The Foreign Service Journal, November 2009

I n recent years the American for- eign policy establishment and in- formed public opinion have again come to realize the key importance of bilateral economic development assis- tance — foreign aid — in foreign pol- icy. Development assistance is “soft power.” It fills an essential role not only in attaining international political objectives and dealing with global poverty, but also in addressing the growing challenges of humanitarian crises, failed states, terrorism, disease, climate change and a host of additional problems. As such, it is one of “the three Ds” of foreign policy — diplo- macy, development and defense. Yet just when we most need an ef- fective apparatus to deliver bilateral development assistance, the structure we have remains grossly underfunded and understaffed. While attention is now (belatedly) being given to these deficiencies, development is still a “poor cousin” of diplomacy and de- fense. Too Many Aid Spigots To be sure, many agencies and en- tities provide and manage U.S. bilat- eral economic development assistance. But there are too many spigots, each with its own manager, staff and budget. Frequently they compete for person- nel and projects, leading to disputes over who is in charge. Much time is spent both inWashington and the field attempting coordination, yet recipient governments and other aid donors re- main confused. These inefficiencies waste a significant portion of our an- nual bilateral assistance budget. Contrary to popular belief, the U.S. Agency for International Development manages less than half of our annual development assistance budget. And even that figure includes food aid pro- grammed in cooperation with State and Agriculture. The George W. Bush administra- tion deliberately placed two massive new programs outside the purview of USAID, setting up the Millennium Challenge Corporation as a separate agency and placing the President’s Emergency Plan for AIDS Relief and several other new health initiatives in State. The department also has offices dealing with humanitarian crises, refugees and educational exchanges, and manages U.S. contributions to de- velopment programs of the United Na- tions. The Department of Defense de- votes increasing attention and re- sources in many countries to activities that used to be the responsibility of USAID, such as community develop- ment, roads, schools and clinics. This trend has reached the point that Army officers these days often talk and act like USAID mission directors. Meanwhile, many Cabinet agencies —Treasury, Justice, Labor, Agriculture and Health &Human Services, among others — have created their own de- velopment assistance offices. In addi- tion, Treasury manages relations with multilateral financial institutions such as the World Bank, and administers debt relief for developing countries. Two other government agencies were spawned in USAID, but later spun off: the Overseas Private Invest- ment Corporation and the Trade and Development Agency (which I once briefly headed). Both assist American companies to invest in developing countries, using tools such as political risk insurance, loan guarantees and feasibility studies. They also encour- age such countries to purchase goods and services from the U.S. Finally, there is the Peace Corps, a develop- ment assistance agency that has always Just when we most need an effective apparatus to deliver foreign aid, USAID is grossly underfunded and understaffed. N O V E M B E R 2 0 0 9 / F O R E I G N S E R V I C E J O U R N A L 11 Merge USAID Fully into State B Y R AYMOND M ALLEY S PEAKING O UT