The Foreign Service Journal, December 2004

and a competent government. Consider the following case studies: • Strong economic growth in El Salvador in the post-conflict period contributed significantly to the gov- ernment’s ability to implement the peace accords during the 1990s. Inflows of foreign aid and private cap- ital, along with some international debt forgiveness and exchange rate reforms, helped to stabilize the Salvadoran economy and mobilize resources for rapid reconstruction. Similar policies in Central America, focused on comprehensive macroeco- nomic adjustment and structural reforms, reduced hyperinflation in Nicaragua in the late 1980s and early 1990s and helped lower inflation in other countries in the region, as well. • The international community’s work in Afghanistan underlines the importance of coordinated assistance in dealing with all aspects of the econ- omy, including such dysfunctional ele- ments as the warlord economy, the black market, smuggling, drugs and the subsistence sector. General eco- nomic progress is retarded by the pro- clivity for violence and vulnerability to plunder and looting in closed systems that can inhibit production and desta- bilize livelihoods and entrepreneurial opportunities. Export and other for- eign trade opportunities and tariff reform are often more important than other forms of assistance to the pri- vate sector. • A U.S. coordinating office could also focus American economic assis- tance on programs that encourage local entrepreneurship, and that include women. Both approaches are more likely to avoid charges of colo- nialism than those dominated by for- eign public or private organizations. Rethinking Foreign Policy Structure and Resources Although past experience builds a strong case for the necessity of nation- building policies, they are unlikely to be sufficient without adequate organi- zational service structures and resources. Explicit, coherent and transparent policies effectively coor- dinated within the U.S. government by the State Department and an interagency committee chaired by the president’s national security adviser, as called for in the Lugar-Biden bill, could more effectively draw on lessons from the past, help establish priorities, and guide the coordination and integration of activities during times of chaos and confusion. The policies must, of course, be applied with due regard for the unique cir- cumstances shaped by different cul- tural, political and economic condi- tions in each country that requires reconstruction. A strong need still exists for a Response Readiness Corps and Reserve, as outlined in the Lugar- D E C E M B E R 2 0 0 4 / F O R E I G N S E R V I C E J O U R N A L 59