Obama Administration Takes On Development Reform

The administration has decided that promoting economic development around the world is essential. Foreign assistance is a crucial part of how the United States relates to the developing world and plays a critical role in U.S. national security policy. To date, however, U.S. programs have not been as effective as they ought to have been. Aid flows through too many channels and there is poor overall coordination among the relevant agencies scattered through the government. It is time for this to change.

The preceding paragraph was pretty easy to write, since those were key themes of Secretary of State Condoleezza Rice in 2006. The paragraph works equally well this week, as the Obama administration unveils its own approaches. I'm well-versed in the earlier version, since I had the privilege of working on those issues as a member of her policy planning staff. After an extensive review of foreign assistance programs and countless intra- and interagency discussions about how the sprawling aid apparatus might be improved, Secretary Rice implemented a series of reforms, most prominently featuring tighter integration between the U.S. Agency for International Development (USAID) and the State Department.

Skip forward four years. After not one, but two extensive and concurrent reviews, the Obama administration is poised to tackle the same problems. It is doing so in the context of a United Nations discussion of the (limited) progress that has been made toward the Millennium Development Goals. Herewith, some places to look for potential changes.

The role of USAID:

Earlier this month, the USAID Administrator, Rajiv Shah, announced the recreation of a budget and planning office for the agency. This explicitly undoes one of the reforms from 2006. Then, the theory was that if the State Department and USAID were pursuing the same goal of global development and diplomacy, and if they were to work in tightly integrated fashion, it would help if they had a single set of plans to achieve this goal. Now there will be coordinators at the USAID, State, and White House level. Apparently the new theory is: the more coordinators, the more coordinated the policy.

The Washington Post story further reported this week:

Development experts have. . . criticized [the Bush administration] for continuing to weaken USAID, which has withered for years. That is changing under the Obama administration.

It cites hundreds of staff hirings. Presumably those hirings are junior level. The senior level story has been quite different. The Center for Global Development has provided a very helpful "tracker" for USAID leadership positions. The administrator position was vacant for 11 months until Shah assumed the post in January of this year. The deputy administrator post was vacant for over 18 months until being filled in the beginning of August. For the majority of top posts, no nominee has yet been named. Even if nominees are chosen and quickly confirmed in the next Congress, they will not have influence in policy discussions until the FY2013 budget. The vacancies in USAID's top corridors raise the question of how strong a leaderless agency can be in Washington.

Policy selectivity:

A major aim of the new approach to assistance, according to the Post, is greater concentration of resources.

What we'd like to do is focus selectively on a subset of countries, or regions, subregions, and try and make sure all our development resources . . . are being applied in those countries in a way to maximize economic growth," said one senior official, speaking on condition of anonymity before Obama's speech at the United Nations.

This touches on two dimensions of selectivity. There is selectivity in choosing recipient countries, and there is selectivity in choosing programs and activities within each recipient.

Such focus is relatively easy in a time of expanding resources. You can just devote all new resources to the new areas of emphasis. It is substantially more difficult when resources are capped or shrinking. Then tough choices have to be made.

It is not clear that prominent figures in the aid debate have yet received the memo about a new focus on economic growth in select countries. One senior U.S. official recently drew a warm reaction from an Asia-Pacific gathering when he said that USAID engagement in the smaller Pacific islands would be renewed. There may be very good diplomatic and even strategic reasons for doing so, but those countries would not merit assistance if the goal is to find exemplars of economic growth. Tuvalu and Tonga would likely be left behind in any serious country screening process. There are constituencies and rationales for each country assistance program the United States has. A refocusing--pulling out of some countries in favor of others--would likely impose some serious diplomatic costs.

In terms of choosing among potential goals for assistance, on Sept. 21, Secretary of State Hillary Clinton rolled out the Global Alliance for Clean Cookstoves. That's not trivial; cooking smoke can have serious health consequences. But it is hard to argue that this is a linchpin for achieving faster rates of near-term economic growth.

The real difficulty with reforming foreign assistance is the plethora of worthy recipients and legitimate objectives pitted against the paucity of resources. Foreign assistance can be a tool to win diplomatic influence, a means to spur economic growth, a way to address humanitarian emergencies, or a means of addressing chronic health or environmental problems. It is also, consistently, unpopular with a cash-strapped American public looking for ways to cut spending. Some things never change.

Philip I. Levy is a resident scholar at AEI.

Photo Credit: iStockphoto/Peeter Viisimaa

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