high political and financial cost that a U.K.-style transformation would entail, it is unlikely that the Obama administration will pursue a similar path.
In the near future, a more achievable goal may be to revitalize USAID. Unger advocated an “empowered USAID administrator” that would “represent development considerations in all foreign policy and national security discussions, whether at the National Economic Council or the National Security Council.” An empowered administrator would help to unify aid policy among various bureaucracies and simplify U.S. interaction with multilateral organizations and NGOs.
Today’s incoherent and fragmented American aid policy is the result of decades of neglect and politically driven aid disbursement. Even development’s newfound significance after 9/11 has not led to a sharpened aid strategy. Instead, more funds have been pushed through an increasingly hollow and complicated aid bureaucracy. In an era of failed states, faltering economies, and international terrorism, the development imperative is more pressing than ever. But before the world’s largest aid donor can hope to build effective institutions abroad, it must repair its own foreign assistance infrastructure.