Foreign Assistance Reform: Transformational Diplomacy and the Development Enterprise

In successive speeches yesterday at Georgetown University and today at the State Department, Secretary of State Condoleezza Rice has outlined a bold vision of “transformational diplomacy,” the goal of which she defines as

"to work with our many partners around the world, to build and sustain democratic, well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system.”

What’s motivating this policy shift? Transformational diplomacy reflects above all the administration’s conviction – hardened by 9/11 – that the main threats to U.S. national security and foreign policy today come from “weak and failing states” that are unable to exercise “responsible sovereignty.” (CGD recently released a working paper taking a closer look at this alleged connection see also: On the Brink: Weak States and US National Security). To help bolster weak and failing states, the administration needs a new diplomatic and foreign assistance culture, that ensures that U.S. diplomats not only “report” on the world but “seek to change the world as it is” for the better – as doers and implementers.Transformational diplomacy has broad implications for U.S. development policy. At today’s event in the Ben Franklin room at State, Rice announced the long-awaited plans for reforming U.S. foreign aid. Contrary to previous rumors, the administration will not attempt to integrate USAID fully into the State Department. Instead, it will dual-hat the Administrator of USAID as the nation’s first Director of Foreign Assistance. Rice named Randall Tobias, who currently coordinates the President’s Emergency Plan for Aid Relief, to that position today. In that capacity, he’ll be responsible for coming up with a coherent foreign assistance strategy, overseeing all State and USAID foreign aid windows. (He will “coordinate” with MCC and PEPFAR, which will remain separate entities).There’s lots to be said in favor of the reform effort announced today. It’s motivated by a laudable goal: to bring greater coherence and strategy to the fragmented foreign assistance apparatus – which now entails 19 separate aid windows that go well beyond development assistance to include military training, counter-narcotics assistance, and economic support to allies – and, more broadly, to ensure that the activities of USAID contribute to broader U.S. foreign policy and national security goals. The proposal may get rid of multiple lines of authority that complicate accountability and coherent policy, ensure that State/USAID are better stewards of taxpayer money.At the same time, Rice painted in pretty broad strokes today, and a lot of difficult questions remain. We hope Steve Krasner, who has been leading Rice’s year-long review of foreign aid reform as Policy Planning Director at State, will answer at a CGD-sponsored event tomorrow. We’ll be looking for the answers to the following questions:*How much power will the Coordinator actually have? To be effective, Tobias will need significant authority, as well as the backing of Rice and the President himself. Will Tobias have authority to actually move monies around from different accounts? In previous weeks, the administration was rumored to be consolidating the 19-odd aid baskets into 5-6 separate windows that would be used for particular categories of countries (e.g., fragile or strategic states). Is this scheme still on the cards, and is it workable?*What implications does the reform have for poverty alleviation – and indeed the whole development enterprise? Rice’s speech did not even mention the goal of alleviating poverty. Rather, the focus was on whether various foreign assistance spigots can help improve prospects for democracy, governance and institutions in weak and failing states. For this administration, “aid effectiveness” means advancing the US freedom agenda and good governance worldwide, rather than “development,” per se. Is that a correct diagnosis?*How receptive is Congress to these proposals – and does it matter? Rice said that the new Director would be operating on the basis of “existing authorities,” but folks on the Hill are less convinced. Based on my conversations with Hill staff yesterday, there is bipartisan concern about the reactions of major constituencies to the politicization of foreign aid -- and about potential loss of Congressional oversight. Rice closed by saying she looks forward to working with Hill on question of “how to respond to development needs of weak and poorly governed states” -- but folks on the Hill are annoyed the administration laid little groundwork for these proposals.*How will the reforms correct the flaws in current U.S. development policy? In a recent CGD paper, CGD president Nancy Birdsall and colleagues outlined four weaknesses in U.S. development policy. The proposed reform helps in a couple of areas, particularly aid fragmentation and in addressing weak and failing states. But it does little to improve the mediocre performance of the US in non-assistance components of development policy, or to ensure a more effective use of multilateral institutions.