[Senate Hearing 110-203]
[From the U.S. Government Publishing Office]
S. Hrg. 110-203
FOREIGN ASSISTANCE REFORM: SUCCESSES, FAILURES, AND NEXT STEPS
=======================================================================
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 TENTH CONGRESS
FIRST SESSION
__________
JUNE 12, 2007
__________
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COMMITTEE ON FOREIGN RELATIONS
JOSEPH R. BIDEN, Jr., Delaware, Chairman
CHRISTOPHER J. DODD, Connecticut RICHARD G. LUGAR, Indiana
JOHN F. KERRY, Massachusetts CHUCK HAGEL, Nebraska
RUSSELL D. FEINGOLD, Wisconsin NORM COLEMAN, Minnesota
BARBARA BOXER, California BOB CORKER, Tennessee
BILL NELSON, Florida JOHN E. SUNUNU, New Hampshire
BARACK OBAMA, Illinois GEORGE V. VOINOVICH, Ohio
ROBERT MENENDEZ, New Jersey LISA MURKOWSKI, Alaska
BENJAMIN L. CARDIN, Maryland JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania JOHNNY ISAKSON, Georgia
JIM WEBB, Virginia DAVID VITTER, Louisiana
Antony J. Blinken, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
------
SUBCOMMITTEE ON INTERNATIONAL DEVELOPMENT AND FOREIGN ASSISTANCE,
ECONOMIC AFFAIRS, AND INTERNATIONAL ENVIRONMENTAL PROTECTION
ROBERT MENENDEZ, New Jersey, Chairman
JOHN F. KERRY, Massachusetts CHUCK HAGEL, Nebraska
BARBARA BOXER, California BOB CORKER, Tennessee
BARACK OBAMA, Illinois LISA MURKOWSKI, Alaska
ROBERT P. CASEY, Jr., Pennsylvania JIM DeMINT, South Carolina
(ii)
?
C O N T E N T S
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Page
Brainard, Dr. Lael, vice president and director, Global Economy
and Development and Bernard L. Schwartz Chair in International
Economics, Brookings Institution, Washington, DC............... 32
Prepared statement........................................... 35
Response to question submitted by Senator Lugar.............. 69
Fore, Hon. Henrietta H., Acting Administrator of U.S. Foreign
Assistance and Acting Director of the Agency for International
Development, Washington, DC.................................... 6
Prepared statement........................................... 8
Responses to questions submitted by the following Senators:
Questions of Senator Biden............................... 55
Questions of Senator Lugar............................... 60
Questions of Senator Menendez............................ 62
Questions of Senator Hagel............................... 66
Hagel, Hon. Chuck, U.S. Senator from Nebraska, opening statement. 5
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening
statement...................................................... 1
Radelet, Dr. Steve, senior fellow, Center for Global Development,
Washington, DC................................................. 39
Prepared statement........................................... 42
Responses to questions submitted by Senator Lugar............ 75
Worthington, Sam, president and CEO, Interaction, Washington, DC. 24
Prepared statement........................................... 26
Responses to questions submitted by Senator Lugar............ 70
Additional Material Submitted for the Record
Holmes, Hon. J. Anthony, President, American Foreign Service
Association, Washington, DC, prepared statement................ 55
Lugar, Hon. Richard G., U.S. Senator from Indiana, prepared
statement...................................................... 53
(iii)
FOREIGN ASSISTANCE REFORM: SUCCESSES, FAILURES, AND NEXT STEPS
----------
TUESDAY, JUNE 12, 2007
U.S. Senate, Committee on Foreign Relations,
Subcommittee on International Development and
Foreign Assistance, Economic Affairs, and
International Environmental Protection,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:33 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Robert
Menendez (chairman of the subcommittee) presiding.
Present: Senators Menendez, Feingold, Casey, Lugar, and
Hagel.
OPENING STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM NEW JERSEY
Senator Menendez. This hearing will now come to order.
Let me just say, this is the first hearing of the
subcommittee. We think it's a good start, and an important
topic. And I look forward to working with the distinguished
ranking member, Senator Hagel, in a bipartisan fashion.
I'm looking at the issues of the jurisdiction of the
subcommittee, and we've gotten a good start working together,
and we look forward to that continuing starting in the days
ahead.
Let me say, today the subcommittee will examine U.S.
foreign assistance reform. We want to welcome the Under
Secretary, Henrietta Fore, the Acting Director of U.S. Foreign
Assistance, and the Acting USAID Administrator. She has a lot
of titles. I think you're getting one salary, though, right?
[Laughter.]
I'd also like to thank our witnesses on the second panel. I
would note that, at the conclusion of this subcommittee
hearing, we will reconvene for a full-committee hearing on the
nomination of Reuben Jeffery III to be Under Secretary of State
for Economic, Energy, and Agricultural Affairs.
I know we have a busy agenda, so I want to recognize myself
now for an opening statement. I normally try to keep my opening
statements brief when I had the privilege of being a ranking
member of the other body, but this particular issue is of such
serious nature, and has a lot of detailed issues, that this may
be a little bit more than we normally will do. But we thought
it is important to lay out the parameters of the discussions
that we want to have, and then we'll turn to the distinguished
ranking member for his comments.
Secretary Fore, the foreign assistance reform process has
been in place a little over a year, but I believe this new
foreign assistance process is seriously flawed, and may be in
serious trouble. And this is where you come in. You have just
been just nominated for this job, and made both Acting USAID
Administrator and Director of U.S. Foreign Assistance. You have
an ability to reassess the situation, to bring a new
perspective, and, if confirmed, to make real change.
So, Secretary Fore, you have the opportunity today to take
this opportunity before the committee to tell us what you
believe needs to be done to fix the foreign assistance reform
process, or, as it is often called, the ``F process.'' You have
the opportunity to start fresh with USAID employees, with the
State Department, with the NGO community, and with Members of
Congress.
But let me, for my own sake, be personally clear, if USAID
and State simply move full speed ahead with this reform
process, and make only minor changes around the edges, then the
administration will have serious problems with Congress. I'm
not saying that we may not actually agree with the ultimate
goal the administration wants in this reform process; in fact,
we may agree in many areas. But I am officially putting the
administration on notice that you simply cannot go forward with
this process in the nontransparent top-down way it has been
handled in the past.
I believe, and I certainly hope, that the foreign
assistance reform process was started with the best of
intentions. Clearly, we need more transparency in our work. We
need to know exactly how much we are spending--not only how
much we are spending, but how we are spending our money, and on
what. We need to eliminate overlap between programs in
different areas. We need cohesion and coherence. And I
certainly recognize that there are many who have worked very
hard to create this new transparency and to force disparate
parts of the U.S. Government to work together.
But after the first year of reform, I have serious
questions about both the design and implementation of the
reform. So, let's look at some of the problems we face now.
The foreign aid reform process was carried out in what I
consider an exclusive, secretive manner.
People refer to the F process as a black box without any
real input or consultation, except for post-facto briefings
with Congress, with the NGO community, or others inside the
Government.
The process was top-down and excluded valuable input from
the people in the field who know the most about what is
happening on the ground.
The foreign assistance reform was supposed to coordinate
all of U.S. foreign assistance, but left the Millennium
Challenge Account and the President's emergency plan for AIDS
relief, among others, out of the F umbrella.
USAID is in the process, in my view, of being decimated as
its funding role and mission are reduced. As a result, USAID
faces serious morale problems and questions about its future.
The promise the administration made on MCC, I believe is
false. MCC is not additive, and, instead, it appears to be
taking funds away from USAID in core development. And the
administration's decision to shift funds from the traditional
core development assistance account into an account with much
more flexibility raises serious concerns, and has, thus far,
been rejected by the House appropriators.
I'd like to address a few of these issues now, and then
discuss specific items in more detail during the question
period.
I understand that the administration has carried out an
after-
action review, and I look forward to hearing how you plan to
take those results and make significant changes. I'm deeply
concerned that by moving decisionmaking power away from USAID
to the State Department, the administration is continuing the
decimation of USAID that started with the creation of the
Millennium Challenge Corporation, and may end up with a new
development attaches you may be creating. I, for one, do not
intend to preside over the slow death of USAID.
Let me be clear, USAID is not a perfect agency, and I'm not
against reform, but I am against taking money, power, control,
and expertise away from one agency inside the U.S. Government
that was designed with development and fighting poverty around
the world as its core mission.
And I would remind everyone that our foreign policy agenda
is not identical, and should not be identical, to our
development agenda. Development should not be about the short-
term strategic goals that the State Department is often focused
on. Development is about long-term goals that don't always
coincide with those who are friends, and especially friends
with at the moment. For example, we're not giving $3 billion a
year to Pakistan over a 5-year period because Pakistan is the
country most in need of development assistance. No; we're
providing those funds because the administration sees Pakistan
as a key ally that is helping with central foreign policy
goals, like stopping the war on terror, and we know and
understand that.
I'm also deeply concerned about whether the F process is
really focusing on poverty alleviation. I know that the
administration included the goal of reducing widespread poverty
into the foreign assistance framework only after the persistent
insistence of the NGO community and Members of Congress.
I believe that reducing poverty should have been at the
center of any foreign assistance reform from the beginning,
and, as we move forward, I expect to see poverty alleviation
front and center in the on-the-ground implementation of the
reform.
And just as I will not stand by and watch the decimation of
USAID, I will not stand by and watch our core development
agenda and our poverty alleviation agenda be swallowed by
immediate foreign policy needs.
That is why so many people are concerned about the decision
to shift money from the development assistance account to the
economic support fund account. This is not about semantics or a
name change, in my mind. ESF funds were designed to be used in
our national interest, to help our friends for strategic
purposes, and to provide economic assistance. Let me quote from
the language that authorized ESF. It says, ``The Congress
recognizes that under special economic, political, or security
conditions, the national interests of the United States may
require economic support for countries or in amount which could
not be solely justified for standard development purposes.''
These funds have always been a strategic fund used by State and
the Secretary of State.
Meanwhile, our development assistance accounts have been
used to fund true development for the purposes of development
itself. I see no reason to change that system, and I am deeply
concerned that the administration's decision to move these
funds isn't simply about matching accounts to countries' needs,
but is designed to subsume development goals into short-term
foreign policy goals. And I find the results of the shift in
these funds disturbing.
In the FY08 budget, the administration proposed shifting
funds from the development assistance account to the ESF
account. In addition to cutting the development assistance
funding by 31 percent and shifting those funds to ESF, the
budget also cuts total child survival and health by 9 percent,
international disaster and famine assistance by 18 percent,
while increasing funding to the MCC counternarcotics and law
enforcement, among others. And, while I certainly support
significant increases in good governance, rule of law, and
counterterrorism, I don't believe that that justifies the
proposed cuts in the administration's FY08 budget to human
rights, maternal and child health, family planning,
reproductive health, agriculture, and environment.
I also am disturbed by the recent trend with the Department
of Defense stepping into the role that USAID or the State
Department has traditionally performed. The Department of
Defense's disastrous record in Iraq reconstruction certainly
speaks for itself. DOD's role has dramatically increased. In
2001, it had just 7 percent of total disbursements of
development assistance. In 2006, it took 20 percent.
And there are serious risks with DOD continuing to take on
these tasks. As Gordon Adams said during a Senate Budget
Committee hearing on Iraq, ``The more we ask DOD and the
military to do, the more that they become responsible for our
overseas relationships. The more we expand DOD authorities and
underfund State and USAID for such activities, the less State
and USAID have the credibility and retain the competency to
carry out policy, leadership, and program administration in
these areas. This trend risk becomes a self-fulfilling
prophecy.''
So, I've just laid out some of the challenges we face as we
move forward over the next year and a half. I also believe we
need to look toward the long term. In January 2009, we will
have a new President. We need to start talking about how we can
work with that new President on real, long-term foreign
assistance reform. I know that a number of our witnesses will
suggest that we create a Cabinet-level position to head our
development programs, and I look forward to discussing that
idea today.
But, for right now, we have a lot to do between this time
and January 2009. And, Madam Secretary, on our second panel we
have three very distinguished witnesses who have dedicated
countless hours of research and writing to the issue of U.S.
foreign assistance. They are leaders in their field. And I hope
you'll take some of their recommendations seriously.
Let me be clear, I expect the administration to make
significant changes in the reform process. I expect the
administration to work with Congress, both authorizers and
appropriators. I expect real transparency and inclusion in the
process. In essence, I expect real change. And the
administration should expect significant and detailed oversight
of foreign assistance reform from this subcommittee and from
Congress.
With that, let me recognize the distinguished ranking
member of the committee, Senator Hagel, for any opening
statement he may make.
OPENING STATEMENT OF HON. CHUCK HAGEL, U.S. SENATOR FROM
NEBRASKA
Senator Hagel. Mr. Chairman, thank you.
Welcome, Secretary Fore.
Mr. Chairman, we are grateful for your convening this
hearing, this important hearing, and we look forward to
Secretary Fore's comments and her analysis and the opportunity
to discuss the ongoing efforts to reform and restructure U.S.
foreign assistance.
Today's hearing will evaluate the results of the reforms
over the last year, explore the issues and challenges that
remain. And we will also consider what further changes are
needed to ensure that America's foreign assistance framework is
relevant to the 21st century.
Last January, Secretary Rice announced her intention to
implement significant changes to how U.S. taxpayer dollars are
spent on foreign assistance. As Secretary Rice said, ``The
current structure of America's foreign assistance risks
incoherent policies and ineffective programs, and perhaps even
wasted resources. In today's world, America's security is
linked to the capacity of foreign governments to govern justly
and effectively.''
I agree with those comments, and believe that her decision
to undertake these reforms was broadly supported. It is time to
review the decisionmaking process in the executive branch to
ensure that coherency, transparency, and effectiveness that
Secretary Rice noted.
Your focus on developing country-specific strategies is a
step, I believe, in the right direction. I believe, also, that
it is time to review the legislative framework under the 1961
Foreign Assistance Act to consider whether further structural
changes to the U.S. foreign assistance process are needed.
Since 1961, a complex, diverse, and sometimes overlapping
bureaucracy has emerged to administer U.S. foreign assistance.
The State Department and USAID do not control all foreign
assistance, particularly with the recent growth in nonmilitary
assistance projects run by the Defense Department that the
chairman has already noted.
Ultimately, successfully reforming U.S. foreign assistance
will require a more comprehensive approach. You need to have
all of the relevant executive branch agencies involved. You
need to consult closely with the dedicated professionals in
your organizations. You need to consult and work closely with
Congress. And you need to reach out and engage the hundreds of
private organizations that actually implement assistance
projects and are on the ground around the world.
Secretary Fore, I look forward to the hearing, your
comments, and also, as has been noted by the chairman, the
second panel of distinguished experts.
Secretary Fore, I understand your nomination to be USAID
Administrator is before the committee, and that your paperwork
is complete.
And, Mr. Chairman, I hope that Secretary Fore's nomination
hearing will be scheduled as quickly as possible, as we know
this is a critical position, and the committee should move to
consider Secretary Fore's nomination as quickly as we can.
Mr. Chairman, thank you.
Secretary Fore, thank you, look forward to your comments.
Senator Menendez. Well, thank you, Senator Hagel.
Let me say, Madam Secretary, we welcome you to the
committee. We proceed to your opening statement. In the
interest of time, we ask you to summarize your statements to
about 7 minutes or so, and we'll certainly have all of your
written testimony included for the record.
STATEMENT OF HON. HENRIETTA H. FORE, ACTING ADMINISTRATOR OF
THE AGENCY FOR INTERNATIONAL DEVELOPMENT AND ACTING DIRECTOR OF
U.S. FOREIGN ASSISTANCE, WASHINGTON, DC
Ms. Fore. Thank you very much, Mr. Chairman. And thank you
very much, Ranking Member Hagel. And thank you for the
opportunity to testify before the subcommittee today. I thank
you for your interest in what the State Department and USAID
are doing to strengthen U.S. foreign assistance, and I want to
address your concerns and your interest.
As the President has said, we are a compassionate nation.
When Americans see suffering, and know that our country can
help stop it, they expect our Government to respond. They
help--we help the least fortunate across the world, because our
conscience demands it. We also recognize that helping
struggling nations succeed is in our interest.
With the full support of Congress, America's deeds have
matched these words. For instance, we have nearly quadrupled
our foreign assistance for sub-Saharan Africa. We have helped
provide food to the hungry, medicine to the sick, security in
troubled regions, and education and economic opportunities to
people of every creed and culture. Our programs save lives and
lift individuals from poverty. But we do not want simply to
achieve disconnected good outcomes, we want to lift nations and
all their citizens, including the poorest, to permanent
prosperity.
In America today, there is a new unity of purpose for
foreign aid and a growing consensus that global development is
both a moral ideal and a national interest. From community
leaders to corporate leaders, from religious leaders to movie
stars to college students, Americans recognize that if we, as
members of the global community, are to address the most
difficult challenges of our time, we must all work together.
Yet, Secretary Rice rightly noted that, as we increase the
quantity of our foreign assistance, we must also work to
improve its quality. That is why she launched this broad reform
of U.S. foreign assistance.
As you know, Mr. Chairman, Secretary Rice arrived at the
Department 2 years ago, and she asked a basic question, ``How
much is the United States Government spending on democracy
promotion?'' This question goes to the heart of America's post-
9/11 foreign policy of protecting America by encouraging good
government around the world. She found it extremely difficult
to get a straightforward answer. The problem is that our
foreign assistance has been stovepiped. We can all agree that
we have too many separate accounts overseen by multiple
officials, each with different standards of measurement and
different ways to judge success or failure. This left
decisionmakers, including the Secretary of State and Members of
Congress, without an effective way to judge tradeoffs, weigh
options and priorities, or allocate money in a truly strategic
way to meet America's foreign policy and development policy
goals.
Some of our Ambassadors did not have a comprehensive idea
of all U.S. Government programs being implemented in their
countries. Our State Assistant Secretaries and USAID Assistant
Administrators had no adequate way to ask what are our long-
term goals in a given country, and how are we using all of our
many forms of assistance to achieve them?
Funding tradeoffs were often decided by budget officials
rather than by those charged with carrying out America's
foreign policy and development policy. And everyone was
thinking of her or his own piece of the whole--not the whole--
because we did not have a mechanism to see the whole. Such a
system would be considered deficient under any circumstances,
but in the post-9/11 environment, as we focus on threats
germinating in failed states and failing states, and work with
our local partners to transform conditions within those states,
Secretary Rice found the situation unacceptable, and I have no
doubt that her successors will agree with that judgment.
To address the problems, Secretary Rice established the
position of the Director of U.S. Foreign Assistance. By placing
all State and USAID foreign assistance under one official,
reporting directly to the Secretary, we can use foreign
assistance far more effectively. Starting with the Ambassador
and his or her team, and the Mission Director, we can create
long-term plans for our countries receiving assistance, plans
that effectively use all of our resources. We will be able to
employ foreign assistance strategically to advance U.S. goals.
Secretary Rice's vision gives us a strong foundation for
getting foreign assistance right. We are at the beginning of
this important reform process, not in the middle and not at the
end. We must continually work to improve our reform.
There is no question that reform and institutional change
are difficult, and they take time. But I believe that if we
work together, we can make significant improvements. Already,
we've begun to take some key steps, such as starting to develop
the tools to link foreign assistance programs across the U.S.
Government to our foreign policy and development policy goals.
In the past few weeks, I've been listening to people's
concerns and hopes for successful foreign assistance reform.
And, at this moment, they are asking us to communicate, to
collaborate, and to simplify. We need to communicate and
collaborate with Congress, the people in State and USAID, the
Federal Government, and our partner community. This will ensure
our commitment to transparency.
Since assuming these roles 4 weeks ago, as Acting USAID
Administrator and Acting Director of U.S. Foreign Assistance,
I've made it one of my top commitments to enhance our
communication about what we are trying to accomplish with the
Secretary's transformational diplomacy agenda and foreign
assistance reform, generally. I expect to be fully engaged,
here in the United States and abroad, in our outreach efforts
to build greater understanding of U.S. foreign assistance and
the role it has played in building a more peaceful and
prosperous world.
I'm committed to continuing our work with an increased
spirit of consultation. I also intend to move forward
immediately through more intensive collaboration with a broad
and vibrant development community to reach a more unified
approach.
Last week, I met with the board of the Advisory Committee
for Voluntary Foreign Assistance, InterAction, and the Society
for International Development and several other key development
leaders. And in the coming weeks, I look forward to meeting
many more.
We also need to simplify and streamline the process of
foreign assistance. We need less time spent in meetings, and
more focus on tapping the benefits of technology. We need to
continue to break down stovepipe systems and foster
flexibility. We also need to get on with the work of delivering
foreign assistance effectively.
I know USAID, and I share your concern; I do not want to be
present at a time when it is being decimated. I want it to grow
and be healthy and strong. I have extensive management
experience in both the public and private sector. As Assistant
Administrator for Asia and for Private Enterprise from 1990 to
1992, my service in both regional and functional bureaus at
USAID has provided me good lessons on the need for a more
thorough collaboration with multiple public and private
partners in the multilateral, bilateral, country, and local
level to ensure effective development.
We need to begin and end our discussions on development
with our extraordinary women and men who are carrying out our
foreign assistance in the field. As Secretary Rice has said,
``We are helping people to better their own lives, to build
their own nations, and to transform their own futures.''
I pledge to enhance consultation with Congress and with the
development community, and I look forward to working with you.
I want decisions to be made as transparently as possible and to
make this very important foreign assistance reform live up to
its promise.
Thank you. And I look forward to your thoughts and those of
the distinguished panel which follows.
[The prepared statement of Ms. Fore follows:]
Prepared Statement of Hon. Henrietta H. Fore, Acting U.S. Director of
Foreign Assistance and Acting Administrator of USAID
Thank you, Chairman Menendez and Ranking Member Hagel, for the
opportunity to testify before the subcommittee today. I thank you for
your interest in what the State Department and USAID are doing to
strengthen U.S. foreign assistance, and I want to address your
concerns.
As President Bush has said, ``We are a compassionate nation. When
Americans see suffering and know that our country can help stop it,
they expect our Government to respond. We help the least fortunate
across the world because our conscience demands it. We also recognize
that helping struggling nations succeed is in our interest.''
With the full support of Congress, America's deeds have matched the
President's words. For instance we have quadrupled our bilateral
foreign aid for sub-Saharan Africa. Our assistance has helped provide
food to the hungry, medicine to the sick, security in troubled regions,
and educational and economic opportunities to people of every creed and
culture.
Let me be clear, the dramatic increases in American foreign
assistance in the 21st century required collaboration among all
stakeholders--between Congress and the administration, both political
parties, and the broad and vibrant development community, without whose
partnership and support our efforts on the ground would not be
possible.
In America today, old divisions between those who saw foreign aid
as a tool to influence strategic partners and those who viewed it as a
means of doing good in the world are giving way to a new unity of
purpose. There is a growing consensus that global development is both a
moral ideal and a national interest. From community leaders to
corporate leaders, religious leaders to movie stars to college
students, Americans recognize that if we--as members of the global
community--are to address the most difficult challenges of our time, we
must all work together.
But as Secretary Rice has rightly noted, as we increase the
quantity of our foreign assistance, we must also work to improve its
quality. That is why she launched an effort to reform U.S. foreign
assistance.
Probably the greatest challenge at hand is that of getting the
balance right between field expertise, overall administration
objectives and congressional intent. Often this is a difficult
balancing act with State and USAID staff being pulled in competing
directions. We need a process that figures out a way to balance those
sometimes competing perspectives.
THE CASE FOR REFORM: A NEED TO WORK TOGETHER
Mr. Chairman, when Secretary Rice arrived at the Department 2 years
ago, she asked a basic question: How much is the United States
Government spending on democracy promotion?
This question goes to the heart of America's post-9/11 foreign
policy of protecting America by encouraging good government around the
world.
Incredibly, she found it extremely difficult to get a
straightforward answer.
The problem is that our foreign assistance was stove-piped into
numerous separate accounts, overseen by multiple officials, each with
different standards of measurement and different ways to judge success
or failure.
This left decisionmakers, including the Secretary of State and
members of this committee, without an effective way to judge tradeoffs,
weigh priorities, or allocate money in a truly strategic way to meet
America's foreign policy goals.
Our Ambassadors often only had a vague idea about some of the
programs being implemented in their countries. Our State Assistant
Secretaries and USAID Assistant Administrators, had no adequate way to
ask what are our long-term goals in a given country and how are we
using all of our many forms of assistance to achieve them. Funding
tradeoffs were often decided by budget officials rather than by those
charged with carrying out America's foreign policy.
Such a system would be considered deficient under any
circumstances. But in the post-9/11 environment, as we focus on the
threats germinating in failing states and work with our local partners
to transform conditions within those states, Secretary Rice found the
situation unacceptable. I have no doubt that her successors will agree
with that judgment.
To address the problem, she established the position of Director of
Foreign Assistance and delegated authority over most forms of State and
USAID foreign assistance to that official. The goal was to build a
system in which we can make strategic choices and ensure that foreign
assistance is spent wisely and advances our foreign policy objectives.
We are at the beginning of this important reform process, not the
end. We must continually work to improve our reform.
There is no question that reform and institutional change are
difficult. They take time. But I believe that if we work together, we
can make significant improvements. Already, we have begun taking some
key steps--such as starting to develop the tools to link assistance
programs across the U.S. Government to our foreign policy goals.
In my acting capacity and if confirmed, I am committed to
increasing consultation and communication with you and our many
stakeholders as we take the next steps in this reform effort. Together,
I believe we can make it work.
PROGRESS TO DATE: NEW TOOLS
As you know, I appear before you today in my capacity as Acting
Director of U.S. Foreign Assistance and as Acting Administrator of the
U.S. Agency for International Development, an organization for which I
have long had much respect and admiration. I have been serving in this
acting capacity for a little over a month and looking at what has been
accomplished and what can be improved.
Consistent with the need to improve the coherence and coordination
of State and USAID foreign assistance be improved, for the first time
in the FY 2008 budget, the two agencies integrated their budget
planning, taking into account a broader totality of U.S. Government
resources--including resources provided by the President's Emergency
Plan for AIDS Relief and the Millennium Challenge Corporation.
This integrated planning was based on our governmentwide commitment
to a shared goal--the goal Secretary Rice has articulated as
Transformational Diplomacy: ``to help build and sustain democratic,
well-governed states that respond to the needs of their people, reduce
widespread poverty, and conduct themselves responsibly in the
international system.''
The goal itself has already benefited from collaboration. In
response to recommendations received from many of you, our colleagues
in the international development community, and our host government
counterparts, that goal now expressly includes poverty reduction.
I am committed to continuing our work in an increased spirit of
consultation. I also intend to move forward immediately with more
intensive collaboration with the broad and vibrant development
community. This past week I have met with the board of the Advisory
Committee for Voluntary Foreign Assistance, Interaction, the Society
for International Development, and many other development leaders.
Having served at USAID in both regional and functional bureaus, I
know that effective development requires a more thorough effort at
collaborating with multiple partners at the multilateral, bilateral,
country, and even local level. I pledge to enhance consultation with
the development community, especially as it relates to improving our
aid effectiveness at the country level.
The first step in this reform effort was developing a new strategic
framework for foreign assistance and beginning to agree on how we will
define progress. Now that we have a framework and the beginnings of a
common language around foreign assistance, we must work to ensure our
activities are targeted to help countries move from a relationship
defined by dependence on traditional foreign assistance to one defined
by partnership.
A set of common definitions and indicators, on which we are still
soliciting and accepting suggestions, will allow us to compare partner,
program, and country performance across agencies and sources of
funding. These new tools are being used to create detailed country-
level operational plans that describe how resources are being used.
The first such plans--produced for an FY 2007 pilot by 67 fast-
track country teams, including most USAID missions, and many embassies,
offices, and bureaus--were approved just before I was nominated. I look
forward to becoming familiar with these plans and consulting with the
Congress as we implement them.
They will allow us to provide you in Congress, the American people,
our partners around the world, and those we seek to assist with the
means to readily access and understand foundational components of our
foreign assistance initiatives, namely:
First, across the U.S. Government, what are we trying to
accomplish with our foreign assistance in a particular country;
Second, with whom are we working--both inside and outside
the USG--toward our objectives;
Third, how much are we spending across the board; and
Finally, what results are we achieving.
Our foreign aid programs do a lot of good in the developing world.
These programs save lives and lift individuals from poverty. But, we do
not want simply to achieve disconnected good outcomes; we want to lift
nations and all their citizens--including the poorest--to permanent
prosperity. We want to create more donor nations. We want countries to
build their own schools and train their own teachers. That was the
motivation that impelled the reforms.
Ultimately, our aim is to significantly improve the human
condition, and to develop the tools to know if we are reaching our
goal.
LOOKING AHEAD: IMPROVEMENTS FOR FY 2009
The Secretary and I are committed to continuous learning and
improvement of the tools, processes, and principles of the reform. It
is my strong desire to communicate, collaborate, and simplify this
process. Reform itself is important--to all of us--and we are just
beginning to go down this road together.
As you know, the office to manage this system only became
operational last June, in the middle of the fiscal year. Staff had to
be detailed from many bureaus, new procedures had to be developed, a
new way of doing things had to be accommodated. To be sure, decisions
were not as transparent as they will be in the future. Some decisions
need to be reviewed, some procedures need to be amended and some need
to be abandoned altogether. And some decisions are good building blocks
for the future.
With a view toward improving the FY 2009 process, an After Action
Review was conducted of the new budget formulation process. Review
sessions were attended by a mix of people from State and USAID regional
and functional bureaus, including both mid-level and senior-level
individuals in the field and Washington.
It was especially important that the field's views were heard,
therefore, at least one USAID mission and one Embassy representative
were included in the After Action Review from every region of the
world. Suggestions were also solicited from other USG offices and
agencies, such as the Department of Defense, Department of Justice,
Office of the Global AIDS Coordinator, and the Millennium Challenge
Corporation. Already, as a result of this review, we have formalized
and increased opportunities for the field to be involved in every stage
of the budget process. We have also streamlined processes and improved
how we communicate.
I pledge that in my acting capacity and if confirmed, I will
continue to seek and respond to suggestions from stakeholders in
Congress, in the NGO community, the university community, the USG's
many other development partners, the donor community at large and of
course in the USG agencies.
CONCLUSION: A COMMITMENT TO COMMUNICATION AND COLLABORATION
As Acting USAID Administrator and Acting Director of Foreign
Assistance, I have made it one of my top commitments to enhance
communication about what we are trying to accomplish with the
Secretary's Transformational Diplomacy agenda and foreign assistance
reform generally. I expect to be fully engaged here in the United
States and abroad in outreach efforts to build greater understanding of
U.S. foreign assistance and the role it has played in building a more
peaceful, prosperous world.
This is important not just for foreign assistance but also to help
build support for U.S. foreign policy around the world. There is no
better diplomacy for the United States than effective development
assistance, combined with effective communications about these efforts
to host country audiences. I think our ability to communicate what we
stand for as a nation will be improved by foreign assistance reform.
I have spent the vast majority of my time over the last few weeks
listening--listening to my senior management at State and USAID as well
as doing ``walk throughs'' to speak to all my colleagues in USAID and
the Office of the Director of U.S. Foreign Assistance.
People are the most important part of an organization, and both
USAID and State have remarkable and extraordinarily capable people. As
Americans, we are well served by the hard work and dedication of all
the fine people in these organizations. I know they can achieve foreign
assistance reform and I know they can do it well. I will work equally
hard to listen to your concerns, their concerns, and the community's
concerns to ensure that we use best practices to achieve results.
In that same vein, I am here to listen to you. I hope to begin
implementing a process moving forward that makes it easy for you to
provide suggestions and receive timely answers to your questions, as
well as a process which respects your opinions and ultimately makes our
aid more effective.
As we move forward, we must always remember that at a time when
some of the greatest threats to our people come from conflicts within
states, it is not enough to have a foreign assistance program that
merely cements government-to-government relations. As the Secretary has
said, ``Our foreign assistance needs to be an incentive for
transformation, not a source of dependency.'' Improving the quality of
our assistance is essential to transformation and we cannot improve the
quality without reform.
My commitment to you is that I will always strive to consult fully
with the Congress, to make decisions as transparently as possible and
to make foreign assistance live up to its promise.
Senator Menendez. Thank you, Madam Secretary.
And let me say that we have two panels, and, depending upon
how many of our colleagues show, we'll start off with a round
of 7 minutes, and then, if necessary, we'll revisit.
I'll start off with myself.
I'm enthused to hear some of what you said, that this is
the beginning of the F process. If that's the case, good. I'm
glad to hear about the consultations and your outreach,
particularly to the development community. That's good. I'm
glad to hear that you're talking about transparency, and also
about this--not wanting to preside over the demise of USAID.
So, that's all music to my ears, and I'm glad to hear it.
Let me pursue, however, some of these things with some
questions.
The administration proposed a 15-percent cut to the FY08
operating expense budget for USAID. That's the funding that
runs our operations at USAID missions, and cutting it
ultimately, I think, would mean closing missions. We have
specifically heard that there are discussions about closing a
number of missions in Latin America and Africa. Have there been
any such discussions about closing missions in these regions?
And, if so, exactly which ones?
Ms. Fore. I believe, Mr. Chairman, that there has been the
beginning of a discussion on a number of issues that have to do
with operating expense funds. USAID, as you know, has struggled
to fund enough of their operating expenses to support their
people, to hire enough people, and to be able to have them be
well supported when they are at work in the field.
Facing tight budgets and very restricted budgets, the
Agency started discussing ways that they could save operating
expense money, and they have begun discussions on how they can
better structure the organization.
I have just begun reading in on those discussions. I know
that they are ongoing. I know the decisions have not yet been
made. So, I am interested to hear of your interest in it----
Senator Menendez. Well, I appreciate----
Ms. Fore [continuing]. And will follow it with interest.
Senator Menendez. I appreciate--one thing you'll learn
about me is, I like to get right to the point, so I'll try not
to interrupt you, but--question: Within this process, have you
talked about closing certain missions; yes or no?
Ms. Fore. I've received briefings in which----
Senator Menendez. Have those briefings suggested closing
certain missions?
Ms. Fore. They have suggested----
Senator Menendez. OK.
Ms. Fore [continuing]. Closing certain missions, but I
personally have not talked about closing missions.
Senator Menendez. OK. And exactly which ones have been
identified that should be closed?
Ms. Fore. I do not know that.
Senator Menendez. They don't tell you that in the
briefings.
Ms. Fore. Well, they've just begun, sir, and----
Senator Menendez. OK.
Ms. Fore [continuing]. It's----
Senator Menendez. So, we know that some--there is some----
Ms. Fore. There----
Senator Menendez [continuing]. Suggestion of closing----
Ms. Fore. There is some discussion of it, yes.
Senator Menendez. Have there been any other discussions
that you've been briefed on inside of F, USAID, or State about
closing other missions?
Ms. Fore. About closing other than USAID missions?
Senator Menendez. No; closing other missions within USAID.
Ms. Fore. Well, there have----
Senator Menendez. You mentioned that there were some that--
you got a briefing on USAID. Within the overall process, have
you been informed about closing other missions?
Ms. Fore. No; I've just received one briefing on this.
Senator Menendez. OK.
Ms. Fore. And it was not full.
Senator Menendez. Let me ask you this. What is the
difficulty of the administration's decision to shift funds from
the development assistance account, which focuses on long-term
poverty and development goals, to the economic support funding
account, which gives the State broad jurisdiction? What is
about the authority within the development assistance that is a
problem for the administration? Why can it not leave the funds
as they are? And what's the authority that you don't have in
the development assistance account that you need?
Ms. Fore. As I understand it, the thinking was that ESF
would be used for restrictive or rebuilding countries; that is,
countries that have been in conflict or were post-conflict.
There was not a sense that ESF or DA would fund different types
of projects, so that the very important health and education
and government support projects that are going on in countries
now using DA money could be used--could continue using ESF
money. So, it was a question of structuring it within the
framework.
Senator Menendez. But isn't it true that ESF money largely
gives the State Department a much broader jurisdiction of how
it uses that money? I mentioned the example of Pakistan. We
wouldn't advocate that it's the most in need of development
assistance money, but we give it a very significant amount,
because we have made, through the administration, a calculation
that they are a very important partner in certain foreign
policy objectives, and, therefore, we give them a very sizable
amount of money within the context of the overall budget. Isn't
it true that ESF funds gives you very broad flexibility to do
what you want?
Ms. Fore. ESF does give flexibility. It's--the construct--
--
Senator Menendez. Including the flexibility to move in a
direction that is away from development assistance.
Ms. Fore. It could. But it could also give you the
flexibility to do development assistance. And, at least as I
have understood it, the intention was not to move away from
development assistance, but, rather, to structure it in a way
that was more--that was clearer, so that countries that were in
conflict or that were just coming out of conflict would receive
ESF funds.
Senator Menendez. But there would be no guarantee--if we
move all of the funds to ESF, there would be no guarantee that
development assistance would actually take place or that we'd
have a defined development program as part of our poverty
alleviation strategy, because, in fact, that flexibility could
allow the administration to use ESF funding in a way that would
do very little, if any, development assistance. Is that not
true?
Ms. Fore. Well, as we look at the process the way it is
now, it begins with the field, so it starts with mission
strategic plans. So, if, in a mission strategic plan, they are
suggesting assistance to the health sector, to the education
sector, to the environment, then that funding, whether it came
from DA or ESF, would be considered. So, the actual type of
money would not be the determining factor for the kind of----
Senator Menendez. Well, let me----
Ms. Fore [continuing]. Work that was done.
Senator Menendez. Let me try once again. Right now, under
the present system, ESF funds are largely discretionary by the
Secretary to promote foreign policy objectives; whereas,
development assistance funds are pretty clear, they're for
development assistance. If you shift all of them to ESF funds,
the discretion is wide, the latitude is great, but there is no
guarantee for development assistance. Now, I'm not saying--
you're saying that's not the administration's intention. I'm
simply asking you, though, isn't it true that, if we make that
change, that, in fact, we have no guarantee of development
assistance, notwithstanding the administration's intention?
Ms. Fore. Well, it's a collaborative process, so I don't
think, in any collaborative process, that the guarantees are
very easy to come by. There are lots of interests that are
traded off because there are multiple interests, as you know,
Mr. Chairman.
Senator Menendez. Senator Hagel.
Senator Hagel. Thank you, Mr. Chairman.
Secretary Fore, as the Acting Director of Foreign
Assistance and Acting USAID Administrator, what percentage of
all the U.S. foreign assistance programs, including Department
of Defense, the Millennium Challenge Corporation, and others,
do you directly control, that you have authority over?
Ms. Fore. It's approximately 60 percent. It covers the
USAID portfolio and the State Department portfolio. And it also
includes coordination for the Millennium Challenge Account and
PEPFAR, the HIV/AIDS program.
Senator Hagel. Thank you.
Do you believe that the executive branch, in order to
fulfill what Secretary Rice talked about earlier this year, can
successfully develop a comprehensive foreign assistance program
without any changes to the Foreign Assistance Act, 1961?
Ms. Fore. Well, I think----
Senator Hagel. Do you believe you have all the authority
required in order to make the changes without legislative
changes?
Ms. Fore. I'd like to actually think about that, sir, as
time progresses here. At the moment, I think we have lots that
we can--that we can do within our current authorities, but
there may well be authorities that would be useful. So, if I
could come back to you on that, I would appreciate it.
Senator Hagel. Thank you. If you'd provide an answer for
the record, we would appreciate it.
[The submitted written information from Ms. Fore follows:]
We are still in the early stages of the foreign assistance reforms,
and our focus remains on optimizing the performance of taxpayer funds
within current authorities. We understand that we must demonstrate to
Congress and to the American people the value added of a more strategic
and integrated approach to foreign assistance. To that end, we have
already begun to make changes to the FY 2009 budget process based on
the comprehensive After Action Review. Together with Secretary Rice, I
plan to continue to systematically evaluate our progress and to use
this evaluation to identify any further changes that might be
appropriate, legislative, or otherwise. I very much look forward to
working with Congress going forward to consider the appropriateness and
effectiveness of the tools that are currently available to help us
improve our foreign assistance.
Senator Hagel. The 80-percent number that you noted is
obviously significant. The other 20 percent, how is that
coordinated with your overall efforts, being--starting with the
President? You used President Bush's quote to begin your
testimony. I quoted Secretary Rice. So, obviously, there is, or
should be, a Presidential administrative objective within this
administration, on foreign assistance. So, then, how do you
coordinate the other 20 percent? I'm particularly interested in
Department of Defense's control of those assets.
Ms. Fore. Well, we all fall under the national security
strategy, and, as a result, diplomacy and development and
defense are seen together as a whole. So, between the NSC and
OMB and all of the working groups that exist that are
interagency, we work hard at trying to coordinate with each
other.
With the Department of Defense, we have been working hard
to coordinate our assets, because, in conflict and post-
conflict situations, it is important that we are there, and
that we are as seamlessly working together as possible.
Senator Hagel. So that coordination is done, essentially,
through interagency----
Ms. Fore. Working groups.
Senator Hagel [continuing]. Purpose directive working
toward common interests.
Ms. Fore. Yes.
Senator Hagel. Chairman Menendez touched on some of this in
the ESF funding and some of the budget alterations, changes,
shifts. Some refer to it as ``cuts.'' And I want to focus on a
particular area, the development assistance funds, primarily
viewed, I think, by most as money intended to address long-term
development problems in these countries, particularly poverty.
Can you explain the administration's FY 2008 budget-cut
request in this funding--and I believe, by 31 percent?
Ms. Fore. This, Senator, is the issue that we were just
talking about with the chairman, of placing funding in with the
category of the type of country, so that countries that are
restrictive and rebuilding were given ESF funding, and
countries that were developing or transforming were requested
to have development assistance money. The intention, as I
understand it, was not to change the actual work being done,
the projects being carried out in the field, but, rather, to
give a rationale for funding in these types of countries.
Senator Hagel. Well--and I know you pursued some of this
with the chairman--but where do those resources go? That--what
you're saying is, that's the discretion of the administration
as to where you would apply those resources in other areas,
other programs?
Ms. Fore. Yes. In the request, we then requested those
funds in ESF for those----
Senator Hagel. That 31 percent was shifted----
Ms. Fore. Correct.
Senator Hagel [continuing]. In the budget.
Ms. Fore. Correct.
Senator Hagel. OK.
Ms. Fore. And that was because we had so many needs in
countries that were in the rebuilding and restrictive
categories.
Senator Hagel. How many staff people will you have that
will report to you? What kind of support staff are you going to
have?
Ms. Fore. Well, we are looking at that, sir. And if I might
come back to you on that, I don't have an answer.
I do know that it is important to have a very good staff,
and we have some extraordinary individuals who are working
there now. Most of the individuals who are in the Office of the
Director of Foreign Assistance are from USAID, and I hold great
respect for USAID people. And so, we will work to have the best
staff, to be collaborative, and very good at communication and
outreach.
[The submitted written information from Ms. Fore follows:]
To coordinate the entire gamut of activities associated with
managing the approximate $25 billion foreign policy programs of the
United States, I will have about 80 direct hires. I plan to have a very
lean administrative staff and will rely, as much as possible, on
existing State Department infrastructure for support.
Senator Hagel. How do you intend to engage the hundreds of
nongovernmental--nonprofit organizations that you work with?
Any different approaches you intend to take? Any changes you
intend to make?
Ms. Fore. Well, I've just begun, and I really look forward
to talking to all of our partners, because they really are our
partners. It is how foreign assistance is delivered around the
world. And we've begun to talk about what is going right and
what is due for change within the current foreign assistance
reform process. We've been making some changes for the 2009
year, which, as you know, we are in the midst of. So, I think
the discussions are leading to some very good suggestions and
ideas. So, we are starting to put those ideas into practice.
And then, what I would hope is that our discussions would
begin to turn to some of the policy issues about what we are
really trying to get accomplished in development around the
world, and what we are accomplishing for both foreign policy,
as well as for our development assistance.
Senator Hagel. Thank you.
Mr. Chairman, thank you.
Senator Menendez. Thank you.
I'm pleased to recognize a member of the full committee,
Senator Feingold.
Senator Feingold. Thank you, Mr. Chairman.
Secretary Fore, thank you for your testimony today.
And I just wanted to talk a little bit about the HELP
Commission and what you think those recommendations, which are,
as I understand, expected no later than December 2007--what
role will they play in helping to inform the foreign aid reform
process, particularly given that the proverbial F process ball
has already started rolling and that the Commission was--the
HELP Commission--was specifically created to influence a more
effective foreign aid process?
Ms. Fore. Senator, thank you for that question.
I'm really looking forward to the suggestions that come
from
the HELP Commission. There are some extremely expert
individuals who serve on that Commission, and they have been
taking some trips to see the work in the field, which I will
find very valuable. So, I'm looking forward to seeing their
report, to discussing with them what observations they have,
and ways that we can strengthen both the U.S. Agency for
International Development, as well as the Office of the
Director for U.S. Foreign Assistance.
Senator Feingold. So, you don't think the F process will be
too far along to incorporate their good ideas.
Ms. Fore. Oh, no. I think this is the beginning of a
process, and that we will be able to improve it as the years go
by.
Senator Feingold. Well, talk a little bit about what you
see as the indicators of success envisioned by the F process.
How will we know--both here in Congress and in the countries
where foreign aid is so critical--what success will look like?
How do we know when we've reached it?
Ms. Fore. I know when I first served in USAID, 17 years
ago, I hoped that there would be a way that I would know when a
country was ready to ``graduate,'' and that it was a time that
we could then begin pulling down many of the projects, and they
would go on and be picked up by private partners. And, in those
years, what I've seen is that much of the private development
community and foundations and private corporations have really
risen up with an enormous wellspring of funds and attention
into the development community and the foreign assistance
community.
So, I'm looking forward to really exploring the area of
partnerships. I think we have enormous possibilities and
opportunities there. And once we begin to see private partners
coming into countries, and countries looking after their own
health sectors and education sectors, I think we will begin to
see when it is time to change our programs, that we will have
success.
I'm very interested in looking at these indicators of
success and making sure that we refine them as the months and
years progress, because I think it's a very important part of
our country-based strategy that countries move along, and that
all of us progress in our own ways, and that none of us are
perfect.
Senator Feingold. Talk a little bit, if you would, about
what counterterrorism funding, from a foreign assistance
perspective, looks like. I noticed, in the fiscal year 2006
budget, there was a request of just over $157 million for this
specific account, while the FY08 request is 18 percent higher--
at more than $185 million. What programs will this fund and who
will implement them? And will this be coordinated with defense
and intelligence counterterrorism programs?
Ms. Fore. I would like to get back to you for which
programs that they will fund, particularly.
[The submitted written information from Ms. Fore follows:]
Much of the increase you refer to under the Counter-Terrorism Area
reflects our commitment to develop programs that address the underlying
conditions that feed the terrorist threat. On the training and
assistance side, we have requested increases in programs that help
build partner-nation capabilities in law enforcement, as well as in the
judicial, prosecutorial, and regulatory fields. We are particularly
focused on developing programs that build on the Regional Strategic
Initiatives, or RSIs, that we have launched in a number of regions
around the world that are most directly challenged by the terrorist
threat. the RSIs are field-centric programs that seek to develop
policies and programs to deny terrorists the freedom to operate in
ungoverned or poorly governed spaces and to use those spaces to train,
equip, and finance their activities as well as to launch attacks. As
ungoverned spaces are most frequently found in border areas between
states, regional versus bilateral approaches are often the most
effective means to address the challenge.
In all of these programs, we work closely with our colleagues in
the military and the intelligence community. Washington agencies, as
well as the Combatant Commanders, are full participants in the Regional
Strategic Initiatives. The Office of the Coordinator for
Counterterrorism also chairs several interagency working groups on
technical assistance and counterterrorism finance that coordinate
training and assistance programs throughout the interagency.
Ms. Fore. Yes; we must coordinate them with Department of
Defense and other U.S. Government agencies, because that is
where we will get our strength and clarity and focus and
purpose.
Senator Feingold. All right. And, as you mentioned in your
testimony, one of the key goals for any strategic foreign aid
assistance framework is the integration and coordination of all
assistance mechanisms--which includes State, USAID, MCC,
PEPFAR, and even DOD, given their increasing role in U.S.
foreign assistance. Taking a holistic and integrated approach
to dealing with all of these tools will ultimately, obviously,
help us better reach our core objectives. Accordingly, and with
the President's request to reauthorize PEPFAR, I'm wondering if
you could outline how the F Bureau is currently coordinating
with the PEPFAR office and what kind of coordination do you
expect in the future between this initiative, traditional
health assistance, and broader foreign aid initiatives?
Ms. Fore. Yes; they're very interlinked. Programs with
nutrition, with maternal child health care, with child
survival, with PEPFAR and HIV/AIDS, and our traditional health
programs, are all interwoven in the development tapestry.
The Office of the Director of Foreign Assistance does
closely coordinate with Office of the Global AIDS Coordinator.
These working groups that Ranking Member Hagel and I were
speaking about earlier involve PEPFAR. USAID is often the
implementer with implementing partners on the ground for many
of the PEPFAR programs. So, we are working at ways that can be
future best practices and models for the developing world, as
well as the foreign assistance world, in how these can
integrate with each other.
Senator Feingold. Thank you, Secretary.
And thank you, Mr. Chairman.
Senator Menendez. Thank you.
I think we'll have another round of 7 minutes, for those
members who wish to do so. And let me start with myself.
Madam Secretary, I'm going to go back to where we--I
finished off with you, which is the economic support funds and
the development assistance accounts. Have there been any
discussions inside of State about closing or eliminating one of
these accounts?
Ms. Fore. Not that I know of.
Senator Menendez. Have there been any discussions inside of
State about just creating an F account and eliminating all of
the accounts?
Ms. Fore. Not that I know of.
Senator Menendez. OK. I--you know, if you understand that
for those of us who care about poverty alleviation as one of
the core missions, and saw that we had to fight to include it
in the mission statement, and then see the movement toward the
ESF accounts, for which there's total flexibility, you may get
a sense of why some of us are concerned.
Let me ask you--Congress uses congressional directives and
appropriation bills to express the intent of Congress given to
it under the Constitution to direct how funds should be used.
These, to be clear, are not earmarks to send the money to a
particular organization, they are a directive to detail how
much money should be spent in a particular country or that a
certain amount of money should be spent on educational funds in
a specific region, by way of example.
If you were ultimately confirmed, do you plan on honoring
congressional directives?
Ms. Fore. Yes, sir.
Senator Menendez. And if you believe there is a reason--
that there is a compelling reason not to honor a directive,
would you commit, to the members of this committee, assuming
that you are confirmed, that you would come back to Congress
for such consultation?
Ms. Fore. I would.
Senator Menendez. All right. Let me ask you--the whole
idea, in part, is to create greater transparency, a move away
from stovepipes. I have a chart here that is the foreign
assistance framework under the new proposal, and I'm wondering
to myself how much more clear and concise and less stovepipe
this all is.
Ms. Fore. Well, I did mention, sir, that we would look at
ways to simplify it. In the discussions that I've had with our
implementing partners, one of their requests has been to make
it simpler and clearer, and it's one of the things that we will
attempt to do.
Senator Menendez. Well, in that respect, let me ask you
this. USAID has assistant administrators who handle each area
of the world. In addition, it's my understanding that the F
Bureau has a person who handles each region of the world. So,
who has say over the budget for the region? The F person or the
USAID Assistant Administrator?
Ms. Fore. There's actually another player in this----
Senator Menendez. Oh?
Ms. Fore [continuing]. Which is the State Department
Assistant Secretaries. And what we are trying to do with the
working groups is to bring everyone around the table, on a
country-by-country basis, so that if you are a regional
Assistant Secretary in State Department, or an Assistant
Administrator in USAID, or if you work that portfolio at
Treasury or Commerce or Justice or DOD, that, around one table,
you can talk about the interests of that country and the United
States and the host-country interests.
Senator Menendez. I appreciate that, but, at the end of the
day, there has to be someone who makes a decision, based upon
that whole collaborative process, as to who has a determination
of what the budget will be for that region, who has final say
over how the money expended in the region would be. In my mind,
that's pretty clear right now. Now you've added another layer
to it, with the assistant secretaries. So, who is responsible
in this process? Who makes that final determination?
Ms. Fore. The final determination is made by the Secretary
of State.
Senator Menendez. Well, obviously. I--that's a poorly
worded question on my behalf. [Laughter.]
I will readily admit to it. So, before it goes to the
Secretary of State, who is the entity that makes that
recommendation to the Secretary?
Ms. Fore. Well, the working group comes up with a
recommendation that then----
Senator Menendez. And who within the working group makes
that determination of that that decision is, to the Secretary?
Ms. Fore. Well, it's the members of the working group. But
then, that working group makes a recommendation. As I
understand it, it would then come to me and to my deputies. I
have not yet been through this process, but we have seen the
reviews that are coming up in the next month, and that's when
the Secretary will first hear what the recommendations are for
each region.
Senator Menendez. Well, let me just say, by creating these
new positions, it seems to me that we are duplicating work,
we're reducing the power of the USAID assistant administrators.
And, given that USAID assistant administrators are Senate-
confirmed and that F people are not, how do we justify that
move, moving away from those individuals who have to go through
the process of being confirmed by the Senate, as we recently
had a hearing in this committee, of several USAID deputy
administrators--assistant administrators?
Ms. Fore. Well, and we're very pleased that they have been
confirmed and are now working strongly at USAID.
I just will reiterate that this is a collaborative process,
but the final authority rests with--coming up through me to the
Secretary of State.
Senator Menendez. What about the--what about not just the
budgeted money, but how it is expended? How does that process
get determined? Because we could say, ``Look, this is the
budget for this region or this country,'' but the actual
determination--who makes the determination of how it's spent?
Ms. Fore. Each country team sends in their request, and
there is a country operational plan that is given. We have a
first group, a pilot group, of countries that have sent in
their country operational plans. Those operational plans become
the basis on which money is then expended, so it goes--it is
distributed through those plans.
Senator Menendez. And you intend to continue that process?
Ms. Fore. Well, it's just begun, sir.
Senator Menendez. When you say ``a country team,'' is this
a--the USAID country team in-country?
Ms. Fore. No; this is the country team that represents all
U.S. Government agencies within a country. So, it----
Senator Menendez. Isn't it important, in this setting that
you just described, who's sitting there and who they represent?
Ms. Fore. Yes.
Senator Menendez. Yeah. And isn't it true that some people
clearly will have more weight than others in that process, as a
reality?
Ms. Fore. Yes.
Senator Menendez. That's different than what we do now, in
terms of the USAID assistant administrators and the experience
that comes from in-country to the director of that particular
region, and then ultimately percolates upward. This seems to me
like a much more top-down process than using the expertise and
experience of people in the field as to what that country
needs.
Ms. Fore. As you know, I've been an Assistant Administrator
in USAID, and I remember the process, that used to exist, in
which the funds would come up to an Assistant Administrator.
This new process is really trying to get the country team in-
country to look at the country's needs from all aspects--so, it
is not just development, but it's also defense, it's also
diplomacy--and that they, as a country team begin to make some
assessments for what are the greatest opportunities and
priorities within the country, and they then recommend a plan.
I have no intention of taking power away from the field. It
is the field that we rely on to have the greatest knowledge.
They are the closest to all of the projects--our implementing
partners know what is actually going on in the field. It is
where the process should begin, it's also where it should end
once the money is ready to be distributed.
So, the field must play--has to play a very important part
of this process.
Senator Menendez. Senator Hagel.
Senator Hagel. Thank you, Mr. Chairman.
Staying on this subject, Madam Secretary, I noted, in your
testimony, you referenced Ambassadors having vague ideas,
implying, I assume, that sometimes they don't have a very good
understanding of these programs in their own country, and how
they're implemented. Isn't that a rather significant problem,
if that's the case, and what you say in your testimony? Then,
if that is the case, what role do the Ambassadors play in the
country where they are stationed? And how are you dealing with
this issue?
Ms. Fore. It is a problem, in that a--an ambassador should
know everything that is going on in his or her country. It is
also important that the team, as a whole, have an overview of
the whole, because then they can see how their part, the part
that they are working in, fits in with others.
And when you are out in the field--and you can see it at
posts that have many other government agencies present--when I
was in Bangkok, I could see that occurring, that there is lots
of synergy among various U.S. Government programs, but it's
very important that they communicate and talk with each other
on the ground, in the field, and in the country.
This issue came up when a very prominent head of a
nonprofit organization was speaking with one of our
Ambassadors, and the Ambassador did not know all of the
projects that this particular nonprofit organization had going
on in-country.
It is something that we can improve on. It is something
that we must improve on. This is just not good enough. We can
do foreign assistance in a much more cohesive, transparent, and
collaborative way.
Senator Hagel. How much weight do you give the Ambassador's
opinion on these programs when you have this collaborative
effort that you described to the chairman?
Ms. Fore. A great deal. And in this--in the modifications
we have been doing for the 2009 process, even more weight has
been moved to the field recommendations, suggestions, and
ideas.
Senator Hagel. But that's--in the face of your testimony,
that some Ambassadors--or, you say, ``our Ambassadors often
only have a vague idea.'' So, the answer, then, to the question
is more involvement by the Ambassadors, more education, more
information, more collaboration, so that they have a better
understanding of it. Is that what you're telling me?
Ms. Fore. Yes; and that they work with their country teams
and really forge that integration in the country so that there
is a good sense of what our foreign assistance is to accomplish
in the country.
Senator Hagel. I want to go back to a point that Senator
Feingold raised. And you spent some time answering the issue of
measuring results. How do you know--as you, I think, noted in
your own personal experience in a previous position--how do you
know when these countries are actually developing in the way
that you had hoped and what our programs are intended to do?
What measurement is there, other than--at least what I heard
from you, in your response to Senator Feingold, a subjective
measurement--what measurement--measurements do we have? Are we
going to change those measurements? Should we change them? How
should we change them?
Ms. Fore. Yes; it's a very interesting question. Currently,
we're using a number of indicators. There's economic
prosperity, child survival rates, education, literacy, a number
of indicators across the entire spectrum of human development.
And all of these indicators give one a sense for how a country,
a sector within a country, is progressing. And so, they become
touchstones for us in seeing how a country is progressing, and
thus, what type of assistance and what our relationship should
be with that country and those sectors.
Senator Hagel. But you also, I suspect, still have to use
some subjective analysis, based on people and leadership and
uncontrollables, and those type of dynamics.
Ms. Fore. Yes. There are times when you have opportunities,
given a particular Education Minister that is interested in
helping to bring more women and girls into schools, or when a
particular minister is interested in looking at legal reform,
or an Economics or Finance or Trade Minister is interested in
looking at the regulatory systems, or in the customs
procedures. And when those opportunities arrive, then the
country teams recommend moving in those directions, because
they can see real value in the chance for a real step forward
in progress for that country in that sector at that time with
that leadership.
Senator Hagel. Thank you.
Mr. Chairman, thank you.
Senator Menendez. Thank you.
Madam Secretary, we have several other questions. I will
submit them for the record.
You also have said that you will get back to some of the
members of the committee in response to questions they posed to
you. We would expect that, as well, and your answers to the
ones that we submit to you in writing.
I know this is not your confirmation hearing, but let me
just raise some things with you while--for when we have that
opportunity, of waiting upon the answer to a letter that both I
and Senator Obama have sent to you, and we await, eagerly, your
responses to that.
One is, I'll be asking you for a commitment that, if
confirmed, you'll work to repair the morale that I get a sense,
at USAID, is waning. It's an excellent group of people who do a
fantastic job. And yet, you know, off the record they express
some real concerns about where they're at. That doesn't mean
you won't make hard decisions--of course you will--but that you
will to make sure that the people that are included--that are
included in the process, and that the expertise that that
agency has, is valued and utilized.
I'll ask you not to close any USAID missions without
intense consultations with Congress. You've already said you're
going to observe congressional directives in the appropriations
bill, and, if necessary, if you have a--if the Department has a
deviation, you'll come and discuss it with the Congress.
We didn't get a chance to talk about mission attaches, but
we have a concern about the change of that title and what it
means, and the consequences thereof.
We hope that you'll run the 2009 budget process
differently, in terms of real consultation on the ground with
USAID mission directors and their team.
We hope that you'll change, as interaction recommends in
their testimony, the current model, to ``substantively
implement the top-line goal of poverty alleviation.''
And we're going to be pursuing with you the DA-to-ESF shift
to see exactly why it is so necessary, and to ensure that, in
fact, development assistance continues.
I want to put that out there, so that, as we get closer to
your hearing, you've been thinking about and have ample
opportunity to have responses to it.
With that, on behalf of the committee, we thank you for
your testimony. And we appreciate you being here with us today.
Let me call up the second panel. And let me, as the
Secretary leaves----
Ms. Fore. Thank you, Mr. Chairman.
Senator Menendez. Thank you.
Ms. Fore. Thank you, Mr. Ranking Member.
Senator Menendez. Let me take a moment to introduce them.
We want to thank all of our witnesses for joining us today: Sam
Worthington, the president and CEO of InterAction; Lael
Brainard, the senior fellow and vice president and director of
the Brookings Institution; and Steve Radelet, senior fellow at
the Center for Global Development.
We'll proceed to opening statements from all of the
witnesses. In the interest of time, we ask them to keep their
statements to about 7 minutes, and summarize it. We'll include
all of your written statements fully in the record.
And let me start in the order that we recognized you.
Mr. Worthington.
STATEMENT OF SAM WORTHINGTON, PRESIDENT AND CEO, INTERACTION,
WASHINGTON, DC
Mr. Worthington. Chairman Menendez and Ranking Member
Hagel, I thank you for this opportunity to speak on a topic
that's of major interest to U.S. private volunteer
organizations. And I want to thank the chair and the ranking
member for your interest in the current transformational
diplomacy reform process and how it affects the issues that are
most important to our community, including poverty, aid
effectiveness, gender, and humanitarian assistance.
I have a longer written statement that I will submit for
the record.
Senator Menendez. Without objection.
Mr. Worthington. InterAction is the largest coalition of
U.S.-based international development and humanitarian
organizations, or we'll call them ``U.S. NGOs.'' With over 165
U.S. NGOs operating in every developing country around the
world, we work to overcome poverty, exclusion, and suffering by
advancing human dignity for all.
Our members include service delivery and advocacy
organizations, faith-based and secular organizations who work
to help the world's poorest and most vulnerable people.
Let me also say that if Under Secretary Fore is confirmed
as the Administrator of the U.S. Agency for International
Development, or as the Director of U.S. Foreign Assistance, we
hope that we can work closely with her to monitor and provide
counsel on the long-term effectiveness of these reforms.
What I want to talk to you about today is about
partnerships, the partnership between InterAction and the U.S.
Government, and the partnership between the American people and
the world's poor.
InterAction members, collectively, leverage some $5 billion
annually from donations from the American people for a wide
range of both humanitarian and poverty-focused programs. These
programs help countries around the world try to achieve and
meet the millennium development goals. The field activities
supported by these programs enable programs to work alongside
with USAID-funded programs, mutually reinforcing them.
The programs represent a partnership of the American people
with the people of the rest of the world, a partnership that
allows individuals and communities to articulate their needs,
to identify results and to improve their lives.
Our community tries to meet the needs of individuals,
families, and communities halfway. We partner with local
groups, NGOs, religious institutions, civil society,
government, and many other actors, to help them meet the most
basic rights and needs.
InterAction has always argued that sustainable development
and poverty alleviation will lead to a more secure world, but
we feel that the needs of people who are plagued by chronic
instability, and that the act of lifting people out of poverty
is, in and of itself, a laudable goal, regardless of the
strategic impact.
The pursuit of these goals will have a direct impact on the
image of the American people in the poorest parts of the world,
thereby advancing our country's national best interest.
As we address the diplomatic and security challenge we face
as a nation, we must continue to make the proper investments in
areas that mitigate the decivilization of poverty, ignorance,
and hopelessness, items that foster militant ideologies and
conflict.
To achieve some form of complementarity between the three
pillars of American foreign policy--of defense, diplomacy, and
development--there must be a greater degree of parity between
them and a respect for development's need to operate free from
undue influence by diplomatic or security objectives.
Our concern with regard to the current framework for
foreign assistance reform is that it appears that either
development goals are in competition with security goals, or,
perhaps more troubling, subservient to them. Long-term
development does support long-term security goals, but U.S.
Government development agencies need the space to set their own
priorities and agendas, and be informed by the technical
expertise and on-the-ground experience of USAID staff, working
with civil society organizations and our members, American
NGOs.
I'd like to share some select examples in the current
transformational diplomacy budget that highlight some of these
challenges.
As noted in the earlier comments, we are troubled by the
shift in the administration's budget for development assistance
accounts to economic support funds account, or ESF. We
recognize that there are no legal safeguards in place that
could ensure that ESF funds, which traditionally, as you noted,
are flexible and managed by the State Department, would not be
funneled to short-term needs or driven by political agendas,
either in this administration or a future one.
In the area of basic education, we've seen dramatic shifts
away from programs in Africa and India, and toward strategic
allies. For example, in India, a country that has one-third of
the world's illiterate population with 4.6 million children who
have no access to schools, the program is being zeroed out.
Strategic allies need major investment in basic education, but
those investments should not be at the expense of poor
individuals in other countries.
Also, in terms of the budget, the administration has
proposed significant cuts to health and development programs
that you noted earlier, especially in countries where there
have been large infusions of PEPFAR/MCC funding. These laudable
Presidential initiatives were never set up to displace
effective child survival, literacy, or civil society programs.
For example, in Cote d'Ivoire, PEPFAR funds have nearly
tripled, but basic maternal and child health are entirely
zeroed out.
In Latin America, the administration proposes cuts of core
poverty programs by 25 to 40 percent in certain countries, with
five of seven MCC-eligible countries facing significant cuts in
child survival, health, particularly in family planning,
reproductive health funding.
We also express concern at the administration's FY08 budget
for USAID's operational expenses, which are 15 percent lower,
and recognize that, between 1992 to 2006, USAID workforce has
been reduced by 29 percent. This is a significant reduction in
technical expertise, and has led to a large bundling of
contracts that shift the management burden to a few large
contractors and grantees, and away from career professionals.
Another area of note that came up in the earlier testimony
is our concern with the level of transparency and consultation.
The F Bureau did not hold its first information meeting with
the NGO community until a full 7 months after Secretary Rice's
announcement of transformational diplomacy reform. And, while
the level of dialog has significantly increased in recent
months, the NGO community would certainly like to see a greater
degree of true consultation.
The goals of U.S. development and humanitarian assistance
can only be achieved if we have a more efficient, more
coherent, and more accountable foreign aid system. Reforms need
to account for not only where moneys are being invested, but
also for what purpose, and, equally important, to determine
whether or how they have helped make a change in someone's
life.
For us, the key elements of any successful reform are the
following: The need for coherence across all civilian U.S.
foreign assistance programs; a focus on the well-being of the
world's poor; the space for the type of partnership we need to
shape effective long-term and partial programs; and programs
that enhance local capacity to meet mutually defined results.
Now, to this end, we would like to see the creation of
something new: A strong Cabinet-level foreign assistance
agency. And we recognize that this may take a while, and that
bipartisan congressional authorization would be needed. And it
would build on, but need to go much further than, the current
reforms.
In the meanwhile, we will do our best and work as
effectively as possible with the current U.S. assistance reform
processes throughout the coming months.
I have talked a lot about partnership with the world's
poor, partnership with the American people, with the Department
of State and USAID, but we have a special partnership also with
Congress, and I would like to thank you for your support and
oversight of the U.S. foreign assistance program, and I look
forward to your questions.
Thank you.
[The prepared statement of Mr. Worthington follows:]
Prepared Statement of Samuel A. Worthington, President and CEO,
InterAction, Washington, DC
Chairman Menendez, Senator Hagel, and other members of the
subcommittee, I welcome the opportunity to testify before this
subcommittee on a topic of major interest to U.S.-based international
nongovernmental organizations. I also want to thank you, Chairman
Menendez and Ranking Member Hagel, for your interest in foreign
assistance reform and how it affects the issues that are most important
to our community, including poverty, aid effectiveness, gender, and
humanitarian assistance.
U.S. foreign assistance operates in an increasingly complex
environment of global development donors and recipients--national and
international NGOs, multilateral institutions, governments, local NGOs,
foundations. To ensure the effectiveness of overall foreign assistance
in any country, collaboration becomes crucial among these varied
actors.
InterAction is the largest coalition of U.S.-based international
development and humanitarian nongovernmental organizations (NGOs). With
more than 165 member NGOs operating in every developing country, we
work to overcome poverty, exclusion and suffering by advancing basic
dignity for all. Our members include service delivery and advocacy
organizations, focusing on health, hunger, economic development,
children, refugee crises, the environment, and humanitarian
emergencies. InterAction convenes and coordinates its members, so they
can influence policy and debate on issues affecting millions of people.
InterAction members collectively leverage more than $5 billion annually
from the American people for a wide range of humanitarian relief and
poverty-focused programs overseas. These programs help countries around
the world further advance national commitments to reach all of their
Millennium Development Goals.
I am here today to tell you about our community's perspective on
the role of international development assistance in U.S. foreign
policy, how the foreign assistance reorganization and the President's
2008 budget proposal to Congress reflects or contrasts with our
perspective, and to make specific recommendations for the future
direction of foreign aid reform.
If Undersecretary Fore is confirmed as Administrator for the U.S.
Agency for International Development and Director of Foreign
Assistance, we hope to work closely with her to monitor and provide
counsel on a process of reform that we hope will bring greater long-
term effectiveness and impact to the ways our country promotes
transformational development around the world. InterAction members have
a long history of partnering with USAID, we look forward to
strengthening that partnership.
Why Foreign Assistance
I'd like to relate at this point, if I may, a short story that
captures the essence of the work we do in partnering around the world.
Five years ago, as the CEO of Plan USA, an InterAction member
organization that raised millions from the U.S. public, I met Michael,
a young man who lives near Lake Victoria. He was an orphan at 15 and by
17 had organized a group of orphaned children to provide sewing
services for their village. He had lost his father and mother to HIV/
AIDS and within a 2-year period, without any external assistance, he
had organized 103 orphaned children in an activity that provided them
with food each day. He came to us, a group of U.S. nonprofits,
including Save the Children, CARE, World Vision, and Religions for
Peace for some resources that would bring access to education to the
village's orphaned children. These InterAction members, who had raised
tens of millions of dollars of support, provided help; we also tapped
funding from the President's Emergency Plan for AIDS Relief (PEPFAR).
Our community of U.S. NGOs meets the Michaels of this world half
way. We partner with local community groups, NGO's, religious
institutions, civil society, governments and many other local actors to
help them meet their most basic needs and rights--their rights to a
gainful livelihood and to participate fully in their societies, their
rights to a healthier life, to be free from extreme poverty or abuse
based on gender, ethnicity, or religion. Any effective U.S. foreign
assistance reform must be able to both meet the Michaels of this world
halfway as well as partner with the U.S. international NGOs operating
on the ground.
We have many decades of field experience, working directly with
national governments, local communities and individuals, or partnering
with USAID and the Department of State. We know that by focusing on
vulnerable populations, promoting the ability of states to govern
justly and invest in their people, and providing individuals and
societies the means to help themselves, U.S. foreign assistance can
help the world's poor while advancing U.S. strategic interests. Saving
lives and alleviating poverty reflects Americans' deeply rooted
humanitarian values, thereby furthering a positive U.S. image abroad.
Our experience shows that an effective reform of U.S. foreign
assistance must incorporate the following principles:
In order to encourage self-sufficiency foreign assistance
programs must include local ownership of programs and
partnerships with stakeholders.
Sustainable development is long-term and requires
commitments that should not be compromised for the sake of
short- or long-term political goals.
U.S. foreign assistance programs need to be coherent, not
fragmented.
The goals of the United States, recipient countries and
multilateral institutions like the United Nations must as much
as possible be in harmony and reinforce each other. A prominent
example are the Millennium Development Goals, endorsed by
President Bush and adopted by donor and recipient countries
around the world.
Humanitarian initiatives must be impartial and not be
dictated by the strategic or political significance of any
nation.
Gender equality must be placed at the heart of program
strategies.
As I noted, foreign assistance can serve a dual purpose. Some
foreign assistance has been, and will continue to be, a tool to further
U.S. strategic interests. On the other hand, it is also clear to us
that long-term foreign assistance comprises the development component
of the administration's ``three Ds'' strategy (defense, development,
and diplomacy), as outlined in the 2002 National Security Strategy. We
view development as part of this three-legged stool; the development
``leg'' must be equal to--not subsumed under--the other two legs of the
stool. The development component, which is based upon partnerships,
should not be dictated by the strategic or political significance of
any nation.
Designing an Effective Development Aid Structure and Process
The goals of U.S. development and humanitarian programs can best be
achieved through a more efficient, coherent, and accountable foreign
aid system. Getting more bang for our buck is best assured when foreign
assistance programs operate under one coherent system and can account
for not only where moneys are being invested and for what purpose, but
equally whether and how we have helped improve peoples' lives, e.g., by
increasing literacy rates, decreasing infant deaths, sustaining
communities' natural resources, etc.
The keys to the success of any reform are:
Coherence across all civilian U.S. foreign assistance
programs;
A focus on improving the well-being of the poor;
The space for partnership to shape effective and long-term
programs;
Programs that enhance local capacity and work to meet
mutually agreed upon results.
Together they point to the need for an important institutional
step: The creation of a Cabinet-level agency for international relief
and development alongside the Secretaries of State and Defense. We
recognize that the creation of a new strong foreign assistance agency
may unfold over a number of years, that bipartisan congressional
support will be needed, and that it must build on and exceed the
current reforms. We also recognize that InterAction's desire to create
a Cabinet-level department may place us at odds with efforts to make
permanent the recent incorporation of a new foreign assistance
structure within the Department of State. In the meantime we believe
that the current arrangement--with the Director of Foreign Assistance
reporting to the Secretary of State--has significant limitations and
can hinder some of the principles of effective foreign assistance
stated above. In the meantime, we are committed to work to create more
effective U.S. foreign assistance within the current reform process.
Commentary on the Restructuring Process by the Office of Foreign
Assistance
We support a number of steps taken by the Office of U.S. Foreign
Assistance (F Bureau) through its reform process:
At InterAction's urging last year the Office of the Director
of the F Bureau added the words ``reducing widespread poverty''
in the top-line goal of foreign assistance.
We support building systems for accountability and
measurement.
We support developing an approach to track how U.S. foreign
assistance dollars are being spent.
We welcome the F Bureau agreeing in the last year to
increase its sharing of information with our community on some
of its internal processes and decisions. Previous to that, the
F Bureau shared little such information.
We continue, however, to oppose and be concerned about other
aspects of the restructuring process. First, the goal of widespread
poverty alleviation has yet to be truly integrated into operational
practice. For example, we have seen only limited indications that
reducing widespread poverty has been integrated into operational
practices within the F Bureau. The Department of State has repeatedly
referred to reducing widespread poverty only in the context of building
democracies and strengthening national security. The preparation of
Country Operational Plans and FY08 budget allocations were heavily
directed by USAID and the Department of State in the Washington
bureaus, and there were insufficient opportunities for mission staff to
weigh in before significant decisions had already been made.
Second, we find that the foreign assistance structure is still
fragmented. The F Bureau's attempt to streamline and consolidate
foreign assistance structures falls substantially short of its goal.
Omitted from this ``reformed'' consolidation are major programs such as
PEPFAR and the Millennium Challenge Corporation (MCC). Our urging for
consolidation should be viewed in the larger context that the current
restructuring undermines in our view the essential principles to
effective development assistance. Ultimately U.S. foreign assistance
must be organized in an altogether different structure that shields it
from dominance by the Department of State.
Third, the establishment of the new Office of the Director of U.S.
Foreign Assistance and the current restructuring of foreign assistance
are provisional and have no legislative basis, making them subject to
the arbitrary changes by current and future administrations. New
authorizing legislation would address this concern as well as legally
ensure a system that truly consolidates the myriad institutions that
administer foreign assistance. We realize this could be a long-term
process involving Congress, the administration, our community, and
other pertinent parties.
Fourth, determining program strategies by using the U.S. Foreign
Assistance Framework's 5X6 matrix (6 categories of recipient countries
and 5 objectives for foreign assistance) reflects at times a lack of
understanding of development realities within a particular country with
very different levels of affluence, and a downplaying of the need for
local-level authority.
Fifth, certain budget cuts to regional and country programs have
undermined the importance of local input and participation. This is
counterproductive to ensuring that recipient countries will become
self-sufficient.
Finally, consultation with the NGO community on foreign assistance
reform continues to be mixed. Despite providing more information and
initial senior-level meetings, the F Bureau has yet, prior to the
nomination of Acting Director and Acting Administrator Fore, to
adequately address our concerns or questions or respond adequately to
our appeals for regular two-way consultation. As a result, the
relationship is marked by some suspicion and distrust. We look forward
to working with the next director of U.S. Foreign Assistance and USAID
Administrator to rectify these problems and urge for a more
collaborative and transparent communication process.
Commentary on the Impact of the Restructuring on the 2008 Budget
Proposal
InterAction supports the allocation of the critical resources
Congress provides for foreign assistance, which constitutes .9 percent
of the entire Federal budget. We are equally concerned with how these
moneys are being spent, for what priorities, and for what results. The
administration's FY08 budget proposals confirm our overriding concern:
That poverty is in the topline goal but funding for basic needs appear
to be sacrificed for funding of strategically sensitive countries and
regions of the world. Drawing on our member's analyses and our own, I
make a number of observations:
The bulk of the foreign assistance is proposed to be allocated to
many countries of strategic interests, who do have real needs, rather
than those countries who are simply poor or facing a humanitarian
crisis: The top nine FY08 U.S. foreign aid recipients are (in
descending order of amount) Israel, Egypt, Afghanistan, Pakistan,
Sudan, South Africa, Kenya, Nigeria, and Jordan. These countries' per
capita income range from $17,000 in Israel to $230. Need does not
appear to be a key factor in this funding distribution.
In the area of Basic Education, the biggest recipients are Egypt,
Jordan, Indonesia, Afghanistan, and Pakistan. Egypt, Jordan, and
Pakistan need major investments in basic education but those
investments should not be made at the expense of other very poor
countries. Of the 25 countries in Africa with basic education programs,
13 are proposed for cuts or zeroed out. One program in Madagascar to be
zeroed out seeks to strengthen teacher training, to increase local
support for elementary schools and planning for teacher professional
development. Basic education programs are proposed to be zeroed out in
four non-African countries--East Timor, India, Mexico, Nepal.
The substantial increase in poverty-focused development assistance
is primarily due to funding for MCC and PEPFAR. Without funding for
these two programs, development assistance to many countries actually
diminishes, particularly in African and Latin American countries.
PEPFAR and MCC funding appears to be in competition with other core
poverty programs, which violates the original understanding that the
two programs' funds were to be in addition to core development
assistance. In Uganda, PEPFAR funds have been nearly doubled, while
Maternal and Child Health funds have been cut by half. This is
troubling because it ignores an important lesson that our members have
learned in their decades of experience: An integrated, multisectoral
approach is the only way to successfully tackle the huge global health
challenges that we are currently facing. Programs like PEPFAR that
provide urgently needed medicine are certainly welcome, but without
taking a comprehensive approach that improves nutrition and food
security, access to clean water, and the strength of local health
systems, we risk compromising the efficacy of our intervention overall.
In Latin America, cuts in core poverty programs range from 25-40
percent, in countries such as El Salvador, Nicaragua, Honduras all of
which have an MCC presence.
Under Transformational Diplomacy, the administration's FY08 budget
proposed that much of the funding for traditional development
assistance accounts be transferred from Development Assistance (DA)
funds to Economic Support Funds (ESF); an account that is statutorily
intended to support national security interests. There are no legal
safeguards in place to prevent a scenario of arbitrarily putting
development assistance activities under the Secretary of State. We are
encouraged, however, by the recent decision of the House Foreign
Operations Appropriations Subcommittee to reverse the administration's
proposed shift of DA funds to the ESF account.
The administration's FY08 budget request for USAID Operating
Expenses, is 15 percent lower the FY06 actual budget. This would
continue a long and disturbing trend in the diminution of technical
expertise at that agency. USAID has been put in the unfortunate
position of managing more and more foreign assistance dollars with less
and less human and financial resources, to the detriment of aid
effectiveness. This has led to a second problem, the bundling of large
umbrella contracts that shift the management burden to a few large
contractors and grantees and away from career professionals. This trend
also extends to the area of monitoring and evaluation. As USAID's
technical capacity to do M&E declines, the agency is forced to
outsource this work to contractors, thus leading to a loss of
institutional knowledge about important lessons learned and best
practices in the field.
The recent proposed cuts in operating expenses were rumored to have
been related to the notional closings of some USAID missions, which
means projects could be abruptly terminated. In Namibia, a country
whose mission is targeted for closing, a $3 million successful
education program in its final phase will be closed prematurely. The
``Living in a Finite Environment'' (LIFE) program in Namibia, a highly
successful program is also targeted for early closure. The LIFE
program, a multiyear USAID investment, has placed 13 percent of
Namibia's land under 44 community-managed conservancies and engaged
some 185,000 community members in natural resource management
activities. The benefits to the Namibian economy were an estimated $21
million.
Given the F Bureau's restructuring process on largely a country-by-
country basis, there is concern that natural resource management and
biodiversity conservation, which transcend political boundaries, will
fall between the cracks. There is also evidence of country-based
environmental needs being ignored. The Government of Madagascar, one of
the world's biologically richest countries, has identified the
environment as a critical sector of the country's social and economic
development. Yet USAID has proposed reducing environment funding for
Madagascar by 40 percent.
Recommendations to the Administration
If she is confirmed in her new role, we look forward to working
with Under Secretary Fore on pursuing a number of issues outlined
below. For some of those issues stated above, the F Bureau has made
steps in the right direction, and we would encourage further movement:
Amend the current Transformational Diplomacy restructure of
foreign assistance in a manner that substantively implements
the topline goal of poverty alleviation. This would include:
Developing indicators that track the steps to achieve the
goal of poverty alleviation and local involvement
Developing country plans whose content is more driven by the
technical expertise of missions' professionals on the
ground.
Take further steps to improve the coordination, coherence,
and accountability of the foreign assistance reform. This would
include widening the purview of foreign assistance
consolidation to include MCC, PEPFAR, and other entities that
administer foreign assistance funds.
Establish more substantial consultation and transparency
with the NGO community, including:
Establish a meaningful two-way dialog with the U.S. NGO
community;
Inform and consult the NGO community regarding followup
implementation plans for the outcome of the F Bureau's
After Action Review of the administration's FY08 budget
development process.
Impact of the Current Reforms on Field Operations
We recently received anecdotal information from some of our members
on the impact of the foreign assistance restructuring on their field
operations. We surveyed some members with substantial USAID grant
portfolios, asking whether the restructuring had affected their
activities in the field, namely in terms of:
The availability of new USAID proposals to manage or design
on-the-ground activities;
The timeframes for deciding pending awards of proposals and/
or funding continuity for ongoing awards.
Of the members surveyed, virtually all noted a significant slowdown
in 2007, compared to 2006, in available new USAID proposals. Some also
expressed concern for the longer time lapse in which USAID notified the
awardees. As a result of these funding delays and/or fewer
opportunities to take on new projects, these members reported:
Difficulty in future planning for ongoing programs;
Higher risks of closing down the program or cutting back
staff;
Risks of scaling down programs' activities;
Difficulty leveraging other sources of funding.
Many of these NGO members had been informed directly or indirectly
by USAID that following the approval of country operating plans in
April 2007, there would be a significant resurgence of available
proposed new project activities. To date, some of these members have
noted a minor increase, but no substantial changes.
In addition, a few of the affected member organizations observed a
definite trend in the funding mechanism for projects: Increase use of
funding conditions that don't allow for local involvement in design and
implementation and decreased use funding parameters that encourage
strong local input.
InterAction's Ongoing Monitoring and Analysis of Transformational
Diplomacy
In order to better understand the impact of the restructuring
process at country mission level around the world, InterAction has
undertaken recently a research project in designated recipient
countries. The research will examine the types of future programs to be
funded, the allocation of funding, and the nature of northern and
southern civil society engagement in drafting USAID's Country
Operational plans. We look forward to sharing our findings with
Congress, Under Secretary Fore, the Secretary of State, and other
interested members of the administration.
We also welcome the research program initiated by Committee on
Foreign Relations Ranking Member Senator Lugar, which seeks to examine
the current impact of the foreign assistance restructuring. We also
welcome the important oversight by this subcommittee under the
leadership of Chairman Menendez and of Ranking Member Senator Hagel.
Conclusion and Recommendations to Congress
We urge a more collaborative process among Congress, the Office of
U.S. Foreign Assistance, and our community. Accordingly in the next
year and a half, we urge Congress to:
Urge Under Secretary Fore to ensure a plan that begins
restoring the authority of USAID in Washington, and the field-
based technical capacity of USAID, including such actions as
restoring cuts in operating expenses. USAID was long recognized
as a global leader in effective development assistance. The
shrinking of the agency's cadre of experience experts has
substantially contributed to not only the loss of USAID's
stature, but also the loss opportunity of valuable lessons that
we can learn today in the future direction of development
assistance.
Restore cuts in funding programs that pursue the poverty
alleviation goal;
Oppose concentration of resources in 10 strategic countries;
Oppose shifts from DA to ESF accounts (the House Foreign
Operations Subcommittee recently rejected this proposed shift
of funds);
Work with Under Secretary Fore to reverse efforts toward
complete institutionalization of U.S. foreign assistance within
the Department of State;
Work with Under Secretary Fore and NGOs to develop and
pursue political and diplomatic goals that do not compromise
but rather encourage the delivery of long-term development
programs or the space for effective humanitarian action;
Oppose efforts that shift the rules for USAID implementation
mechanisms traditionally used by the InterAction community away
from a partnership and toward contracts. Under contracts, a
more time-effective delivery of services, there can be
substantial loss of local involvement, technical expertise, and
long-term commitment to program operations.
InterAction offers an expanded vision for the future of U.S
development assistance and we hope to promote a new dialog on the
evolution of foreign assistance. We look forward to our vision being
properly considered and vetted as part of a fully bipartisan reform of
foreign assistance.
I am inspired to quote Bill Gates who spoke at Harvard University's
graduation ceremonies last week. He noted that ``. . . reducing
inequity is the highest human achievement,'' and that this goal is one
of the major challenges of our time--but a doable one. I could not
agree more. Our community looks forward to collaborating with Congress
and the administration to successfully take on this challenge.
Senator Menendez. Thank you very much.
Dr. Brainard.
STATEMENT OF DR. LAEL BRAINARD, VICE PRESIDENT AND DIRECTOR,
GLOBAL ECONOMY AND DEVELOPMENT AND BERNARD L. SCHWARTZ CHAIR IN
INTERNATIONAL ECONOMICS, BROOKINGS INSTITUTION, WASHINGTON, DC
Dr. Brainard. Chairman Menendez, Ranking Member Hagel, and
Senator Casey, thank you for the opportunity to testify today.
I hope that this will be one of several hearings that really
take a strong look at this area.
Let me just touch briefly on four areas: Why I think this
is a particularly critical juncture for U.S. foreign assistance
reform; the problems that need to be addressed; a set of
principles that might be used to assess current reforms; and a
roadmap toward more fundamental reform.
I believe that, today, foreign assistance is particularly
important as a critical instrument of American soft power and a
key determinant of the face that the poorest people around the
world see of America. Recent polls show that this is true
abroad, and it's also true here at home. There's a poll that
shows, in the wake of the earthquake in Pakistan and the
earlier Indian Ocean tsunami, that perceptions of America were
markedly improved, and that that was sustained over a long
period of time. Similarly, a recent poll here at home found
that fully 57 percent of the American people favor building
goodwill toward the United States by providing food and medical
assistance to people in poor countries. So, when designed and
executed well, foreign assistance is not just soft power, it
can be smart power, working to advance not just national
security, but also national interests, and, importantly,
national values.
Unfortunately, I don't think that's the case today. I will
refer you to a chart, which is also in the testimony. This is
what the Government looks like right now, doing foreign
assistance. There is a striking quote that our foreign
assistance structure is a haphazard and irrational structure
covering at least four departments and several other agencies.
That was actually John F. Kennedy in 1961. Unfortunately, that
rings true again today. The last 6 years have seen foreign
assistance rise at a faster rate than at any time since the
cold war, and, unfortunately, new global challenges have been
met by the administration by creating new institutional
arrangements that sit alongside the existing ones. The result
is more than 50 separate units, pursuing more than 50
objectives, many of them overlapping with each other, the
result of which is, we're not getting as much bang for our
buck.
So, 18 months ago the State Department started down the
track of creating a coordination function overlaying these
multiple entities. The nomination of Henrietta Fore provides a
nice opportunity to take a breath and look at the process so
far.
We ran a bipartisan ``Task Force, on Transforming Foreign
Assistance for the 21st Century,'' that developed a set of
reform principles that are very relevant for assessing the
process to date.
State/F deserves credit for the very significant progress
it has made in answering the Secretary's basic question: You
now can figure out exactly what is being spent against what
country and what objective. And that, in itself, was a
herculean task, because, surprising as it may seem, USAID and
the State Department kept completely separate accounts that
didn't talk to each other.
But on four other principles, I'm afraid the State/F
process doesn't look so good.
First, let me talk about stakeholder ownership. One of the
few things we know about foreign assistance is that it works
best when it supports priorities that are embraced locally,
where recipients are invested, themselves, in achieving
success. If you look at stakeholder ownership, it really
doesn't show up anywhere in the State/F process. I don't think
that there was sufficient consultation. It was a top-down,
Washington-out process. It has had no recipient-country input.
As this hearing is pointing out, a much broader lack of
stakeholder engagement seems to be the central weakness.
Interaction with key Members of Congress, with NGOs in the
field and in Washington, and field staff have been perceived as
one-way informational briefings rather than true consultations.
As a result, I think there's very little buy-in outside of the
narrow confines of the State/F process.
The second principle is transparency. Transparency is
critical for achieving aid effectiveness. Why? It diminishes
the scope for short-term political considerations to overwhelm
longer term investment priorities, and it provides very clear
incentives for the recipients themselves to make reforms in
priority areas. This was a clear rationale for the strong and
transparent eligibility criteria that were set out in the MCC;
in contrast, it's very hard to tell exactly how the five
categories that were established by the State/F were decided.
It was done in an opaque manner, using terminology unfamiliar
to most of us. And the process for determining budget
allocations was similarly opaque, providing ample scope for
short-term political expediency, and very little inducement for
policy reform.
Obviously, the most conspicuous outcome has been the
request to reduce the DA account by about $468 million, while
requesting a $703 million increase to the Economic Support
Funds. Although it is driven by the recategorization of
countries into the rebuilding category, if you don't support
the categories, it's very hard to understand or support that.
Moreover, it also happens to be associated with a lot more
flexibility for the State Department.
It's also worth noting that, if you look on a per-capita
aid allocation basis, some of the same patterns are very
evident. Egypt gets about $24 in foreign assistance per capita;
in comparison, Ecuador gets about a $1.50. That won't change.
Third, it's absolutely critical to elevate the development
mission. Many applauded when the President put development into
the 2002 national security strategy alongside defense and
diplomacy. Many of the same people are now worrying that the
Director of Foreign Assistance process is subordinating
development to diplomacy.
Development and diplomacy are fundamentally different.
Indeed, the development mission itself sometimes involves
working around and outside governments with groups on the
ground, especially in the area of democratization. So it is
beneficial to the entire enterprise to separate them. It also
allows better management of the tension between the short-term
political goals and the longer term agenda.
The sense of mission has to be restored in order to elevate
the stature and the morale of the development enterprise, and
to attract and retain the most talented professionals, who are
not now going to USAID. For example, the MCC was recently
ranked among the top five as one of the best small government
agencies in which to work. The USAID was ranked among the
bottom 10. This State/F process is not going to improve that.
The fourth principle is policy coherence. Foreign
assistance is now only one of many tools. Trade, debt relief,
and investment all lie outside the State/F process. There has
to be a mechanism for coordinating our policies toward
developing countries more broadly, and there have to be
incentives and organizational structures to make that happen.
State/F cannot do that.
And, finally, the mark of a successful reform ultimately
will be a reduction in the number of players and elimination of
overlapping jurisdictions. The current reforms superimpose
another player into the mix, without eliminating any offices.
In response to an earlier question posed by Senator Hagel, I
think only about 55 percent of ODA, maybe a little bit more, is
actually under the jurisdiction of State/F, when you take out
things like DOD spending, MCC, PEPFAR. And so, it's going to
require much more extensive effort. I don't see how you do that
without Congress.
Successful foreign assistance reform is going to require a
little bit more patience, a lot more vision, and a lot more
congressional involvement. Instead of the 50 separate offices,
ultimately we probably should have one, maybe two; instead of
the 50-odd objectives, we probably should have about five.
We looked, in the task force, at episodes of successful
reform, both within the United States and outside. I'll mention
a few lessons.
From the United Kingdom, I think we have a very strong
instance where elevating the development mission empowered it
and made U.K. foreign assistance both more effective and also a
stronger voice in the international community.
If you look at the seven major reform efforts that have
taken place in the United States since the 1960s, there are
about two that have succeeded.
It is critical to have congressional involvement from the
outset. Timing is also critical. Big reforms tend to take place
at the start of new administrations.
And if you look at the Goldwater-Nichols process, the clock
has started ticking, since it took about 2 years for the
congressional process to develop a consensus on that
legislation.
In conclusion, last week, was the 60th anniversary of the
Marshall Plan. Our friends and partners abroad are looking to
America to show a more compassionate and cooperative face. The
time to act is now.
Thank you.
[The prepared statement of Dr. Brainard follows:]
Prepared Statement of Dr. Lael Brainard, Senior Fellow and Vice
President and Director, Global Economy and Development and Bernard L.
Schwartz Chair in International Economics, Brookings Institution,
Washington, DC
Chairman Menendez, Senator Hagel, distinguished members of the
subcommittee, I appreciate the opportunity to testify today on the
subject of Foreign Assistance Reform: Successes, Failures, and Next
Steps. I hope this hearing will be the first of several by this
subcommittee that call attention to the critical importance of
strengthening the Nation's foreign assistance.
SMART POWER
In a world transformed by globalization and challenged by
terrorism, foreign aid deserves attention as a critical instrument of
American soft power and a key determinant of the face of America seen
by poor people around the world. With hard power assets stretched thin
and facing 21st century threats from global poverty, pandemics, and
terrorism, the United States must deploy its soft power more
effectively. But America's weak aid infrastructure hampers our ability
to do so.
Recent polls underscore the importance of getting this right.
Abroad, Terror Free Tomorrow found that foreign aid dramatically
improved public perceptions of the United States in Pakistan,
Bangladesh, and Indonesia, for a sustained period following U.S.
generosity in the wake of the tsunami and the Pakistan earthquake. Here
at home, a majority of Americans appreciate that linkage: The Program
on International Policy Attitudes/Knowledge Networks found that fully
57 percent of Americans favor ``building goodwill toward the United
States by providing food and medical assistance to people in poor
countries.''
When designed and executed well, foreign assistance is not just
soft power but smart power, working to advance national security,
national interests and national values. It works best when there is
clarity about the objectives it is designed to serve and well aligned
with the other instruments of American engagement. Unfortunately, at
present clarity and alignment are the exception rather than the rule.
A HAPHAZARD AND IRRATIONAL STRUCTURE
America's foreign assistance structure has been criticized as ``a
haphazard and irrational structure covering at least four departments
and several other agencies.'' That was the assessment of John F.
Kennedy in 1961, when he proposed the creation of USAID. More than four
decades later, his words again ring true.
The urgent demands of post-conflict reconstruction in Iraq and
Afghanistan and humanitarian disasters have led to a faster rate of
expansion of foreign assistance dollars in the last 6 years than at any
point since the cold war. The administration has responded to each new
global challenge by creating new institutional arrangements alongside
existing ones, most notably the President's Emergency Plan for AIDS
Relief (PEPFAR) and the Millennium Challenge Corporation (MCC).
As shown in the chart below, dozens upon dozens of separate units
share responsibility for aid planning and delivery in the executive
branch, with a dizzying array of objectives ranging from narcotics
eradication to biodiversity preservation. Different agencies pursue
overlapping objectives with poor communication and coordination. At
best, the lack of integration means that the United States fails to
take advantage of potential synergies; at worst, these disparate
efforts work at cross purposes. As a result, the impact of American
foreign assistance falls far short of the value of aid dollars
expended--which remains unmatched among bilateral donors.
[Editor's note.--The chart mentioned above was not reproducible in this
printing. It will be retained in the permanent record of the
committee.]
The Secretary of State in January 2006 designated a Director of
Foreign Assistance with the rank of Deputy Secretary of State as the
Administrator of USAID with the mandate to provide strategic direction,
coordination, and guidance over foreign assistance. Last month, Under
Secretary Henrietta Holsman Fore was nominated to serve as
Administrator of USAID and appointed to concurrently serve as Director
of Foreign Assistance. This change in leadership provides a welcome
opportunity to reflect upon the direction and scope of the current
foreign assistance reforms.
Despite the creation of the State/F Bureau and the energetic
efforts of Ambassador Tobias and his staff, lack of coherence is still
a significant problem for overall U.S. foreign assistance and
development policy. Little progress has been made in addressing the
confusion demonstrated by the chart because the reforms to date are
piecemeal and have not incorporated a truly consultative process across
the legislative and executive branches of government or with outside
stakeholders, which will be critical to building support for the
statutory changes necessary for fundamental reform.
FOREIGN ASSISTANCE REFORM: SUCCESSES AND FAILURES
The bipartisan Task Force on Transforming Foreign Assistance for
the 21st century recommended a number of principles for effective
foreign assistance reform that provide useful benchmarks to assess
progress to date.\1\ According to this assessment framework, the State/
F process has been successful on one important criterion but has not
made progress on several others:
1. Track resources against objectives by country
State/F deserves great credit for the significant progress it has
made in a short time in developing a consistent system for categorizing
and tracking resources for programmatic activities from a number of
different foreign assistance budget accounts. In recent years,
strategic, development, and humanitarian funds have been intermingled,
with individual projects often in receipt of money from several types
of accounts. This process was further complicated because the State
Department and USAID budget offices tracked funding with two different
systems that could not easily be cross-referenced.
The new Office of the Director of Foreign Assistance was created in
part to streamline this process within the confines of the current
budget accounts. One result is an information management system with a
standardized lexicon. The new reforms incorporate a computerized
accounting system (the Foreign Assistance Coordination and Tracking
System or FACTS) that includes funding levels, objectives, indicators,
and outcomes, albeit for State and USAID only. This facilitates a basic
set of management tools and enables successful queries regarding
funding levels by year across regions, countries, program objectives
and program elements. It is astonishing that such a system did not
exist earlier.
2. Stakeholder ownership
Aid works best when it supports priorities determined locally and
recipients are invested in achieving success. Just 2 years ago,
Congress made the principle of country ownership one of the central
tenets of the design of the MCC.\2\ Obviously, the extent of U.S.
oversight and control of aid implementation should vary with the
quality of local governance, with poorly governed countries less likely
to formulate national strategies based on the priorities of poor
communities and thus requiring greater oversight in the aid process.
But the principle of stakeholder ownership applies to the entire aid
enterprise--even if it requires different mechanisms of implementation
depending on circumstances on the ground.
To date, the State/F reform process has ignored this important
design principle. Programming decisions are made from a playbook put
together by State/F known as the ``Standardized Program Structure and
Definitions.'' The State/F process has provided no formal mechanism for
recipient country input--let alone soliciting proposals or reflecting
national priorities. This contravenes considerable research and
experience.
Indeed, the lack of stakeholder engagement seems to be the central
weakness of the State effort overall. Not only are potential
beneficiaries in the dark about what the reforms might mean for their
ability to meet the needs of their constituents, but State/F
interactions with key Members of Congress, delivery NGOs, and field
staff have been perceived as informational briefings rather than truly
consultative in nature. As a result, there is little sense of buy-in
outside the narrow confines of
State/F.
3. Practice transparency
Transparency is critical for achieving aid effectiveness.
Transparency about the criteria by which countries are classified into
different eligibility groups and resources are allocated has two
virtues: It diminishes the scope for short-term political
considerations in what should be a long-term investment process, and it
provides clear incentives to potential recipients to improve policies
in priority areas (such as investing in health or education). For these
reasons, the administration and Congress put a high priority on
transparency in the design of the MCC eligibility criteria.
In contravention of transparency, teams established by the State/F
Bureau assigned countries to five categories based on new and poorly
explained terminology in an opaque manner with no outside
consultations. For instance, a country classified as a ``rebuilding
state'' might justifiably be confused regarding the point at which its
status might change to a ``developing state,'' and how that change
would affect U.S. assistance.
The State/F process allocates budget resources among countries in a
similarly opaque manner that provides ample scope for short-term
political expediency and scarce inducement for policy reform on the
part of beneficiaries. The process involves a complicated combination
of country team input via Mission Strategic Plans, functional
roundtables, a computational ``budget model,'' regional assistance
working groups, Washington-based country core teams, country team
feedback and senior reviews. Perhaps the most conspicuous outcome of
this process has been the request to reduce the Development Assistance
(DA) account by $468 million while correspondingly requesting a $703
million increase to the Economic Support Funds (ESF) account, which
coincidentally provides greater flexibility and discretion to the
Secretary of State. This request is driven by the assignment of ESF to
the Rebuilding and Restrictive Countries categories, but it will be
hard to obtain support for the request as long as the country
categorizations are not well understood or supported.
4. Elevate the development mission
Many applauded when the President's 2002 National Security Strategy
recognized development alongside defense and diplomacy as a third
critical and independent pillar of national security.\3\ Many now worry
that the 2006 decision to bring the Director of Foreign Assistance
formally within the State Department structure subordinates development
to diplomacy.\4\ Indeed, early versions of the State/F framework were
marked by the conspicuous absence references to ``poverty,'' and there
is still an overwhelming focus on the capacity of states and little
reference to the well being of the poorest.
Development and diplomacy are fundamentally different; it is
important not to confuse them through such terms as ``transformational
diplomacy.'' The primary function of diplomacy is state-to-state
relations, whereas development and democratization often require
working around foreign governments and sometimes with groups opposed to
them. Development seeks not only to develop state capacity--the
overarching objective of the State/F process--but to ensure that poor
communities have the tools and resources they need to lift up their
lives. Moreover, maintaining the integrity of independent diplomatic
and development functions makes it far easier to manage the frequent
tension between short-term political objectives--which often requires
working with undemocratic regimes--and longer term economic and
political reform objectives.
If there is one principle that applies above all others to the
revitalization of the U.S. foreign assistance enterprise, it is that
the development mission--construed to include security and
democratization--must be elevated to coequal status with defense and
diplomacy not just in principle but also in practice. The sense of
mission--vital to America's interests as well as to global peace and
prosperity--must be restored in order to elevate the stature and morale
of the enterprise and to attract and retain the most talented
professionals in the field. One of the most compelling reasons for
standing up the MCC independently was to create a strong organization
that would attract top talent and instill a culture of delivering
results in innovative ways. The MCC was recently rated among the top 5
in a ranking of the best small government agencies to work, while USAID
was ranked among the bottom 10, a troubling trend.
5. Achieve policy coherence
At a time when the international community has identified policy
coherence as a core principle for aid effectiveness, the United States
too often stovepipes decisions on the key policy instruments affecting
nations it seeks to support.\5\ Foreign assistance is but one of
several tools to support development. Other instruments such as trade
provisions, investment agreements, financial stabilization policies,
debt relief, and economic sanctions are now more important than aid for
many developing countries.
The United States could wield greater influence per aid dollar
spent than any other nation simply by deploying its influence in world
trade, investment, debt, and financial policies in a deliberate manner
as a force multiplier. Regularized mechanisms for policy integration
are vital either by coordinating across agencies or assigning authority
to a single empowered agency. Integration across agencies is just as
important at the level of planning and operations, as illustrated by
recent post conflict experiences. Achieving integration requires
removing disincentives and creating positive incentives, such as
reserving special budgetary funds to reward effective interagency
collaboration on priority goals--as is done in the United Kingdom--and
tying career advancement to interagency rotations and participation in
joint operations.
6. Rationalize agencies and clarify missions
Ultimately, the mark of a successful reform will be a reduction in
the number of players within the executive branch and elimination of
overlapping jurisdictions. The current reforms superimpose another
player into the mix--the new State/F Bureau--without eliminating any of
the offices or criss-crossing lines shown in the chart. The mandate of
the Director of Foreign Assistance is expansive, but the office's
actual power is more limited. It does not have jurisdiction even over
PEPFAR within State, let alone foreign assistance administered by the
MCC and the Departments of Treasury, Agriculture, and Defense. A more
extensive effort will be required that reaches across the entire
executive branch--possibly through White House coordination. This will
require much greater congressional involvement and the expenditure of
political capital.
NEXT STEPS
Successful foreign assistance reform will require vision, patience,
and congressional involvement. Instead of the 50 separate offices that
currently manage U.S. aid programs, we should have one integrated
agency. Instead of the 50-odd objectives these offices currently
pursue, we should have no more than five strategic aid priorities. The
ultimate goal should be to create a unified framework that fuses
America's objectives--supporting sustained development,
democratization, and poverty alleviation and countering security,
humanitarian, and transnational threats with differentiation based on
the governance and economic capacities of recipients. This requires
integrating the national security perspective of foreign assistance as
a soft power tool with that of a development tool allocated according
to impact and human needs.
Lessons for fundamental reform
The Task Force on Transforming Foreign Assistance for the 21st
Century identified several episodes of reform that offer important
lessons to guide these efforts. Outside the United States, the United
Kingdom reforms of the 1990s are widely credited with boosting the
impact of U.K. foreign assistance programs and Britain's influence in
the international aid community. The U.K. reforms demonstrated that
according development equal standing and independent status can yield
an enormous payoff.
In the United States, there have been seven major foreign aid
reform efforts since 1960. Two of these were successful: The Kennedy
reforms and passage of the New Directions legislation in 1973. These
hold important lessons for successful reform today. The conditions for
fundamental reform include an emergent political consensus surrounding
the urgency of the mission, strong support from key groups outside
government, and personal commitment on the part of the President or key
congressional champions. Any successful reform process must engage all
stakeholders--across branches of the government, across agencies, and
outside government.
Congress has an integral role in shaping the organization and
delivery of U.S. foreign assistance by holding hearings such as this,
mandating independent analysis of the current structure and operations,
and requesting expert input on alternative organizational structures.
The process leading to the Goldwater-Nichols Defense Reorganization Act
of 1986 can serve as a model.
Finally, timing is critical: Successful instances of transformation
both here and in the United Kingdom have been initiated early in the
course of a new administration. At the outset of the Goldwater-Nichols
process, there was broad agreement on the problems confronting the
military, but it took more than 2 years for key lawmakers and
administration officials to build consensus on a road map for reform.
If America is to develop an effective soft power response to new global
challenges in this decade, the clock has already started ticking.
Quick fixes for the current foreign aid coordination process
While broader reforms are being contemplated, foreign assistance
planning and implementation can be improved in immediate ways. First,
true consultation and greatly improved transparency should be built
into the evolving system of foreign aid coordination immediately even
as more fundamental changes are contemplated. Second, it is critical to
improve morale at USAID or risk further erosion on recruitment and
retention. Third, the process of formulating and requesting budgets
must take given constraints into account. The process of planning
budgets and operations for specific countries without taking into
account the realities of stringent budget accounts, congressional
earmarks, and other initiatives can waste time and demoralize the
valuable Foreign Service officers and other public servants working to
get U.S. foreign aid right in the field. Finally, the State/F process
to date has been overly Washington-centric. Whereas Washington is an
appropriate focus for discussions on strategic vision and objectives,
the specifics of country programs are best developed by the country
teams who are implementing in the field.
ACHIEVING SUCCESS
The challenge of strengthening the planning and delivery of foreign
aid is neither partisan nor short term. To achieve success, a patient
effort will be required that involves Congress centrally at the outset
and reaches across the entire executive branch. The development mission
must be enhanced, stakeholder ownership strengthened, transparency
instituted, and the number of players within the executive branch
rationalized in order to achieve greater impact from foreign assistance
dollars.
These steps would go a long way in making U.S. foreign aid more
strategic and effective during a time of intense global need and would
also help showcase America's true spirit. On this 60th anniversary of
the Marshall Plan, when our friends and partners abroad are looking to
America to show a more compassionate and cooperative face, the time to
act is now.
--------------
\1\ This testimony draws upon the work of the bipartisan task
force, Transforming Foreign Assistance for the 21st Century, which I
codirected. The task force included representation from staff of both
Houses of Congress and all committees of jurisdiction, current and
former members of relevant executive branch agencies, practitioners
from the NGO community, a senior U.K. foreign assistance official, and
outside experts. The task force met nearly 20 times, benefited from
presentations by administration officials, congressional staff and
leading practitioners, and invited outside experts to critique all of
the recommendations. The findings were published by Brookings in
``Security by Other Means: Foreign Assistance, Global Poverty and
American Leadership'' (http://www.brookings.edu/press/books/
securitybyothermeans.htm).
\2\ For detailed analysis of the design of the MCC, see Lael
Brainard, Carol Graham, Nigel Purvis, Steve Radelet, and Gayle Smith,
``The Other War: Global Poverty and the Millennium Challenge Account,''
Brookings Press, 2004.
\3\ White House, ``The National Security Strategy of the United
States of America,'' September 17, 2002 (www.whitehouse.gov/nsc/
nssall.html).
\4\ Carol Lancaster, ``Bush's Foreign Aid Reforms Do Not Go Far
Enough,'' Financial Times, January 19, 2006.
\5\ For example, determinations on investments in rural
infrastructure and agricultural extension in cotton-growing parts of
Africa are made by USAID, subsidies for American cotton farmers are
made by the Department of Agriculture and Congress, and cotton trade
barriers are made by the Office of the U.S. Trade Representative
(USTR).
Senator Menendez. Thank you.
Dr. Radelet.
STATEMENT OF DR. STEVE RADELET, SENIOR FELLOW, CENTER FOR
GLOBAL DEVELOPMENT, WASHINGTON, DC
Dr. Radelet. Thank you, Chairman Menendez, Ranking Member
Hagel, Senator Lugar, Senator Casey. I'm honored that you've
invited me to offer some perspectives on this process.
I want to make three points today. First, the reform of our
foreign assistance programs is long overdue. Second, as
designed, the current reform programs are only partial, and
don't go far enough to substantially strengthen our foreign
assistance programs to meet our important foreign policy goals.
And, third, while the reform process includes some positive
elements, the process, so far, has not been implemented
particularly well. Some important changes will be necessary
over the coming months to strengthen the process.
On the first point, the reforms are long overdue, and we've
talked--many of us have talked already today about some of the
problems that we're trying to address about the fragmentation,
the heavy bureaucracy and the little accountability in
achieving results. And the reforms are overdue. But they must
be seen in a larger context, I think, of the U.S. role in the
world.
The United States needs, today, a bold new vision for its
foreign assistance programs, and, more broadly, about how it
engages with the rest of the world. We face a variety of
changes, from security threats to spreading disease to deep
poverty, and, most importantly, in many parts of the world, as
I travel around the world, we've lost our moral leadership, and
it's been slowly replaced by a growing resentment of the United
States from people who see us as the problem, rather than the
solution.
We can do better, and we must do better. We must use our
ideas, our ingenuity, and our creativity to lead the world to
greater openness, greater prosperity, greater security, and
greater democracy. But to do so is going to require greater use
of all of our tools of what we might call ``smart power,''
including diplomacy, defense, trade, investment, intelligence,
and foreign assistance. Our foreign assistance strategy can no
longer be a weak sister if we are going to be successful in the
world.
My second point is, while--is that, while some of these
reforms are steps in the right direction, much deeper and more
fundamental reforms are going to be necessary to achieve the
goals to bring our foreign assistance programs into the 21st
century.
We need five things. We need a better strategy, we need the
right organizational structure, we need the right legislation,
we need a unified budget, and we need a monitoring and
evaluation program that will let us know whether we're
achieving our goals. And we're only part way on each of those.
We've talked about some of them already today. Let me just
highlight two.
Organizationally, as the others--my other colleagues have
mentioned, I believe that we do need one unified Cabinet-level
agency to bring together all of our foreign assistance
programs. Certainly, we need much more unity than we've got
today.
A second alternative--recognizing that a Cabinet agency
might be difficult--would be a Cabinet-level coordinator that
incorporates all of our programs, not just the ones that are
here today.
With respect to the legislation, Senator Hagel, I believe,
is absolutely correct that many of these problems cannot be
done with minor fixes, and that much of it does have to do with
the Foreign Assistant Act of 1961, which served its purposes
during the cold war, but it was for a different time in a
different era. If you print that act out today, it's over 2,000
pages long, which I think tells you enough about its clarity
and its usefulness today. We really do need to think again, in
today's day and age, about what we're going to do.
The current reforms only partly deal with these issues. The
Director of the Foreign Assistance Office claims that it covers
80 percent. It's very hard to come up with that figure. The
Congressional Research Service has estimated that it covers 55
percent of our foreign assistance programs, and I think we must
do better than that.
My third broad point is, while the new process includes
some steps in the right direction, they haven't been
implemented as well as they could be. And so, let me talk more
specifically about the reforms.
There are some things that the administration deserves
credit for:
First of all, they deserve credit for initiating this
process. It is long overdue. It should have been done earlier.
They missed two opportunities. It should have been done when
the Millennium Challenge Corporation was established. But,
instead, we went around and established a new organization. It
could have been done when PEPFAR started. But it is starting
now. Better late than never. But it--they do deserve credit for
taking on this issue.
Second, they deserve credit--the naming of the Director of
Foreign Assistance is a first step toward greater coherence,
and it is good that we've got much more discussion now between
State and USAID, and the beginnings of a dialog more broadly
than that, although we must do better.
Third, the strategic framework introduced last year, I
believe, is a solid step forward. I think the country-based
approach makes a lot of sense, from a development perspective
and from a U.S. strategic-interest perspective. Rather than
thinking about things from a sector approach, to look at the
needs of particular countries, and build up from there. I have
been calling for a change like that since 2003, and I am
pleased to see the initial steps in this direction.
But I have several concerns:
First, as we mentioned, the approach is too narrow. We need
to be bolder if this is going to be successful.
Second, as has been mentioned, this cannot be done in a
closed-door process with just the executive branch, there must
be greater consultation with Congress and others to get the
broad consensus necessary. The administration has already run
directly up against this with its attempts to do country-based
budgeting. They come directly in conflict with the
congressional authorities that are based on sector approaches.
And you can't have it both ways. So, if they're going to move
toward a country-based approach, going to have to consult more
with Congress to work out the differences in this approach.
Third, as has been mentioned, the whole process has been
too closed. There must be much greater openness, which has
started in the last few months, about incorporating other
people in the field and in the Washington area, and in other
agencies in this process.
Fourth, and perhaps most importantly--this reflects the
chairman's remarks--I'm quite concerned about this being under
the direction of the State Department, and the possible
politicization of our foreign assistance programs. I think
there's a need for this tool to be coordinated with our foreign
policy, but it needs to separate from the State Department
approach. Our other foreign assistance tools, like our defense,
like our intelligence, like our foreign trade, like our
international financial policy, are independent from State, and
I believe that our foreign assistance programs need to be
coordinated with State, but independent from them. And I do
believe there is a great risk that these programs may become
more politicized over time.
So, going forward, let me suggest several more concrete
steps, over the next couple of months, that could help
strengthen this process.
No. 1, strengthen communication and build a stronger
constituency for this reform. This process has now started, in
the last couple of months, where it's a little bit more open,
but there has to be greater consultation with people within the
AID, within the field missions, within other executive branch
agencies, up on the Hill, and with other interested people in
Washington. There's been a lot of misunderstanding and a lot of
miscommunication. And if you talk to different people, they'll
tell you very different things. And who's right and who's wrong
and what's going on is very hard to understand, so there needs
to be much greater outreach and communication. That's going to
take time and be hard, but it's necessary to do.
Second, they need to build a much stronger team at USAID.
Some of the people that have been--had senior positions in this
process have been rather young and rather inexperienced, and, I
think, in many ways, it has shown. USAID needs to have its core
competencies and technical skills rebuilt, and they need to
bring more experienced people into this process.
Third, you need to strengthen the process for these country
operational plans. This first attempt over the last year was
late, in terms of guidance going out to the countries. It was
not well understood. That's to be understood, to some extent,
the first year through this, but the process was very rough,
and, I think, this next year, coming up, they need to do a
better job at bringing in the technical expertise into these
country operational plans.
Fourth, we need a much stronger strategy for monitoring and
evaluation. We have only talked a little bit today about how we
ensure results. And I am not at all confident that the reforms
have incorporated a fundamental new way, and strong way, to
monitor what we're doing and how we're achieving different
outputs, outcomes, and impact along the way. The process has
introduced many new indicators, but I think there are too many,
and I think they may not be focused on the right things. We
need to have much better independent evaluation so we can tell
what we're doing right, what we're doing wrong, what's working,
and what's not working. I'm not sure that that's been
incorporated.
And then, finally, over the next few months I'd like to see
how this process builds into the longer, more fundamental
reform. Secretary Fore did say that this was the beginning of
the process. Well, where does it go? And how does it map to
these longer and more fundamental reforms of a broader
organizational structure, of fixing up the budget issues, of
dealing with the legislation? If it's the beginning of the
process, where is this process going? And I think that needs to
be laid out more clearly in the next couple of months.
Thank you very much for your interest, and I look forward
to your questions.
[The prepared statement of Dr. Radelet follows:]
Prepared Statement of Steven Radelet, Senior Fellow, Center for Global
Development, Washington, DC
Thank you, Chairman Menendez, Ranking Member Hagel, and other
members of the subcommittee. 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 AND OVERVIEW
Today the United States and its partners face many complex global
challenges, including new security threats, the spread of virulent
diseases, the opportunities and potential pitfalls of globalization,
climate change, and fallout from the war in Iraq. Meeting these
challenges requires a bold new vision of American leadership. America
must lead with the strength of its core values, ideas, and ingenuity.
Today's challenges require 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. To achieve these goals the United States must
make greater use of ``smart power'' by integrating all the tools of
statecraft, including diplomacy, defense, trade, investment,
intelligence, and--the subject of our discussion today--a strong and
effective foreign assistance strategy.
I wish to make three key points in my testimony today. First, the
process of reform of our foreign assistance programs is long overdue.
While many of our programs are effective in achieving development
outcomes, there is little doubt they can be improved. The
administration deserves credit for initiating this process, however
belatedly.
Second, unfortunately, as designed, the reforms are only partial
and do not go far enough to substantially strengthen our foreign
assistance programs and to meet today's most important foreign policy
challenges. Deeper reforms are necessary that incorporate a larger
share of assistance programs, involve Congress in changing existing
legislation, more deeply change executive branch administrative
structures, and guard against the possibility of the politicization of
foreign assistance programs.
Third, while the reform process so far includes some important
positive elements, the process has not been implemented as well as it
could have been. A relatively closed deliberations process and poor
communication has led to misunderstandings within the agencies
involved, with other agencies, with Capitol Hill, and with key actors
outside the government. A reinvigorated approach with greater
consultations and some changes in strategy is needed to move the
process forward in the coming months. Key next steps include
strengthening communication and building constituencies for reform,
bringing in a more experienced team as part of the effort,
strengthening the process for developing country plans, further
refining the budget process, and developing a stronger approach for
monitoring and evaluation.
II. WHAT ARE WE TRYING TO FIX?
Strong foreign assistance programs are vital to strengthening our
foreign policy and restoring U.S. global leadership. However, we
significantly underinvest in foreign assistance programs, and we have
structured these programs in ways that weaken, rather than strengthen,
their impact.
U.S. foreign assistance programs have been long criticized as being
ineffective. However, it is important to recognize that often the
criticisms are overblown and miss the fact that many programs have been
successful. U.S. foreign assistance was central to supporting the Green
Revolution that 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;
and for supporting sustained economic growth in Korea, Taiwan,
Botswana, and more recently Mozambique, Tanzania, Ghana, and several
other countries. U.S. foreign assistance deserves more credit than it
usually receives.
Nevertheless, there is wide agreement that our programs can be
significantly strengthened. U.S. foreign assistance programs continue
to be a hodge-podge of uncoordinated initiatives from multiple
institutions without a coherent guiding strategy. Many of the
structures and guiding principles of our programs have their roots in
the cold war, and they are not well-suited to meet today's global
challenges. Programs are highly fragmented with little coordination
across the 20 or so executive branch agencies that administer foreign
aid 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.
Recipients sometimes need to ask: Does this program need to conform to
USAID procedures, PEPFAR procedures, MCC procedures, or Defense
Department procedures?
Many programs are subject to heavy bureaucracy that ensures that
some funds never get close to its intended recipients. Aid flows are
heavily earmarked and subject to myriad directives, procedural rules,
and restrictions that add significantly to administrative costs and
slow the delivery process. In addition, much aid is wasted on countries
with governments that are not serious about development and that cannot
use it well.
Moreover, there is little 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.
To some extent these problems can be traced to the structures and
procedures of USAID and other agencies that administer our assistance.
But much of the problem lies with the elaborate web of legislation and
directives from Congress that lie at the foundation of our foreign
assistance programs. The Foreign Assistance Act of 1961, as amended, is
an outdated piece of legislation dating to the early days of the cold
war. The act specifies a remarkable 33 different goals, 75 priority
areas, and 247 directives. These multiple goals are more than just an
administrative burden: They make it very difficult for the United
States to achieve clear development results.
III. THE REFORM AGENDA: THE BIG PICTURE
Thus, the reform process is long overdue, and the administration
deserves credit for beginning to wrestle with these issues, even if
belatedly. However, the process underway is too narrow in its scope and
breadth. Partial reforms will not solve the problems of a diffuse and
segmented apparatus with outdated legislation that was built during the
cold war. Making our aid programs more effective requires a bold,
ambitious vision for updating these programs for the 21st century and
strengthening America's role in the world. Although the focus of our
discussion today is the current reform process, these steps should be
seen in the context of the bigger picture of the deeper reforms
necessary to put our foreign assistance programs on a stronger footing,
including the following.
1. Develop a National Foreign Assistance Strategic Framework. The
most important first step is to reach broad agreement amongst all key
actors--across the full range of executive branch agencies and with
Congress--on the principal objectives and basic framework for foreign
assistance as part of our broader policies for engaging with the world.
The new Director of Foreign Assistance (DFA) released a Strategic
Framework in 2006 that went part way toward achieving this goal, but
since it did not include all agencies and did not fully incorporate the
views of Congress it was incomplete. Going forward, a broader framework
should be developed with wider participation that lays out key
objectives and priorities, describes the key programs that will be used
to meet these objectives, and details strategies for coordinating and
communicating across agencies. The Strategic Framework must go beyond
USAID and State and include Defense, Treasury, Agriculture, Energy, the
MCC, and other agencies and organizations.
2. Rewrite the Foreign Assistance Act (FAA). The FAA of 1961 is
badly out of date. The current amended version of the act is nearly
2,000 pages long and includes a complex web of rules, regulations,
multiple objectives and directives. A new FAA is central to clarifying
the central objectives and methods of foreign assistance to meet U.S.
foreign policy goals in the 21st century. Rewriting the FAA would allow
a fundamental redesign of the morass of personnel and procurement
regulations and other rules that undermine the effectiveness of USAID
and other agencies. It would reduce the extensive amount of earmarking
and ``tied aid''--much of it well-intentioned--but which severely
cripples the ability of agencies to effectively allocate funds to the
highest priority areas. The new reform process has come squarely up
against existing legislation: The administration cannot easily
implement a country-based strategy--however wise that might be--when
existing authorities are based on sector accounts rather than
countries. Rewriting the act will not be simple, and concern over the
inherent difficulties is a prime reason for the piecemeal approach. But
it is becoming clearer that fundamental change is not possible without
reexamining the basic legislation.
3. Strengthen Coordination Across Agencies. U.S. foreign assistance
cannot be fully effective when it is spread among nearly 20 different
agencies with different objectives and implementing procedures. This
problem cannot be solved through commitments for stronger interagency
processes. And (according to an estimate by the Congressional Research
Service), the current reform process only includes about 55 percent of
the foreign assistance budget. There are at least two bolder
possibilities:
Create a new Department for International Development that
would bring under the direction of one Cabinet official all
U.S. foreign aid programs. This step would streamline the
bureaucracy, reduce duplication, and strengthen our ability to
align major programs with our key objectives. The United
Kingdom took this step several years ago, and its foreign aid
programs are now considered among the best of the bilateral
donors.
Name a Cabinet-Level Coordinator reporting to the President,
to be responsible for all aid programs. This approach would
build on the Bush administration's initial step of naming a
DFA, but would widen it to include all agencies providing
foreign assistance and would elevate to a Cabinet-level
position.
4. Clarify the Budget. The budget should be at the center of
designing clear priorities and tradeoffs. However, foreign assistance
activities are scattered throughout several accounts in the budget. It
is very difficult to look through the budget and determine where and
how we are spending our assistance dollars. The current reform process
has tried to begin to tackle this problem, but there is far to go. As
mentioned, it will not be possible to design a budget based on country
priorities when current budget rules are based on a sector approach.
5. Strengthen Monitoring and Evaluation. With only a few
exceptions, monitoring and evaluation of U.S. foreign aid programs
focuses on ensuring that funds are spent according to plan, rather than
on their contribution to development or to achieving other objectives.
We need strong monitoring and evaluation processes aimed at keeping
funded programs on track to meet their goals, 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. Monitoring and evaluation should be
incorporated into projects from the outset, not added on as an
afterthought halfway through the process.
IV. INITIAL STEPS AND MISSED OPPORTUNITIES FOR FUNDAMENTAL REFORM
The administration deserves credit for some initial steps toward
elevating the importance of foreign assistance in our overall foreign
policy. Its National Security Strategy calls for strengthening
approaches for development alongside defense and diplomacy. It
introduced the Millennium Challenge Account as a way to provide
significant support to a small number of low-income countries with good
governance and a commitment to strong development policies. It
established the Emergency Plan for AIDS Relief to substantially expand
resources to fight this killer disease. It has significantly increased
total spending on foreign assistance, although much of the increase has
been focused on a relatively small number of countries.
However, the administration has had three opportunities to tackle
the broader challenges of restructuring and strengthening our foreign
assistance organizations and structures, and in each case it has failed
to do so. It has shied away from the bold, visionary changes needed to
meet today's global challenges, and instead has opted for partial
changes that have left the process incomplete and the future uncertain.
Its first opportunity came with the introduction of the MCA. There
was significant debate throughout 2002 about where to house and how to
structure the MCA. The administration clearly believed that existing
structures were not effective enough to take on this new initiative,
but instead of addressing head-on the weaknesses of existing programs,
it avoided the problem and decided to establish a new institution to
implement the program.
The second opportunity came with the Emergency Plan for AIDS
Relief. The new initiative came with a problem: International HIV/AIDS
programs were administered by many different agencies with different
approaches and mechanisms. These institutional divides and bureaucratic
duplication were symptomatic of broader problems in our foreign
assistance programs. But again the administration opted for a partial
fix: It established a new office to coordinate programs across multiple
agencies. While this approach might have satisfied the immediate goal
of quickly establishing new HIV/AIDS programs, it separated the HIV/
AIDS initiative from other health and development programs, and only
added to the broader problem of multiple agencies implementing
different programs without a clear and coherent strategy.
The third opportunity came with the current reform process itself.
To their credit, the early proponents of the process recognized the
deeper structural problems and attempted to deal with them more
directly. But a key flaw in the approach is that it is partial and
narrow: It only deals with programs under the direct control of the
State Department, including the Department itself, USAID, and to a
lesser extent PEPFAR and the MCC. It does not include programs run by
more than a dozen other executive branch agencies, including the
Departments of Agriculture, Treasury, Defense, Labor, and others. The
Congressional Research Service has estimated (based on the FY05 budget)
that the DFA will manage just 55 percent of the foreign assistance
budget, with the Department of Defense controlling 19 percent and other
agencies managing 26 percent. In short, the scope of the reforms was
limited to what the State Department could carry on its own without
coordinating with other executive branch agencies or Congress. As a
result the best it possibly can achieve are incomplete and partial
reforms.
V. INITIAL PROGRESS IN THE CURRENT REFORM PROCESS
The current reform process has several positive elements. First, a
reform process is long overdue, and the overall objectives of the
broadly were the right ones. The designers deserve credit for trying to
provide greater coherence to assistance programs, better align programs
with objectives, focus first on countries rather than sectors, and to
begin to rationalize the budget process.
Second, the naming of a DFA clearly was aimed at bringing greater
coherence across significant parts of U.S. assistance programs. The
``dual-hatted'' nature of the appointment as both DFA and Administrator
of USAID should lead to stronger communication and coordination across
programs, and hopefully the beginnings of less fragmentation in
assistance programs. Observers state that interagency coordination and
communication has improved, although it still has a long way to go.
Third, the Strategic Framework introduced in May 2006 is a solid
initial step toward articulating clear goals and steps toward achieving
those goals. The document describes five distinct goals for foreign
assistance programs. It then groups all recipient countries into one of
five categories, (Rebuilding, Developing, Transforming, Sustaining
Partnerships, or Restrictive), reflecting current assessments of those
countries' circumstances. I strongly support differentiating across
countries as a first step toward more clearly identifying appropriate
goals and designing more effective implementation strategies (indeed I
called for a categorization of countries along these lines in
congressional testimony in 2004), and in the idea of building budgets
based primarily on country needs and priorities.
Fourth, reorienting the budget to be more in line with these goals
and with country needs is a sensible step. The first budget process
revealed several significant concerns in how it was carried out and
whether appropriate authorities exist, but a rationalization of budget
accounts to better align them with strategic priorities is a welcome
step forward.
VI. SOME KEY CONCERNS
However, while the reform process has several positive elements, it
represents only a partial reform process. It is too narrow and
incomplete, and does not add up to a coherent and comprehensive
strategy for foreign assistance designed to meet our major foreign
policy goals in the post-September 11 world. There are several major
concerns.
First, the reforms omit large parts of our assistance programs. The
DFA will have control over USAID and at least most State Department
programs, but will only give ``guidance'' to MCC and PEPFAR programs,
and will have at best only indirect influence over programs
administered by other agencies.
Second, by not including Congress in the deliberations, the reforms
missed the opportunity to build greater consensus on the path forward
and to redress some of the weaknesses in the Foreign Assistance Act. In
the absence of agreement with Congress on major objectives, earmarks,
procurement and personnel rules, and key strategies, the reforms will
fall short of what is needed. Most importantly, as mentioned, the
reform process came up squarely against existing legislation through
the budget process. The reforms envisage a country-based budgeting
process, while existing authorities provide for sector-based
allocations. It is not possible to do both simultaneously in an
effective manner. Moving forward with country-based budgeting will
require much stronger buy-in from Congress, and probably new or amended
legislation.
Third, while the process has been ongoing for over a year, much of
the discussion has been restricted to a small number of people,
especially during the early months. Substantial confusion and
misunderstanding remain about the process, objectives, and steps to
date. Discussions with senior people in the process, staff at USAID,
officials in other departments, and knowledgeable persons outside the
government reveal widely different perceptions and lack of information
about what is happening. Many people feel marginalized from, and
uninformed about, the process. While some of this is to be expected in
any reform effort, the process to date has been characterized by poor
communication, which has undermined morale and potential support.
Fourth, while appointing a DFA to coordinate across programs is
welcome, putting that person under the direct control of the Secretary
of State raises concerns. There is a danger that foreign assistance
allocations will change quickly to address short-range and rapidly
changing diplomatic and strategic concerns, sometimes to the detriment
of achieving long-term development or institutional changes in
recipient countries. While the new strategic framework calls for
funding to support democracies and countries with strong governance, a
large share of current funding goes to strategic partners with weak
governance systems. The history of U.S. assistance to such countries--
the Philippines under Marcos, Zaire under Mobutu, and Haiti under the
Duvaliers--suggests that achieving development results or strengthening
governance systems often takes a back seat to short-term political
expediency.
Ensuring that foreign assistance is properly aligned with U.S.
foreign policy does not necessarily mean that it should come under the
direct authority of the State Department. U.S. policies in defense,
international finance, trade, and intelligence are all aimed to be
consistent with major foreign policy goals, but they purposively are
established independently from (albeit coordinated with) the State
Department. Achieving long-term success in supporting development and
good governance systems in recipient countries demands programs that
are coordinated across agencies and consistent with our foreign policy
goals, and yet independent of direct control by the State Department.
VII. SOME NEXT STEPS
The reform process is at a crucial juncture as a result of the
political calendar and the nomination of a new DFA. Actions taken in
the next few weeks and months will determine the ultimate success or
failure of the effort. The most important next steps include the
following:
1. Strengthen communication and build a constituency for reforms.
Senior officials must make much stronger efforts to communicate more
clearly within State and USAID, with other departments, with Congress,
and with key nongovernment agencies. For the reforms to succeed in the
long run, they will need much stronger support than they currently
enjoy. Building this support will require substantial time and effort,
and will be all the harder with the change in the DFA. But it is
crucial for success.
2. Build a strong and experienced team. A widely held complaint is
that key persons in the reform effort lacked significant technical
expertise and experience in development and in program implementation,
which weakened their understanding of the issues and of options. There
is no substitute in development for significant experience living and
working in developing countries. The new DFA should move quickly to
build a team with strong experience that balances an understanding of
the need for fundamental reform with an understanding of what works and
does not work on the ground.
3. Strengthen the process for developing country-level operational
plans. Many participants complain that coordination between the center
and country offices in the budget process was not sufficient. Guidance
for developing country operational plans came late and was often
unclear. While the DFA office claims that the process has been
decentralized with more authority given to individual country offices,
many country offices state that there is more direction from the center
on how to use the funds. To some extent, misunderstandings and lack of
clarity should be expected in the first year of major reforms where
people comfortable with old systems resist changes to new ones.
Nevertheless, for FY09 the process must start sooner and include
greater consultations and communications to be more effective.
4. Further refine the budgeting process. For FY08 the DFA office
provided budget requests consistent with its new Strategic Framework.
By many accounts, given the tight timeframes and unclear guidance,
budgets using the old framework were retrofitted into the new framework
with various activities simply renamed to fit the new categories. At an
aggregate level, the new presentation failed to recognize the sector-
based budget accounts required under existing authorities. Reports
suggest that the budget presentation did not meet requirements for many
key areas of expenditure under existing legislation. As mentioned
earlier, there remains a huge unresolved tension between the vision of
country-based budgets and existing sector-based authorities.
5. Develop a clearer strategy for monitoring and evaluation. One of
the central objectives of the reform process is to make U.S. foreign
assistance more effective. But at the core of increasing effectiveness
is a strong monitoring and evaluation process that includes independent
monitoring, regular review, and an assessment of results and impact.
But the reform process appears to have made little progress in this
area, and may have even stepped backward. The DFA office has introduced
a large number of new indicators to track progress. However, there
appear to be far too many indicators, and most of these emphasize
immediate outcomes rather than output or actual impact. As of yet there
is no independent process to verify results and to evaluate the
connection between short- and medium-term results and impact. One key
step would be for the United States to 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 their
initiatives.
6. Begin to move to deeper and more fundamental reforms. The
current reform process has made some positive steps forward, but its
limited scope and its location within the State Department will
undermine its ultimate effectiveness. It is critical to use these
earlier steps to launch a broader discussion among all key parties on
making our foreign assistance programs more effective to meet today's
foreign policy goals.
Senator Menendez. Well, thank you all for your testimony.
It was very insightful.
We'll have a series of 7-minute rounds, and I'll start by
recognizing myself.
One of the criticisms coming from merging USAID's
decisionmaking into the State Department has been the fear that
long-term development goals, which USAID has traditionally
focused on, will be sacrificed for short-term strategic goals,
which the State Department has traditionally focused on. And
I'm wondering, from any of you who wish to answer, is that a
legitimate concern? And what are the consequences that flow
from that?
Sam--Mr. Worthington.
Mr. Worthington. InterAction is currently involved in a
process of research in five countries to look at the different
aspects of the framework, to look specifically at this
question. We should have results later this year. Right now we
have indications of this, but we are actually researching the
question in-country, looking at it, how it applies to both the
development of programs and the implementation of programs. So,
we'll be able to get back to you on that.
Senator Menendez. Anyone else?
Dr. Radelet.
Dr. Radelet. I am concerned about that, and I think we have
a long record in the United States of providing significant
foreign assistance to short--to meet short-term political
expediency goals. Those have their role in U.S. foreign policy.
Our assistance to Mr. Marcos, and our assistance to the
Duvaliers, and, more recently, to others, have their role at
their time, but it's very separate, and I think it can
undermine development assistance. And I'm quite concerned that,
with some programs, where we need to be there for the long
haul, building health systems, building education systems,
that, as those countries where we're doing that work begin to
fall off the radar screen because they are not an immediate
emergency or crisis, that funding might be cut for those in
favor of whatever is today's more immediate crisis.
Senator Menendez. Dr. Brainard.
Dr. Brainard. The example that you raised, of Pakistan, is
a good one. There's no question that the Government of Pakistan
has not used the many, many dollars we've given it well for
development purposes, but we have strategic interests there
that justify some of our funding.
The State Department needs to work with governments
frequently for strategic interests. That's what diplomacy is
all about. But, from a development and democratization point of
view, in countries where you have autocratic regimes, you need
to work around governments to make sure that money is actually
going to the poorest populations, and to make sure that
organizations on the ground who are promoting democratization,
accountability, good governance, have the wherewithal to build
the bottom-up demand for change. It's more effective to manage
those development and democracy objectives if there is a very
strong Cabinet-level entity in the U.S. Government making the
case on the development side, and ensuring implementation. In
these instances it's actually helpful for the State Department,
to say, ``Look, I can't affect that money, and foreign
assistance is being decided in a separate process.'' Sometimes
it's actually useful for the person responsible for diplomacy
to be able to say, ``I didn't have control over that foreign
aid decision.''
Senator Menendez. Can we collectively agree that
development assistance is one of the important tools that we
can use, which is in the national interests of the United
States? Does anyone disagree with that?
[No response.]
Senator Menendez. In view of that, then one of the concerns
I raise--I'm sure you've heard it--is the significant shift in
funds between the development assistance account and the
economic support fund accounts in the FY08 request. On the
House committee, before I came to the Senate--a total 15 years
in the House--the traditional objectives of ESF have been to
strengthen markets, improve economic growth, develop democratic
institutions, and they have traditionally been used for--and
they're more vulnerable to diversions for political or
strategic purposes. And we recognize that. But if that is the
case--and we've had some--I've had my examples, you've had
yours--some of them are not more shining in our history, but,
nonetheless, they have been used in that regard--what's your
opinion of the shifting of these funds, in terms of, you know,
conserving the development assistance aspect of our foreign
policy?
Mr. Worthington.
Mr. Worthington. We worked very hard to have three words
added to the top-line goal of U.S. foreign assistance, and that
was ``reducing widespread poverty.'' If we had a clear set of
indicators that looked at the relative investments, in terms of
poverty throughout U.S. development assistance, compared to
security interests or other interests, we'd have a much better
sense of actually where resources are going. In the absence of
that, we need to rely on congressional directives that do a
much better job of steering resources, because, at this point
in time, it really comes down to an act of faith of where these
resources will go, and, because there aren't the indicators
that give us a sense of the degree to which this broad goal of
reducing widespread poverty lies at the core of the investment.
We then ask Congress to go back to the more traditional frame
that enables it to ensure that these resources do have that
intent.
Senator Menendez. Anyone else?
Dr. Radelet. I share your concern. I understand the point
that Secretary Fore was making, that it doesn't necessarily
mean that the funds won't be used for development assistance. I
spend a lot of my time in Liberia. I just came back. And they
are a recipient of economic support funds, at the moment, and
much of that is going toward strong development processes. So,
it is quite possible that the ESF funds could be used for the
right kind of development purposes, but we don't know.
I'm not so much concerned about the increase in ESF funds,
given today's world and the number of strategic partners that
we work with. The issue for me is less the shift than the
decline in development assistance. And if we need more funds in
the ESF account, that's fine, but those should not come out of
the development assistance account.
Senator Menendez. I appreciate that.
Dr. Brainard.
Dr. Brainard. One of the things that's most important in
foreign assistance is being clear about our goals. I don't
think you can measure results unless you know what you were
trying to achieve in the first place. There's always going to
be a category of assistance that's primarily strategic in
nature. We should be very clear about that, and we should
measure the outcomes there, not in development terms, but in
strategic terms. To some extent, this big shift between DA and
ESF, is a symptom of lack of clarity. I think it was a huge
tactical misstep on the part of the administration, in the
sense that I don't think they have buy-in for their new country
categories to begin with, and this shift is driven by these
categories that are not so obvious to begin with.
But it strikes me that development assistance should be
used to promote development, and we should measure the outcome
accordingly. And because I care a great deal about development,
I think it's a very troubling shift.
Senator Menendez. Thank you.
Let me turn to the distinguished ranking member of the full
committee, Senator Lugar.
Senator Lugar. Well, thank you very much, Mr. Chairman.
Let me ask this question as a practical political
consideration. In the past, we have tried to determine, through
the foreign assistance budgets or the State Department budget,
or a combination of that, for interest in development in
foreign countries. Sometimes interest in a country's
development is driven by strategic purposes. One proposition
suggested by members of this panel of professionals is to
elevate the head of U.S. foreign assistance to a Cabinet-level
position, so that there would be a Secretary of Defense, a
Secretary of State, Secretary of Development, or whatever the
proper nomenclature. And the hope would be that the interests
of the United States would be manifest to whoever was the
Executive in the administration, or Members of Congress, so
that they would support the three objectives of defense,
diplomacy, and development.
Now, as part of the work of this committee and others has
been to discover why, in certain instances recently, the
Department of Defense appears to have taken roles that
historically would have been taken abroad by the Department of
State or our Ambassador, whoever it might be. One pragmatic
reason why this is so is that the Department of Defense had
money, it had resources, and it had supplemental appropriation
ability. So, as affairs arose, you can make the case that the
Ambassador and other development authorities were not always
included in the activities of the Defense Department--but,
nevertheless, maybe some good things happened and American
taxpayer money was the same in any event. However, the politics
of the situation were not equal with regard to the two
departments.
Now, if we were to have the three departments, just as a
practical matter, how do we develop a constituency in this
country for development in other countries? There is clearly
that constituency with many people in religious communities, in
many NGOs, others who organize from goodwill, those who have
had an international understanding. From your own experience in
this field, as a practical matter, how do we develop, once we
have the organization, the support, the budget? And what would
be the criteria, then, for determining the countries as
recipients? Would it be as the Millennium Challenge, in which
we now take a look and say we want to encourage human rights,
the right of women, democracy-building, and so forth, and
there's an idea of reward, of movement of resources if
countries seem to adopt those policies. Maybe that's the ethos.
Would any of the three of you comment on your views of these
general questions?
Mr. Worthington.
Mr. Worthington. Just a comment on a few InterAction
members. The ONE Campaign, which is an InterAction member, just
launched a campaign that will go out to all the Presidential
candidates. The Campaign has a broad membership across the
country. Today we can witness, for example, 20,000 ONE
supporters in both New Hampshire and Ohio. ONE has 2.4 million
members committed to our work across the country, and that is
just through that one InterAction member. Later this week, I'll
be traveling to Little Rock to meet with InterAction member,
Heifer International, to meet with their board. They have about
500,000 donors across the United States who give to Heifer. The
shift that we've seen in the last 10 years is the strong
interest of many of these donors to get involved in advocacy
around issues outside the United States, and issues of poverty,
because individuals in our country, across campuses, church
groups, and others, are seeing a direct link between the United
States being a good neighbor and the security and the well-
being of our Nation and our children. So, we see a rise of
Americans' interest in this issue. We're actively investing
resources in channeling this interest as it goes forward.
With regard to the point you make as to, you know, which
countries to invest in, I think development requires multiple
tools. One of the tools is the MCC approach that enables us to
get a sense of investment based on good governance. There are
other investments that simply need to be made on the basis of
need and the ability to deliver well-designed child survival
other types of programs. Other investments are more geared
toward security. If we're able to break down these different
types of investments we're making, I believe that the American
people will respond. And one way that our institutions have
seen that response is a shift, close to a $1 billion increase,
of giving of the American people to our institutions. And this
is broadly based within the faith groups and others around the
country. So, we're seeing a shift in public opinion, and our
challenge is to see that shift reflected up here in Congress.
Senator Lugar. Thank you.
Dr. Brainard. I believe there is now a strong public
constituency for poverty reduction and development in this
country. We have seen an enormous shift, in just 10 years, in
public involvement in these issues. If you look at polling
inside the Beltway, national security is the rationale; outside
the Beltway, in the Heartland, Americans respond on the basis
of moral values and humanitarian impulses. You can also see
enormous public support in the vast flows of private
generosity, which, in the case of humanitarian disasters,
greatly exceeds our official assistance funding. You can also
see growing public interest in an explosion of volunteering
overseas. There's a nice bill that's making its way around now
that provides government support for this increased interest in
voluntary service abroad. And we also see it in the fact that
we now get missives from Angelina Jolie and Brad Pitt and Bono
on these issues. And so, there's just tremendous interest.
In terms of criteria, there will remain a limited number of
different types of countries receiving funding according to
different criteria. One of the criteria, obviously, is
transformation, but another one is need, humanitarian need;
HIV/AIDS is another compelling criterion. There is always going
to be a strategic category. There is always going to be,
unfortunately, the conflict prevention and post-conflict
reconstruction category. And each one will require a separate
set of eligibility criteria.
Senator Lugar. Thank you.
Dr. Radelet. I think it's an excellent question, or set of
questions, Senator.
In terms of how to develop the constituency, this month's
cover story in Vanity Fair magazine is all about foreign
assistance. So, if we've made it to Vanity Fair, I think we're
making some progress here.
I share my colleagues' view that, over the last 10 years,
this has changed dramatically. It started with debt relief, and
the ``drop the debt'' campaign in Jubilee, and accelerated with
the attention to HIV/AIDS and other things that brought in a
much broader constituency, and, after September 11, for
different reasons, widened that constituency.
So, I think the support is beginning to grow. But what the
American people demand, and deserve, is to know that this money
is spent well. And I think, at the core, that brings us back to
the need for better organizational structure and, I think,
stronger legislation that puts together all of these different
pieces into a coherent whole, with a clear mission, at a more
professional nature, instead of decimating and undermining the
professionals that we have at USAID and other organizations, to
put them together and give a stronger mandate, where we can
recruit and retain the best talent in the world for this, give
them a voice at more senior levels, at the executive--in the
executive branch, and provide some independence from State and
Defense and intelligence services, and our many different tools
of foreign assistance that need--our many different tools of
foreign policy that need to be coordinated, but have some
independence from each other. So, I think building that
constituency goes hand-in-hand with making these things much
more effective.
I think Sam is also right in terms of the need for multiple
tools across different sets of countries. And I've been arguing
this for many years, and I think the new approach of a country-
based approach, looking at the characteristics of countries,
makes a lot of sense. Some countries, like the MCC countries,
are on the right path, they've got a good government; we ought
to give them more funding and more flexibility in what they do.
But there are lots of other countries where we need to provide
less money, with tighter strings, perhaps a lot of it through
NGOs, rather than through governments, when we don't trust the
governments, and we need different approaches in different
kinds of countries. We're beginning to move in that direction,
but we need to move more.
Senator Lugar. Mr. Chairman--I thank the witnesses--I'd
like to ask permission to insert in the record, at the
appropriate spot, a statement welcoming Under Secretary Fore,
who was a witness earlier on.
Senator Menendez. Without objection.
Senator Lugar. I thank the Chair.
[The prepared statement of Senator Lugar follows:]
Prepared Statement of Hon. Richard G. Lugar, U.S. Senator From Indiana
I join in welcoming Undersecretary Fore. I appreciate the
cooperation she has shown to the committee during her tenure at the
State Department. I look forward to her insights related to her new
role as the Director of U.S. Foreign Assistance and as the President's
nominee to head the United States Agency for International Development.
The Director of U.S. Foreign Assistance is a new position at the
Department. It was created by Secretary Rice to oversee and coordinate
our Government's multifaceted outreach to countries where poverty,
disease, displacement, and other challenges create both a humanitarian
imperative and a security risk. Americans have long supported their
Government's work to save lives and alleviate human misery. Since
September 11, 2001, we have acquired new insights into how failing
states can provide fertile ground for terrorism.
The Bush administration has expanded U.S. commitments to
international economic development. It has increased foreign aid
spending and created new funding mechanisms. It has boosted America's
focus on crises--such as the HIV/AIDs epidemic--that can undermine the
fabric of developing societies. And it has sought to promote good
government, sound economic policies, and strong social programs focused
on human development in poor nations around the world.
Secretary Rice's instinct to seek greater coordination and clarity
in the new firmament of foreign assistance is well founded. We should
prioritize our goals and design our strategies in ways that are
transparent to aid recipients and U.S. taxpayers, alike. We must ensure
that we are able to measure the impact of our assistance. Every dollar
of foreign assistance should count toward the realization of a more
peaceful and prosperous world.
Our witness today is taking over the crucial task of foreign aid
coordination that Secretary Rice initiated a little more than a year
ago. We will be looking for leadership that strikes the appropriate
balance between the need to maintain focus on policy priorities, while
at the same time allowing for the flexibility required to address
unique challenges in each recipient country.
Because of the importance of this topic to the success of U.S.
foreign policy, I have directed the Republican staff of the Senate
Foreign Relations Committee to undertake a field-based study of our
foreign assistance efforts. Now ongoing, we are examining assistance
funded by the State Department, USAID, the Defense Department and other
agencies in more than 20 countries in Africa, Asia, Eastern Europe, and
Latin America. We are paying particular attention to the new
coordination process to see whether and how it is mirrored in the
field. We are looking at USAID programs, section 1206 security
assistance, the Millennium Challenge Corporation, the Middle East
Partnership Initiative, and the President's Emergency Plan for AIDS
Relief. We are also studying how programs run by other U.S. Government
departments, such as Agriculture, Treasury, and Homeland Security, are
coordinated at the embassy level.
In 2006, the committee staff produced a report entitled ``Embassies
as Command Posts in the Campaign Against Terror.'' The report
recommended that all security assistance, including section 1206
funding, be included under the Secretary of State's authority in the
new coordination process for rationalizing and prioritizing foreign
assistance. I am particularly interested in knowing how Under Secretary
Fore views her own role in making certain that our security assistance
is properly coordinated and supported by both civilian and military
agencies.
Senator Menendez. Thank you, Senator Lugar.
Let me ask you just two other quick questions before we go
to the hearing on our next nominee.
Mr. Worthington, you, in your testimony, said that without
MCC and PEPFAR, development assistance to many country actually
diminishes, particularly in Africa and in Latin American
countries, two continents that perhaps need it the most, yet
these two Presidential initiatives were supposed to be added to
the regular assistance--and I stress the ``additive'' part. I
have a particular interest in this. How do you see the F
process hurting Latin America in this process?
Mr. Worthington. I think the process, again, focuses on the
top-line goal--when one should really focus on need. We could
take Brazil as an example. In the northeast region of Brazil,
which has massive amounts of poverty, you could then categorize
Brazil as a country that is transforming itself. And, because
of that categorization, you miss the complexity of the
realities in-country, and, in essence, reduce programs that you
should not be reducing.
So, I think that it, again, comes down to need--there is
tremendous need in Latin America, there's tremendous capacity
to support a democratization process and other efforts, but
because the security lens, or strategic lens, seems to
dominate, we see this reduction, that I mentioned above, of up
to 40 percent of resources.
Senator Menendez. Dr. Brainard, let me ask you one other
question.
You were codirector of the Brookings CSIS Task Force that
put out ``Transforming Foreign Assistance in the 21st
Century.'' And it resulted in the publication of ``Security By
Other Means,'' which I found interesting. Let me ask you--in
it, you have a chapter entitled ``Organizing U.S. Foreign
Assistance to Meet 21st-Century Challenges.'' How do you view
U.S. foreign assistance having to change, in the long term, to
meet those 21st-century challenges?
Dr. Brainard. First of all, there are a lot more
instruments that are now of great relevance to countries that
are developing. In Latin America, for instance, trade
agreements and investment agreements are just as relevant as
foreign assistance. For many countries, the key issue is not
even primarily about foreign assistance anymore. And we do a
particularly bad job as a government, of bringing the
development perspective to the table when we talk about trade
or we talk about investment.
Over time, I think foreign assistance needs to be much more
effective, monitored, as Steve was talking about, in a way that
connects the moneys actually to impact. Right now, there's a
lot of assessment of inputs, rather than outcomes.
And perhaps most immediately, we have an unwieldy cold-war
structure that no longer fits the realities that we're trying
to address as a nation. It needs to be fundamentally
overhauled, streamlined, and elevated.
Senator Menendez. Great. Well, thank you very much.
Senator Lugar, do you have anything else?
With that, let me thank all of our witnesses.
Before I close, I'd like to ask unanimous consent to have a
report, by Freedom House, which details cuts to democracy and
human rights funding, entitled, ``Supporting Freedom's
Advocates,'' and written testimony by the American Foreign
Service Association, be added to the record. And, without
objection, it so will be added.
[Editor's note.--The report referred to above was too
voluminous to include in this hearing. It will be retained in
the permanent record of the committee.]
Senator Menendez. I want to thank all of the witnesses for
testifying today. The record will be open for an additional day
so that committee members may submit additional questions to
the witnesses, and we certainly would ask you to respond
expeditiously, should there be some questions to you.
Senator Menendez. Thank you very much for your insight to
today's hearing.
And, with that, this part of the hearing is closed.
[Whereupon, at 4:25 p.m., the hearing was adjourned.]
----------
Additional Statement and Questions and Answers Submitted for the Record
Prepared Statement of Hon. J. Anthony Holmes, President, American
Foreign Service Association, Washington, DC
The American Foreign Service Association (AFSA), as the exclusive
representative of the Foreign Service employees of the U.S. Agency for
International Development (USAID) has been following closely the
changes to U.S. foreign assistance administration, allocation, and
policy adopted since the position of Director of Foreign Assistance (F)
was created in early 2006. While recognizing that some reforms were
needed in our foreign aid allocation system, AFSA has several serious
concerns with the wholesale changes made by F over the past year.
The nature and process of delivering foreign assistance has
dramatically changed through the adoption of the ``Transformational
Diplomacy'' initiative which is now being implemented at the State
Department by F. Basically, ``development'' has now been subordinated
to political concerns and decisionmaking and control shifted to the
State Department. The upshot is that foreign assistance has been
largely transformed from what was a partnership with developing
countries to a more paternalistic relationship. Countries are
classified using a Foreign Assistance Framework into five simplistic
categories and a global category. The goal seems to be to have
Washington, through a highly centralized decisionmaking process based
on approved country-by-country Operational Plans, attempt to ``fix''
countries.
The dominance of State--through F--in managing development
priorities and directing our assistance programs will have negative,
long-term results, and the USG capacity to deliver development
assistance will atrophy, just as our ability to communicate effectively
with external audiences withered after State's absorption of USIA.
AFSA sees many flaws in this ``reform'' program, particularly given
the way it has been implemented so far. Therefore, AFSA does not
support the continuation of F as it is currently configured. Below are
some of the issues we have identified that hurts our Nation's foreign
affairs efforts that support our point of view:
1. The centralization of decisionmaking has been taken too far. By
trying to rein in and then reshape the scattered foreign assistance
programs of State and USAID, F has created unacceptable delays. In
theory this centralization is needed at the start and thus is a short-
term problem. But a plan for delegating appropriately back out to the
field or the technical bureaus where development knowledge and
expertise reside is still not in place. The whole process serves to
marginalize the embassies and USAID missions overseas and imposes a
level of central control that is antithetical to the Agency's
traditional reliance on field staff to engage the host country and the
embassy country team and design and implement activities and
interventions to address country-specific development issues within
broad guidelines established by Department of State, USAID, and
Congress.
2. Development expertise is being ignored, either by design or by
fiat. Either way, U.S. objectives are ill-served. The highly
centralized planning and decisionmaking has demoralized the
experienced, technically qualified, and competent people in the field.
Their role has been marginalized to being implementers of Washington
decisions. Rather than building leadership, this has disempowered
people. It also brought in an arbitrariness that has had a very
negative impact on important programs.
3. The Strategic Framework promulgated by F is not strategic. This
framework is merely a tracking system. State and especially USAID need
to think and plan assistance programs strategically over the long term.
Nothing that F has produced assists with this, and the existence of
this ``framework'' seems to excuse State and USAID from such thinking,
planning and analysis, and it must not. And as mentioned above, the
process of development is no longer collaborative but instead has
become paternalistic.
4. Long-term development is increasingly subordinated to short-term
foreign policy goals. With F in place, the trend will only accelerate.
F is doing a minimally acceptable job of laying out budgets for the
Secretary of State. But neither the Secretary nor Deputy Secretary
should be determining minutiae of budgets for foreign assistance as F
and State's very hierarchical bureaucratic culture encourages.
Development will never outweigh U.S. foreign or defense policy any
serious way, even if the USAID Administrator is ``at the table.'' And
bringing development into State has almost no hope of making foreign
policymakers take a long-term view. While an actual merger of USAID
into State might be preferable to the current ``merger by stealth,''
AFSA has serious misgivings about such an approach. A more independent
and strengthened cabinet-level development assistance organization
would be the optimal approach for the USG.
5. Development policy has been divorced, from implementation. In
the fluid and technically complex area of development, this is
crippling. In addition, USAID has disbanded its policy function, thus
abdicating this critical function to State, oftentimes regional
bureaus. These State regional bureaus do not have the capacity to
evaluate and set development policy. State regional bureaus are the
appropriate home of foreign policymaking and implementation and are
configured around this important task, not development assistance.
Based on the findings from the Paris Declaration monitoring survey, the
Operational Plan misses entirely what is found to be the key to
successful development, i.e., engagement with the host government. If
budget categories, levels, and activities are set by Washington, how
can we get our host country to have ownership, alignment,
harmonization, or mutual accountability?
6. Roles and responsibilities between State and USAID are more and
more confused. To add to the problem, the organizational structure
which now exists is irrational and confusing, making it hard to
determine which office has responsibility for which program. It does
not help that F is located at the State Department far away from the
USAID headquarters. Morale is low and plummeting even further as this
process unfolds, and USG development expertise is eroding at a drastic
rate and will take many years to rebuild. This and previous
administrations' paltry requests for USAID Operating Expenses belie the
rhetoric that development is an important part of the U.S. role in the
world. The FY07 Operational Plan process lacked sufficient involvement
of the Ambassadors and USAID Mission Directors in budget allocation
decisions. The missions were only provided planning levels for
preparation of the Operational Plan without prior consultations.
7. Noninclusion of the PEPFAR funds in FY07 Operational Plan led to
much confusion and does not reflect the whole workforce level for the
country, since the workforce funded by PEPFAR funds gets reflected only
in the PEPFAR Country Operational Plans.
8. The FACTS system, which is a monitoring tool, is not very user-
friendly and gives a lot of problems in data entry. There were frequent
outages. However, this centralized database, which makes budget and
programmatic information about the entirety of State and USAID funding
and programs, may be useful if further developed. A key feature of this
database is the list of standardized program definitions and
indicators, which rationalizes the descriptive aspect of foreign
assistance and allows for cross-country comparison and aggregation.
Some criticize these indicators as mere outputs or as encouraging
stovepiping. These valid criticisms point out a fundamental limitation
of the system. The advantages of having this system must not be turned
into a straitjacket, which is a serious risk. The system cannot and
should not replace strategic planning and good development thinking and
analysis.
AFSA believes it is important and timely for Congress, the public,
this administration, and the next to learn from this experience and
move forward using an improved approach. The United States is a
generous nation and should be represented by the best people and
programs the field of international development can produce. By trying
to rationalize foreign assistance, F's early experience has shown how
horribly bungled the U.S. foreign assistance system is and how a
piecemeal effort to improve it is insufficient and in fact
counterproductive. A comprehensive vision, political will, or
considerably more time are needed to completely overhaul it. By
embarking on radical process reforms without the necessary intellectual
groundwork, and given the early and continuing flaws and significant
failures of the effort so far, the present effort has proven that an
even more dramatic reform/rethinking is essential. Piecemeal
adjustments are nowhere near sufficient. Therefore, AFSA recommends a
different approach which will elevate Development to be truly on par
with Defense and Diplomacy, even if getting it involves creating a
cabinet-level development agency.
______
Responses of Under Secretary Fore to Questions Submitted by the
Following Senators
QUESTIONS SUBMITTED BY SENATOR BIDEN
Question. You indicated there were plans underway to modify and
simplify the Foreign Assistance Framework. Please describe in more
detail what this simplification would entail. Would certain categories
of countries be merged? Would some of the existing objectives change or
disappear? Will she have the authority to do accomplish those changes?
What will be the process for approving and implementing them?
Answer. As I noted in my opening remarks to the hearing, the
Secretary believes that as we increase the quantity of our foreign
assistance, which is critically important, we must also work to improve
its quality. This is a driving factor behind her foreign assistance
reform initiative. In my role as Acting Director of U.S. Foreign
Assistance, I am charged with helping the Secretary to identify and
realize new means to constantly improve our foreign assistance programs
and activities. Having assumed this role but a few weeks ago, one of
the first things I am doing is to listen to people's concerns and to
consult with stakeholders about what we might improve. I will take all
the ideas and suggestions I have received under advisement and continue
to gather more as I think about the best ways to move forward. I am
especially interested in any thoughts and suggestions you might have
about the reforms, to include the processes and tools, and I would seek
an opportunity to consult with you before making any significant
changes thereto.
Question. Near the end of Ambassador Tobias' tenure, he initiated a
comprehensive review of USAID's core focus and alignment, beginning
with the proposal that USAID should realign its focus toward the very
poorest, most fragile countries, and away from activities related to
investing in people, economic growth and democratic governance. Is this
review and the lead working group in operation? How far along is the
process and what is the timeline? Are final decisions being made to
structurally realign the Agency's focus?
Answer. The working group is developing recommendations for me, as
Acting Administrator, regarding adjustments to overseas staffing
levels, and the associated operating expenses. Currently, there is
considerable variation in the number of USAID staff (direct hire and
total staff) managing similar-sized portfolios in countries at
comparable stages of development. Adjustments to respond to the need to
establish or increase USAID's presence in countries with growing
programs and more limited indigenous capacity to manage their
development process do not imply a shift away from programs in Economic
Growth, Governing Justly and Democratically, and Investing in People.
As Acting Administrator I will consult with Members of Congress
before making any decisions about restructuring. The working group's
recommendations, if approved, will be incorporated in the FY 2009
budget request and the 2009 Foreign Service assignment cycle.
Question. If USAID were to change its core mandate and focus only
on fragile states and least developed countries, which USG agencies
will fill the gap and continue to implement critical social sector
programs--such as education and health activities--in threshold and
lower middle-income countries? How will the F process assure adequate
funding for those responsibilities? Does USAID plan to fund these new
priorities through shifting funds from the DA account to the ESF
account?
Answer. I am reviewing all of these options. We are at the very
beginning of the process of looking at whether USAID's mandate is
appropriately focused and if any changes are necessary. I have not made
any decisions and I assure you that, if confirmed, I will look forward
to substantive engagement with the Congress, and all stakeholders
before any final decisions are made with regard to USAID's mandate. I
want USAID to be healthy and strong. I am committed to supporting our
extraordinary women and men who are carrying out our development and
humanitarian assistance activities all over the world.
It is simply too early in the process to fully answer your
questions, but if confirmed, I look forward to working with you as we
move forward to ensure USAID's place as the premier development U.S.
Government agency.
Question. Describe the role and expected function of ``development
attaches''? How will they interact with mission chiefs? What gap are
they expected to fill? What is their value add? Will development
attaches be staffed by career foreign service or outside contractors?
If the former, will this thin out an already overextended foreign
service corps?
Answer. The concept of a development attache, or development
counselor, as we are now calling it, is inspired by the catalytic role
that USAID officers play in bringing together host country government,
private sector, and other public or private donor interests to address
a development issue.
We believe that this is a valuable form of assistance that USAID
can provide in countries that are generally capable of financing and
managing their own development process but that may not yet have the
capacity or experience to put together these kinds of partnerships.
USAID officers often leverage the U.S. Government's investment through
innovative public/private partnerships and other arrangements.
The development counselor position would give the U.S. Government
(USG) an authoritative voice in a country's development dialog even as
direct development assistance becomes less necessary.
While we are still refining and discussing the concept, and welcome
your input, we envision the development counselor as the U.S.
Ambassador's principal advisor on development issues and coordinator of
development-related activities of all USG agencies in a country on
behalf of the Ambassador. The development counselor would provide
guidance to any USAID activities in a country but operational
management would be provided by a regional platform. It is envisioned
that the development counselor would be an experienced USAID Foreign
Service Officer with requisite technical expertise, and entrepreneurial
skills. S/he would have a very small staff, perhaps 2-4 people,
depending on the nature of USAID's role in a country. We will have to
increase recruitment and enhance career development and training
programs to have sufficient officers with the necessary skills and
experience for this position.
Question. As Acting Administrator of USAID, do you have plans to
restore the technical capacity that has been lost at that agency over
recent years? If yes, specify.
Answer. Yes. When I first served at USAID, our technical capacity
was much more robust. Since that time, significant downsizing has left
us far less reliant on our core permanent workforce, in favor of a U.S.
nondirect hire workforce. It is my strong belief that USAID needs to
increase its in-house technical capability through the world. If
confirmed, I plan to do this in a systematic, thoughtful manner.
We need to both revitalize our Foreign Service Officer Corps and
place those with the needed technical oversight skills in the positions
where they will ensure an efficient and effective delivery of
development services.
Over the past several years, our Office of Human Resources has
developed a workforce planning model (WPM) that projects the need for
technical staff based mainly on the amount of funding in a program. It
is clear from the model that USAID needs to increase its permanent core
technical staff as well as other staff, both Civil Service and Foreign
Service.
In order to do this we have to increase our recruitment and career
development programs and our supervisory training and absorptive
capacity. This is the only way we can reach our increased mandates with
rebuilding our capacity, both technical and other, as rapidly as
possible.
Question. It is our understanding that your predecessor proposed
significant reductions to USAID funding for research and capacity-
building in the developing world. This important research, which USAID
has supported successfully for many years, is vital to making sure that
treatments and preventive technologies like vaccines and microbicides
reach and serve the needs of people suffering from disease in
developing countries. Do you plan to support this important function at
USAID in the future?
Answer. I assure you that I have made no decisions outside of the
President's FY 2008 budget request regarding any change in the
important research and capacity-building activities that USAID
supports. I am committed to USAID carrying out the necessary research
to make sure that health treatment and preventive technologies reach
those most in need. I will rely on the expertise of my staff at USAID
to advise on the best use of funds and the correct mix of assessment,
development, and introduction research as well as of capacity-building.
With the necessary funding support from Congress and the President,
USAID will maintain its commitment to achieving its 5-year research
strategy as outlined in the May 2006 Report to Congress, ``Health-
Related Research and Development Activities,'' and specifically to its
projected FY07 obligations for health research as reported to Congress
(attached).
HEALTH RESEARCH REPORT TO CONGRESS: UPDATE CORE FUNDING FOR TARGETED HEALTH ISSUE STRATEGIES \1\
----------------------------------------------------------------------------------------------------------------
FY 2006
Health issue and product Projected FY obligated Projected FY
2006 funding funds 2007 funding
----------------------------------------------------------------------------------------------------------------
HIV/AIDS:
Vaccines.................................................... $29,000,000 $28,710,000 $28,710,000
Microbicides................................................ 39,600,000 39,600,000 39,600,000
Global Leadership in HIV/AIDS applied Research and Public N/A 1,750,000 3,250,000
Health Evaluation \2\......................................
-----------------------------------------------
Total..................................................... 68,600,000 70,060,000 71,560,000
===============================================
Malaria:
Vaccines.................................................... 6,200,000 6,200,000 6,000,000
New Drugs, Formulations, and Approaches..................... 3,800,000 3,200,000 3,200,000
-----------------------------------------------
Total..................................................... 10,600,000 8,400,000 9,200,000
===============================================
Tuberculosis:
New Drugs................................................... 2,300,000 2,400,000 3,000,000
Improving Performance of and Access to DOTS \3\............. 1,400,000 2,790,000 2,790,000
-----------------------------------------------
Total..................................................... 3,700,000 5,190,000 5,790,000
===============================================
Reproductive Health:
Contraceptive Technologies.................................. 10,500,000 10,500,000 10,500,000
Improved Use and Services Delivery.......................... 14,000,000 14,000,000 14,000,000
-----------------------------------------------
Total..................................................... 24,500,000 24,500,000 24,500,000
===============================================
Maternal and Newborn Health:
Healthy Pregnancy and Birth Care Outcomes................... 1,985,000 1,283,000 1,860,915
Maternal Mortality Measurement Tools........................ \4\ 0 130,000 130,000
New Pregnancy and Birth Interventions and Introduction...... 3,725,000 4,065,000 3,545,000
Neonatal Research and Newborn Care Practices................ 1,600,000 1,600,000 2,200,000
-----------------------------------------------
Total..................................................... 7,310,000 7,078,000 7,735,915
===============================================
Micronutrient Deficiencies:
Vitamin A Deficiency Prevention and Control \5\............. 700,000 759,000 200,000
Zinc--Diarrhea Therapy and Prevention \6\................... 884,000 755,000 150,000
Iron--Anemia Prevention/Rx Packages \7\..................... 1,100,000 376,600 380,810
Community Therapeutic Care.................................. 1,100,000 1,100,000 1,200,000
Antenatal Multiple Micronutrient Supplementation \8\........ 0 180,000 1,000,000
-----------------------------------------------
Total..................................................... 3,784,000 3,170,600 2,930,810
===============================================
Acute Respiratory Infections:
Community--Based Pneumonia Treatment........................ 550,000 650,000 630,000
Reducing Exposure to Indoor Air Pollution................... 100,000 70,000 70,000
-----------------------------------------------
Total..................................................... 650,000 720,000 700,000
===============================================
Health Systems:
Performance Assessment and Financing \9\.................... 380,000 695,000 100,000
Pharmaceutical Management................................... 125,000 150,000 75,000
Quality Assurance........................................... 325,000 342,000 290,000
-----------------------------------------------
Total..................................................... 830,000 1,187,000 465,000
===============================================
FY 2006 Funding \1\....................................... $119,374,000 $121,305,600 $122,881,725
----------------------------------------------------------------------------------------------------------------
\1\ This report highlights approximately 80 percent of the total health-related research at USAID in FY 2006.
\2\ Interagency/OGAC strategy launched February 2007.
\3\ Reclassification of the category of research based on the new OP documentation process.
\4\ FY 2006 activities are based on prior-year investments.
\5\ As described in the May 2006 Health Research Report to Congress, research findings are currently being
introduced into programs.
\6\ As described in the May 2006 Health Research Report to Congress, research findings are currently being
introduced into programs.
\7\ The full complement of planned FY06 projects were dependent on the outcomes of a data analysis consultation,
which have not yet been finalized.
\8\ A planned, new research study will begin mid FY07.
\9\ Reclassification of the category of research based on the new OP documentation process.
Question. How will the change in leadership at the F Bureau impact
the plans that Ambassador Tobias put in motion? Do you plan to follow
the timelines he laid out? If not, how will they differ?
Answer. My team and I immediately turned to review the FY 2007
Operational Plan process so that we can learn how to improve the FY
2008 process. What I hope to do is capitalize on, and reinforce, what
appears to be working and make changes to those elements which are not
proving useful. I am particularly interested in simplifying the
process.
Of course, within all of these changes and evaluations, I will
ensure that the Department of State and USAID are able to deliver the
FY 2009 Congressional Budget Justification to Congress on time.
Question. Many have commented that the reform process has been one
in which foreign assistance has been viewed solely through a lens of
national security. Do you feel that national security concerns are the
primary factor that determines how and where we spend our foreign
assistance dollars?
Answer. National security concerns are certainly considered in
determining the allocation of our foreign assistance resources, as are
development concerns. By acknowledging that an appropriate balance must
be struck between the two, the Secretary of State has clearly
articulated our overarching transformational diplomacy goal as:
``helping to build and sustain democratic, well-governed states that
respond to the needs of their people, reduce widespread poverty, and
conduct themselves responsibly in the international system.''
Our Nation's security depends on the stability of other nations.
The locus of threats has shifted to the developing world, where
poverty, injustice, and indifference are exploited by our foes to
provide a haven for criminals and terrorists. Foreign assistance and
the development it supports are a key part of our national security
architecture and the war on terror.
In the past there was a perception that development policy and
foreign policy objectives were entirely separate and typically at odds.
Poverty reduction, good governance, and capacity-building for
sustainable long-term success are long-held development goals. Foreign
policy goals also now recognize that lasting peace and prosperity
cannot be achieved unless we expand opportunities for all citizens of
the global community to live hopeful and prosperous lives. As evidence
of the Secretary's commitment to long-term development, you will find
that in the FY 2008 request, 51 percent of Department of State and
USAID program assistance resources are concentrated in rebuilding and
developing countries. These are the countries that are farthest away
from sustaining partnership status, as measured by instability,
poverty, human capacity, life expectancy, governance, and barriers to
economic growth--all critical barriers to regional stability and
success in the war on terror.
Question. To avoid being compromised in both their effectiveness
and perceived intent, development initiatives may sometimes require
distance from diplomats and security officials. Has the Office of the
Director of Foreign Assistance taken this reality into consideration as
it moves to combine U.S. diplomacy, security, and development under the
same policy and implementation rubric?
Answer. Yes; but I think we can improve in the years to come. The
new coordinated processes we have put in place are intended to maximize
the involvement and expertise of our development, diplomacy, and
security professionals at the point of planning and budgeting against
broad strategic objectives and priorities for individual countries and
global initiatives. In addition, operational plans provide a
coordinated and comprehensive picture of how fiscal year funds will be
used and what results will be achieved. With respect to the
implementation of programs, however, we seek to empower our experts in
the field to identify the best implementation strategy based on country
circumstances and objectives to be achieved. This practice should allow
the people who have the on-the-ground perspective to make the
appropriate choices about implementation. This on-the-ground
perspective will ensure that as in the past, where necessary, the
appropriate distance is preserved.
Question. Are there any plans to incorporate environmental
considerations and activities into USAID's overall strategy going
forward? Will a greater emphasis on sustainable environmental
activities be reflected in the Foreign Assistance Framework (currently
there is only one mention of the environment in the entire chart)?
Answer. The framework and transformational diplomacy goal
acknowledge that an appropriate balance must be struck among
development objectives in order to bring about lasting change in
countries. Our strategy as it relates to environmental activities is to
link healthy ecosystems to sustainable economies, good governance, and
equitable and just societies. We recognize that ecological stability is
necessary for sustainable social and economic progress.
Through the new Strategic Framework, foreign assistance is focused
on five objectives (e.g., economic growth) designed to further the
transformational diplomacy goal, and, in each country, to address the
specific gaps and obstacles countries face in achieving the goal. In
doing so, USAID's environmental compliance regulations and procedures
help ensure that the environment and the natural resources are managed
in ways that sustain productivity and growth as well as a healthy
population.
To that end, environment is present throughout the framework, and
is explicitly recognized under the economic growth objective. Programs
and activities consistent with this area include the management,
policy, and governance of natural resources and biodiversity. USAID
programs and activities focus on establishing and sustaining a clean
productive environment, balancing the needs of present and future
generations. These are highly synergistic with other components of the
economic growth objective--e.g., energy and agriculture, and our global
health objective; e.g., by improving the quality and cleanliness of air
and water. Clean productive environment activities also address climate
change, such as by reducing greenhouse gas emissions.
Question. Describe the comparative benefit of adopting a country-
focused approach as opposed to the broad sectoral approaches used in
the past. What have been some specific advantages of this shift? Where
have there been problems and how will these be addressed? Is there
value in keeping centrally funded programs, such as those promoting
democracy, labor, and the environment? Does the agency plan to continue
funding sectoral programs to some degree?
Answer. The intent in adopting a country-focused approach is to
maximize country progress with our programs supporting these goals.
With sectoral approaches, we find that while we may be doing good work
within discrete sectors--e.g., HIV/AIDS, malaria, family planning,
etc.--we may not be making the investments necessary to sustain the
success of these investments and ensure that countries can sustain
further progress on their own. In addition, with various sector-based
strategies at play, country programs tended to be a patchwork of
disconnected or loosely connected programs. Our programs thus tend to
be ``patches of green'' instead of comprehensive, long-term country-
based development strategies targeted to sustained development
progress. The FY 2008 request reflects a focus on the specific gaps and
obstacles countries face in moving along a development trajectory. The
ultimate intent is to support recipient country efforts to move from a
relationship defined by dependence on traditional foreign assistance to
one defined by full sustaining partnership status.
In prior budget years, funds were allocated first by account, then
by sector, and last, by country. Much of the budget was built by
determining so much for family planning, so much for basic education,
so much for security assistance, and so on. It is not that these
sectors are not critical to a country's development strategy--clearly
they are, and USAID and the State Department continues to evaluate
resources by sector, ensure appropriate targeting, and incorporate best
practices. It's a matter of what should drive the country's development
program--country prioritized need or a set global amount for a sector.
The Secretary feels that we must tailor programs to the unique needs of
each recipient country in reaching the transformational diplomacy goal.
Focusing resources in this way has its tradeoffs. When one area
goes up, unless there is an abundance of new resources, other areas go
down. While the FY 2008 budget increased by $2.2 billion over FY 2006
enacted levels, we squeezed far more in the budget. The budget includes
important increases for HIV/AIDS, malaria, and humanitarian assistance;
and for countnes in which there are new requirements and opportunities
such as in Kosovo, Iran, and Cuba. The FY 2008 budget also reflects
efforts to continue to shift program funding, where requirements are
predictable, from supplemental requests for Iraq, Afghanistan, Sudan,
and avian influenza into the base budget. Country teams prioritized
interventions that would help a country's institutions to build the
capacity to take on challenges in the longer term.
In order to ensure a coordinated response and effective and
sustainable impact, the reform process sought to maximize all resources
implemented at the country level within country budgets. In identifying
resources within global or regional budgets which were actually
allocated to specific countries, we sought to bring transparency to the
process as well as to ensure that what were in truth country resources
were maximized and coordinated within country level budgets.
Previously, ambassadors and mission directors often did not have a
full picture of the resources being implemented in their countries,
because some activities were planned and implemented from Washington.
Consequently, they did not exercise full oversight over these programs,
and doing so from Washington was costly and time-consuming. To empower
our mission directors, ambassadors, and country teams, the reform
process maximized resources implemented at the country level into
country-level budgets.
However, the FY 2008 budget also includes substantial funding in
the centrally funded programs. We fully recognize that not all foreign
assistance is, or should be, implemented on a country basis, and that
many issues are best addressed as part of a global or regional
strategy. Accordingly, the Foreign Assistance Framework includes a
separate category to highlight global and regional initiatives, defined
as those activities that transcend a single country's borders. Such
activities may include trade capacity-building, emergency humanitarian
assistance, support to regional institutions or multilateral
organizations or research. Certainly, issues such as trafficking and
labor issues have a place in specific country programs as well as on a
global basis. The framework allows for both these types of programs to
take place within the goal of transformational diplomacy.
______
QUESTIONS SUBMITTED BY SENATOR LUGAR
Questions. In FY08, basic education funds were reduced in Latin
America and ``zeroed out'' in East Timor, Guinea, India, Madagascar,
Mexico, Nepal, and South Africa.
(a) What criteria are being used to determine the allocation
of education funding to various countries? What are the
targets?
(b) If we are targeting our education funding where there is
the greatest health/HIV need, why cut education funding to
South Africa?
(c) If we are targeting our education funding where there is
the greatest illiteracy problem, why cut education funding to
India?
Answer (a). A collective decisionmaking process was used to
determine the FY 2008 funding request for basic education involving
country teams in both Washington and the field. These teams are
knowledgeable about each country's mix of donors and what U.S.
Government (USG) assistance is required to stimulate and sustain
transformational development and country progress, including whether
support for basic education is the most strategic use for USG funds.
These teams used several sets of criteria to determine the allocation
of education funding to countries.
The first set of criteria was a set of index scores. The index
scores provided a common yardstick of objective data for all countries,
focusing on education access, country context, quality and performance,
and education need. The second criterion was the strategic importance
of countries to the broader transformation diplomacy goals.
There are different levels of targets. At the highest level, the
USG supports the six goals of Education for All (EFA) as these
represent a global consensus on education targets. At the individual
country level, the USG supports the Paris Declaration and the goal of
donor harmonization around the specific targets set forth in individual
country education plans. Below this are the targets that are within the
manageable interest of USG-funded projects and that are articulated in
monitoring and evaluation plans.
Answer (b). Senator, it is not USAID policy to target education
funding to countries with the greatest health/HIV needs. USAID is
prioritizing basic education funding for countries other than South
Africa because South Africa is generally capable of financing and
managing its own development process in the basic education sector.
Answer (c). This is precisely the type of difficult question that
we have focused on in designing our foreign assistance reforms and in
trying to make the most strategic use of limited resources. We
recognize that India does have significant education needs. Because of
the large population size, limited foreign assistance resources, and
extreme and growing needs in health, we determined that focusing the
majority of U.S. foreign assistance in the health sector will have a
greater impact reducing poverty and transforming India than spreading
limited resources across many sectors. According to the Millennium
Challenge Corporation indicators, India has improved in education this
year, while health indicators have declined. Therefore, over 90 percent
of the FY 2008 request for India will be used to integrate health
services and nutrition to improve survival of children and their
mothers, stem global disease threats, and help India manage the growth
of its rapidly increasing population.
Question. What is the focus, strategy, and structure for the
President's Education Initiative? Will it be housed at USAID? If not,
why not? What is the process in determining the lead agency/house for
the Education Initiative?
Answer. Education is an important driver for poverty reduction,
social empowerment, and gender equality, and the administration has
made significant strides in expanding the amount of foreign assistance
resources devoted to basic education programs in particular, and
targeting these resources effectively. In FY 2008, the President's
budget requested $535 million for basic education programs, up from
$126 million in FY 2001. In FY 2006, the United States provided $521
million.
Currently, most of USAID's basic education programs support teacher
training, scholarships, textbook distribution, and policy reforms.
These metric-focused efforts have helped to address financial obstacles
to schooling and availability of quality instruction. Empirical
evidence illustrates that school enrollment, performance, and the
development of employable skills are tied to a range of factors. This
demands a more comprehensive approach. The United States will build
upon existing efforts with a bold and innovative plan to: (1) Provide
an additional 4 million children with accountable and quality basic
education; (2) deliver technical training for 100,000 at-risk youth;
and (3) coordinate with child health programs that impact educational
attainment.
The initiative would provide approximately $525 million over 5
years--roughly $425 million for additional basic education activities
and $100 million for a new Communities of Opportunity program that will
provide after-school language and skills training for at-risk youth in
the 8-14 age group. The basic education component would begin in 2008
with a modest amount of funding to develop partnerships with target
countries and support capacity-building. The effort would then scale up
between 2009 through 2013 to help partner countries meet concrete needs
identified through the Fast Track Initiative process. Funding and
startup of Communities of Opportunity will begin in 2009 and the
commitment runs through 2011. These centers will provide at-risk youth
with training in English, computer skills, science, math and finance,
and critical thinking.
The initiative largely will be housed at USAID. The administration
will establish a new high-profile Education Coordinator--located at the
U.S. Agency for International Development--for international basic
education programs. The Secretary of State, in consultation with the
Secretary of Education, would appoint the Coordinator. The Communities
of Opportunity program will be managed by the Bureau of Educational and
Cultural Affairs at the Department of State, under the authority of the
Under Secretary for Public Diplomacy and Public Affairs.
Question. What specific criteria are being used to determine
whether to close or reduce the size of USAID missions?
Answer. The key considerations are program size, program complexity
(including foreign policy visibility), security constraints and
countries' capacity to manage their own development. The latter
includes the capacity of the host government, civil society, and the
private sector. USAID's clear preference is to maintain presence in a
country when the level and complexity of development and humanitarian
assistance justifies it. However, the rising cost of overseas
operations makes this a challenge. I would like to review these options
as Acting Administrator, and if confirmed, I will seek the views of the
Congress on the difficult tradeoff between reducing presence in some
countries and increasing presence in others.
______
QUESTIONS SUBMITTED BY SENATOR MENENDEZ
Question. One of the stated objectives of Transformational
Diplomacy was to provide more flexibility to the executive branch in
constructing the foreign assistance budget. The FY 2008 President's
budget request, produced using the new strategic framework, directs a
disproportionate amount of the funding to a handful of U.S. allies in
the ``global war on terror'' and ignores congressional country,
regional, and sectoral priorities. Can you provide assurances that the
process that you will use in assembling the FY 2009 budget will better
reflect congressional priorities and provide a more balanced country
allocation based on need and U.S. comparative advantages in providing
long-term development assistance?
Answer. I support the checks and balances system of our Government
that allows the executive branch to present a budget to Congress and
for Congress to use its best judgment to direct how that money should
be spent. One of my personal goals for the FY 2009 budget is to work
very closely with the Congress, and I fully intend to consult with you
and other members of our oversight committees about your priorities so
that they might be appropriately reflected in the FY 2009 budget
process.
In the past there was a perception that development policy and
foreign policy objectives were entirely separate and typically at odds.
Poverty reduction, good governance, and capacity-building for
sustainable long-term success are long-held development goals. Foreign
policy goals also now recognize that lasting peace and prosperity
cannot be achieved unless we expand opportunities for all citizens of
the global community to live hopeful and prosperous lives. A driving
purpose behind the establishment of the Office of the Director of U.S.
Foreign Assistance is to strengthen the U.S. commitment to long-term
development. To that end, the Office of the Director of U.S. Foreign
Assistance has worked to replace fragmented programming with coherent,
comprehensive planning, and focusing our foreign assistance on
promoting greater ownership and responsibility on the part of host
nations and citizens. As evidence of the Secretary's commitment to
long-term development, you will find that in the FY 2008 request, 51
percent of Department of State and USAID program assistance resources
are concentrated in rebuilding and developing countries. These are the
countries that are farthest away from sustaining partnership status, as
measured by instability, poverty, human capacity, life expectancy,
governance, and barriers to economic growth--all critical barriers to
regional stability and success in the global war on terror.
The President's FY 2008 budget request was built collaboratively by
USAID and State. USAID and State country and regional teams identified
the critical gaps and obstacles that recipient countries faced in
trying to advance in a sustainable manner and requested funding
allocations in accordance with those assessments. The result of this
collaboration was a budget in which half of all resources were invested
in rebuilding and developing states--those states in greatest need in
terms of such critical barriers as poverty and governance.
Following the completion of this first integrated budget, we set
out to determine how we could improve the process for FY 2009. An
after-action review was launched whereby scores of State and USAID
regional and functional participants, both at the working and senior
levels, were consulted, along with special consultation sessions in the
field. While the field had significant input in the FY 2008 budget
build, we wanted to bolster and better institutionalize these
suggestions. Two of the key changes for FY 2009 are that the field will
weigh in before the Secretary sets the initial control numbers, and the
field will allocate funds to the program element level, specifically
defining the activities in-country. We intend to maintain consultations
with the field to ensure these changes prove useful and effective and
to determine if further changes might be necessary.
Question. I understand that the F Bureau intends to notify Congress
of how USAID intends to spend its FY07 funds using a new notification
format based upon the recently approved Operational Plans. What is the
status of preparing this new congressional notification and when do you
expect to submit it? What information has the F Bureau provided to
Congress about how this new notification will differ from the
congressional budget justification? Has USAID's withholding of funds
for operating units until the notification is submitted caused any
adverse impact on its operations on the ground?
Answer. Funds have not been withheld on account of proposed changes
to the CN format. The Department of State and USAID have been judicious
in releasing funds, not to include urgent circumstances which are of
course funded as quickly as possible, while discussions with the
Appropriations Committees on the FY 2007 allocations are still taking
place. We hope to bring these discussions to conclusion in short order.
With respect to new formats for congressional notifications over
the years, Congress has expressed concerns about how difficult it is to
get a true picture of what is being done with our foreign assistance
dollars. Both USAID and the Department of State are working closely
with their oversight committees on a congressional notification (CN)
format which addresses this concern--one that provides all the
information that the committees require and reflects the Secretary's
reforms. While the Department of State will wait until FY 2008 to make
changes to its CN format, USAID is talking to the committees about
getting a head start, especially since its operating systems, including
its financial systems, already reflect the new foreign assistance
framework.
What is innovative about the framework format is that it allows for
cross-agency comparisons and assessments. For example, in the past, we
were unable to determine what funding and activities related to
vulnerable children across agencies and accounts. This year, we are
able to create this comprehensive picture of activities and to identify
funding levels ($265 million in FY 2007).
Again, our goal is to make sure that Congress receives all the
information it needs in a timely and user friendly format, and we
believe that moving toward a framework-based congressional notification
is a significant step in that direction.
Question. To what extent will transparency be an important element
in moving forward with budgeting and strategic planning processes as
the foreign assistance reform process matures? For example, approved
Country Operational Plans contain the essence of how U.S. Government
aid will be used to achieve critical reform goals on a country-by-
country basis. But these key documents are not available to the public
as of yet. When will these documents, or declassified versions of them,
be made available so that recipients, partners, and other donors can
coordinate their assistance and activities with those of the USG?
Answer. I am committed to providing as much information on our
foreign assistance activities as possible to our oversight committees
and congressional partners. We are currently looking at ways to make
the information obtained from the FY 2007 Operational Plans as user
friendly and available as we can. We are likewise exploring formats for
future years' Operational Plans with an eye toward the same goal. In
the meantime, if there is particular FY 2007 country or other
information that you would like to discuss, we would be happy to meet
with you.
Question. How will the F Bureau ensure that missions include
consultations with a diverse group of civil society organizations,
including women's groups, and meaningfully consider the input for
program development and implementation? How will you ensure that gender
analysis will be incorporated throughout all stages of country program
planning, project implementation, and monitoring and evaluation?
Answer. Promoting a stronger and more productive role for women in
development is a priority which demands a broad and flexible approach.
The Office of the Director of U.S. Foreign Assistance has taken a
number of steps to ensure that gender is considered at each stage of
the assistance process. Prior to the country planning stage, staff
consulted with gender-based advocacy groups in the NGO community about
the appropriate integration of gender considerations into our planning
and practices. The Foreign Assistance Framework definitions, used to
account for and evaluate programs and activities, correspondingly
highlight women and girls distinctively where possible and appropriate.
For example, one program element on justice systems addresses whether
innovations toward equitable access to the justice system are
specifically in place for women. With regard to monitoring and
evaluation overall, people-level indicators are being disaggregated, to
the extent possible, by sex to best track the inclusion of women and
girls in foreign assistance programs. In all, the contributions that
women make to the economic, social, and political lives of their
nations, communities, families and the next generation make them key
actors in effective development, and we are committed to recognizing
and encouraging their inclusion in our assistance activities. I am
personally interested in encouraging this area.
Question. As Acting Administrator of USAID, do you have plans to
restore the technical capacity that has been lost at that agency over
recent years?
Answer. Yes. When I first served at USAID, our technical capacity
was much more robust. Since that time, significant downsizing has left
us far less reliant on our core permanent workforce, in favor of a U.S.
nondirect-hire workforce. It is my strong belief that USAID needs to
increase its in-house technical capability through the world. If
confirmed, I plan to do this in a systematic, thoughtful manner.
We need to both revitalize our Foreign Service Officer Corps and
place those with the needed technical oversight skills in the positions
where they will ensure an efficient and effective delivery of
development services.
Over the past several years, our Office of Human Resources has
developed a workforce planning model (WPM) that projects the need for
technical staff based mainly on the amount of funding in a program. It
is clear from the model that USAID needs to increase its permanent core
technical staff as well as other staff, both Civil Service and Foreign
Service.
In order to do this we have to increase our recruitment and career
development programs and our supervisory training and absorptive
capacity. This is the only way we can reach our increased mandates with
rebuilding our capacity, both technical and other, as rapidly as
possible.
Question. Some NGO's have expressed concern about the indicators
that have been developed to measure the success of U.S.-funded
programs. For example, many of the indicators measure outputs rather
than outcomes, the latter of which we believe to be the ultimate goal
of USAID projects. Additionally, there is concern that the disease- or
project-specific nature of the indicators may inhibit--and perhaps be
detrimental to--critical efforts to integrate services and strengthen
systems. Are you planning to address some of these shortcomings of the
current indicators?
Answer. Yes; as part of the review during this pilot year of the
reform effort the Office of the Director of Foreign Assistance has
begun to review the purpose and use of the indicators in the
Operational Plans. We plan to consult with our development partners
over the summer and fall, and will focus both on refinements to the
Standard Program Definitions, as well as the indicators.
The initial set of standard indicators includes measures at the
activity, sector, and strategic levels for each foreign assistance
objective. Indicators were developed to track and report on the way
that foreign assistance money was being spent by each implementing
partner. Missions and headquarter offices were asked to classify each
program according to the standard program definitions; and to select
indicators that measured the annual outputs and outcomes which were
directly attributable to the U.S. Government's (USG) programs,
projects, and activities.
The standard indicators do not replace the critical performance
management systems of the individual posts which measure the results
over time of USG programs. These systems recognize the multisectoral
nature of USG development programs and assess over time the integrated
nature of the results being achieved, including for critical system
strengthening.
The Office of the Director of Foreign Assistance also measures
progress at the country and sector levels. At the strategic level,
indicators capture the impact of foreign and host-government efforts
for the five objectives in the Foreign Assistance Framework, such as
investing in people or economic growth. Area level indicators measure a
country's performance within subsectors of the five functional
objectives (such as health and education within the investing in people
objective). These indicators necessarily measure results beyond what
could be achieved solely by the USG (USG, host country, and other
donors' activities combined). The data are collected from secondary
sources, such as the World Bank, the United Nations Development
Program, and Freedom House by staff in Washington. Our intent was to
develop a system that would allow us to identify and account for the
specific results of USG-funded programs (often necessarily at the
output level) as well as evaluate the impact of programs overall.
Question. What are the main reasons for the dearth of Requests for
Applications and Requests for Proposals (RFAs and RFPs) in FY07 and
will USAID have a normal procurement season in FY08?
Answer. Due to the continuing resolution, the on-going negotiations
to finalize FY 2007 allocations, coupled with the newness of the
Operational Plan process, the release of funds this fiscal year has
been slow. In an effort to counter the effects of these complicating
factors, the Office of Director of Foreign Assistance and the USAID
Procurement Executive have been encouraging operating units to issue
draft solicitations in appropriate circumstances to permit firms and
organizations to begin planning proposals. USAID is also trying to
arrange for early availability of FY07/08 funds in FY08 to mitigate
end-of-fiscal-year pressures on USAID and potential offerors. We expect
FY 2008 to have a more normal procurement season based on anticipated
adjustments to the programming process; however, the FY 2008
appropriation will also play a role in availability of funds.
Question. Seven countries' basic education funds have been ``zeroed
out'' in FY08 (East Timor, Guinea, India, Madagascar, Mexico, Nepal,
and South Africa). If we walk away from our current investments in
these countries, we run the real risk of wasting that money when our
programs have not yet created self-sustaining educational systems. Do
you agree that walking away from our current investments in basic
education in these seven countries could be detrimental to lasting
transformational change?
Answer. Funding for basic education has increased more than five-
fold since FY 2000, from less than $100 million to more than $500
million. As a founding member of the Education for All--Fast Track
Initiative and as a signatory to the DAC Agreement on Aid
Effectiveness, the United States is committed to aligning its
assistance with that of other donors in support of country-driven
education strategies. A collective decisionmaking process was used to
determine the FY 2008 funding request for basic education involving
country teams in Washington and the field. These teams are
knowledgeable about each country's mix of donors and what USG
assistance is required to stimulate and sustain transformational
development, including whether support for basic education is the best
decision for the USG.
The possible negative consequences of discontinuing our investments
in the seven countries mentioned above must be balanced by the intended
positive consequences of providing new or additional investments
elsewhere. Basic education funds have been spread too thin in some
cases; better and more strategic results may be achieved by supporting
more robust programming in fewer countries. This will allow us to focus
our technical attention on fewer countries while also having larger
resources to leverage host country commitment to change.
Overall, USAID feels that our requested FY 2008 budget will not be
detrimental to lasting transformational change in these seven
countries, and in each case there was a sound rationale for the
decision. We certainly want to maximize our investments to date, and we
will actively work toward this in each of these countries.
Question. Why does the administration's FY08 request eliminate
basic education funds to India, which is home to over one-third of the
world's illiterate people, and a country where 4.6 million children do
not have access to school?
Answer. This is precisely the type of difficult question that the
Secretary has focused on in designing our foreign assistance reforms.
On the one hand, India does have significant remaining education needs.
On the other hand, the USAID budget for basic education in India in FY
2006 was less than $4 million, a miniscule part of the funds spent on
education by the government and the people of a country as enormous as
India. Moreover, India's economy is presently growing at over 8 percent
a year, making it one of the world's best-performing economies for a
quarter century. India has also emerged as a significant donor in its
own right, notably in Afghanistan where it has contributed over $50
million to rebuilding the country. Thus, despite the need, it is
difficult to justify providing donor assistance for basic needs to a
country that is devoting far larger shares of its own resources to
assist other countries. Reflecting these trends and programmatic
successes, the FY 2008 USG foreign assistance budget request level for
India has declined by 35 percent from the FY 2006 level ($124.9 million
to $81 million).
An objective of the foreign assistance we provide to India is to
diminish the conditions that permit and/or promote extremism by
focusing on the most underserved and poorest segments of the
population. Over 90 percent of the request is accordingly in health,
where funds will be used to integrate health services and nutrition to
improve survival of children and their mothers, stem global disease
threats, and help India manage the growth of its rapidly increasing
population. The U.S. Government will also focus FY 2008 assistance on
energy and agriculture--interventions that the country team believed to
be appropriate to continue India's progress.
The Secretary's foreign assistance reforms are about making the
most strategic use of taxpayer dollars. In many instances, such as with
India, this means making tough decisions to ensure that our resources
are used to leverage host country resources and a commitment to change
in order to obtain maximum results.
______
QUESTIONS SUBMITTED BY SENATOR HAGEL
Question. Do you believe that the executive branch can successfully
develop a comprehensive, effective, transparent, and efficient country-
focused foreign assistance framework without changing the 1961 Foreign
Assistance Act? If so, please describe how a ``reformed'' U.S. foreign
assistance process would operate. If not, what legislative changes will
you seek?
Answer. The reforms that have been proposed so far--including the
creation of the Director of U.S. Foreign Assistance--are an attempt to
ensure that we make every effort within current statutory authorities
to fulfill our responsibilities to maximize U.S. foreign assistance
activities. With the reform process still in the early stages, we are
taking time to review carefully, with input from a wide range of
participants and stakeholders, what has been accomplished to date and
how we might strengthen or adjust our processes. If as part of these
ongoing assessments, we determine that successful reforms will require
legislative changes, we will consult with you and other members of our
authorizing committees to work together toward necessary change.
Question. What will be the staffing structure and size of the
Director of Foreign Assistance Office? Will you bring in new staff into
the F bureau? Who will be your key advisors on foreign assistance
reform?
Answer. To coordinate the entire gamut of activities associated
with managing the approximate $25 billion foreign policy programs of
the United States, I will have about 80 direct hires. I plan to have a
very lean administrative support mechanism and will rely as much as
possible on existing State Department support mechanisms to manage my
office.
I am pleased to inform you that Richard Greene will act as my
Deputy in the Director's office. He is experienced and committed, and I
believe you will find him to be very responsive. At USAID, Jim Kunder
will be acting as my Deputy, and I am confident that you are familiar
with his excellent work. In addition, my key advisors will be USAID
Assistant Administrators, State Under Secretaries and Assistant
Secretaries, and I will actively seek suggestions from colleagues at
the Millennium Challenge Corporation (MCC), the President's Emergency
Plan for AIDS Relief (PEPFAR), the National Security Council (NSC), the
Office of Management and Budget (OMB), and, of course, Congress and the
nongovernmental organization (NGO) community.
Question. In response to my question, you stated that 80 percent of
U.S. foreign assistance is under the direct control of the Director of
Foreign Assistance. However, Dr. Radelet testified on the second panel
that only 55 percent of U.S. foreign assistance is controlled by State
or USAID. Please provide a breakdown of the amounts and percentages of
U.S. foreign assistance that are under the direct control of State and/
or USAID, under ``policy guidance'' of State and/or USAID, and not
under any type of control of State and/or USAID. How much U.S. foreign
assistance is controlled by the Defense Department?
Answer. Attached please find a summary chart of the FY 2008
International Affairs Request, which appears in the Congressional
Budget Justification on pages 12 and 13. Section 1 of the chart,
``Department of State and USAID Bilateral Economic Assistance,'' lists
the accounts and programs under the approval authority of the Secretary
of State, which amount to approximately 80 percent of the entire
foreign operations request. The Director of U.S. Foreign Assistance and
USAID Administrator has direct approval authority over roughly 60
percent of all foreign assistance in the Foreign Operations request,
and has robust coordinating authority over assistance provided under
the Global HIV/AIDS (GHAI) and Millennium Challenge Corporation
accounts (at which corporation the Administrator serves on the board).
The Department of Defense is an important implementing partner of
the Department of State, implementing both Foreign Military Financing
and International Military Education and Training programs. The
Department of Defense also implements programs with foreign partners
that are authorized under Defense authorization acts using funds
appropriated in the Defense appropriations acts. Some of those programs
provide training and equipment for foreign forces, similar to that
provided under the Department of State's foreign assistance
authorities. Thus, for example, the Iraq Security Forces Fund and the
Afghan Security Forces Fund are used to provide training and equipping
to a range of security forces in those countries. Both of these
authorities must be exercised with the concurrence of the Secretary of
State. In addition, pursuant to section 1206 of the National Defense
Authorization Act, the President is authorized to direct the
Departments of Defense and State to jointly develop programs to build
the capacity of foreign military forces to be funded from Department of
Defense appropriations in an amount up to $300 million in this fiscal
year. Likewise, pursuant to section 1207 of the same act, the
Departments of State and Defense may concur on the provision of
reconstruction and stabilization assistance to be funded through DOD
appropriations up to $100 million per fiscal year. These authorities
have proved effective in addressing rapidly evolving security
situations. DOD has certain other authorities that they rely upon in
specific circumstances to provide assistance to foreign countries in
support of their mission, e.g., the Commanders Emergency Response Fund
and authorities to respond to humanitarian emergencies.
FY 2008 INTERNATIONAL AFFAIRS REQUEST
[Dollars in thousands]
------------------------------------------------------------------------
FY 2006 FY 2007 FY 2008
actual estimate request
------------------------------------------------------------------------
Department of State, USAID and $31,389,613 $29,916,040 $36,186,518
Foreign Operations
(International Affairs)......
========================================================================
I. Department of State and 18,074,969 17,713,444 20,266,913
USAID Bilateral Economic
Assistance...................
-----------------------------------------
Andean Counterdrug 727,155 569,350 442,812
Initiative (ACI)...........
Assistance for Eastern 357,390 269,200 289,322
Europe and the Baltic
States (AEEB)..............
Assistance for the 508,860 435,480 351,585
Independent States of the
Former Soviet Union (FSA)..
Child Survival and Health 1,591,425 1,518,359 1,564,279
Programs Fund (CSH)........
Global Fund to Fight AIDS, [247,500] [247,500] [0]
Tuberculosis, and Malaria
Development Assistance (DA). 1,508,760 1,508,000 1,041,248
Development Credit [21,000] [0] [21,000]
Authority--Subsidy (DCA)...
Economic Support Fund (ESF). 2,616,075 2,603,540 3,319,567
U.S. Emergency Refugee and 29,700 30,000 55,000
Migration Assistance (ERMA)
Foreign Military Financing 4,464,900 4,454,900 4,536,000
(FMF)......................
Global HIV/AIDS Initiative 1,975,050 1,852,525 4,150,000
(GHAI).....................
Global Fund to Fight AIDS, [198,000] [198,000] [0]
Tuberculosis and Malaria.
International Disaster and 361,350 348,800 297,300
Famine Assistance (IDFA)...
International Military 85,877 85,237 89,500
Education and Training
(IMET).....................
International Narcotics 472,428 703,600 634,600
Control and Law Enforcement
(INCLE)....................
Migration and Refugee 783,090 750,206 773,500
Assistance (MRA)...........
Nonproliferation, Anti- 405,999 392,821 464,000
Terrorism, Demining (NADR).
Peacekeeping Operations 173,250 170,000 221,200
(PKO)......................
P.L. 480 Title II........... 1,138,500 1,223,100 1,219,400
Transition Initiatives (TI). 39,600 40,000 37,200
USAID Operating Expenses 623,700 641,000 609,000
(OE).......................
Foreign Service Retirement [42,000] [38,700] [36,400]
and Disability Fund
[Mandatory]................
USAID Capital Investment 69,300 75,942 126,000
Fund (CIF).................
USAID Inspector General 35,640 37,915 38,000
Operating Expenses.........
Development Credit 7,920 3,469 7,400
Authority--Administrative
Expenses...................
Democracy Fund.............. 94,050 -- --
Iraq Relief and 4,950 -- --
Reconstruction Fund (IRRF).
========================================================================
II. Independent Department and 3,012,408 2,354,024 4,373,509
Agencies Bilateral Assistance
-----------------------------------------
African Development 22,770 22,225 30,000
Foundation (ADF)...........
=========================================
Broadcasting Board of
Governors:
International Broadcasting 633,257 636,060 618,777
Operations...............
Broadcasting to Cuba...... -- -- 38,700
Broadcasting Capital 10,754 7,624 10,748
Improvements.............
-----------------------------------------
Subtotal, Broadcasting 644,011 643,684 668,225
Board of Governors.....
=========================================
Department of Agriculture:
McGovern-Dole 99,000 98,260 100,000
International Food for
Education................
=========================================
Department of the Treasury:
Treasury Technical 19,800 23,700 24,800
Assistance...............
Debt Restructuring........ 64,350 20,000 207,300
-----------------------------------------
Subtotal, Department of 84,150 43,700 232,100
the Treasury...........
=========================================
Export-Import Bank:
Loan Subsidy.............. 74,000 26,382 68,000
Administrative Expenses... 72,468 69,234 78,000
Inspector General......... 990 -- 1,000
Direct Loans, Negative -50,000 -45,000 --
Subsidy..................
Offsetting Collections.... -- -- -146,000
-----------------------------------------
Subtotal, Export-Import 97,458 50,616 1,000
Bank...................
=========================================
Foreign Claims Settlement 1,303 1,417 1,684
Commission.................
Inter-American Foundation 19,305 19,268 19,000
(IAF)......................
International Trade 61,951 62,575 67,100
Commission (ITC)...........
Millennium Challenge 1,752,300 1,135,000 3,000,000
Corporation (MCC)..........
=========================================
Overseas Private Investment
Corporation (OPIC):
Administrative Expenses... 41,851 41,856 47,500
Net Offsetting Collections -223,000 -175,279 -236,000
Credit Subsidy............ 20,073 9,423 29,000
-----------------------------------------
Net Negative Budget -161,076 -124,000 -159,500
Authority, OPIC........
=========================================
Peace Corps................. 318,780 324,000 333,500
Trade and Development Agency 50,391 50,300 50,400
(TDA)......................
United States Institute of 22,065 26,979 30,000
Peace......................
========================================================================
III. Multilateral Economic 1,581,124 1,392,361 1,788,350
Assistance...................
-----------------------------------------
International Financial 1,277,236 1,066,198 1,498,950
Institutions...............
Global Environment 79,200 56,250 106,763
Facility.................
International Development 940,500 752,400 1,060,000
Association..............
Multilateral Investment 1,287 1,288 1,082
Guarantee Agency.........
Asian Development Fund.... 99,000 99,000 133,906
African Development Fund.. 134,343 134,343 140,584
African Development Bank.. 3,602 3,613 2,037
European Bank for 1,006 1,006 10
Reconstruction and
Development..............
Enterprise for the 1,724 1,724 29,232
Americas Multilateral
Investment Fund..........
Inter-American Investment 1,724 1,724 7,264
Corporation..............
International Fund for 14,850 14,850 18,072
Agricultural Development.
Arrears................... [5,453] [4,018] [175,000]
=========================================
International Organizations 303,888 326,163 289,400
and Programs (IOandP)......
========================================================================
IV. Department of State 8,721,112 8,456,211 9,757,746
Operations and Related
Programs.....................
-----------------------------------------
State Administration of 6,434,123 6,238,058 7,194,596
Foreign Affairs............
State Programs............ 4,421,359 4,561,170 5,013,443
Diplomatic and Consular 4,294,734 4,460,084 4,942,700
Programs...............
Ongoing Operations.... 3,614,018 3,664,914 3,977,940
Worldwide Security 680,716 795,170 964,760
Upgrades.............
Capital Investment Fund. 58,143 34,319 70,743
Centralized IT 68,482 66,767 --
Modernization Program..
------------------------------------------------------------------------
Question. Also in your testimony, you highlight ``detailed country-
level operations plans that describe how resources are being used'' and
that such plans have been developed for 67 countries already. Will you
make these plans available to this committee? Will these plans be
available to the public?
Answer. I am committed to providing as much information on our
foreign assistance activities as possible to our oversight committees
and congressional partners. We are currently looking at ways to make
the information obtained from the FY 2007 Operational Plans as user
friendly and available as we can. We are likewise exploring formats for
future years' Operational Plans with an eye toward the same goal. In
the meantime, if there is particular FY 2007 country or other
information that you would like to discuss, we would be happy to meet
with you.
______
Response of Dr. Brainard to Question Submitted by Senator Lugar
Question. Why were new institutions created, such as the Millennium
Challenge Corporation and the President's Emergency Plan for AIDS
Relief, to address global challenges rather than utilizing the U.S.
Agency for International Development? Are those concerns still
relevant?
Answer. In the case of the Millennium Challenge Corporation (MCC)
and the President's Emergency Plan for AIDS Relief (PEPFAR), the
administration decided, after extensive internal deliberations, to
create new institutions rather than making such initiatives part of the
U.S. Agency for International Development.
The rationale underlying the decision to create the MCC as an
independent agency governed by its own board was based on the sense
that the delivery of Millennium Challenge Account (MCA) funds should be
``freed from bureaucratic inertia, should be sufficiently independent
from political interference that funds are invested in meritorious
recipients and not on the basis of foreign policy considerations, and
should be allowed sufficient flexibility by Congress to operate
expeditiously.'' \1\ While at the time we agreed strongly with these
objectives, a group of experts and I concluded that ``the existence of
two U.S. Government agencies devoted to providing development
assistance would appear to violate all the tenets of efficient,
effective government (and common sense).'' \2\ We instead recommended
that the MCC be placed within USAID and that the overall entity be
given greater independence and stature. We noted that the integration
of MCA with USAID would reduce costs and boost effectiveness because it
would prompt the sharing of infrastructure and professional expertise
while also leading to greater coherence across the spectrum of
development programming. This integrated alternative was also
attractive because it would strengthen rather than weaken U.S.
capability to speak with one voice to development partners. The
potential existed to integrate the MCA with USAID while legislatively
ensuring independence, flexibility, and an innovative approach. Under
this alternative, the Chief Executive Officer of the MCC would serve as
a Deputy Administrator at USAID and lessons learned from mainstreaming
best practices into the MCC endeavor would more easily and directly
translate to improvements at USAID.
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\1\ Lael Brainard, Carol Graham, Nigel Purvis, Steve Radelet, and
Gayle Smith, ``The Other War: Global Poverty and the Millennium
Challenge Account,'' Brookings Press, 2003, p. 128.
\2\ IBID.
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The decision to have a U.S. global AIDS coordinator run PEPFAR out
of a newly created bureau at the State Department was based on a desire
for domestic and international audiences to view the program as a bold
appendage of U.S. foreign policy and a notion that this position would
allow the coordinator to be a broker between USAID and the Department
of Health and Human Services. This approach stemmed from the
perspective that the larger post-9/11 context of U.S. projection of
power required a balance to military initiatives, but it did not take
into account the weaknesses of the State Department as an operational
agency.\3\ The fact that the Office of the Global AIDS Coordinator
(OGAC) was created apart from our primary agency for international
development and its global health infrastructure served to highlight
the difference in approach between OGAC's treatment oriented
programming and the overwhelmingly prevention oriented programs already
under implementation by USAID and Centers for Disease Control. Several
of the same problems posed by the placement of the MCC--incoherence,
the challenges of transferring innovation-based lessons learned, and a
weakened U.S. capability to speak with one voice on development
issues--were further compounded by the establishment of OGAC at the
State Department.
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\3\ In his chapter, ``What Role for U.S. Assistance in the Fight
Against Global HIV/AIDS?'' in Lael Brainard, ed. ``Security by Other
Means: Foreign Assistance, Global Poverty, and American Leadership''
(Brookings, 2007), J. Stephen Morrison makes these arguments and notes
that PEPFAR's institutional home failed to deliver some anticipated
advantages.
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The administration intentionally set MCC apart, heeding concerns
that MCA funds should be provided on the basis of performance and not
political calculus, but it tied PEPFAR to the established U.S. foreign
policy structure. The original concerns about maintaining development
assistance independent from political interference and shorter term
foreign policy considerations are still valid. Such concerns justify a
separation from direct State Department control for both MCC and USAID.
This argument further compels us to reconsider the institutional
placement of OGAC. Also still relevant are the concerns about the
cumbersome and outmoded bureaucracy of USAID, with its excessive
regulations and requirements, which led to an aversion to integrate new
initiatives within an agency that would otherwise be best-suited for
the job. Although such concerns are still relevant, they should lead to
a different path. The administration avoided the considerable
investment necessary to fundamentally reform our development assistance
capabilities--a daunting task our government must now confront. In the
short-term such a fragmented approach may have resulted in more rapid
programmatic change, but it has served to further weaken our overall
foreign assistance infrastructure and posture.
______
Responses of Sam Worthington to Questions Submitted by Senator Lugar
Question. Could you provide, for the record, a chart of the level
of USAID operating expenses over the past 25 years?
Answer. I've enclosed a spreadsheet that charts USAID Operating
Expense (OE) levels for the last 25 years, USAID's total budget
authority for that period, and OE as a percentage of USAID's budget
authority. You'll also find a graph (Table 1 below) which demonstrates
the downward trend in OE funding relative to total budget authority
from 1982 to 2007, and a graph (Table 2 below) that adjusts the numbers
for inflation.\1\
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\1\ OMB Public Budget Database.
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The budget numbers in the attached spreadsheet clearly demonstrate
an alarming downward trend in USAID Operating Expenses relative to
total budget authority over the past 25 years, but the problem is even
more serious than is apparent from looking at the top-line OE numbers.
Over the last 15 years, larger and larger portions of Operating
Expenses have been consumed by costs that were not as substantial in
the 1980s when OE was generally funded at its highest levels. For
instance, computers and other technology that were not as widespread 20
years ago have become critical to doing business in the modern era, and
their costs are funded by USAID's Operating Expenses. The agency's rent
also consumes a greater proportion of the OE budget than it once did:
USAID's rent costs increased by more than 10 percent between 1995 and
2003.\2\ These increasing costs, when combined with decreasing
appropriations for Operating Expenses, have forced the agency to
operate with an ever-smaller workforce, which in turn compromises
program effectiveness.
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\2\ GAO-03-1152R USAID Operating Expenses.
[Dollars in thousands--actual amounts]
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Account 1982 1983 1984 1985 1986 1987 1988 1989 1990
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Agency for International Development
USAID Operating expenses.................... 331,000 346,438 372,512 394,033 360,167 348,263 406,000 429,500 431,894
Total Budget Authority...................... 1,210,901 1,137,019 1,315,947 1,770,642 1,256,299 1,444,600 1,576,388 1,556,383 1,825,588
OE as % of Total Authority.................. 27.34% 30.47% 28.31% 22.25% 28.67% 24.11% 25.76% 27.60% 23.66%
Adjusted for Inflation
USAID Operating expenses.................... 713,275.84 723,307.59 745,558.21 761,512.72 683,361.02 637,508.30 713,671.12 720,274.96 687,160.87
Total Budget Authority...................... 2,609,385 2,373,915.30 2,633,781.16 3,421,963.13 2,383,632.49 2,644,393.71 2,770,991.62 2,610,066.84 2,904,584.54
OE as % of Total Authority.................. 27.34% 30.47% 28.31% 22.25% 28.67% 24.11% 25.76% 27.60% 23.66%
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Account 1991 1992 1993 1994 1995 1996 1997 1998 1999
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Agency for International Development
USAID Operating expenses.................... 441,000 474,122 518,035 518,697 514,000 469,000 488,000 479,000 501,000
Total Budget Authority...................... 2,493,729 2,465,613 2,817,219 3,439,772 2,927,000 3,359,000 3,360,000 3,539,000 3,809,000
OE as % of Total Authority.................. 17.68% 29.23% 18.39% 15.08% 17.56% 13.96% 14.52% 13.53% 13.15%
Adjusted for Inflation
USAID Operating expenses.................... 673,315.04 702,731.26 745,500.76 727,817.29 701,350.30 621,593.89 632,268.61 611,089.39 625,344.83
Total Budget Authority...................... 3,807,404.20 3,654,467.27 4,054,241.34 4,826,556.45 3,993,876.14 4,451,884.58 4,353,324.86 4,514,917.25 4,754,368.19
OE as % of Total Authority.................. 17.68% 19.23% 18.39% 15.08% 17.56% 13.96% 14.52% 13.53% 13.15%
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Account 2000 2001 2002 2003 2004 2005 2006 2007
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Agency for International Development
USAID Operating expenses.................... 523,000 534,00 567,000 589,000 653,000 640,000 725,000 647,000
Total Budget Authority...................... 2,742,000 4,226,000 3,742,000 4,941,000 4,682,000 4,813,000 5,169,000 3,900,000
OE as % of Total Authority.................. 19.07% 12.64% 15.15% 11.92% 13.95% 13.30% 14.03% 16.59%
Adjusted for Inflation
USAID Operating expenses.................... 631,575.65 627,017.31 655,403.46 665,662.83 718,849.64 681,450.90 747,823.47 647,000
Total Budget Authority...................... 3,311,243.66 4,962,125.77 4,325,431.67 5,584,108.74 5,154,140.91 5,124,723.69 5,331,787.60 3,900,000
OE as % of Total Authority.................. 19.07% 12.64% 15.15% 11.92% 13.95% 13.30% 14.03% 16.59%
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Sources: OMB Public Budget Deatabase and Consumer Price Index Calculator.
Question. Could you describe, in more detail, the impact on the
USAID organization of operating expense constraints?
Answer. Operating expense constraints, among other things, have
resulted in the hypercentralization of USAID planning and program
design, and in the months since Secretary Rice's announcement of
Transformational Diplomacy in January 2006, that hypercentralization
has even manifested itself in the suggestion that some missions should
close in certain ``nonstrategic'' countries around the globe. In a memo
that former Director of Foreign Assistance Randall Tobias sent to all
USAID field staff on April 12, he described a process by which:
``[USAID] will need to shift resources away from some functions,
including those nations where USAID's full-scale mission platforms are
not critical to delivering U.S. assistance effectively . . .
Specifically, I will propose the deployment of USAID `development
attaches' to assist U.S. chiefs of mission and countries teams in such
nations.''
It would seem that, in a time when the White House has acknowledged
the importance of development relative to defense and diplomacy, the
administration would be looking for ways to expand USAID's presence in
the developing world. Rather, the administration requested a total OE
number that was 15 percent lower than the FY 2006 actual budget for OE.
The administration's request, when viewed in the context of the
quotation above, was troubling to say the least. Budgetary and
management decisions such as these will lead to the overcentralization
of USAID's strategic planning and program management processes and
compromise aid effectiveness by moving strategic decision points from
the field to headquarters. For example, a 2005 study conducted by the
USAID mission in Senegal found that the ability of a donor organization
to achieve program objectives is closely linked to the ability to make
key program implementation decisions in-country, rather than at the
donor's headquarters. The results of the study, which compared eight
different donor organizations operating in Senegal at the time,
indicate that donors with few management decisions delegated from their
headquarters had very low disbursement rates (10-15 percent of funds
available in the beginning of fiscal years were spent by the end of
that year), while USAID, which delegated the most decisions from
headquarters, had the highest disbursement rates.\3\
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\3\ ``Senegal MCA Jumpstart Exercise Completion Report,'' January
2005, USAID Senegal (submitted to GAO March 2005).
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Disbursement rates are a prerequisite for achieving results and
thus are a good broad measure of a key aspect of performance that can
be compared across donors and program types. Adequate funding
disbursement is critical to USAID's program effectiveness, and it is
one of many factors that risks being compromised if the agency lacks
the top-notch human resources to make important decisions in the field,
rather than here in Washington, DC. According to data compiled by
USAID's Office of Policy and Program Coordination (PPC)--before it was
folded into the State/F Bureau in 2006--the number of USAID direct
hires working abroad dropped by 29 percent between 1992 and 2005, from
1,173 to 833.\4\ A 15-percent cut in Operating Expenses would certainly
have exacerbated this alarming trend, and we are very heartened that
both the House and Senate State, Foreign Operations Appropriations
Subcommittees increased funding for USAID's Operating Expenses
substantially, by $17 million and $36 million above the
administration's FY 2008 request, respectively.
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\4\ ``USAID 13-Year Workforce Levels.''
Question. How does the alleged loss of institutional knowledge
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impact the effectiveness of USAID programs?
Answer. The number of USAID Foreign Service Officers (FSOs) has
decreased substantially over the last 15 years, which has led to the
troubling loss of technical expertise at the agency. In the 1990s, for
instance, 37 percent of the agency's workforce (including direct hires
and FSOs) left without being replaced, or was laid off in the 1995
reduction-in-force (RIF), and the current attrition rate is outpacing
new hires by more than two-to-one.\5\ In 2006, 65 FSOs retired while
only 29 were hired, and about half of all FSOs have been recruited in
the last 6 or 7 years. Even when new officers are hired, it takes 2
years to fully train them for entry-level jobs.\6\ The result is that
the workforce increasingly lacks the institutional memory and technical
knowledge that make USAID widely recognized as a leading bilateral
development agency among other donor governments and in the developing
world.
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\5\ Zeller, Shawn, ``On the Workforce Roller Coaster at USAID.''
The Foreign Service Journal, April 2004.
\6\ Source: American Foreign Service Association.
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Because of the ever-constricting size of USAID's workforce, the
agency has been forced to manage an increasingly large portfolio with
fewer and fewer human resources. As Jim Kunder, USAID's Acting Deputy
Administrator, noted at a recent Advisory Council on Voluntary Foreign
Assistance (ACVFA) meeting, ``Federal guidelines indicate that the
average [U.S. Government] contracting officer should manage around $10
million in contracts per year; in USAID each contracting officer
oversees an average of $57 million in contracts. At some point the
system's management and oversight capabilities are simply
overstressed.'' \7\ USAID's Foreign Service Officers are our country's
first line of defense in many fragile states and countries in conflict,
and it is extremely disconcerting that they have been asked by our
government to do so much with so little.
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\7\ ACVFA Public Meeting, May 23, 2007.
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There are several problems that are directly attributable to the
long-term reduction in USAID's human resources and the extraordinary
management burden being carried by its remaining workforce. First, the
shrinking size of the agency's direct-hire workforce has meant that
most Foreign Service officers work as Cognizant Technical Officers
(CTOs), managing programs rather than designing them. Accordingly, the
technical aspects of program development have been outsourced to
contractors, and the result is that much of the technical expertise
that once resided within the agency has been lost. A secondary problem
that results from this outsourcing of technical expertise, as well as
the high attrition rates at USAID generally, is that many important
development projects are being managed by unseasoned Foreign Service
officers who lack the experience to do so effectively. Whereas in the
1970s and 1980s a USAID development program would likely have been
managed by agricultural or public health specialists, for example,
those experts have since become contractors and have yet to be replaced
at the agency.\8\
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\8\ Andrew Natsios, personal interview, June 29, 2007.
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Second, the management burden that has been placed on USAID's
contracts officers, noted by Acting Deputy Director Kunder at the ACVFA
meeting, has contributed to a troubling ``bundling'' phenomenon, in
which giant umbrella contracts are being awarded to very large
contractors or consortia of contractors. While these bundled contracts
often provide many subgrants and subcontracts to smaller organizations,
they are by their very nature biased to large institutions, which have
the capacity to successfully manage them. This favoring of very large
contractors not only reduces competition, and therefore the purchasing
power of American tax dollars, but it also stifles the innovation of
smaller indigenous nongovernmental organizations, which are often best
able to ascertain and address the needs of communities throughout the
developing world. These contracts, which shift the management burden
away from U.S. Government personnel, discourage competition, and fail
to stimulate innovation, seriously compromise aid effectiveness and are
a direct result of the shrinking corps of Foreign Service officers at
USAID.
The reduction of personnel at USAID has also disrupted what was
once a valuable method of sharing lessons learned and best practices
around the globe, namely the rotation of FSOs between different
missions and regions. As the contingent of FSOs serving overseas
continues to shrink, there are fewer and fewer opportunities to
transfer technical expertise from one country program to another.
Again, this speaks to the negative impact on program effectiveness
which is directly related to the loss of technical expertise at USAID.
The failure to capture lessons learned also extends to USAID's ability
to effectively monitor and evaluate its programs, as many of those
functions have been shifted away from the agency to the State/F Bureau
or to contractors. In either case, the technical capacity of USAID is
significantly reduced, to the detriment of aid effectiveness.
The Operating Expense constraints at USAID have also led to a
proliferation of personnel systems at the Agency. According to former
Administrator Andrew Natsios, there were 13 different personnel systems
in place when he led the Agency from 2001 to 2005, many of them
designed to circumvent OE and human resources restrictions.\9\ In order
to implement its programs, USAID has even been forced to outsource jobs
that require technical expertise to other U.S. Government agencies like
the Department of Health and Human Services and the Department of
Agriculture. This is problematic, according to Natsios, because the
USAID Administrator lacks direct control over his own workforce, even
when it comes to employees of the United States Government.
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\9\ Andrew Natsios, personal interview, June 29, 2007.
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Saving lives and alleviating the suffering of the world's poorest
people is a noble goal, and I'd like to close by thanking you again for
your committee's leadership on this issue, and for your own personal
leadership on behalf of humanitarian and international development
causes. When I spoke before the committee on June 12, I discussed the
longstanding partnership between InterAction, Congress, USAID, and the
world's poor, and I see this effort to improve technical capacity at
USAID as an excellent example of that partnership. In working with
Congress and career Foreign Service officers to improve the agency's
ability to implement effective development programs around the globe,
we are all working to lift the world's poorest people out of extreme
poverty. Thanks again for this opportunity.
______
Responses of Steven Radelet to Questions Submitted by Senator Lugar
FOREIGN ASSISTANCE ACT
Questions. You assert that the Foreign Assistance Act of 1961 ``is
badly out of date'' and that a new act ``is central to clarifying the
central objectives and methods of foreign assistance to meet U.S.
foreign policy goals in the 21st century.''
1. What are the major components of such reform?
2. What would you recommend as to how we can stem
earmarking?
3. Would you change the human rights and other restrictions
contained in the current law?
Answer to 1. The Foreign Assistance Act of 1961 and the major U.S.
Government institutions charged with implementing foreign assistance
programs were designed for the cold war for a set of threats that no
longer apply. The act has been amended many times and is now over 2,000
pages long and contains at least 33 different goals, 75 priority areas,
and 247 directives. The act leads to conflicting objectives, heavy
administrative burdens, and weak results. Our current foreign
assistance apparatus consists of at least 20 separate government
agencies operating without an overarching national mission and
sometimes at cross-purposes. The executive branch and Congress should
work together to reach consensus on several key reform elements as part
of a new FAA, including the following:
Clarifying objectives: Identify a small number (say around
five) of key objectives and purposes for foreign assistance.
Rationalize and strengthen organizational structure: Ideally
fold all assistance programs into one Cabinet-level agency, or
name one person to coordinate all major aid programs, and
significantly strengthen the capacity of USAID.
Clarify the principles for guiding policies and programs
(such as local ownership, coordination and harmonization with
other donors, transparency, use of budget support, etc.) and
how these mechanisms would differ across countries.
Strengthen monitoring and impact evaluation so that we can
better learn what works, what doesn't, and why.
Review all earmarks and restrictions (including tied aid)
and maintain only those that are of critical importance.
Strengthen the budget and reporting processes, including
reviewing the option of moving toward a 4-year strategic plan,
and moving toward primarily regional or country-based budget
lines rather than sector-based approaches.
One option to move forward would be for Congress to create a
commission specifically mandated to review and redraft the FAA, a job
that is not being tackled by Congressman Wolf's HELP Commission.
Members could include congressional, executive branch, independent
experts, and representatives from other donors and recipient
governments.
Answer to 2. Earmarks are an inherent tension in the struggle
between the Congress and the executive branch to assert their
respective roles in foreign policy and spending priorities. Earmarks
are not necessarily bad in and of themselves at an individual level,
but problems arise when there are too many earmarks, they conflict with
each other and with major goals, and they add to costs and reduce the
benefits of our assistance. The FAA has too many conflicting earmarks,
so a major rationalization is required. Some key steps toward doing so
include:
Build consensus on overall goals and objectives. The process
of building a new consensus around the critical goals and
objectives of foreign assistance should help bring the
priorities of the Congress and the executive branch into closer
alignment and will thereby reduce the pressure for earmarks.
The MCA legislation has no earmarks, partly because there was
strong agreement on the key goals. If the goals are not clear,
than everything seems reasonable, and earmarks proliferate.
Expand the budget consultation process. The annual process
of building the President's next year budget is a closed,
internal executive branch affair. As part of a new FAA the
executive branch and Congress should agree on new ground rules
that will open the budget process to greater consultation with
the Congress. The executive branch should consult with key
congressional actors during the process of building the budget,
take into consideration their priorities, and give them a
little ownership, all of which can contribute to the greater
likelihood that congressional leaders are able to accept and
defend the President's budget.
Rationalize institutional and reporting lines. The plethora
of aid agencies leads to confusion and poor communication with
Congress, and therefore to more earmarks. A more rational
structure would lead to clearer lines of authority and
reporting, and stronger communication with Congress, which
would reduce pressure for earmarks.
Answer to 3. There are two key issues on restrictions (similar to
earmarks): First, all restrictions should be reviewed. Second, some
should be retained, and in my judgment the human rights restrictions
should remain.
The process of developing consensus and writing a new FAA should
encompass a review and justification of all of the restrictions which,
over time, have been added through amendments without reviewing those
that already exist. The review should aim to:
Remove out-of-date restrictions.
Justify the retention of restrictions and grouping them into
several categories by intent and purpose, with common
structures developed for each category relating them to broader
objectives. There should be only a few, clear, common standards
for applying waivers--(i) who is the decisionmaker (when the
President, when the Secretary, when the senior program officer,
etc)--and common standards and definitions for the basis of a
waiver (national interest, national foreign policy interest,
national security--get agreement on one or two terms; and the
basis of an administrative waiver might be program efficiency
or some other standard).
Place all restrictions in a single section of the act.
This kind of review would lead to a streamlining of current
restrictions, and the retention of some of the most important. I would
support retaining the current restrictions on U.S. foreign aid to
countries with human rights violations, along with restrictions related
to child labor and human trafficking.
IMPACT EVALUATION
Your testimony suggests that the U.S. should support and join the
International Initiative for Impact Evaluation which joins foreign
assistance providers from around the world to provide independent
evaluations.
1. What is your assessment of the costs and benefits
evaluations?
2. Why has there been reluctance to implement these
evaluations?
3. How would the evaluations help ensure that U.S.
development dollars were not misused?
Answer to 1. The costs of rigorous impact evaluations vary widely,
depending on methods, context, and the duration of time between
baseline and end-of-program period. As a rough guide, a small- to
moderate-sized impact evaluation might cost about $250,000 on average;
a large impact evaluation might cost about $750,000. Depending on the
design, it is possible for much of this cost to be included in the
implementation of the program. For example, it is often reasonable to
include a portion of the baseline data collection costs in program
budgets because the information is needed for establishing beneficiary
needs, targeting benefits, and other program-related activities. In
addition, activities typically included in the program implementation
to provide information to managers can, in some cases, be modified to
provide much (rarely all) of the data required for end-of-project
evaluation. However, evaluation is a specialized activity requiring
extensive data collection and analysis; good evaluation isn't cheap.
Although impact evaluations are generally more costly than
monitoring of outputs and/or process evaluations, the knowledge
generated by impact evaluations can have extremely large benefits
relative to its costs if findings are relevant and acted upon. For
example, Mexico undertook a rigorous impact evaluation of a new
conditional cash transfer program beginning in 1997. Without the study,
it is likely that the program would have been eliminated under a
subsequent administration and alternative uses of the program funds
would probably not have been as effective. Thus, by preserving the
program, the US$2 million spent on evaluating the intervention can be
conservatively estimated to have led to an additional 275,000 children
making the transition to secondary school schooling and 400,000
children aged 12 to 36 months, at risk of stunting, experiencing
incremental growth of 8 percent--a rather substantial benefit/cost
ratio.
Other examples demonstrate similarly high returns to rigorous
impact evaluations. In Mexico and Bangladesh, studies found that
important nutritional programs were having lower than expected impact
on children's growth. The studies led to important reformulations of
strategies and food supplements to improve the return from these large
national public expenditures. In Kenya, a study of agricultural
extension services aimed at improving rural productivity and incomes
found that it had only been effective in areas with low productivity
and that the information, messages, and approaches to outreach needed
to be updated and adapted to changes that had occurred in farming
communities.
Moreover, the benefits of good evaluation can be multiplied many
times over when the knowledge is used by decisionmakers elsewhere
facing similar policy and program decisions. So, for example,
information about the response of families to a girls' secondary school
scholarship program in Bangladesh can inform design of programs to
enhance girls education in Pakistan and India--and even in Senegal.
This is the global public good aspect of the knowledge generated
through impact evaluation.
Beyond the strategic value of the knowledge generated is the badly
needed reputational benefit to the development community when rigorous,
credible evaluations are undertaken. As Senator Lugar said, ``If
development projects are transparent, productive, and efficiently run,
I believe they will enjoy broad support. If they are not, they are
likely to fare poorly when placed in competition with domestic
priorities or more tangible security-related expenditures.''
Answer to 2. In addition to the inherent reluctance of most
bureaucracies to risk exposing failure, there are two core incentive
problems that have led to a situation of persistent underinvestment in
impact evaluation:
A portion of the knowledge generated through impact
evaluation is a public good. Those who benefit from the
knowledge include--but go far beyond--the ones directly
involved in a program and its funding. But because the cost-
benefit calculation by any particular agency might not include
those benefits, an impact evaluation appears to be costlier
than appears to be justified by the returns.
Development institutions typically are ``doing''
organizations, which reward timely implementation rather than
learning or ``building evidence.'' Although those who are
designing and implementing programs recognize the value of
having a strong evidence base to draw upon, faced with the
choice to invest in evaluation or move implementation ahead,
they will opt for implementation. Development professionals
find it extremely difficult to protect the funding for good
evaluation, or to delay the initiation of a program to design
the evaluation and conduct a baseline study. Time and again,
resources initially earmarked for evaluation are redirected
toward project implementation, perpetuating the cycle.
Answer to 3. Global progress depends on the success of programs to
improve health, literacy and learning, and household economic
conditions--and year after year governments, NGOs, and private actors
dedicate resources to design and implement promising and innovative
approaches to achieve those goals. Yet after decades in which U.S.-
funded donor agencies have disbursed billions of dollars for
development programs, and developing country governments and NGOs have
spent hundreds of billions more, it is disappointing to recognize that
we know relatively little about the net impact of many important
approaches. Instead, the focus has been on how much money has been
disbursed and how many outputs have been generated. Addressing this gap
in knowledge--systematically building more evidence about what works in
development programs--would make it possible to improve the
effectiveness of domestic spending and development assistance in low-
and middle-income countries, and to sustain support for such
expenditures over the long term. Moreover, the simple act of
considering evaluation design at the inception of a program forces the
appropriate discussion of what relevant and measurable change is being
sought, and how. Finally, undertaking rigorous evaluation helps to
signal to key constituencies, including the American taxpayer, that
good stewardship is being exercised over precious public dollars that
are intended to improve the lives of families in poor countries.