U.S. foreign assistance can play an outsized role in more than half the countries in the world. Here are five priorities for USAID in the period ahead.

BY STEVEN E. HENDRIX

As a new administration enters the White House, it is opportune to look at the direction of the U.S. Agency for International Development (USAID), the spearhead for one of the essential elements of national security. The March 2006 National Security Strategy advanced the “3 Ds”—defense, diplomacy, and development—as the core components of national security. Since then, all administrations have carried forward this same framework in one version or another.

For more than half of the countries in the world, development is the most important tool in the U.S. national security toolbox, despite the fact that defense garners most “national security” interest and accounts for the bulk of the national security budget.

This article reviews the role of development, discusses how foreign assistance works, describes what effective foreign aid looks like, and proposes five steps needed now to make it fit for purpose in the coming decade.

The Three Ds’ Division of Labor

The three Ds are interdependent and work together throughout the world, but they each have particular areas of responsibility, and depending on the foreign policy situation, one or the other may be primary at any given time. To get a clearer perspective on the role of development and appreciate what it means, it is useful to review who does what in national security.

Where there is war, the Department of Defense (DoD) is the most important national security tool, as in Iraq and Afghanistan, for instance—but of the 195 countries recognized in the world, that’s at most three countries at a time. DoD is also the most effective tool in North Korea, where diplomacy and development are of marginal impact. Even where diplomacy is engaged, DoD may still play a central role, for containment (think Iran). Defense is also critical in Eastern Europe to contain and prevent Russian aggression. It guards against Beijing’s encroachment on Taiwan and in the Pacific, and ensures the safety of the Gulf countries.

All told, defense may be the most important national security tool in, perhaps, 15 countries. Yet in terms of the White House and public attention, defense is what takes up most of the “national security” interest. And DoD gobbles up the lion’s share of the national security budget (about 13 percent of the federal budget), too.

Congress straitjackets the use of funds and creates an accounting nightmare when it comes to tracking and monitoring funding against results.

The State Department, of course, leads on diplomacy. This includes everything from arms control to commercial relations, trade sanctions, human rights, climate change, and narcotics control. Diplomacy is certainly the most important foreign policy tool for like-minded countries, such as the nations of Western Europe, Japan, Australia, India, Brazil, Argentina, and perhaps 30 other countries. After defense, this is what most people think of when they think of national security and foreign policy. While the State Department leads diplomacy, others also play critical roles, such as the Commerce, Agriculture, Justice, and Treasury Departments; the White House; USAID; the Development Finance Corporation; the Export-Import Bank of the United States; and others.

That leaves about 80-100 countries where the most important tool in the national security toolbox is development. For these countries, defense is not a significant component: We are never going to invade Venezuela, Nicaragua, Bolivia, Sudan, Egypt, Niger, or Pakistan. In these places, though it can be important, our diplomacy is not getting the same traction as it would in Europe. However, here our foreign assistance can play an outsized role. These areas include the conflict countries, where there will be famines, civil war, food insecurity, organized crime, extreme poverty, and human rights abuse.

How Development Assistance Works

Despite being the least developed, the nations where development assistance is most important are allocated a meager portion of the national security budget—about $51 billion (or 1 percent of the budget). USAID receives about half of that (i.e., 0.5 percent). In other words, as a government, we put our fewest financial and personnel resources into the most problematic, most difficult places. The public hears little about these programs, and the White House is engaged mainly in bigger issues—not development. So, Congress has an outsized role.

In any given year, there are about 450 congressional directives or earmarks on foreign aid. In Nigeria, for example, the U.S. embassy and USAID may want funding for democracy, conflict, or trade, but most of the money it gets will be for HIV/AIDS and tuberculosis. Ukraine, Israel, Egypt, Jordan, and Pakistan have specific assistance earmarks. The exact wording of earmarks varies from year to year. Congress straitjackets the use of funds and creates an accounting nightmare when it comes to tracking and monitoring funding against results by multiple funding year streams.

The limited foreign assistance is spread across 100 countries; yet it manages to have a real impact. By helping other countries address poverty, health crises, and political instability, the U.S. reduces the likelihood of conflicts that may require more costly military interventions. Aid programs that combat infectious diseases like Ebola and HIV/AIDS prevent these diseases from spreading to the U.S., protecting American citizens.

Foreign assistance works best when Washington leadership allows initiative to come from the embassy team–level to respond to emerging problems in real time. For example, in South America, my team at USAID worked with the U.S. Centers for Disease Control and Prevention (CDC) and the respective health ministries to establish a network for disease surveillance in Brazil, Argentina, Paraguay, and Uruguay. Then came a Zika virus outbreak in 2014. This network detected the Zika virus and alerted the CDC. The news that the virus can be transmitted to a fetus during pregnancy, leading to severe birth defects like microcephaly, where a baby is born with a smaller head and brain, exploded in the American media.

Due to the early detection, Brazil contained the virus, and the U.S. was able to trace the few women who had traveled to Brazil so that they could get treatment. The story then evaporated from the news. Effective work, well done. That is textbook development work.

As a second example, look to Ghana, 2016. Fall armyworm, known for its voracious appetite and ability to cause significant damage to crops, especially maize, threatened widespread hunger, spikes in food prices, and greatly reduced income for farmers. With no additional funding or personnel from Washington, my team in Ghana worked with the host government to implement control measures like pesticides, biological control agents, and integrated pest management. We educated farmers to identify the pest early and apply appropriate measures. That intervention was fast, nimble, and effective. There was no famine, no political instability. That, again, is textbook development.

Priorities for a Time of Tight Budgets

What should be some of the top concerns for an incoming administration? First, expect constrained budgets. President Donald Trump paid for tax cuts with record budget deficits. President Biden used the justification of COVID-19 for his stimulus package, which continued to expand budget deficits. With Ukraine and Palestine, foreign aid was at a record high last year. Those days are gone. Whoever wins the White House, expect federal budgets to be squeezed. The budget enactment and debt ceiling will return as headaches, with threats of government shutdowns. During its time in office, the Trump administration proposed budget cuts to foreign assistance by more than 30 percent each year, although that was never enacted. Regardless of the election results, we could see draconian cuts—as happened during the Clinton administration years.

Those days are gone. Whoever wins the White House, expect federal budgets to be squeezed. The budget enactment and debt ceiling will return as headaches, with threats of government shutdowns. During its time in office, the Trump administration proposed budget cuts to foreign assistance by more than 30 percent each year, although that was never enacted. Regardless of the election results, we could see draconian cuts—as happened during the Clinton administration years.

Given a constrained budget, where should a new administration take foreign assistance? Here are five top priorities.

First, USAID must embrace diversity in a way it has never done. Director of National Intelligence (DNI) Avril Haines has noted that the most serious threat to our national security is not China, or Russia, but rather our blind spots resulting from groupthink, a product of our lack of diversity in the national security institutions.

To address this, USAID Administrator Samantha Power signed agreements with historically Black colleges and universities (HBCUs) to create a recruitment pipeline of highly qualified talent. While that itself is good, it did not address the fundamental diversity problem at USAID: its ability to retain, advance, place, and promote its diverse workforce.

Senior leadership at USAID should look like America. While a few women of color are serving as USAID mission directors, their numbers are still not representative of the American population. In the 1990s, USAID did better at recruitment of Latinos than it does now. It does USAID no good to recruit the nation’s top talent and invest a half million dollars in each new employee to train them in development, management, contracting, and accountability, only to have them walk out the door because we could not retain them.

We need a financial return on this important investment. We will not address Director Haines’ concern until decision-making reflects the benefits of our diversity.

Foreign assistance works best when Washington leadership allows initiative to come from the embassy team–level to respond to emerging problems in real time.

Second, plan for the long term and keep politics out of assistance decisions. Politics changes with the news cycle. American foreign policy, however, has always strived to be stable, bipartisan, and consistent. Development is a generational project. We have been at our best when we have stuck to our values in diplomacy and taken the long-term approach to our foreign assistance. When the development agenda reflects stability and commitment, it generates greater results. So, the next administration should throttle the political impulse to put forth a flashy new agenda and, instead, make clear why there will be no new administration initiatives. Staying the course on what is already there is the best bet for achieving measurable progress.

Third, work with Congress on a bipartisan basis. The reason there are 450 earmarks and directives per year is because USAID and State are not listening to Congress: they have not been responsive.

Thanks to the efforts of Administrators like Mark Green, and going back to Brian Atwood, there has been more effective engagement with the Hill. When Administrator Samantha Power saw a member of Congress, she would always start by mentioning a particular project or organization in that member’s district that benefited directly from USAID.

That’s effective communication, and USAID and State need to do much more of that, across the aisle and in both chambers. That also means working hand-in-glove with the Government Accountability Office, the Office of Inspector General, and the Congressional Research Service to make sure that accountability is accessible and comprehensive. It also means being frank when things don’t go as planned.

As we work to improve accountability, there must be an evaluation of cost-effectiveness and return on investment. This includes impact evaluation. Twenty years ago, USAID talked about “manage-to-budget,” an initiative established in 2005 to improve transparency and accountability and control costs, but lost sight of that. USAID needs to return to that fiscal discipline. That, in turn, will require that USAID focus on its priorities. It may mean that USAID cut fringe “would be nice” programs to focus on the areas where it has a comparative and competitive advantage. Over time, as USAID is more responsive to Congress and presents greater focus of purpose, it can propose to Congress the removal of some of those excessive earmarks and directives.

Given a constrained budget, where should a new administration take foreign assistance? First, USAID must embrace diversity in a way it has never done.

Fourth, work with other donors on joint programming. USAID does not have to fully fund everything. If the Export-Import Bank of the U.S. or the Development Finance Corporation can partially fund something, USAID budgets will go further. Similarly, look to complement programs from the World Bank or regional financial institutions—perhaps helping countries to meet conditions required to unlock large sector lending in key target areas like health, sanitation, or agriculture.

At the same time, helping local organizations to establish financial controls on funding, set personnel systems, and manage for results could set them up for grant funding from other private funders like the Ford Foundation, Open Society Institute, or the MacArthur Foundation. Working together with others will allow USAID to stretch its scarce funding further.

And fifth, USAID must stop downplaying itself. While DoD may be the most important player in 15 countries, and State in another 50, USAID may be the best foreign policy tool in 80 to 100 countries. An ambassador is the administrative chief of mission, but the USAID mission director has cash and programs. USAID is operational. It gets things done. USAID must play to its strength.

Former USAID Assistant Administrator for Policy and Program Coordination Doug Menarchik used to say that USAID needed to be proud of its work and “walk with swagger.” The U.S. will not be able to counter China without an effective USAID. We will not be able to meet our climate change commitments or help other countries to meet theirs without an effective USAID. People will starve, wars will break out, disease will spread, and organized crime will expand—unless our foreign assistance is effective. USAID is doing its work so that our military and diplomats can focus where they have to. USAID should not be shy about saying that our country needs USAID.

Menarchik was right. The bottom line is that the U.S. Agency for International Development is an essential, critical national security organization. It needs adjustments to rise to the new global demands of the day, given the impending budget constriction. These five recommendations will make USAID fit for purpose for the coming challenges.

Steven E. Hendrix recently retired from the U.S. Agency for International Development (USAID) Foreign Service, where he served most recently as the USAID coordinator for the State Department’s Office of Foreign Assistance and as the State Department’s managing director for planning, performance, and systems for the Office of Foreign Assistance. Earlier USAID assignments include senior adviser for South America, deputy mission director in Ghana, program office director in Nigeria, peace negotiations adviser to the president in Colombia, director of national capacity development for Iraq, and others. Prior to joining the Foreign Service in 1997, he worked as an attorney, having received his JD degree in 1987 at the University of Wisconsin–Madison. He is a member of the FSJ Editorial Board and the principal of Hendrix LLC.

Read More...

• “USAID Transforms” by Chris Milligan, The Foreign Service Journal, December 2019
• “USAID at 60: An Enduring Purpose, a Complex Legacy” by John Norris, The Foreign Service Journal, November 2021
• “Inside USAID’s Policy Framework” by Steven E. Hendrix, Society for International Development: United States, August 2023