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Seeking a Foreign Aid Focus

Prepared by: Robert McMahon, Editor
March 17, 2006

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International development is listed as one of the three pillars of the U.S. National Security Strategy, revised by the White House March 16. Now comes an effort to rationalize the U.S. foreign aid system, widely regarded as fragmented and, in places, incoherent. Secretary of State Condoleezza Rice includes foreign assistance reform in her sweeping "transformational diplomacy" initiative. The effort has earned plaudits from policy experts for recognizing the need to transfer U.S. diplomats from cushy European posts to more of the world's trouble spots. But views are mixed on Rice's plan, announced in January, to make the delivery of aid more rational. This CFR Background Q&A looks at the scope of U.S. foreign aid programs and issues surrounding the reform proposal.

Rice's plan seeks to integrate the aid accounts maintained by multiple State Department bureaus and the independent U.S. Agency for International Development (USAID), placing them under a director of foreign assistance. She has nominated Randall Tobias, who currently heads the government's global HIV/AIDS initiative, to be director of foreign assistance and head up USAID. That places about three-quarters of the roughly $20 billion the U.S. spends each year on aid under the control of one office. But Tobias will only be empowered to provide "guidance" on aid delivered through his former office of global AIDS coordinator, and the administration's ambitious new Millennium Challenge Corporation, which conditions aid to poor countries that have demonstrated a commitment to economic and political reforms. Nor will he have authority over the aid programs run by numerous other government entities, including the departments of treasury, defense, homeland security, commerce, and agriculture.

Some have suggested establishing a cabinet-level position responsible for overseeing aid flows, as Britain did in 1997. Former USAID administrator Andrew Natsios told a recent briefing at CFR the U.S. government needs to conduct a periodic review of international development along the lines of the Pentagon's Quadrennial Defense Review and produce a unifying document on aid strategy. CFR's adjunct senior fellow James Goldgeier and CSIS fellow Derek Chollet write in the Washington Quarterly it would be wise for U.S. policymakers to study why the Marshall Plan was so effective as they develop strategy to help the less developed parts of the world. They point to the Marshall Plan's multilateral approach and the security umbrella provided by NATO as aspects to consider in providing meaningful assistance to troubled regions like Africa.

This USAID white paper lays out the goals of U.S. foreign assistance, from humanitarian help to "transformational development" in emerging democracies. A number of aid experts fault the comparatively low levels of U.S. official development assistance, as rated by the Organization for Economic Cooperation and Development (OECD). This Congressional Research Service report (PDF) explores the differences in the way aid is calculated internationally. The UN Millennium Development Goals, which include a pledge to halve world poverty by 2015, remain the international community's main foreign aid benchmarks.

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