The Foreign Service Journal, December 2008

34 F O R E I G N S E R V I C E J O U R N A L / D E C E M B E R 2 0 0 8 ne of the enduring lega- cies of the George W. Bush administration will be the expansion of the United States government’s foreign aid program, which increased by the largest amount since the Kennedy administration (or, depending on how you calculate it, since the Truman administration). The for- eign aid budget has more than doubled, rising from $10 billion in FY 2000 to over $23 billion in FY 2007. While some of this assistance has been focused on the Muslim world, a far greater portion has been devot- ed to sub-Saharan Africa, where the U.S. government’s aid program has increased from $1.3 billion in FY 2000 to over $5 billion in 2008. Perhaps even more impor- tant, this increased funding has been accompanied by conceptual changes in how foreign aid is spent. The Millennium Challenge Corporation, the signa- ture Bush reform, has taken three of the central find- ings from the latest research on development assis- tance and created an entirely new approach to foreign aid spending. First, foreign aid programs that are locally owned and designed are more likely to succeed than those imposed by outside donors. Second, efforts by international financial institutions to impose reform through what is called conditionality (where the IFIs agree to provide aid if the developing countries later implement governance and economic policy reforms) have not been a great success because recipients have taken the aid without implementing the reforms. Third, we now know what we earlier suspected: the most critical factor in development is good, strong, local leadership. Accordingly, the Millennium Chall- enge Corporation rewards reform-minded political leadership that demonstrates good performance on 17 indicators of development. Even in countries that do not qualify, the so-called “MCC effect” is being felt as reformers press for changes to boost their countries’ performance indicators so they will qualify. And in Washington, the board structure created by the F O C U S O N I D E A S F O R T H E N E W A DM I N I S T R AT I O N T HE F OREIGN A ID R EFORM A GENDA A LL FOREIGN ASSISTANCE FUNCTIONS SHOULD BE CONSOLIDATED WITHIN USAID OR SOME NEW ENTITY ENTIRELY SEPARATE FROM THE S TATE D EPARTMENT . B Y A NDREW S. N ATSIOS O Andrew Natsios was Administrator of the U.S. Agency for International Development from 2001 to 2006, and from 2006 through 2007 he served as President Bush’s special envoy to Sudan. He has been a professor in the practice of diplomacy at Georgetown University’s Walsh School of Foreign Service since January 2006 and is also a senior fellow at the Hudson Institute. Ambassador Natsios is the author of numerous articles on foreign policy and humanitarian emergencies, as well as two books: U.S. Foreign Policy and the Four Horsemen of the Apocalypse (Center for Strategic and International Studies, 1997) and The Great North Korean Famine (U.S. Institute of Peace, 2001).