Q: InterAction is part of the Modernizing Foreign Assistance Network’s Reform Within Reach campaign, advocating for a reform of the United States’ foreign assistance policy. Why is this kind of reform necessary, and what shape should it take?

A: InterAction was a founding member of the Modernizing Foreign Assistance Network, and has been actively involved in the reform agenda here in the U.S. In this capacity, we have advocated for a number of significant reforms largely because the U.S. foreign assistance structure is broken, with close to 30 U.S. agencies involved in foreign assistance and no clear overall strategy.

In this regard, we’ve advocated with MFAN for significant reforms. These include an adoption of a national development strategy by the U.S. government, which is an effort that seems to have been successful; a rewrite of the U.S. Foreign Assistance Act, and we’ve been closely engaged with Congress on the details of what a new Foreign Assistance Act would look like; and a shift to ensure greater country ownership of U.S. Foreign Assistance.

It is important to understand that when we say ‘country ownership,’ we are not just talking about nation-states, but about broader societal ownership of the development process, which means funding of government programs but also significant funding for civil society efforts, public- private partnerships with businesses and active engagement by the international NGO community in partnership with local civil society in building local capacity.

All of these efforts have a significant momentum in the U.S., and we are witnessing one of the most significant potential reforms in U.S. foreign assistance in over a generation.

Read the full interview with Sam Worthington here

To join MFAN’s effort to urge President Obama to show leadership on foreign assistance reform and strengthen the U.S. commitment to development, please sign our Open Letter to the President, which has already been endorsed by more than 70 organizations and prominent individuals.

CQ WEEKLY – IN FOCUS
July 19, 2010

Backers Say Time Is Ripe For Foreign Aid Overhaul

By Emily Cadei, CQ Staff

The earthquake that slammed Haiti in January also rocked the U.S. Agency for International Development and its brand-new administrator, Rajiv Shah, who were promptly assigned to head up the civilian U.S. response to the disaster. The experience of the next several months afterward was eye-opening and “helped me shape my agenda for reform for the agency writ large,” Shah said in a speech last month.

That agenda is packed, given the multitude of challenges facing USAID, an agency once viewed as the country’s lead repository for expertise on international development. But its role has declined over the past decade into what the chairman of the House Foreign Affairs Committee, Democrat Howard L. Berman of California, describes as “somewhat of a contracting agency where money passes through without a creative and well-staffed process.”

Shah says the rapid mobilization of USAID after the quake demonstrated that much of that expertise, although often dormant, still exists. The Haiti response, he said in an interview, shows there are “so many different ways where this agency could be nimble, it could move quickly, it could be focused on results,” as opposed to “just getting money out the door.”

Development experts say that while Shah is moving ahead with a package of operational changes at USAID, both President Obama and Congress will ultimately need to weigh in to better delineate both the over-arching strategy and the chain of command for U.S. international development operations in the 21st century. While there is a broad consensus about the general changes that need to be made, many of the more controversial details still need to be decided, including how the authority gets divvied up among the government agencies involved.

Congress is driving the reassessment of development policy already under way with a series of legislative initiatives from Berman and the two leaders of the Senate Foreign Relations Committee: Chairman John Kerry, a Massachusetts Democrat, and top Republican Richard G. Lugar of Indiana. But before progressing further, these lawmakers and development officials are waiting for the White House to deliver its vision for development as a pillar of its foreign policy, as well as demonstrate the political leadership to implement that vision.

Backers of a foreign aid overhaul say they will need buy-in across parties, congressional chambers and branches of government. These development boosters say that Obama elevating the role of foreign aid in places such as Afghanistan, combined with a group of allies in important positions — including Defense Secretary Robert M. Gates and top Senate and House leaders — makes the next 18 months a rare window of opportunity to reconfigure the architecture for international development to an extent not seen in half a century, since Cold War foreign aid policies were set by the Foreign Assistance Act of 1961. If they don’t succeed, backers of an overhaul worry that it could be another 50 years before they get as good a shot.

Beyond the Crisis

A disaster like the quake in Haiti “plays to AID’s strength, because it has a very strong, positive history in responding to humanitarian emergencies,” says George Ingram, a former deputy assistant administrator at the agency who’s now co-chairman of the Modernizing Foreign Assistance Network, a coalition put together two years ago to advocate for aid changes.

“What doesn’t get attention is those 50 to 60 countries that are relatively stable, not-so-well- or moderately well-performing, and are really the countries that are struggling for how to do development better,” Ingram says. “That’s sort of the day-to-day meat and potatoes of USAID.” The challenge, he says, is to put in place a structure that lifts some of the stifling bureaucracy and allows USAID “to do what Shah wants to do — be more creative, be more responsive, be more analytical, engage your local stakeholders more.”

Shah, who before joining the Obama administration spent seven years working on global economic development for the Bill and Melinda Gates Foundation, expressed the desire to introduce “some of the flexibility we have in our humanitarian relief operations,” such as in Haiti, more broadly across the organization. “I would like to replicate that capability throughout our agency,” he says.

Flexibility is exactly what Berman is hoping to achieve with a rewrite of foreign aid policy that he and his committee staff have been working on for the past two years. After a series of meetings and discussions with lawmakers, government officials and representatives of nonprofit aid organizations, Berman unveiled an initial draft this month. If Democrats hold the House this fall, he hopes to win passage of the legislation next year.

Drafters are hoping to write a bill that, in the words of one Berman committee aide not authorized to speak about the matter, would embody “a new grand bargain” of “accountability in exchange for flexibility.” The president would have to provide more detailed information about his international development plans and set ways to measure their results, the aide says, and in exchange Congress would “lighten up on the very specific directives and earmarks.”

The trick will be in getting all involved — lawmakers, the White House, the State Department and the non-governmental organizations — to endorse that system. Of course, the legislation would have some specific mechanisms for limiting congressional earmarks for specific projects — by creating, for example, accounts that would be reserved for certain countries or types of aid, such as for farmers or HIV/AIDS eradication.

But mostly, the drafters are hoping an overhaul of the system will by itself reduce the inclination to earmark. “When you have a coherent, intelligent process, where there is a rational examination by the agency, a rational process of determining some national priorities and a built-in flexibility to allow a significant amount of resources to be shaped by the mission and the country,” says Berman, “I think the temptation to do this becomes less.”

Forging Consensus

Such a grand bargain would also require an unprecedented level of coordination between the executive branch and Congress. “The biggest thing that needs fixing is to get the Congress and the administration maybe not on the same page but on the same playing field,” instead of everybody “going at it in their own little way,” says Ingram.

The Obama administration is in the midst of two major policy reviews — the Quadrennial Diplomacy and Development Review being run by the State Department, and a National Security Council review of foreign aid, both of which have dragged on longer than initially intended.

The administration kick-started the reviews last year after Berman wrote language into the State Department reauthorization bill that would mandate the processes. The bill quickly stalled in the Senate after passing in the House, but it’s clear that “Congress got this process going,” says David Beckmann, president of the anti-hunger advocacy group Bread for the World, and Ingram’s co-chairman at MFAN.

Until both policy reviews are complete — likely by early fall — the administration has declined to provide any formal feedback to Congress’ activities to overhaul the foreign aid process. But development experts are starting to get restive, with several former USAID administrators issuing calls in the past few days for faster action.

One thing they would like to see the president outline is an over-arching rationale for American foreign assistance programs. “Only the president can clarify the mission,” says Gregory Adams, aid effectiveness director at the global humanitarian group Oxfam. Obama, he says, needs “to define what we are going to do and what we’re not going to do and how we make choices about that.” The legislation from Congress, Adams says, can then provide “the statutory framework to support that.”

The same groups of people are also looking for the president to take a stand on the long-running debate over the relationship between the State Department and USAID. During George W. Bush’s presidency, the aid agency was effectively subsumed more deeply under State. But for years, there has been a debate over how much autonomy USAID should have — something that has played out most recently over Caribbean earthquake relief.

“The Haiti response has made clear a lot of the divisions going on between State and USAID over who should be in charge and what should happen,” one senior congressional aide says. This split in authority was evident in something as simple as the State Department’s briefing last week on the six-month anniversary of the quake. Cheryl Mills, Secretary of State Hillary Rodham Clinton’s chief of staff and lead counselor on issues surrounding Haiti, fielded questions while Shah played backup.

The Senate Foreign Relations Committee was so concerned about the lack of a clear government head of the Haiti rebuilding effort that it proposed, as part of a relief measure it approved in May, establishing a new coordinator position under Clinton to oversee the government’s policies.

Clinton’s involvement in development, as well as that of some of her key deputies — including Jacob J. Lew, her deputy secretary for management who was tapped last week to become White House budget director — is lauded by many development boosters, but it has added heat to the turf battle still playing out.

State has already signaled its displeasure with part of Berman’s plan. An internal department e-mail, sent earlier this month to solicit comments on the chairman’s draft, noted it would create a development policy committee that included the secretary of State “only as a co-equal member as opposed to placing her as the lead, as had been earlier requested.” Other provisions “do not vest authorities in the secretary, as had been requested for comparable provisions.”

Berman has held off taking an explicit position on just how the relationship between State and USAID should break down. But, he says, “As a general principle I want to elevate the role of development, and therefore I want to elevate the role of AID.”

Clinton, he acknowledged, is “a big friend and big booster of development,” but to make the changes enduring, “you can’t make decisions based on any one person that is in any one position at a given time.”

FOR FURTHER READING (Note: a subscription to CQ is require to access additional reading.): Lew, p. 1759; fiscal 2011 foreign aid spending, CQ Weekly, pp. 1629, 1274; State Department reauthorization (HR 2410), p. 44; fiscal 2010 foreign aid spending (PL 111-117), p. 28; background, 2009 CQ Weekly, p. 1303; Foreign Assistance Act (PL 87-195), 1961 Almanac, p. 293. The Senate Foreign relations’ Haiti relief bill is S 3317 .

ONE – “The Heart of Human Progress”: After painting a picture of the resource disparities between a pregnant woman in sub-Saharan Africa and her counterpart in the United States, Shah presented a sobering statistic: a woman in the United States faces a 1-in-4800 chance of dying in childbirth, whereas in sub-Saharan Africa, the chance is 1-in-22. This disparity is “simply unacceptable,” said Shah. “The President’s Global Health Initiative is designed to close that gap.”

U.S. Global Leadership Coalition – “Rajiv Shah at CSIS”: By cutting outunnecessary paperwork and administrative red tape, he hopes to give USAID employees more time to actually work with patients and communities on the Global Health Initiative and encourage them to come up with locally-appropriate solutions. He said it was this entrepreneurship and bending of the rules that allowed USAID to respond effectively to the earthquake in Haiti.

Read the full transcript of Administrator Shah’s speech here or watch the video highlights below.

Video Highlight: Statesmen’s Forum: Dr. Rajiv Shah, USAID Administrator from CSIS on Vimeo.

Recently, the effort to improve our global development policy has become an increasingly important topic of discussion between Congress, the Obama administration and the aid community. At the recent InterAction Forum 2010, held from June 2-4, USAID administrator Rajiv Shah spoke during the opening plenary session, and commented on the agency’s commitment to working closely with Congress on foreign assistance reform. He said, “We have the unique opportunity to frame what development should be for the next 50 years. President Obama… sees development as a cornerstone of his national security strategy.” Shah cited Haiti as an example of the successes of evidence-based development, mentioning the great strides in improving access to clean water since the start of the post-quake recovery process. You can read more about Rajiv Shah’s opening remarks from InterAction and from our blog earlier this month.

At the closing session, Cheryl Mills, Chief of Staff for U.S. Secretary of State Hillary Clinton, emphasized the importance of a Haitian-led recovery effort stating, “NGOs must allow themselves to be coordinated so that capacity-building activities lead to a real transfer of skills.” In the panel following the session, former President Bill Clinton, UN Special Envoy to Haiti echoed this sentiment. “We know we have succeeded in Haiti when we have worked ourselves out of the job,” Clinton said.

In May, a draft of the Presidential Study Directive, A New Way Forward for Development was leaked, demonstrating the president’s intention to reform the U.S. foreign assistance system in a meaningful way. InterAction applauds the paper’s recommendations to:

• include the U.S. Agency for International Development (USAID) administrator on the National Security Council;
• enhance partnership with non-state actors, both donor and recipient, in order to increase the impact of U.S. programs;
• and restore important policy and planning functions to USAID.

Learn more about InterAction’s take on the paper here, or read about MFAN’s stance.

In the end, InterAction believes that the reduction of poverty and disease in the developing world is essential to U.S. national interests and reforming our aid structure is the smart thing to do.

The Aid Reform team, directed by Gregory Adams, is conducting analytical and field research to assess the structure and shortcomings of the current U.S. aid system. They have created a report “Foreign Aid 101” to provide a factual overview of U.S. aid and dispel common myths about aid. The report also provides stories that demonstrate aid at its worst, sometimes completely failing to reach the people who need it most, and aid at its best. Examples of the latter include:

• the eradication of polio;
• increases in literacy worldwide;
• and the National Solidarity Program that gives rural villages in Afghanistan ownership over their own development. In 2003, as part of the National Solidarity Program, villagers in Dadi Khel were able to build their own hydropower plant to bring electricity to about 300 families. The program provides a model for other villages to identify and complete their own development projects.

Oxfam’s Aid Reform initiative has also developed a campaign called “Ownership in Practice: The Key to Smart Development” that demonstrates that when used in smart ways, aid can help people lift themselves out of poverty. “Ownership in Practice” explains that aid must strengthen the compact between citizens and states. With the implementation of the specific reforms that Oxfam advocates, U.S. foreign aid will be able to support effective states and active citizens in a meaningful way. Oxfam’s recommended reforms focus on increasing transparent information, building local capacity and extending control to responsible governments.

At a minimum, U.S. aid should:

• be transparent, providing recipient governments and civil society with comprehensive and useful information;
• be “untied” so that local contractors are able to develop their own capacity, thereby generating local jobs and much needed economic activity;
• and limit earmarks that are inconsistent with a country’s development priorities.

At best, Oxfam recommends that U.S. foreign aid:

• be predictable, allowing governments to plan for longer term programs and initiatives;
• be provided through indigenous financial systems;
• and increase direct budget support for states with responsible governments.

To get the word out about aid reform, Oxfam hosted a series of events tied to the Ownership report; watch the most recent event at the Newseum here. Oxfam hopes that through political advocacy such as this, the voices of committed aid experts and those affected by poverty will be heard by policy makers who have the power to make U.S. foreign aid truly effective in the fight against global poverty.

Shah used the speech as an opportunity to outline reforms at USAID saying, “My job as administrator is to make good on the President’s promise to revitalize USAID by modernizing the agency” through a “comprehensive set of operational reforms designed to partner and deliver high impact, cost efficient development.”  Below are excerpts from the speech that describe Shah’s reform agenda for the agency:

• “…we will rebuild USAID’s budget accountability with a strong focus on getting better results for U.S. taxpayers. We will pursue a development strategy that is based on focus, scale, and impact. We will focus in fewer sectors in each of the countries that we work.”
• “Second, to achieve greater returns from our investments we are readying a package of procurement reforms… We are redoubling our efforts to support local institutions and build local capacity.”
• “Third, to get the best out of each employee we are reforming our personnel policies. A development entrepreneur needs real flexibility and the ability to take risks.”
• “Fourth, we need to do a much better job at monitoring and evaluation so we can easily identify what works, what doesn’t work, and why, and implement changes quickly in our programs to optimize against that information.”
• “Finally, our agency will embrace the concept of extreme transparency. We will meet President Obama’s open government directive and seek to set a standard on transparency for the field of development…We owe American taxpayers hard evidence of the impact their money is making.”

Shah also reinforced the administration’s commitment to reform, despite what the community sees as tension between the State Department and USAID, saying “I actually see all of this coming together as really elevating development, elevating all of the different parts of development policy, and certainly elevating in a very significant and fundamental way USAID.” Shah closed with an urgent call to action: “I think it’s incumbent upon us to get this reform agenda enacted and to make USAID the most effective and strategically significant development enterprise anywhere in the world.”  Watch the speech below.

Jonathan D. Quick, MD, MPH

President and Chief Executive Officer

Management Sciences for Health

Development resources, strategically invested and wisely managed, can build local systems that have a large scale, lasting impact:  In Haiti, a four-way partnership between the Ministry of Public Health and Population, local NGOs, USAID and an international NGO (in this case, MSH) was providing access to healthcare pre-earthquake for 4 million Haitians (43% of the population). In Afghanistan, a similar collaboration saw child mortality fall by 25%, saving an estimated 25,000 children’s lives each year. In Afghanistan it was assumed that local leaders would reject family planning. But when listened to and respectfully informed, they embraced it. Under their leadership, contraceptive use increased by 24-27 percentage points in rural Afghan villages.

We are excited by the conversations taking place across the U.S. Government about development. These conversations matter:  to our citizens at home and to millions of people around the world. MSH welcomes this concerted effort by the Obama administration, not just to develop a whole-of-government approach to development, but to lay out principles for development that works.

What constitutes development that works?   Effective development helps people help themselves out of poverty, improves their lives and their well-being – now and into the future. This may seem obvious, but this human goal needs to be held up as an important end in itself. We urge the Obama administration to make development a distinct priority along with diplomacy and defense.

Perspectives differ on what makes development work. One fundamental debate is over who “owns” or should own development.  Some say, “Foreign governments and multilateral agencies provide generous resources, but too often push policies and programs that don’t fit local priorities and needs.” Others say, “International NGOs are effective and transparent, but they’re uncoordinated, expensive, and introduce unsustainable solutions.” And some believe “Local ownership can create sustainable local solutions, but local governments and organizations are ineffective and corrupt.” There are kernels of truth in each of these views but the real issues of development lie in the complex space between these extremes. Striking the right balance is the key.

For nearly 40 years, in over 120 countries, MSH has observed common elements in development that works. First, local ownership must exist at the outset. It can’t be grafted in after the fact. Partnerships need to be genuine, based on mutual respect. Second, developing local leadership and technical skills is fundamental to lasting success.   Projects may come and go, but the tens, hundreds, or thousands of local colleagues who have developed needed experience and skills remain as national resources.

We’ve incorporated these two lessons into a two-pronged approach to building sustainable health systems. We work with governments to build their leadership and governance capacity, and we simultaneously collaborate with government and civil society to build their capacity to deliver health services. We follow Lao Tzu’s ancient “Way of Leadership”:  “Go to the people…Start with what they know… Build on what they have… and when the task is accomplished… the people will remark… We have done it ourselves.”

Our experiences in Haiti and Afghanistan and elsewhere have proven that it is possible to build on the strengths of local and international communities and mitigate their weaknesses. It is possible to create synergies between local insight and global expertise.  Our success in Haiti and Afghanistan was built on respectful, authentic, dynamic collaboration. It was built on local ownership and international partnership. It was built on the principle of investing in people. And it was built with a focus on creating systems that would last well after the project was gone.

These concepts are, from a practitioner’s point of view, the highlights of the NSC’s draft recommendations to the President: First, let’s keep the focus on the goal of development, helping people to help themselves out of poverty and to improve their own lives. Second, rather than getting caught up in extreme arguments, let’s build on what we’ve already learned about the contributions that different development partners offer. Finally, we want to see a direct voice for development community on the NSC to speak  out for this priority, to bring an evidence-based approach to development, and to draw on the expertise of the development community.

We are excited by the ambitious effort by the Obama administration to craft a common vision for the U.S. role in global development. We’re encouraged that local ownership and a systems focus are emphasized in the recommendations.

We look forward to gaining more insight into how the Obama administration plans to leverage the work of USAID and the State Department so they mutually inform and support one another. And we stand ready to support, advise, and partner with the U.S. government to advance effective development around the world.

So far, the blog has stories about USAID-funded programs — like the Asia Regional Biodiversity Conservation Program — and updates from USAID meetings and speeches, as well as a post from Administrator Shah outlining his upcoming trip to Africa where he will focus on progress of the Obama Administration’s Global Health Initiative and Global Hunger and Food Security Initiative.  Be sure to check out IMPACTblog, and watch for updates from Administrator Shah as he makes his first trip to Africa as the head of USAID.

“The struggles over who is in charge of what and the resulting delay of the release of the White House’s first ever Presidential Study Directive on U.S. Global Development Policy are having unfortunate consequences for our foreign policy goals — from Pakistan to Haiti to our climate policy — as well as our partners in poor countries and our image abroad.”

“In practical terms, elevating development, as Secretary Clinton has pledged to do, means providing the USAID administrator autonomy over policy, program and budget decision-making sufficient to get the biggest bang for our development bucks. Of course this is not an entitlement for the agency. As with other agencies, we should set the bar high for USAID and expect to see — and measure — strong performance and results, with programs and resources scaled up or down accordingly.”

“For almost two decades, the U.S. has not only significantly under-invested in development; we have structured our development programs in ways that weaken, rather than strengthen their impact. It’s time for decisions. We urge Secretary Clinton to put the USAID administrator in charge of these two major new development initiatives. We urge her, whose commitment to development objectives is clear and compelling, to give Raj Shah the broader policy and budget authorities that will make USAID, as she promised in her January speech at the Center for Global Development, “the world’s premier development agency.”

Staats also cleverly recounts the foreign aid reform story so far on CGD’s Rethinking U.S. Foreign Assistance blog – a story that follows with detailed reactions to the PSD-7 draft.

Mrs. Obama enumerated the many difficult challenges facing our country and the world as a whole, including global hunger, climate change, natural disasters, and the fast-rising youth population.  But in doing so, she spoke of the dedication and commitment demonstrated by USAID employees, from risking their safety working in dangerous environments, to spending long stretches of time away from family.  She also referenced the two decades’ worth of development work in Indonesia her mother-in-law, President Obama’s mother, took part in while with USAID.  “And you do it all,” she told the audience, “because you believe in the power of development to make America stronger in the world and improve the lives of those less fortunate.”

She listed improved basic health, sustainable agriculture, and democracy and human rights as major advances over the years as a result of USAID’s efforts.  She highlighted ongoing work in Haiti as a shining example, saying “…wherever I went, I was amazed and incredibly touched to hear the stories of your sacrifice and your compassion and your amazing partnership with the Haitian people and folks around the world in the aftermath of that disaster. It was clear from my visit that people valued the work and saw this country in a different way because of the work that you were doing.”

However, she was quick to point out that the goal should be to help developing countries stand on their own: “…as my husband, the President, and Raj have said, the ultimate job, the ultimate objective here is to create the condition that you are no longer needed… That’s why you have always represented what is truly best about America –- the idea that we have an obligation not just to help those in need, but to also help folks beyond our borders build capacity to help themselves.”

Mrs. Obama also reiterated the strong support from President Obama and Secretary Clinton for USAID’s mission, how “together, they have made development an important part of foreign policy once again… USAID will play a central role in our mission going forward. The President and Secretary Clinton are committed to making development an essential part of our efforts to ensure peace, security and progress in the world.”

She closed by recognizing that so often the work of development professionals goes unnoticed and perhaps underappreciated, though not by her: “And I know that many of you here and around the world are making a difference in ways that will never show up on the TV.  It’ll never land on the front page of the newspaper.  Much of the work that you do is quiet. Many people don’t know it’s happening.  But I do think that events of the last few months have given the American people just a glimpse of the kind of people who work here –  the sacrifices you make; the exhaustion; the tragedy and the risk that you endure – all because you believe that it’s your duty to help people in their greatest time of need.”