Foreign Assistance: Strengthen the "Third Pillar" of National Security

Vol. 35 No. 1

By

Sen. Richard G. Lugar (R-IN) is former chairman and current ranking minority member of the U.S. Senate Foreign Relations Committee, on which he has served since 1979.

Foreign assistance has long been an important component of U.S. foreign and national security policy. U.S. citizens have always been generous in providing emergency funds to victims of famines, earthquakes, and other natural disasters. They have also funded, primarily through the U.S. Agency for International Development (USAID), long-term programs to alleviate poverty, improve education and health, encourage good governance and democracy, and promote economic growth in scores of poor countries around the world. We fund these programs for humanitarian reasons and for our own self-interest. History shows that extremist ideologies take root more easily in impoverished societies, and that instability in one country can spread to others, often leading to conflict. Prosperous countries make better partners and better customers.

In the years following the terrorist attacks of September 11, 2001, it has become clear that these two strains of our foreign assistance efforts, the humanitarian impulse and the security imperative, are mutually reinforcing. Good governance, sustainable and equitable economies, and just societies are objectives that are part of our government’s key strategic challenge to protect U.S. citizens from harm by an aggressive worldwide terrorist movement.

Beyond the direct and well-organized threat of Al-Qaeda, according to the 2007 National Intelligence Estimate, “globalization trends and recent technological advances will continue to enable even small numbers of alienated people to find and connect with one another, justify and intensify their anger, and mobilize resources to attack.” Although intelligence, law enforcement, and the military are necessary to thwart immediate terrorist threats, over the long term, economic development can be an antidote to violent extremism.

The Bush administration recognized the new strategic importance of our foreign aid programs in 2006 when it said it would place development along­side defense and diplomacy as one of the three pillars of U.S. national security strategy. “Development reinforces diplomacy and defense, reducing long-term threats to our national security by helping to build stable, prosperous, and peaceful societies,” the White House said in releasing the new National Security Strategy.

The Bush administration deserves credit for substantially raising spending on foreign assistance, which had languished during the 1990s as the U.S. government sought to collect a “peace dividend” from the end of the Cold War. Not counting emergency supplemental appropriations for the wars in Iraq and Afghanistan, the foreign aid budget has grown from $14.9 billion in 2001 to a record $26.14 billion administration request for the 2009 fiscal year. But much more needs to be done. Military and civilian capabilities remain severely out of balance. As Secretary of Defense Robert Gates has pointed out, the total foreign affairs budget, including overseas assistance and the operations of the State Department and our embassies abroad, is roughly equivalent to what the Pentagon spends on health care alone.

Along with the increased foreign aid money have come an increased number of ways to spend it. To promote political and socioeconomic progress in the Middle East and North Africa, for instance, the administration in 2002 created the Middle East Partnership Initiative (MEPI). Managed by the State Department’s Bureau of Near Eastern Affairs, the program (funded at an average of about $80 million per year) works to support worthy entrepreneurs, projects, and organizations, with a special focus on increasing women’s participation in public and private decision making.

In 2003, the administration announced the President’s Emergency Plan for AIDS Relief (PEPFAR), initially funded for five years at $15 billion, to combat HIV/AIDS, tuberculosis, and malaria in fifteen hard-hit “focus” countries, most of them in Africa. PEPFAR has provided treatment to an estimated 1.4 million men, women, and children. Based on this success, my colleague Sen. Joe Biden (D-DE) and I have introduced legislation, approved by the Senate Foreign Relations Committee, to renew the program for another five years and to more than triple the funding to $50 billion.

In 2004, the administration launched the Millennium Challenge Corporation (MCC), an innovative approach to development assistance that uses objective indicators from independent, outside organizations to identify poor countries that are well-governed and on the right track toward market-based policies. The MCC works with the candidate countries to develop and fund major, five-year development projects aimed at jump-starting economic growth. Appropriations have so far totaled $7.5 billion.

And in 2005, President Bush started the President’s Malaria Initiative (PMI), which aims to increase support for international malaria programs by more than $1.2 billion between 2006 and 2010. The goal is to reduce malaria deaths by 50 percent in fifteen target countries.

In addition to these marquee initiatives, the Defense Department increasingly has been granted authority to fill gaps in foreign assistance and public information efforts, even though the military is often ill-suited to run such programs. The Pentagon, for instance, has engaged in stepped-up counternarcotics assistance in Latin America, disaster relief in places like Indonesia and Pakistan, humanitarian and civic assistance by building schools and clinics in many developing countries, and enhanced train-and-equip programs. It is now estimated that such Pentagon spending accounts for up to 20 percent of all U.S. bilateral aid. A far more rational approach to fill such gaps in foreign assistance would be to give the State Department the resources it should have to achieve what are clearly civilian missions.

As new programs and mechanisms have proliferated, the primacy of USAID has faded. Estimates are that the agency now accounts for only half, or less, of total bilateral foreign assistance. What is the impact of these new aid “spigots” on the overall U.S. foreign assistance program? Are these independent actors duplicating each other’s work, or are they leaving gaps in our assistance programs? Is there an overall strategy for our development assistance? How is this strategy designed, how is it implemented? How, and how well, are these programs being coordinated in Washington and in the field? Do our embassies and USAID missions have sufficient flexibility to adjust programs to fit the unique challenges of each recipient country? Is increased foreign assistance funding being spent as efficiently as possible? Are U.S. development programs properly aligned with our nation’s other foreign policy and national security goals? Are we able to measure, analyze, and assess the outcomes of our spending programs to determine if they are making a difference?

To answer these and other important questions about our foreign aid programs, I tasked the minority staff of the Senate Foreign Relations Committee to conduct a field-based study on the operations of our foreign assistance programs. This request was a follow-up to an earlier staff study I commissioned on the growing military role in foreign assistance. ( “Embassies as Command Posts in the Anti-Terror Campaign”).

Staff members traveled to twenty-four countries in Latin America, Africa, Eastern Europe, Asia, and the Middle East to examine foreign assistance projects on the ground and interview local officials, persons benefiting from U.S. assistance, nongovernmental organizations (NGOs) that run U.S.–funded programs, host government authorities, employees of USAID and the other U.S. government aid organizations, and U.S. embassy officials. The resulting report, “Embassies Grapple to Guide Foreign Aid,” details a number of important findings. Among them are the following:

  • The U.S. government and the community of international development supporters have failed to agree on either the importance or the content of a foreign aid strategy. Disconnects between the field and headquarters, criticism and complaints from NGOs, and sporadic, narrow congressional attention to foreign aid issues illustrate this lack of common purpose.
  • The State Department’s initial attempts to provide coherence and strategic direction to the expanding foreign assistance system were largely unsuccessful. They complicated communication between the field and headquarters and left field morale at a low ebb. Headquarters appears to be assuming greater control of ever more tactical decisions, and information provided by the field can appear unread and overlooked as decisions contrary to field advice go unexplained.
  • A new State Department and USAID system to identify foreign policy priorities and direct funding was implemented hurriedly and was poorly thought through, causing an enormous overload of paperwork and resentment in the field. It also created the impression that the central State office was attempting to grab control of resources from USAID and the State geographical bureaus running individual programs.
  • Despite the multiplicity of new programs, embassies are coping well in managing and coordinating them. Strong, well-informed U.S. ambassadors are the rule, and they generally have a good grasp of the foreign aid streams under their control. Particular management challenges, however, come from MEPI, the Pentagon’s foreign assistance programs, and the foreign assistance programs run by non–foreign affairs agencies, such as the Justice Department. Embassies need to be especially vigilant to ensure that these programs are coordinated with other U.S. aid programs and that they are consistent with American foreign policy priorities.
  • USAID is the neglected stepchild in Washington, but in the field it has an indispensable role in nearly all the other foreign assistance programs. Over the years, the number of direct hires working for USAID has been slashed from 4,000 in 1980 to 2,000 today. Since 2001, the agency’s operating budget has stayed essentially flat, while the programs it is implementing have risen from approximately $7.4 billion to $13 billion. In addition to running its own core programs, USAID staff provides advice, contacts, and implementation for other programs, such as the MCC and PEPFAR. In some cases, the MCC is building upon projects that were originally developed by USAID.
  • Management of foreign assistance priorities is inevitably complicated by the competing claims for funds from many strong voices. Hundreds of different U.S.–based organizations are devoted to saving lives and effecting development through their own means and expertise, be it water, health, housing, education, refugees, governance, women’s advancement, human trafficking, religious freedom, or democracy promotion. When Congress or the executive branch makes a decision on priorities that is unfavorable to an organization’s cause, naturally that organization protests. Often, members of Congress may respond by mandating earmarks, which means that other programs may not receive funding. Transparent strategic planning with meaningful input from the field may ameliorate such problems, but in a democratic process these hurdles and rigidities will remain.

The study also notes that foreign assistance is not the only way that U.S. actions affect the developing world, and that sometimes our actions are contradictory. For instance, the government spends large amounts of money to address the health needs of developing countries while the private sector recruits doctors and nurses from those same countries to work in U.S. clinics and hospitals. We dump our excess food production—the result of unnecessary subsidies to U.S. farmers—onto world markets at unfairly low prices, undercutting the agricultural industries of many countries to which the United States provides assistance to alleviate poverty. We send some $143 million in assistance to Peru, yet until late last year Congress stalled ratification of a free trade agreement that will give a bigger boost to Peru’s economy and do more to create jobs there.

Clearly, the United States needs to provide a strategic focus for its burgeoning foreign assistance efforts and bring coherence to all U.S. government policies that affect our broad security and development goals.

Secretary of State Condoleezza Rice launched a foreign assistance reform effort in 2006. While limited in scope, covering just the programs run directly by USAID and the State Department, but not parallel programs like the MCC, the reform aimed to clarify just what American citizens were spending their assistance dollars on, to what purpose, and to what effect. This Strategic Framework for Foreign Assistance defined our broad goals 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. It grouped our myriad assistance programs into five categories, defined by their strategic objectives: Peace and Security; Governing Justly and Democratically; Investing in People; Economic Growth; and Humanitarian Assistance.

At the same time, the framework separated developing countries into groups based on income, stability, and political evolution. “Rebuilding countries” are those emerging from conflict, either internal or external. “Developing countries” are poor or lower middle-income nations that are not meeting key performance criteria. Countries with a similar economic profile but stronger political and civic institutions and the potential for strong economic progress are classified as “Transforming.” Those countries that are better off still, in the upper middle-income bracket or above, where the U.S. is spending money to maintain partnerships and promote peace and progress, are called “Sustaining partnership countries.” Finally, a “Restrictive” category describes rogue states for which the United States has strong legislative restrictions or prohibitions against assistance.

Under the best of circumstances, such a major overhaul would generate friction and bureaucratic resistance. But as the staff found during their travels, the reforms were implemented hastily and got off to a muddled start for a variety of reasons, including congressional delays and the abrupt departure in April 2007, of the first Director of Foreign Assistance, who was the reform’s leader and architect. The result was widespread confusion, frustration, and anger among aid professionals in the field, and a breakdown in communication and trust between USAID missions and Washington. This outcome created the impression that reform was either a bad idea or doomed.

Neither is the case. The United States needs to manage its foreign assistance efforts well, as part of its larger national security policy, to be able to define its goals and measure its progress in meeting them. The structure initiated by Secretary Rice is a plausible one, but it is not set in stone. The structure can be improved or, if necessary, replaced with a better one.

But the real issue is leadership. The staff study makes a number of recommendations that can guide policymakers at all levels, but recognizes that leadership begins at the top. “The President,” the study notes, “should design a national foreign assistance strategy that explains both the national security requirement and the humanitarian imperative that drive our government’s investments in foreign aid. Such a strategy should be designed to put to rest lingering and out-of-date distrust between security advocates and those who focus on humanitarian concerns.”

The report lays out a number of other recommendations and principles for giving better strategic coherence to our foreign assistance efforts, while improving their management and, ultimately, their effectiveness. Among them:

  • The secretary of state should work closely with the USAID administrator to implement the foreign assistance strategy. It is especially important that the secretary be given explicit authority to make sure that all foreign aid programs, including those from the Defense Department and other U.S. government agencies, are in the foreign policy interest of the United States and conform to the president’s strategic goals. The aim is not to micromanage other agencies’ budgets, but to give the secretary of state the leadership role with the authority to weigh in with adjustments when necessary.
  • The secretary of state should be a forceful and articulate champion of robust foreign aid budgets both within the executive branch and in Congress so that the government has the funds necessary from all the various foreign aid “spigots,” not just the State Department’s, to carry out the president’s strategy.
  • The long-overdue reform process was flawed in its implementation and should be redesigned in a way to garner support both within and outside government. The post of Director of Foreign Assistance (DFA) should be elevated to the equivalent of the Deputy Secretary of State commensurate with the importance of economic development to national security, and the DFA’s duties should include oversight of all government agencies’ foreign aid programs. At the same time, the DFA should avoid duplicating the USAID administrator’s work and not add an extra layer of bureaucracy.
  • Because USAID’s role in implementing U.S. development policy is indispensable, the agency should be streamlined and strengthened. The administration’s new proposal to begin adding 300 professional positions annually over the next several years is a first step toward restoring USAID’s depleted ranks. The operating budget should reflect the high priority we now attach to international economic development.
  • American ambassadors overseas have necessarily assumed a greater role in the coordination and management of foreign aid programs, which was once left almost exclusively to the resident USAID mission directors. Training for ambassadors and other high-level diplomats should provide them with a working knowledge of the full spectrum of foreign assistance functions, and in particular should prepare them for effective interaction with the military. Ambassadors today must be ready to make a variety of judgments on such issues as the level of security assistance, the most effective counterterrorism cooperation, or the appropriateness of military psychological operations proposed by combatant commanders.
  • Too many civilian functions are migrating to the Pentagon simply because the executive branch is not requesting—or Congress is not approving—sufficient funds in the civilian budget accounts. While some security assistance programs should be administered by the Defense Department, the funds should come through the foreign affairs budget, as has traditionally been the case.
  • Congress should undertake a rewrite of the Foreign Assistance Act, Pub. L. No. 87–195, 75 Stat. 424 (1961), which has not been substantially revised since 1961, to reflect the new structure of the foreign aid apparatus and give cohesion to foreign assistance strategy. Congress also should pass, at least every two years, a foreign aid authorization bill, which it has not done since 1985. The resulting deliberations and debate would give congressional members the opportunity to set broad legislative priorities and develop a better understanding of strategic and individual programs. At the same time, members of Congress should resist the temptation to focus exclusively on narrow interests, favorite or least-favorite countries, specific NGOs, or other unique enthusiasms that result in earmarks in appropriations bills. For its part, the executive branch should provide sound strategic rationales for its priorities to stave off congressional directives.

The report has generally been well received by the foreign assistance community, NGOs, and Washington-based think tanks that deal with foreign policy issues. I am hopeful that the findings and recommendations will help inform the decisions of the new administration and the deliberations of Congress next year.

While these recommendations focus solely on foreign aid, they reflect the kind of transformation we must take to our overall approach in foreign policy and security in the twenty-first century, which remains too heavily skewed toward the military. We must adjust our civilian foreign policy capabilities to deal with a dynamic world where national security threats are increasingly based on nonmilitary factors. For example, we need a rapidly deployable civilian corps that is trained to work with the military on stabilization and reconstruction missions in hostile environments. I am pleased that after several years of work by the Senate Foreign Relations Committee and the State Department, the Bush administration has requested $248.6 million for a Civilian Stabilization Initiative.

The task of rebuilding our civilian foreign affairs capacity has only begun. We as a nation must remain determined to continue it in the face of shifting political winds and competing demands for resources. Militaries can win wars, but the other elements of our national power—diplomacy, trade, assistance, communication, moral leadership—can help prevent them. The next president must make restoring our civilian strength a top priority.

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