Testimony of The Honorable J. Anthony Holmes
President
American Foreign Service Association
Senate Committee on Foreign Affairs
Subcommittee on International Development, Foreign Assistance, Economic Affairs and International Environmental Protection
Hearing: “Foreign Assistance Reform: Successes, Failures and Next Steps”
June 12, 2007
The American Foreign Service Association (AFSA), as the exclusive representative of the Foreign Service employees of the U.S. Agency for International Development (USAID) has been following closely the changes to U.S. foreign assistance administration, allocation, and policy adopted since the position of Director of Foreign Assistance (F) was created in early 2006. While recognizing that some reforms were needed in our foreign aid allocation system, AFSA has several serious concerns with the wholesale changes made by F over the past year.
The nature and process of delivering foreign assistance has dramatically changed through the adoption of the “Transformational Diplomacy” initiative which is now being implemented at the State Department by F. Basically, “development” has now been subordinated to political concerns and decision-making and control shifted to the State Department. The upshot is that foreign assistance has been largely transformed from what was a partnership with developing countries to a more paternalistic relationship. Countries are classified using a Foreign Assistance Framework into five simplistic categories and a global category. The goal seems to be to have Washington, through a highly centralized decision-making process based on approved country-by-country Operational Plans, attempt to “fix” countries.
The dominance of State -- through 'F' -- in managing development priorities and directing our assistance programs will have negative, long-term results, and the USG capacity to deliver development assistance will atrophy, just as our ability to communicate effectively with external audiences withered after State's absorption of USIA.
AFSA sees many flaws in this “reform” program, particularly given the way it has been implemented so far. Therefore, AFSA does not support the continuation of F as it is currently configured. Below are some of the issues we have identified that hurts our nation’s foreign affairs efforts that support our point of view:
1. The centralization of decision making has been taken too far. By trying to rein in and then reshape the scattered foreign assistance programs of State and USAID, F has created unacceptable delays. In theory this centralization is needed at the start and thus is a short-term problem. But a plan for delegating appropriately back out to the field or the technical bureaus where development knowledge and expertise reside is still not in place. The whole process serves to marginalize the embassies and USAID missions overseas and imposes a level of central control that is antithetical to the Agency's traditional reliance on field staff to engage the host country and the Embassy country team and design and implement activities and interventions to address country-specific development issues within broad guidelines established by Department of State, USAID and Congress.
2. Development expertise is being ignored, either by design or by fiat. Either way, US objectives are ill-served. The highly centralized planning and decision-making has demoralized the experienced, technically qualified, and competent people in the field. Their role has been marginalized to being implementers of Washington decisions. Rather than building leadership, this has disempowered people. It also brought in an arbitrariness that has had a very negative impact on important programs.
3. The Strategic Framework promulgated by F is not strategic. This framework is merely a tracking system. State and especially USAID need to think and plan assistance programs strategically over the long term. Nothing that F has produced assists with this, and the existence of this "framework" seems to excuse State and USAID from such thinking, planning and analysis, and it must not. And as mentioned above, the process of development is no longer collaborative but instead has become paternalistic.
4. Long-term development is increasingly subordinated to short-term foreign policy goals. With F in place, the trend will only accelerate. F is doing a minimally acceptable job of laying out budgets for the Secretary of State. But neither the Secretary nor Deputy Secretary should be determining minutiae of budgets for foreign assistance as F and State's very hierarchical bureaucratic culture encourages. Development will never outweigh US foreign or defense policy in any serious way, even if the USAID Administrator is "at the table." And bringing development into State has almost no hope of making foreign policy makers take a long-term view. While an actual merger of USAID into State might be preferable to the current “merger by stealth,” AFSA has serious misgivings about such an approach. A more independent and strengthened cabinet-level development assistance organization would be the optimal approach for the USG.
5. Development policy has been divorced from implementation. In the fluid and
technically complex area of development, this is crippling. In addition, USAID has disbanded its policy function, thus abdicating this critical function to State, oftentimes regional bureaus. These State regional bureaus do not have the capacity to evaluate and set development policy. State regional bureaus are the appropriate home of foreign policy-making and implementation and are configured around this important task, not development assistance. Based on the findings from the Paris Declaration monitoring survey, the Operational Plan misses entirely what is found to be the key to successful development, i.e., engagement with the host government. If budget categories, levels, and activities are set by Washington, how can we get our host country to have ownership, alignment, harmonization, or mutual accountability?
6. Roles and responsibilities between State and USAID are more and more confused. To add to the problem, the organizational structure which now exists is irrational and confusing, making it hard to determine which office has responsibility for which program. It does not help that F is located at the State Department far away from the USAID headquarters. Morale is low and plummeting even further as this process unfolds, and USG development expertise is eroding at a drastic rate and will take many years to rebuild. This and previous Administrations’ paltry requests for USAID Operating Expenses belie the rhetoric that development is an important part of the US role in the world. The FY07 Operational Plan process lacked sufficient involvement of the Ambassadors and USAID Mission Directors in budget allocation decisions. The missions were only provided planning levels for preparation of the Operational Plan without prior consultations.
7. Non-inclusion of the PEPFAR funds in FY07 Operational Plan led to much confusion and does not reflect the whole workforce level for the country, since the workforce funded by PEPFAR funds gets reflected only in the PEPFAR Country Operational Plans.
8. The FACTS system, which is a monitoring tool, is not very user-friendly and gives a lot of problems in data entry. There were frequent outages. However, this centralized database, which makes budget and programmatic information about the entirety of State and USAID funding and programs, may be useful if further developed. A key feature of this database is the list of standardized program definitions and indicators, which rationalizes the descriptive aspect of foreign assistance and allows for cross-country comparison and aggregation. Some criticize these indicators as mere outputs or as encouraging stove-piping. These valid criticisms point out a fundamental limitation of the system. The advantages of having this system must not be turned into a straitjacket, which is a serious risk. The system cannot and should not replace strategic planning and good development thinking and analysis.
AFSA believes it is important and timely for Congress, the public, this Administration, and the next to learn from this experience and move forward using an improved approach. The United States is a generous nation and should be represented by the best people and programs the field of international development can produce. By trying to rationalize foreign assistance, F’s early experience has shown how horribly bungled the U.S. foreign assistance system is and how a piecemeal effort to improve it is insufficient and in fact counterproductive. A comprehensive vision, political will, or considerably more time are needed to completely overhaul it. By embarking on radical process reforms without the necessary intellectual groundwork, and given the early and continuing flaws and significant failures of the effort so far, the present effort has proven that an even more dramatic reform/rethinking is essential. Piecemeal adjustments are nowhere near sufficient. Therefore, AFSA recommends a different approach which will elevate Development to be truly on par with Defense and Diplomacy, even if getting it involves creating a cabinet level development agency.