"The Future of Foreign Aid" buttons/fp.buttons frnds@solar.rtd.utk.edu, sasha@solar.rtd.utk.edu, acroft@solar.rtd.utk.edu comments.log
Remarks of
J. Brian Atwood
Administrator, USAID

Advisory Committee on Voluntary Foreign Aid Washington, D.C.
March 12, 1996
(as prepared)

It is always a great pleasure for me to speak at meetings sponsored by the Advisory Committee on Voluntary Foreign Aid. Today, we are joined by a number of USAID employees and other partners as well. I want to thank everyone in this room and all the members of Congress who believed that the development mission was vital to the United States, and that USAID and its partners were the most effective way to carry out that mission.

But my purpose today is not to talk about the recent past. We have survived but that is not enough. I want to talk about a future that will be different.

From the time President John Kennedy signed the law that brought USAID into existence in 1961, until just a few years ago, the Cold War provided the rationale for America's international engagement. Our sense of duty and our commitment to a free world were the driving force behind our leadership. We never contemplated the prospect that there would again come a day when American engagement itself would be a matter for debate. But that day has come.

It has now become fashionable to attempt rationalizing away our need for resources to remain effectively engaged. My friend Jeremy Rosner says we have replaced "containment" as our central operating foreign policy perspective with "budget reduction."

But we will get nowhere by wishing this were not so. I am convinced that one day the political realities will change, but we cannot get from here to there by wishing. The Cold War consensus in support of adequate funding for international programs no longer exists. So the time has come, as Abraham Lincoln put it, "to disenthrall ourselves of the past," and arrive at a vision of where we are going.
Part of the difficult job of "disenthralling ourselves" entails making a commitment to think differently about the future. I want to share some ideas with you today, about the future of foreign aid -- specifically of U.S. bilateral assistance. These ideas build on the achievements of the past but they also look to the new international realities and the very real budgetary constraints we face.

The New Realities

The new world is one of complex, fluid international relationships. It is a world facing, on the one hand, rapid population growth, environmental crises, food shortages, refugee flows and conflict. On the other hand, it is a world of vastly improved communications, huge private capital flows and a growing proliferation of non-governmental organizations.

Tragically, a significant number of countries -- especially but not exclusively in Sub-saharan Africa -- remain impoverished. They still lack not only the resources and the physical and human infrastructure, but the institutional capacity and policies to attract the private investment that will sustain their development. These countries remain vulnerable to serious setbacks, civil conflicts, humanitarian emergencies and even state collapse.

Other countries are attempting to transform their economic and political systems. These are the nations of the former communist world engaged in an effort to develop free markets and democratic political systems. This is an extremely difficult task, one in which the United States has a major stake.

And there are countries that face the challenges of reconstructing their political systems and economies almost from scratch after devastating civil conflicts or authoritarian rule. Our enemy in places like Rwanda, Liberia, Cambodia and Haiti is hopelessness. These countries are highly vulnerable to political and economic disorder as they grapple with their painful transitions. Yet, where we have managed to bring hope, progress is measurable.

Transitions have become commonplace in today's world and we must improve our capacity to deal with them. When we succeed in the worst circumstances, as we have begun to do in Haiti, Mozambique, Central America and Cambodia, we avoid a reversion to state collapse with all its attendant problems. In the best circumstances, countries may eventually become promising long term development partners as we have begun to see in Central Europe and Southern Africa.

There are a growing number of economically successful, newly industrializing countries, which have become significant players in the world economy. Many countries no longer need U.S. assistance to the extent they did. Rather, they offer expanding markets for trade and investment. Crucially important foreign assistance interventions some 30 years ago created the emerging markets of Korea, Taiwan, Thailand, Mexico, Brazil, Chile, and India.

Each of these categories of nations and a series of key development issues were addressed at United Nations conferences in Rio, Cairo, Vienna, Copenhagen and Beijing. These international meetings articulated a strong global consensus in support of integrated sustainable development.

This consensus demonstrates that we have within our grasp the capacity to build a global community in which population is in better balance with resources, in which human health everywhere is more secure, in which the participation of people in the development process is taken for granted and in which economic opportunity is more widespread.

We can do these things if we can make the same progress we made in the past 30 years. We don't need to perform miracles. Our challenge today is to maintain our capacity to lead and to continue to make the case to the American people that the work we perform is in their best interest.

USAID: How we will change

As we head towards the 21st century our agency must build on our achievements. And we have a lot to be proud of. We have initiated a wide ranging set of changes that will make the Agency a more effective one. We have sought to transform the culture of our Agency, concentrating on what is needed to achieve results, not on what is needed to push money out the door.
We have taken a paper-bound, risk averse and highly hierarchical workforce and given our professionals what they themselves wanted -- paperless new management systems, results-oriented programs that give field managers the power to reprogram funds, and real and virtual strategic objective teams that develop results packages against a more limited number of goals.

Our reforms are still a work in progress but we have made very significant strides. We have built the foundation we need to look to the future.

To build on this foundation, we must take advantage of the new international consensus on development and perfect the techniques we have learned to involve people in their own society's development, and understand the nature of the modern global economy. We must also find ways to stretch the development dollar through improved donor coordination, tap into private sector capital flows and encourage networking among both governments and NGOs to advance the development cause.

Building on a base of strong Agency experience, we have a new grasp of the importance of attacking development challenges at the grass roots, by strengthening local capacity. The central idea in our New Partnerships Initiative (NPI) -- that development can be energized by linking local business, indigenous NGOs and local governments -- reflects a new understanding of the forces for change that are embedded at the roots of society. Few dispute the development theory behind NPI; now it is time to unleash that powerful idea.

And we have begun to do so. Seven USAID missions have been designated Pilot Missions. In cooperation with the U.S. PVO community and a broad array of U.S. and local development partners, they will test these approaches and break new ground for the rest of the Agency. We will build this program as we have built the other reforms, from the ground up, using our own people and our partners in the NGO community.

A large part of the agency's reengineering effort is designed to decentralize decision making power. By putting more control in the hands of Mission personnel, their government and NGO counterparts, and of course the final recipients of our assistance, we will design programs that are more likely to produce results. Programs driven by Washington are often programs that bear little resemblance to needs on the ground. NPI is a critical part of our effort to move closer to the people who make our programs accountable.

And we need the support of the NGO community and the Congress on this. These are the people best able to decide what a given country needs in order to develop. While NPI is a critical part of this long term process, we need to do more and we need the support of the PVO community. When we in Washington dictate spending in various sectors through earmarks or directives, we contradict what development experts know is the best way to accomplish development goals. We, in turn, rob the US taxpayer of an opportunity to obtain more development bang for the buck.

First and foremost, we will not ignore the continuing need to make investments that will mature only after many years. In the more impoverished countries where many of the conditions for sustainable development are not yet in place, USAID will continue to support integrated development programs with significant resources and with its missions in the field. Our work here is both intended to help societies and people grow and prosper in the long term and avoid disaster in the short term.

In the countries where USAID works we will emphasize achieving our strategic objectives in population and health, environment, democracy and important aspects of economic growth (such as microenterprise, regulatory reform, the creation of capital markets and privatization). However, we will focus on those priority activities where we have the most experience and can be the most effective. We will, for example, leave the financing of macroeconomic reforms to those institutions, such as the World Bank and the IMF, which have the most funding for such activities, though we will stay engaged where useful by providing technical advice and occasional non-project support to advance these reforms.

We will continue to recognize the important role which food security plays in establishing the foundation for development. In the poorest regions of the world, such as the Greater Horn of Africa, a combination of low agricultural productivity, rapid population growth and political conflict have resulted in desperation for millions of people. USAID is making solid progress on a new initiative, led by the Africans themselves, which will focus on regional approaches to food security and crisis prevention. And, where efforts to avert disaster fail, we will respond with humanitarian assistance, as we are doing in over 20 countries around the globe.

In countries in transition -- either from conflict or non-democratic rule -- USAID will continue to work to strengthen institutions of democracy and free markets. We will maintain missions in these countries for the transition period or until we feel that stability has returned.

In much of the world -- especially in Asia and Latin America -- the most basic challenge now is how to build on the substantial development progress that has been made to facilitate trade and investment, the last step in the development continuum. It is time to speed up the shift of our programs in the emerging markets of these regions to better link the recipient country's economy to global trade and investment flows.

To advance this objective, we will establish a new Office of Emerging Markets in our Global Bureau's Economic Growth Center. This office will bring together technical capacity to strengthen capital markets, provide expertise on legal and regulatory reform, help create an enabling environment for trade and investment, and serve as a liaison between other agencies of the U.S. Government responsible for trade promotion. We want to assure that governments respect intellectual property rights, discourage corruption and respect workers rights.

This will enable USAID to scale back its presence in a select number of countries over a five-year period, and eventually to phase out our field missions. We would expect, as in the past, to receive a "development dividend" for the United States economy as these changes strengthen new trading partners.

USAID in 5 years

To sum up, what will the United States development assistance program look like in five years? In our vision, USAID will still be on the front lines, advancing important U.S. economic and foreign policy objectives throughout the world. But it will be configured very differently from today.

We will be smaller, but we will be organized in ways that allow us to retain our leadership position. We will not be able to do as much, but what we do will influence others because we will maintain our reputation by achieving measurable results.

In the next five years, the number of sustainable development missions will shrink, from the current 43 to approximately 30. These remaining missions will be located in key countries, where the need is great, and specific, measurable objectives can be achieved. We will pick our partners carefully. The most important requirement will be that they care as much about their nation's development as we do.

I also see a USAID with the institutional capacity to mount missions in 10 transitional countries at any one time, responding to paramount foreign policy objectives. Today we have such programs in Eastern Europe, the former Soviet Union, Bosnia, South Africa, Haiti and Cambodia, to name a few. I cannot predict where the next transitional crisis will occur -- perhaps Cuba -- but if the first five years of the post-Cold War period are an accurate guide, we know the U.S. must be ready with the tools to deal with the types of ethnic, political or regional conflicts that today threaten our national security.

These missions will not be traditional in any way. They will bring our humanitarian relief, transition initiatives and development capacities together to attack simultaneously the relief-recovery-development needs. We will be flexible. We will share resources. We will work with State and DOD and other agencies. And we will further develop our capacity for rapid response.

If transition-state needs are greater than we have anticipated, we will require additional funding from Congress. The austerity approach reflected in this statement will not permit adding countries without additional resources.

In an additional 20 or so needy countries that will not have sustainable development or transitional missions, I see a USAID with the capacity to target problems -- such as weak governance, environmental degradation or unsustainable population growth -- with no or minimal direct-hire staff. And it is here that I see the most exciting opportunities for our development partners in the NGO community and in the private sector.

In these limited, or non-presence, countries, you will be invited to act as our agents. You have heard us make a reference to "franchising". What it means is if the U.S. wants to have an assistance program in a country without a USAID mission, or where we have a minimal presence, we will be able to use NGO or contractor partners to achieve our objectives. This concept is similar to performance-based contracting, another innovation we are pursuing vigorously.

We need to work on the specific mechanisms of this new arrangement. When we operate in non-presence countries, we will still need to measure results and ensure the accountability of our programs. It is something I look forward to working with you on over the coming months.

All these changes will mean that from the start of the Clinton Administration until the year 2000, USAID will have been radically transformed. We started in 1993 with a presence in over 120 countries, with over 70 missions. By the year 2000, our programs will be targeted on approximately 75 countries, with no more than 30 full sustainable development missions.

Let there be no doubt. I still believe the best way to ensure that our programs achieve their goal is with an on-the-ground USAID presence. But we need to face facts -- we cannot afford to maintain missions in every country that needs our help, nor can we disburse our staff so widely that we lack a critical mass in the missions that remain.

And the facts are that in five years our direct-hire work force will be smaller -- both in Washington and overseas. We have already cut our workforce over the past three years by a higher percentage -- 19 percent - than all but one other Federal Agency. This is down from some 11,500 employees to just over 9,000 today. And we will get smaller still -- reaching a goal of less than 8,500 employees (U.S. and foreign nationals) by 1998.

The Tasks Ahead

A vision for the future is critical. But also important is a road map for getting from here to there. Some of those details will be reflected in our aid budgets for fiscal years 96 and 97. Others remain to be elaborated. It is to these tasks that we must direct our attention over the coming months. I want to work with you to fully develop these new concepts in the coming months. Specifically, we need to:

-- Elaborate the mechanisms through which USAID will work in countries
where it has no field presence or where that presence is limited.

-- Develop innovative approaches to help emerging market countries draw
on the private sector for their growth and to ensure that as our aid diminishes, our accomplishments are sustained.

-- Elaborate new and effective ways for USAID to coordinate joint
programs among aid donors to maximize resources. This could include co-locating our people with those of other donors.

U.S. Commitment and the Future of Foreign Aid

I recognize that any new vision for our foreign aid program must be built on public understanding of the link of security at home with security abroad. The vital issue before the nation is the degree and kind of international engagement that is now required to serve our national interests. It is long past time that we focus on the pursuit of those interests and the resources and organization we need to achieve them.

The changes in the content of our work must drive the changes in our organization which in turn should change the public's understanding of our role. USAID is now more a program in international cooperation than it is a foreign aid program; more a facilitator and knowledge provider than a source of funds.

The USAID of the future needs to buttress its technical capacity and create the organizational resilience to respond to the nature of the problems we are addressing.

Obviously, USAID needs to be adequately financed to play this new role. It will continue to be our job to convince the Congress and the American people that there is a critical role for development assistance and that our vision for USAID -- a vision driven by both practical and programmatic necessity -- is the best way to advance America's interests in an increasingly interdependent world.

I plan to appeal to Congress, in testimony and in person, to permit us to achieve these changes in a responsible way. We will save taxpayer's dollars, as we did last year, by closing missions, streamlining our operations and reengineering our management systems. We will reduce staff as missions are closed and as automation replaces paperwork. But if we have to reduce staff before accomplishing these objectives we will not be able to honor fully our sacred trust to the taxpayer and we will not be able to complete the reinvention of this agency. More importantly, we will damage the capacity of the United States of America to perform its leadership role in the development field.

When we consider the character of that leadership, we often discuss the knowledge base that is America. We talk of our experience in running the oldest development program in the world. We cite the extensive network of universities and think tanks, the creative and dynamic private sector and the effective and dedicated private voluntary agencies.

But as impressive as this arsenal of talent is, it is not the ingredient that makes American leadership indispensable. What makes us essential is our optimism, our conviction that problems are there to be solved. Unlike many other nations, we American do not see ourselves as the victims of our history. We feel we made America what it is today by pushing the limits of our geographic and intellectual frontiers. There is no challenge beyond our reach.

It was so characteristic of American confidence when in 1968 Robert Kennedy surveyed the challenge of apartheid in South Africa in 1968 and declared "Some men see things as they are and say, 'Why?' I dream of things that never were and say 'why not?'"

We didn't bring apartheid down -- Nelson Mandela and his supporters did. But we helped. We led the international community to its opposition of apartheid because we dreamed of a better world and we said "why not"?

So those who would get us out of the development business, would be eliminating more than our expertise, they would be erasing an attitude that gets things done. They would be denying the world that crucial ingredient that has enabled the United States to lead the world toward the Green Revolution, the eradication of diseases, the stabilization of population growth, the survival of millions of children, and the building of free markets and open societies.

Given the development challenges still to be faced -- challenges that impact directly on our own well-being -- we could ill afford to remove that very special attitude that is uniquely American, to say nothing of the individual and institutional talent that goes along with it.

We need to continue to tell our story and in so doing make our case to the Congress and the American people. And one day our own people and their political representatives will demand as much from USAID as the rest of the world does right now. Thank you

trailers/mainfp.trailer 4-April-1996