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Transforming Foreign Aid: A Conversation with Rajiv Shah

Speaker: Rajiv Shah, Administrator, U.S. Agency for International Development (USAID)
Presider: Nicholas D. Kristof, Columnist, The New York Times
March 7, 2012
Council on Foreign Relations

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NICHOLAS KRISTOF: This is a(n) on-the-record meeting, and we have people -- council members watching remotely at other locations around the world. They will be submitting questions to this, after following on a password-protected teleconference.

Raj Shah has been running USAID, has been traveling relentlessly around the world and has been aiming not only to administer the agency but really to transform aid and the way the U.S. delivers it around the world.

He -- usually people say somebody needs no introduction, then proceed for several minutes -- (laughter) -- but I'm just going to say that Raj does need no introduction, and introduce him for the annual Hurford lecture.

Raj? (Applause.)

ADMINISTRATOR RAJIV SHAH: Thank you, and good afternoon. It's wonderful to be here, and I want to thank Nick for that kind introduction and for moderating today. We -- we're all of course, especially all of our 8,000-plus staff, are all avid readers and followers -- (chuckles) -- of Nick. So this is a very special opportunity.

I also want to thank the Hurford family and foundation, and the council -- and I see Richard Haass there -- thank you very much for having me here.

You know, tomorrow's International Women's Day, and on -- and it's a particularly important moment for us to recognize that there's just so much that we can do with our foreign assistance and with our development efforts around the world.

And it's easy for those days to come and go without adequate recognition, but I am so excited to be here, in part because when we -- when I joined USAID, it became very clear to me very quickly for President Obama and for Secretary Clinton and for this administration -- and, I would now argue, frankly, in a bipartisan way in Washington -- there is a tremendous amount of support for taking development far more seriously as the third leg of how America presents itself around the world. Diplomacy, defense and development together are capable now of presenting our values, our capabilities, our ability to avoid conflict and shape a more peaceful and more interconnected world, and our ability to reach out and touch some of the world's most vulnerable populations and do it with great American technology, spirit, willingness to serve and deliver outcomes that at the end of the day make us better and make us stronger.

It's particularly exciting to be in this role in this particular time, because many of the institutions that were created to pursue development objectives, to reduce poverty, hunger, suffering, inequality, were created after the Second World War and were designed for an era when official foreign assistance actually took place because we didn't have enough private capital going to these places or were designed in an environment where the United States was the laboratory and the inventor for the world and could create technologies that would spread quickly, and were designed, frankly, to engage with big countries that have huge populations of very, very poor and vulnerable and threatened populations, places like India and Brazil, Southeast Asia, that have of course since then transformed themselves and are now redefining the way the world interacts.

So the opportunity to be part of our country's development portfolio at a time when the world has so dramatically shifted in terms of what's needed and the context in which we work is a -- is a great challenge and a great opportunity.

We've tried to rise to that challenge in a few specific ways. And I would argue that the things we're trying to put in place now are setting the stage to help us achieve some very specific results. And I'd -- I would like to speak to some of those in a moment.

But before doing that, I just want to describe a few components of our new approach to how we work in development around the world. The first is that we focus very much on delivering value for money. We made some tough decisions. We all know that the political environment has both required that and frankly, in this space, in some contexts, it's the right thing to do. We've lowered our exposure, shifted our staff -- global staffing, concentrated on those countries and those priorities where we know the expenditure of U.S. tax dollars can generate concrete and specific results.

We've prioritized science, technology and innovation. You know, some of the biggest advances in global development, some of the biggest success stories over the last four decades have been when a Minnesota-based researcher created a new form of wheat that transformed food production in Asia and saved hundreds of millions of people, or when the agency that I'm a part of helped invent oral rehydration solution and salts and had it tested in Mali and 40 other countries around the world. And since then that specific effort has saved 11 million children from death due to diarrhea.

It's those types of technological and scientific advances that have powered progress in the past and now, with the advent of the mobile phone and the new horizons around technology and interconnectedness, have the power to take us forward.

But perhaps most profoundly, what we've tried to do in reforming our approach, in changing our approach is to recognize that at the end of the day, the United States really no longer -- and perhaps never did -- has a lock or a monopoly on creating the best solutions. And for anyone who reads Nick's columns, you certainly hear and see in those stories of incredible entrepreneurs, whether they are, you know, a prostitute somewhere in a very difficult environment or a girl who's been trafficked but who manages to break free and protect others, or whether they are a young entrepreneur in a slum in Nairobi creating systems for tracking food needs and water availability, an entrepreneur that we now work with to do things like identify where we need to prioritize putting food and other items during critical humanitarian emergencies.

And so our effort has now really focused on how we identify those superstars and leaders in countries in whom we can invest; who are capable of changing their environment, changing their economy.

And in doing so -- I'd like to just offer one example, if you put the slide up. This is Dr. Suraya Dalil. About eight or nine years ago Suraya Dalil was working training midwives in Afghanistan. Afghanistan had the highest rate of maternal mortality and one of the highest rates of child mortality anywhere in the world. And we made a determination -- my predecessors made a determination that they could work with her to help her build an institution, a ministry, a health system that in Afghanistan would help provide basic and low-cost services to a large percentage of the population. Health services and coverage went from 9 percent to 64 percent.

And over the last nine years -- and we now have this from validated studies -- we've seen the single fastest decline in maternal mortality anywhere in the world take place in Afghanistan. And we've seen women's lives go up -- in terms of longevity -- by more than 18 years, a tremendous, tremendous accomplishment, that resulted from identifying local leadership, making investments, working in partnership with the international community and doing the right things.

I believe this sort of approach is increasingly helping us meet the challenges of our time. In the next -- if I go to the next slide -- in fact, you know, we really recognize that the opportunity today to reach out and connect to local change agents and leaders is greater than it has ever been.

This slide is a picture of protesters, of course in Tunisia, and you would note there was a reason the protesters in Tunisia were chanting "dignity before bread." It was because they recognized and they felt that they needed to have more open space to communicate, more right (towards ?) self-determination, and that if we defined development aspirations too narrowly, as just economic improvement or health improvement or whether people had access to an education, it somehow didn't capture the very basic and fundamental underlying human rights that they sought to fight for.

We've been excited to have the opportunity in Tunisia, in Egypt, in Libya, and in many other countries through the Middle East and North Africa to work aggressively with partners and to make sure that we reach local society -- local change agents. We support civil society organizations -- some you've read about, of course -- that work to expand access to democratic processes.

The president made a very strong commitment that we would stay firm in better aligning our long-term strategic interests in the region with our core and fundamental beliefs in self-determination and respect for basic freedoms, human rights and human dignity. And USAID is honored really to have the chance to be on the forefront of implementing that approach in very difficult and very important environments.

Another area where we work that has traditionally been an area of controversy -- but I hope we're getting beyond that now -- is in our partnerships in active conflict environments. Today our largest program is in Afghanistan where we have more than 450 people taking many of the same risks that our military personnel take, working side by side in fields and in communities to help achieve a basic stability so that our troops can come home as rapidly and as safely as possible.

The truth is it's been quite controversial, over the course of more than a decade, for development partners to be engaged actively in military conflicts. But the reality is we can no longer sort of hide behind that controversy. We know that countries that face violence over a period of 20 years have had poverty rates that are 20 to 30 percent higher than those that see peace. No country in an active conflict is anywhere near meeting their millennium development goals, which are the goals and objectives that have been laid out for achieving basic improvements in the human condition and agreed to by all 190-plus nations.

And so we've really taken efforts in places like Afghanistan to expand our presence, work in a more sustained way, and make sure that some of the gains that have been achieved, whether it's 7 million more people including more kids and 3.5 million girls that are in school today there that were not at the beginning of the conflict, 1,800 kilometers of road, a nearly 10 percent annualized growth rate -- those are great results and great accomplishments. Our challenge now is to sustain those even as we transition out in terms of our significant military presence.

And one of the major challenges that we have had in development, that we're trying to adapt and change as we enter this new era, is how we work with institutions and companies in the private sector. You know, many in our community still have a -- if not bad taste, at least a little bit of discomfort from early corporate activity that did cause significant harm to poorer populations in poor countries. Sweatshops, infant formula, Bhopal -- those are all words that conjure up images of corporations as predators, taking advantage of circumstances and a lack of controls.

But today, many of the best corporations have a much more enlightened understanding. They see that the fastest growing markets around the world are often very early emerging markets. They note that in sub-Saharan Africa there are 15 countries that have grown at 5 to 7 percent annually for about eight years in a consistent way. They see tremendous fortunes being made as people create products and services that can be sold on cell phones to even the most remote parts of the world and they see the outcomes that relate from that.

Just one example that I'd like to offer that I think is emblematic of our new way of working in this space is a partnership we were able to launch with Pepsi in Ethiopia. Pepsi will invest significant resources to reach 30,000 chickpea farmers -- and (I know ?) you say, well, why are you talking about chickpea farmers? -- and they'll reach 30,000 chickpea farmers as part of building out a business to produce both hummus for their commercial markets and to produce a high-nutrition, ready-to-use, high-protein paste that can be delivered to kids in -- at risk of chronic and severe malnutrition in and around the Horn of Africa.

It's those types of partnerships, brokering those types of deals -- in that case between Pepsi and the world's largest food aid provider, the World Food Programme, with USAID in an intermediate role -- that, I think, increasingly will define whether -- our ability to do that will define whether or not we'll be successful going forward.

Is it -- the next slide.

This is a photograph of a visit I made that had a profound impression on me last summer and fall to Dadaab, Kenya. This is the site of the -- of the world's largest refugee camp, and it was at this site that I had the opportunity to meet a young mother named Habiba (ph), who had traveled 60 (kilometers), 70 kilometers by foot from inside of south-central Somalia to safety at this refugee camp.

Along the way of her trek, she was attacked. She had two children, and she was -- over time, they didn't have the strength to continue on themselves. So she carried them in her arms. And then, along the way, she determined that she couldn't physically go on carrying both kids and had to make a choice that, as a parent of three, I can't even process or understand, about leaving one of her children behind, as others have had to do, as she took her other child to safety.

Those are the kinds of choices that people have to make in environments where the combination of famine, of war, and strife and drought -- in this case, the worst drought in 60 years that affected more than 13 million people -- when those conditions come together and create those environments. And as we look forward, our -- the United States -- and I am proud of this -- can say that we were more than 60 percent of the global effort to tackle the humanitarian crisis that took place. We mobilized international partners. We did many of the things -- we did a lot of innovative things in that context to make sure we could reach populations, even inside of Shabab-controlled environments, in a way that was safe, but that ultimately delivered to them either resources, high-nutrition foods, health and water interventions that saved lives.

And while we all know that more than 35,000 children under the age of 5 perished by -- around the end of September, I'm convinced that our efforts taken together, as a global community, did save tens of thousands of children's lives and are one of the proudest moments the international humanitarian community has had in doing that. This year, as we go forward, we're very focused on using the lessons from that experience to prevent the reach of the next set of disasters and to build greater resilience into our programs.

It took me a while to figure out what the world "resilience" meant in this context. Resilience means helping people who live in very vulnerable situations avoid the negative consequences of those types of situations.

An example of resilience is a very innovative partnership we have with Swiss Re, the reinsurance firm, where we've designed insurance products for pastoralists in Kenya and Ethiopia and parts of Somalia, so that when rainfall -- it's rainfall index insurance: When it doesn't rain as much as is expected, they get an insurance payment. Six hundred of those families got insurance payments from that program the -- over the course of the summer, and it kept them in their communities, and it kept them persisting onward and avoiding the need to go on one of those long and dangerous treks.

I'd like to conclude just by briefly describing what I think of as our three biggest opportunities as we go forward. I think the first is our opportunity to mobilize technology, innovation, partnerships like the Swiss Re program and target those parts of the world that we know are increasingly vulnerable to climate shock and climate change and will increasingly suffer from situations like this.

And that -- we're at the end of this month pulling the international community together in Nairobi in order to lay out a plan to do precisely that and build more resilience into places like the Horn of Africa, in environments like the Sahel in West Africa, where 6 1/2 million people this year are going to likely be at risk if our rainfall measurement systems and prediction systems are accurate, and do a better job of letting people protect themselves with all of this new capacity to help them improve their own lives.

But that's not enough, and that's why the second opportunity and the one that is really our -- the president's top development priority is to really invest in countries so they have the capacity to feed themselves. We know it is anywhere from one-eighth to one-tenth the cost to help someone feed themselves than to provide food aid, and we know that despite the fact that every part of the world except for parts of sub-Saharan Africa and parts of dry-land South Asia have escaped food insecurity, in the places where it continues, it has been getting worse over the last few years, not better.

So we're investing in a program we call Feed the Future, a partnership with other international donors and with countries themselves to help countries invest in the technologies and the strategies to literally boost their harvests and pull themselves out of poverty. We're excited because that is starting -- we're starting to see real results. The same day that we were at this camp -- can I have the next slide? The same day we were at this camp -- I'm not sure where this is -- (chuckles) -- but the same day we were at the camp, that afternoon we went -- I was with Dr. Jill Biden and Senator Frist, and the three of us went to an agricultural research institute outside of Nairobi.

And at that institute we saw new forms of hybrid maize or corn being developed in partnership with U.S. universities. We saw scientists, some of whom had been to Purdue for training and education, creating orange-flesh sweet potatoes, potatoes that actually have more vitamin A in them, pro-vitamin A, and therefore they help kids protect themselves from river blindness and other diseases. And we saw that in parts of Kenya, food production had tripled in just a few years, in part as a result of our partnerships, and that had helped about 4 1/2 million people in Kenya not need humanitarian assistance through this crisis.

That's what success looks like in that context. I was thrilled just last week to see new data out of Bangladesh where for the first time in decades their most populous states are going to be sufficient -- self-sufficient in rice production in large part because of a major international partnership to improve the quality of production of rice in that part of the world. And we're seeing child stunting rates for children who are chronically malnourished go down 20 (percent), 30 (percent), 40 percent in just a few years in Central America as a result of our new way of working and tackling these problems.

As Secretary Clinton has said, ending child hunger in particular is not something that we need to learn how to do; it's just a matter of having the will and the commitment and the desire to partner and get it done. And that's our second priority.

The third priority is another area where we have all the tools and technology necessary to create huge advances in the human condition. Today there are nearly 8 million kids who are under the age of 5 every year who die of preventable disease. And we know that if we had the OECD or the first-world child mortality rate extrapolated globally, that would be about a million and a half kids.

So that difference, that 6 1/2 million kids every year, is what we think of as preventable child death. And we've seen huge progress in creating new vaccines for diarrhea and pneumonia. I see some folks here who've been part of that effort. We've seen new strategies, new technologies, things as simple as an insecticide treated bed net that, for a few dollars, can help protect a child for years. We've now seen, in partnership with -- students at Rice University have developed a CPAP machine -- for those of you that are doctors, a continuous positive airway pressure machine -- that helps kids breathe in the first few days of life. They've developed one for $160. You -- in this country, to buy one for a hospital will cost a couple thousand dollars.

It's those types of advances that are making possible now what we believe is the largest reduction in child mortality ever, and we think for the first time you can look across the horizon and try to end completely preventable child death in a generation. And so that's our third major objective and commitment, and we are later this year pulling together the global community to try to raise resources and to get folks to focus on what it will take to achieve those kinds of goals.

Could I have the next -- I think it's the last slide.

And I just want to -- I don't want to get into detail here, but I want to share what success looks like when those things work. If you -- this is a demographic picture of different parts of the world in 1960 and 2010. And the big, exciting thing about saving kids' lives is when you save their lives, they actually -- people invest more; people have fewer children to begin with, and then they invest more in those children getting an education and improving their status in life. And that process is known as a demographic dividend. And countries that have experienced that demographic dividend have added 2 percent to their annual growth rate on an annualized basis for about 15 years.

So just think of how powerful that could be if we could start to see -- and you see the demographic dividend take place by the different shape of the distribution of populations in Asia and Latin America versus in Africa. We now believe we're on the cusp of seeing that kind of a demographic dividend take place in Africa.

And I'll conclude with the following thought: If we succeed in these efforts, if we can protect vulnerable populations and avoid the story I told you about that I heard at Dadaab, if we can end large-scale food insecurity and help countries develop their agriculture as a basis for developing their economy and if we can end preventable child death and usher in a demographic dividend in countries like Nigeria and DRC and Ethiopia, we can look out and envision a world that is more interconnected, that is safer, where people and children and communities everywhere have real human opportunities and where they have more opportunities for self-expression and basic human dignity.

And at the end of the day I would argue, President Obama would argue and I -- what I'm excited about is members in both parties on both sides of the aisle in Congress would argue that that is in our national interest. It is deeply and profoundly in our national interest to create a world where we have trading partners instead of places where we have to send soldiers.

And while sometimes it's hard for political systems to take the long view and make the decisions to prioritize what it takes to get there, this story is a -- such a critical part of our national security strategy, our foreign policy strategy and our own capacity to create an economy that is vibrant and lively and has jobs here.

And so I appreciate the chance to be with you today, and I look forward to taking questions and hearing your thoughts.

And I'd leave you with the following request -- (chuckles) -- which is -- it's hard to sometimes talk about these issues, but I would just make the case that if we all in this room for starters -- and then we all reached out to people we know and work with -- would talk more about these issues, if we all had a little bit more Nick Kristof in us -- (chuckles) -- and we could process the fact that these are solvable problems and that solving them is not just creating benefits for others, but really creating benefits for our own country and is ultimately the purest expression of what it means to be American and how we demonstrate our values, then we'll be better off as a political system, as a country and hopefully as a global community.

So thank you. (Applause.)

KRISTOF: Thanks very much, Raj, for a terrific presentation. In a moment I'm going to broaden it up and make it a conversation with members here and with those who are remote.

Let me just start off by tossing a couple of questions your way. You ended by making the point that this isn't just about our values but also about our national interest and about our national security. And I think a lot of us have been advocates for assistance in making similar kinds of arguments.

But I must say, you know, when we look at what is happening in huge beneficiaries of American assistance, like Afghanistan, which you mentioned is the biggest USAID program, Pakistan, Egypt, then isn't it harder to make that argument that billions of dollars have bought good will, have bought openings for American diplomacy? You know, do the skeptics maybe have a point on that ground?

ADM. SHAH: Well, you know, I think it's hard to judge the quality of American assistance by, you know, our approval ratings in different countries. At the end of the day, our belief is if we design efforts that generate real results, that if people can see and appreciate and value those results, that we're part of the solution.

And I've looked at this carefully, and I'll tell you, when people who are affiliated with, associated with or even aware of our programs -- even in Pakistan, we get more than 1,050 press mentions in Pakistan a month, and the great majority of them -- "we" being USAID -- are incredibly positive. And when we go and see the communities that we're touching because we created road infrastructure in schools in Waziristan or because we've helped put a thousand megawatts onto the electrical grid over the course of the last two years, we see real appreciation for that.

But the honest answer is, I don't think development partnerships will ever have -- will ever fully define the way other countries see us. They see us -- certainly that's part of it, but they also notice if we -- you know, if there are incidents that are deeply offensive to their religious beliefs or their cultures, or if they believe that we are doing things in their country that are inconsistent with the -- with the basic, you know, aspirations they have.

So it's complex, but -- you know, but at the end of the day, if -- you can especially look after -- immediately after big disasters. That's probably when we're most visible, when people see the power and presence of American engagement and we move the sort of numbers on our approval rating, so to speak. But otherwise, I would argue it's better to focus on delivering results and being true to that spirit and that outcome than trying to necessarily design programs solely to have more visibility.

KRISTOF: But just to push back a little bit, I mean, when Kerry-Lugar-Berman was being sold, we all made the argument that this was an essential way to improve our relations with one of the crucial players in the world. And, I mean, USAID may be getting favorable mentions in the Pakistani press; the U.S. itself sure is not. And in that period we've been spending billions of dollars, relations have deteriorated. And what have those billions bought us?

ADM. SHAH: Well, you know, on behalf of a certain part of that portfolio, they've bought us real human results; you know, whether it's the kids in school or vaccination programs for large percentages of the kids in the country that are improving their health. We've trained 22,000 midwives that are helping to reduce the number of women who die during childbirth. Those results matter, because over time, you just can't have stability and opportunity if mothers die when they give birth, if kids don't make it to the age of 5, if population growth is out of control. It creates such tension and pressure that the long-term trajectory for stability is just not there. So they deliver those real results. I think that's the first thing we got to focus on.

I would argue they also do help in what is a very complex, multifaceted relationship that has its ups and downs. They help serve as a bit of a stabilizing force. I don't want to pretend that, you know, by any means our development partnership with Pakistan trumps everything else. It doesn't. But it's part of the area of positive cooperation that -- you know, that Pakistanis can appreciate. It's not the whole story, as we all know, nor is it likely to become the whole story.

KRISTOF: Let me ask one other question before handing it -- broadening it. I think there is a general sense that USAID programs like Feed the Future have been really well thought out and well done, but I think there's also a sense that one of the central challenges assistance faces these days is not just designing great programs, but in building political will around America for support in general. And a couple years ago, President Obama said that development was going to be on par with defense and diplomacy, and I must say that, you know, if you look at the White House since then -- I mean, haven't they been kind of AWOL in that effort to make the case for aid politically so that there is broad support?

The -- I mean, you're out there making the case. Secretary Clinton has been making the case periodically. President Obama not so much, no?

ADM. SHAH: Well, I would disagree. (Laughter.) I think the president's been out there every clearly saying -- not only proposing, you know, the largest and, I would argue, most results-oriented budgets and policies in this space that we've ever had as a country, building on a strong track record of President Bush in this space, but he's also very clearly and personally said that he will continue to fight for foreign assistance even when things are very, very tough, because it's a critical expression of our values and it is both good for us and critical to our national security and foreign policy strategies.

So I would disagree with that presumption, as you wouldn't be surprised.

KRISTOF: I figured you would.

ADM. SHAW: But I'd also say, you know, I think you have to step back and just say over the last 10 or 15 years, one thing that's changed dramatically is, before it used to be the case, if you wanted to be in development or be engaged in development, you would be at institutions like USAID or the World Bank or you'd be trying to get into those institutions. Today there are faith-based organizations, student groups, entrepreneurs, folks in university research labs that are all doing really exciting, innovative things, and because they're just more interconnected, can -- you know, a group of students at MIT can develop a water filtration device to take arsenic out of the water that is low cost and a breakthrough for people in Bangladesh. There's a group of -- there's an engineering and business school group at the Blum Center at the university -- at Berkeley that created an improved cookstove that we're now distributing in Darfur that helps to reduce indoor air pollution and improve health outcomes and reduces the need for firewood, which -- and women get, you know, attacked and are at risk when they're out searching for that. And I mentioned the Rice students who developed the CPAP machine.

I just think the long-term trend here is incredibly positive. More Americans -- you can't go to a U.S. college or university without being overwhelmed -- as you know, of course -- by the interest in development. And we issued a program to enhance our partnerships with universities. We've had there webinars -- it's a way for us to communicate with potential applicants -- each of which have had more than 700 people on them, some of the biggest, most subscribed programs we've ever created in our history. And I think it's because there's an explosion of interest in our country to support and engage in development. And I think someday that will turn into significant political support for what we're doing, if we do it well and if we're delivering real results.

KRISTOF: Thanks. I'd like to invite members to ask questions. If you are watching remotely, you can email your questions to national@cfr.org. Please wait for the mic before you ask your question. Stand up; identify yourself. And please do ask a question, OK? (Laughter.) Where's the mic? OK. Yes.

QUESTIONER: Hi. My name is Dan Rhodes (ph). Raj, United States enterprise funds have been among the outstanding successes in the history of American foreign aid. The original programs are now -- the first generation are now winding down. What is current thinking and planning for a new generation of American enterprise funds?

ADM. SHAH: Well,l thank you. For those who don't know, the enterprise funds have been public-private partnerships that have been set up in countries that were experiencing transitions, most notably in Eastern Europe and the former Soviet satellites. And you're absolutely right, they've been very successful. Many have made money and have returned money to the U.S. Treasury over a long period of time, and they did help to stimulate critical business investment in countries.

Today we are actively creating those types of enterprise funds in Tunisia and Egypt and countries throughout the Arab Spring. We're using a broader set of tools now to help motivate more private-sector business activity and job creation in those countries.

And one of those tools is a -- is a new tool we have called the Development Credit Authority that actually provides loan guarantees so that, you know, small-scale agricultural businesses can get lending from their local banks.

And we found that those local financial institutions have been very sort of skeptical about investing in local businesses. And that's a good thing for us, because then we provide the credit guarantee, they start putting the loans out there, and it turns out that the riskiness of the loans were far overestimated. So for every dollar we've actually spent through our credit authorities, we've leveraged $28 of local investment in small businesses in the health sector and food and agriculture and getting clean water and improved sanitation services to populations in need. And I think -- I think that's very much part of the future -- so enterprise funds and a much broader set of tools that today can unlock real entrepreneurial activities in countries.

KRISTOF: Yes. Yeah.

QUESTIONER: Thank you. Hi. My is Mallika Dutt and I'm with Breakthrough. Raj, I'm curious to hear how the global pandemic of gender-based violence and discrimination plays into these approaches and opportunities that you've just laid out for USAID.

SHAH: Thank you. You know, I -- the -- we issued our first gender policy this last week, and we launched it at the White House. And it was surprising to me -- I've been at AID for about two years, but it was the first gender policy that the agency has released in more than three decades.

And what we've learned in those three decades is extraordinary. We know that a dollar of income that goes to a woman is far more likely to be invested in children's health and education and in moving a family out of poverty than, unfortunately, that same dollar going to a man. I joke about that in my own household -- (laughter) -- here at home.

But the reality is, a lot of data has concentrated on making the case that women are important, and has been -- and we've done less, over the last few decades, to really understand how to make sure, in all of our programs and efforts, we're focusing on women and girls and protecting or prioritizing their interests.

So now when we launch our Feed the Future efforts, we have a data system that collects data on beneficiaries and makes sure that women's incomes are increasing and other measures of women's empowerment. In our civil society programs, we're specifically tracking, are we supporting women-headed NGOs and giving them more visibility in the social context that they work? In our health programs, we of course look to focus on women for a variety of obvious reasons, in maternal health and family planning as major efforts that we support.

And we're just, I think, getting much more sophisticated in developing measures and metrics to do that so that it -- we're really not saying we're going to allocate X amount of money to gender programs but rather say, in everything we do, we're going to be businesslike and sophisticated in measuring the results for women and girls.

And we see it makes a huge difference. You know, the program I mentioned in Guatemala, where we've seen those big reductions in child stunting, that's in part due to effectively focusing on women for nutrition education and other types of activities.

QUESTIONER: Laurie Garrett, from the council. Thank you very much for joining us today.

Many in the global health and development community were pretty stunned by President Obama's proposed 2013 fiscal year budget. The largest cuts proportionally anywhere in the entire federal budget would go to global health at somewhere between 3.5 (percent) to 5 percent. And the rationale given was, well, we're more efficient, we're better at getting bang for the buck, and we're consolidating programs. A lot of the global health community greets that with great skepticism. We're -- obviously, you must defend the position because you're in the administration. Rather than ask you to defend it, can you explain it?

SHAH: Sure. (Laughter.) Well, first, I'll say it's not true, of -- that these are the largest reductions, because actually, we carved out the foreign assistance component, which overall -- and this is an -- you know, by comparison to previous years, this is an austerity budget. There's no question that this budget overall is presented to rationalize our fiscal situation. But our overall foreign assistance budget is down about a percent, a percent and a half, overall, as part of this budget.

That said, in -- you know, in health, we've submitted a request for $7.9 billion. As you've noted, that's about 60 (percent) -- 50 (percent) or 60 percent of total global health spending. It's the single largest item in the U.S. foreign assistance account and the entire U.S. foreign operations account. And we think we're getting incredibly strong results for that significant investment. We are on path to -- as President Obama made a commitment, to put 6 million on antiretroviral drugs. And you know, cost of those drugs have come down by a third of what they used to be.

We're on path to ensure that in a global partnership, every pregnant woman with HIV gets treatment so that she can avoid transmitting HIV to her children and we can have an AIDS-free generation. We have resources in that budget to support the Global Fund and to ensure -- and we've had a big increase in our commitment to the Global Fund to make sure that we're investing in those multilateral vehicles that allow us to leverage our dollars with the dollars of other donors and generate 2 (dollars) or 3 (dollars) or $4 of investment for every 1 (dollar) we put in.

And we have the resources to lay the groundwork for the vision that I laid out in terms of what's possible on child health and child mortality, which is very exciting -- will take more resources in the years to come, but we can lay the groundwork for ensuring that every kid gets to sleep under a malaria bed net, that every kid gets basic vaccines that our children here get, that every child around the world has access to, you know, basic therapies like oral rehydration if they get diarrhea, which has actually come down in recent years.

So you know, we're doing the best we can in a -- in a difficult fiscal environment, but this budget is designed to absolutely meet those very specific commitments.

KRISTOF: Yes.

QUESTIONER: I'm Gary MacDougal (ph), a longtime public company CEO, now chairman of foundations. And I've had interaction with AID over many years. And my question relates to performance outcome measurement.

My observation has been that lots of money gets wasted, that AID doesn't measure things very well, and when they do measure, they often measure the wrong thing. Have you this addressed this problem? And I'm not going to ask you to criticize your boss' boss, but I'm going to ask you to criticize your organization. Have you addressed this problem? And have you considered having a high-level performance outcome measurement executive reporting directly to you? Because you have to create systemic cultural change in an organization that's been that way for many years and you've only been there 24 months. So what do you think about performance outcome measurement?

SHAH: Well, first, this might surprise you -- (chuckles) -- but I agree with you completely. I was stunned to learn when I got there -- because I was at the Gates Foundation for a long time and we put in place very rigorous performance management systems there and in fact had modeled some of those -- and I know, because I was part of this -- on some of AID's templates for how you do programmatic evaluations that came out of the late '80s and early '90s. So I was stunned when I got there to learn that an institution that was sort of synonymous with good evaluation had gone from doing something like 600 program evaluations in the early '90s, after having a more than tripling of the budget, had gone down to doing about 190 a year by the time I got there. So your basic presumption is absolutely accurate.

What was more crippling was that they followed what I call a kind of two-two-two model -- that they'd hire two consultants, they'd go out for two weeks, they'd produce a report that two people would read. And frankly, that doesn't -- (laughter) -- that doesn't tell you anything.

So we got -- we got -- we put together a world-class team. We came up with a new evaluation policy. By the end of this year, we -- this will be the first year that this is in place -- we will publish 250 high-quality, independently conducted program evaluations all done by third parties. They will not be edited or cleaned up; they will go straight to our new website at the end of the year.

And every year, I think we will be generating data and information on what works and what doesn't work in a transparent and clear way and in a way that, I think, within a few years will clearly establish our institution hopefully as a -- as a model in this space.

And I was quite thrilled -- you don't have to believe me -- that there's an institution called the American Evaluation Association that actually issued a statement that they thought what we were trying to do was a best-in-class approach and encouraged other federal agencies to take on a similar one. There's a lot more to it, but I think it's really, really important.

And here's why: I had this really interesting conversation with Stephen Harper, the prime minister in Canada, who led this maternal health/child health group. And I said, OK, if I were in your government, what would your advice or instructions to me be. And he said there's no other area of public policy where the difference between the way people feel about the quality of your work is so stark. You know, either they think you're spending your money in a businesslike way, generating results, saving lives, and they have this tremendous generosity; they want to do more; they want you to do more, or they assume it's going to corrupt dictators, it's not being used well, it's all wasted, and they want you to disappear. And he said there's no middle ground. (Chuckles.)

So -- and I believe -- from my experience, I can say that there certainly feels like there's some truth to that. So I think it's important that we kind of lead in this space so that we can -- you know, our country and Americans can believe what we're doing is generating real results, because I'm confident it's so. The ability to unlock the political support for this work will just go through the roof.

KRISTOF: Yes.

QUESTIONER: John Kine (sp), Kine (sp) Foundation. I've spent a great deal of time in the field in your type of activity, and I find it extremely interesting and useful. And it is truly -- distributing directly to Third World dictators is rarely a platform (for this ?).

A question of public diplomacy: The U.S. is by no means the largest percentage distributor of foreign assistance, but -- although in absolute money, it's a very large one. Should we show some of our trade deficit as a kind of credit? In other words, many people in this room have something on their backs or in their pocket that is made in, let us say, China, or whatever, Bangladesh. And that's the kind of -- our trade deficit is a kind of aid distribution, because you're giving work to very poor people sometimes. (Inaudible) -- people, they wouldn't get the job. This is just a public diplomacy suggestion.

SHAH: Well, yeah. I -- that's an interesting idea. I think that -- I would say two things. The first is, you know, I think there's a difference between designed, results-oriented investments in areas where we think we have the most bang for buck and other types of things. And that's a -- that's an interesting suggestion. Others have suggested that U.S. family remittances to their families back home should also count. As someone who grew up in an Indian-American home watching my father make those remittances back to his family, I know he would certainly not want the U.S. government counting that as official development assistance -- (laughter) -- and would probably be pretty vocal about it. So that's one thing.

The second thing is an -- is the flip side of that point, which is if you look at the biggest aid recipients in our past -- South Korea, Taiwan, other Southeast Asian countries -- and you look at the trends in sub-Saharan Africa, 11 of the 14 fastest-growing export markets under the president's export initiative have been recent or current U.S. aid recipients. And you know, and South Korea is just an incredible example. They had a lower per capita income, a lower per capita caloric consumption in the -- in the 1960s -- in the late 1960s than in eastern Africa. And today, obviously, they are a fully industrialized country, one of our largest trading partners, a source of a free trade agreement that will create hundreds of thousands of jobs in this country.

And you know, that's what success looks like. And I think we need to constantly remind ourselves that this is about creating the kind of world where we can continue to prosper and be successful by lifting others up and connecting them in a -- in an appropriate way to the global economy.

KRISTOF: We've had some questions that have come in from members watching remotely. One is from Cedric Suzman in the World Affairs Council of Atlanta, who asks: Can you tell us what role water, with its connection to nutrition, sanitation and health, is playing in your portfolio, your projects around the world?

SHAH: Well, water is very important. I think water and food go hand in hand. Seventy percent -- 75 percent of total water consumption in places we work is for agricultural purposes. There still are about 1.2 billion people around the world that don't have sufficient access to clean water, which is an extraordinary thing because obviously, we all take that so completely for granted.

We're convinced that water and food security are critical national security priorities. And that's why, you know, Feed the Future is a program that's most notably about food security. But you can't have food security without effective water strategies. And we'll be issuing in a few weeks, on World Water Day, a new water policy. We're very enthusiastic that there are some great opportunities to improve outcomes, particularly on how productive water is used and what that means in the production of food and in the management of watersheds and water resources.

So it's very important. It's a space where public investment is dwarfed by private investment or by the investments of multilateral development banks. So it's a space where we want to partner more with others in order to get larger-scale solutions.

KRISTOF: Yes, yes, yeah, absolutely.

(The ?) microphone is right beside you.

MR. : (Off mic.)

QUESTIONER: Thank you very much, first of all, for your very informative and inspiring talk about the United States. I know that you came to the agency with a -- with having a lot of baggage and regulations in place, and I wanted just to ask you, are you taking any steps to remove what was put in place in 2008, which is an absolute ban on abortions for -- on U.S. aid going to women and girls raped in armed conflicts, such as in the Congo and Sudan?

SHAH: So there's a very -- there's a law in place that precludes USAID from using our direct resources to support abortions and the provision of abortions, and we have very careful controls to demonstrate that we are abiding by that law. President Obama, when he took office issued a repeal of the Mexico City policy, which actually had gone so far as to make sure that the U.S. couldn't work with any organization that was affiliated with providing knowledge about a comprehensive set of family planning services. That repeal has allowed us to reinvigorate our family planning programs and to refocus on women's health.

And so we've been -- we've been very focused on basic, broad and comprehensive family planning. We've been very focused on investments in women's health. And in the specific environments you're discussing, we do quite a lot of work to work with women after traumatic situations and to make sure -- and after, you know, fistula repair and things like that and to make sure -- increasingly and, I think, very importantly -- that we put basic protections in place in a range of different contexts.

But, no, we do not provide resources for abortion, and the law doesn't allow us to do that.

KRISTOF: We have time for one or maybe two questions if we're -- if we're brief.

(There's pressure ?).

QUESTIONER: Hi, my name is Imatra Watchahur (ph) with TerraNova Strategic Partners. I wanted to ask if you could share with us what are your biggest challenges in coordinating foreign assistance with the larger bilaterals and multilaterals around the world?

SHAH: That's a -- it's a great question. I spend a lot of time trying to coordinate our assistance. I guess I'd break it into two different components.

One is around humanitarian emergencies or immediate transitional emergencies. And in those environments, you know, usually there's a "friends of" group that will be developed, like the Friends of Libya, that brings together partners and explores how we can work together. We've taken some extra measures to really make sure we do this well. In fact, I've traveled, for instance, to Southern Sudan with my counterparts from the United Kingdom and Norway. We just felt if we went together, we could send a message of unity; we could ensure that we weren't duplicating efforts.

It was a very interesting trip because a lot of it was spent working with our own teams who -- you know, everybody wants to be doing everything. And so we had to stand next to each other and say, no, he's going to do this, and Norway's going to do, you know, help with the management of the oil resources, and the U.S. is going to focus on health and education and then hope -- and then that got the message through. So there's some -- we're being more effective at that.

The second part is the new partners. You know, in the crisis in Somalia and in many parts of sub-Saharan Africa, partners from the Islamic countries and the Arab states are doing more and more in this space on humanitarian and development needs and partners like China are major investors in Africa, for example, for their own economic interests and resource priorities.

So we have created global agreements to try and make sure that people abide by basic standards in how they do their work, that all these new partners whom we welcome into the -- into the space abide by standards of transparency; of fighting against corruption and graft, as opposed to contributing to it; you know, participate in the international fora for communicating and making clear what they're doing, what their intentions are; and then we learn together. And that is, I think, the big challenge over the course of the next decade, will be really getting that piece right with these new partners.

KRISTOF: After what you talked about, bringing efficiency to USAID, I don't dare go over time. (Laughter.)

SHAH: (Laughs.)

KRISTOF: So I'd -- you know, we asked you questions about your boss, about the agency itself, and you've answered with a lot of grace.

I should also mention that your annual letter is coming out on Friday, I believe. Is that right?

SHAH: Yes. Yeah. This is part of our effort to communicate better the value of this work and what we're learning and where we can do better -- (inaudible).

KRISTOF: And that'll be on your website?

SHAH: That'll be on our website at usaid.gov on Friday. So please check it out, and we'd welcome your feedback and your insight. It's a practice I've shamelessly copied and borrowed from my previous employers, Bill and Melinda Gates, who also do an excellent annual letter that is very informative.

KRISTOF: So please join me in thanking Dr. Shah for being with us. (Applause.)

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