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CONTENTSTHE AMERICAN INTEREST • VOLUME 1, NUMBER 4 (SUMMER 2006)

from the war files6 Making Enemies: An Anthropology of Islamist Terror

by Anna Simons

Nearly five years into the War on Terror, the Bush Administration still

lacks a serious understanding of our Islamist enemies. Here is such an

understanding (first in a two-part series).

19 Law, Liberty and WarAnne-Marie Slaughter & Jeremy Rabkin cross swords over

constitutional balances and civil liberties amidst the War on Terror.

28 Business Bombs: The Rise of Terrorism-for-Profitby Justine Rosenthal

Some terrorists these days are in it just for the money, but that doesn’t

make them a pocket change problem.

33 Blowtorch Bob in Baghdadby Richard K. Betts

Robert Komer’s retrospective on the Vietnam War sheds a hazy light

on U.S. choices in Iraq.

a symposium on the american image43 Ali Salem, Itamar Rabinovich, Lilia Shevtsova, Bronislaw Geremek,

Owen Harries & Tom Switzer, Bernard-Henri Lévy, Luis Rubio,

Niall Ferguson, Hiro Aida, Wang Jisi and C. Raja Mohan.

Americana82 A Short History of a Big Mistake

by Ralph Rossum

Americans revere the Framers, but few realize how distorted their

handiwork became at the hands of the 17th Amendment.

94 A Conversation with Kinky FriedmanTexas’ most renowned Jewish cowboy is busier than a horsefly on a

chili dog running as an independent for Governor.

101 Industrial Folklore: George Gerbner’s (Tele)Visionby Joseph Turow

George Gerbner studied the cultural impact of television with greater

intensity than anyone. A colleague explains what he learned.

107 The Truman Standardby Derek Chollet & James Goldgeier

Bush Administration principals often compare themselves to those of

the Truman Administration. But does the current crowd really meas-

ure up?

6

43

94

Getting Organized113 The Trouble with USAID

by Roger Bate

USAID is a mess. Can the Administration’s recent reform

package fix it?

122 Toolbox: The Democracy Bureaucracyby Thomas Melia

President Bush has made the spread of democracy the cen-

tral strategic goal of U.S. foreign policy. Are we organized

to do this?

132 Get Smartby Norman Augustine

Next to war, the greatest threat to American power and pros-

perity is our acute education deficit.

reviews138 What Is a War Crime?

by Barry Gewen

What do recent trials of Slobodan Milosevic and Saddam

Hussein have to do with the venerable postwar legacy of

Nuremberg? Not enough.

146 Old Masterby Fred Baumann

Cultural critic Philip Rieff has been a man of few but

powerful words. Now, at age 84, he has published the first

volume of a new trilogy.

150 Something New Under the Sunby Aaron David Miller

Shlomo Ben-Ami has done something remarkable, says a vet-

eran U.S. Middle East diplomat: He’s said something new.

153 Tales of the Rajby Jeffrey Meyers

The Ruling Caste is the best book on the British civilians

who ruled India in 50 years. Americans might learn some-

thing from it.

156 Retroview: Utopianism Reduxby John Gray

The re-publication of Leszek Kolakowski’s magisterial Main

Currents of Marxism is cause for celebration. The migration

of the utopian illusion he understood so well is not.

Summer Note164 Dissecting Anti-isms

by Josef Joffe

Anti-Americanism is distinguished by five characteristics

common to all “anti-isms.”

172 Yankee Doodle

Adam Garfinkle, editorDaniel Kennelly, managing editor

David Donadio, deputy managing editorRachel Jurado, assistant editor

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Simon Monroe, illustrator

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Editorial BoardAnne Applebaum, Peter Berger,

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Bernard-Henri Lévy, Glenn C. Loury,Walter Russell Mead, C. Raja Mohan,

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SUMMER 2006 113

Africa, once known as the DarkContinent in the pre-PC era, enjoyed avogue year in 2005. Both the G-8 and

the United Nations declared 2005 the “Year ofAfrica”, and rock stars inspired politicians andfans alike to end poverty. But 2006 may proveto be more momentous for Africa and otherimpoverished corners of the globe: The UnitedStates, the largest and most influential interna-tional development aid donor, has set out tooverhaul its aid structures. This is welcomenews because the most important U.S. aid vehi-cle, the United States Agency for InternationalDevelopment (USAID), has failed disastrouslyin its mission. An array of perverse incentiveshas plagued USAID staff and contractors, par-ticularly since a series of “reforms” in the mid-1990s altered its original modus operandi.Change is long overdue.

The Bush Administration announced itsreform package on January 19 in a speech deliv-ered by Secretary of State Condoleezza Rice.Rice admitted that previous attempts to inte-grate State and USAID programs and budgetshad failed. She was right: The U.S. governmentran 19 separate major aid accounts in 2005,ranging from child survival to strategic support

for Egypt, and including those run by the newand promising Millennium ChallengeCorporation (MCC). Taken together, theseaccounts totaled about $17 billion in spending.As the Administration realized, that’s a lot ofmoney to risk wasting on account of organiza-tional incoherence.

After what the Secretary termed a “compre-hensive review”, the Administration concludedthat “the authority to allocate foreign assis-tance” was still “too fragmented among multi-ple State Department offices and bureaus, andbetween State and USAID.” Reform was neces-sary for three purposes: to ensure that foreignassistance is used as effectively as possible, tomore fully align the foreign assistance activitiescarried out by the State Department andUSAID, and to demonstrate that theAdministration is a responsible steward of tax-payer dollars.

So what changed? The Secretary announcedthe creation of a new position called theDirector of Foreign Assistance, to be held con-currently by the Administrator of USAID(Randall Tobias, who had served asCoordinator of the Office of Global AIDS, wasconfirmed for that position on March 31). TheDirector of Foreign Assistance, who is nominat-ed by the president and confirmed by theSenate, has the rank of deputy secretary—co-

The Troublewith USAID

ROGER BATE

Roger Bate is a resident fellow at the AmericanEnterprise Institute.

GETTING ORGANIZED

114 THE AMERICAN INTEREST

GETTING ORGANIZED

equal in title, if not in fact, to Deputy Secretaryof State Robert Zoellick. This Director is nowresponsible for a newly integrated structure forplanning, budgeting and implementing policyacross all agencies and entities within the gov-ernment having to do with development assis-tance, including the MCC and the Office ofGlobal AIDS.

In addition, Secretary Rice announced newefforts at professional education at the ForeignService Institute concerning development andgovernance efforts, and a new personnelexchange program between State and USAID.At the same time, State Department spokesmenand fact sheets all noted that these changes fellwithin the authority of the Secretary of State,that no new legislation was necessary to enablethese changes, and that USAID’s status as anindependent organization with an administra-tor reporting directly to the secretary of statewould remain unchanged.

All of this was both more and less than ini-tially met the eye. Stephen Krasner, director ofthe State Department’s Policy Planning Staff,emphasized that in addition to theseannounced changes, USAID would take plan-ning and evaluation a good deal more seriouslythan it had in recent years. Krasner, who playeda major role in the Administration’s compre-hensive review (and earlier, as an NSC staffer, amajor role in the creation of the MCC), notedthat Ambassador Tobias would develop bothspecific five-year country plans and one-yearimplementation targets, and that USAIDwould start using and publicizing specific quan-titative indicators of progress to measure itsefforts. Former USAID Administrator AndrewNatsios was a part of the review process, andtoward the end of his tenure he enacted severalother changes in USAID’s operations that par-alleled the new planning, evaluation and imple-mentation goals.

Clearly, then, a good deal of thinking laybehind the Secretary’s January 19 announce-ment. On the other hand, the decision to keepthe reform effort within the ambit of theSecretary’s authority, at least for the time being,and not go to Congress with a more broad-ranging initiatives—such as the total integra-tion of USAID within the State Department—limits what can be done. There are real ques-

tions as to whether USAID, as presently con-structed, is reformable, whether under the guid-ance of a new deputy secretary or not. Andthere are real questions as to whether some ele-ments of the reform package may end up beingcounterproductive.

USAID Then and Now

USAID wasn’t always such a mess.When the Kennedy Administrationcreated it in 1961, USAID represent-

ed a significant advance over the existing hap-hazard and inefficient mix of several aid-dis-pensing agencies. As a single agency that con-solidated the development functions of itsmany predecessors, USAID’s mission would be,as President Kennedy put it, “To prevent thesocial injustice and economic chaos uponwhich subversion and revolt feed.” By blendingdevelopment aid and national security interests,USAID became a “soft power” weapon in theCold War long before the term itself wasinvented. And it worked.

The end of the Cold War, however, thrustUSAID into political limbo. Since the agency’sprimary purpose had been to use foreigndevelopment assistance to help win the ColdWar, many in Congress saw no further needfor it. Foreign aid spending steadily declinedduring the 1990s and conservative congress-men, foremost among them Senator JesseHelms, called for USAID’s elimination.Helms, who famously described foreign aid as“throwing money down foreign rat holes”, andhis colleagues eventually agreed to keep it aliveon three conditions: USAID would shrink; itwould be held accountable to the StateDepartment; and it would embrace privatesector reforms.

Subsequent Clinton-era transformations ofUSAID had an immediate impact on the char-acter of U.S. development assistance. As part ofthe initiative to streamline government throughprivatization and make the agency acceptable toCongress, USAID became largely a contractingorganization. USAID closed 24 missionsbetween 1993 and 1997 and reduced its full-time professional staff from 11,150 to 7,609.With an eye to its own survival, USAID sup-

SUMMER 2006 115

THE TROUBLE WITH USAID

planted its national security constituency withan influential interest group of commercial sup-porters. Prohibited from lobbying for funds inCongress itself, USAID now actively beseechesits “partners”, as it calls its contractors, to pushfor greater funding through what, for lack of abetter term, we may call the K Street consult-ants’ money-go-round.

Though USAID is not unique in pursuing itsobjectives primarily through contracting, it hasdrawn sharp criticism for its particular way ofdoing business. One major criticism is theAgency’s strong preference for using large, U.S.-based organizations with which it has long-termrelationships. Ruben Berrios’ insightful analysis,Contracting for Development (Library ofCongress, 2000), found that the market structurefor development aid contracting was segmentedand largely uncompetitive. Since a significantpart of the supposed advantage of contracting liesin competition, drawing from only a small poolof organizations seriously hampers USAID’s effi-ciency and increases the likelihood of rent-seek-ing behavior. Berrios found that for-profit firmsreceive the most money from USAID, that thegeographic distribution of all contractors skewsheavily toward the Washington, D.C. area, andthat some of the firms rely exclusively on USAIDcontracts to stay in business.

Adding to this “insider” culture, USAIDemployees tend to trade jobs between theAgency and its contractors with great frequen-cy. The Research Triangle Institute, Chemonicsand the Academy for Education Developmentare but three of the many contractors thatactively court USAID employees. From thecontractors’ perspective, inside knowledge ofthe Agency is valuable for procurement purpos-es. Indeed, a quick search of any internationaldevelopment job board shows that previousexperience in procuring USAID funding is ahigh-demand skill.

Other criticisms of USAID persist as well.One of the most serious is that the work typi-cally performed by contractors actually under-mines the local institutions and indigenouscapacities the aid process is presumably tryingto build. Why does USAID continue to paycontractors U.S. rates for work that local organ-izations could do much more cheaply? Largelybecause the mission closings of the 1990s made

the Agency incapable of monitoring operationsin remote locations. Consequently, the Agencyhas little knowledge of local operators capableof doing the job at a cheaper rate. The corollaryis that local contractors have no access to theUSAID lobbying process nor, without experthelp, do they have the capacity to fulfill the reg-ulatory requirements for aid projects.

This raises a larger issue: the incompatibilitybetween what the rich world wants for thedeveloping world and what the developingworld desires for itself. Aid recipients with fewresources are not in a position to complainabout aid they receive, even if it eventuallyproves counterproductive. The fact thatUSAID hires almost no local people com-pounds its insular thinking. U.S. contractorsoften share the same aims as the U.S.

Government, or at least know how to pay lipservice to them, thus reinforcing approachesthat are often unwarranted.

For years USAID justified its existence, toCongress especially, by stressing that foreign aidmoney benefited American domestic economicinterests through contracts to U.S. organiza-tions and commodity import programs for U.S.products. Although exact figures are hard tocome by, USAID spends a significant percent-age of its international development funds onU.S. goods and services going to recipientcountries. Data from USAID’s Buy AmericanReport, the best available assessment, indicatesthat over the last decade between 70 and 80percent of funding appropriations were directedto U.S. sources. In gross terms, the BusinessAlliance for International Economic Developmentestimated in 1996 that foreign aid sustained200,000 U.S. domestic jobs.

USAID itself is not solely responsible forchoosing U.S.-based organizations to carry outthe bulk of its development work. The 1961Foreign Assistance Act that created USAIDincluded special guidelines that extended the

The fact that USAID hires

almost no locals compounds

its insular thinking.

116 THE AMERICAN INTEREST

GETTING ORGANIZED

1933 Buy American Act to ensure that agencyfunds financed goods and services of Americanorigin. While these “Buy American” provisionsremain a source of contention for many aid spe-cialists, they have appeased USAID skeptics inCongress with domestic interest arguments,allowing lobbyists of USAID-dependent con-tractors to win increased funding. These areclear benefits to USAID and, despite the high-er costs that result from not buying local goodsand services, the Agency has never advocatedchanges to the policy or made much use of thegenerous loopholes available to it.

Take the example of former USAIDAdministrator Brian Atwood. After leaving theAgency in 1999, Atwood told the WashingtonPost that the Buy American procurement lawswere “the biggest headache I had to deal with.”Yet during Atwood’s tenure, in all his appearancesbefore Congress and statements to the press con-cerning his initiative to reform USAID (includ-ing its procurement policies), he never men-tioned his Buy American migraine. Indeed, in1995 he boasted to a Senate subcommittee thathe “introduced reforms to open up USAID’s pro-curement to the best expertise in America”, butomitted any reference to non-American sources.During that same testimony, he tacitly endorsedthe Buy American policy, stating, “Foreign assis-tance is far from charity. It is an investment inAmerican jobs, American business.”

Atwood’s actions were unsurprising, as hisAgency’s endorsement of Buy American rulesearn it substantial political capital in an other-wise hostile environment. No USAID officialhas ever attempted to change this longstandingpolicy, though there is some hope now thatTobias has been named to head USAID. Ashead of President Bush’s Emergency Plan forAIDS Relief, Tobias challenged Buy Americanrequirements by openly announcing toCongress his intention to waive them inprocuring anti-retroviral treatment. But will hehold fast to this attitude at USAID?

Another criticism of USAID’s contractingprocess is its lack of transparency. USAID policyforbids the disclosure of “proprietary” informa-tion related to its contracts, which keeps thefinancial details of the bidding process hiddenfrom public view. Part of the reason for this isthat some of the contracts secured by USAID are

for operations in geographically sensitive loca-tions (Islamic states, for example) or for workinvolving national security concerns. Rather thandifferentiating between these types of contractsand those for, say, child immunization in a pre-dominantly Christian African nation, USAIDlumps both sensitive and non-sensitive financialinformation together, protecting it from externalscrutiny without good reason. Congressionalpressure (notably from conservative SenatorsSam Brownback [R-KS] and Tom Coburn,[R–OK]) has only recently been applied to recti-fy this opacity. Even general facts about Agencypolicies and procedures are kept from the public.In response to my office’s request for informationregarding evaluation procedures, a USAID-Kenya employee explained the rules: “I’m unableto respond to your queries due to strict Agencypolicy of sharing USAID information with peo-ple or sources we are NOT familiar with”(emphasis in original).

In addition to its secrecy, USAID also has ahabit of punishing contractors or employeeswho criticize the agency. Some employees havehad their career paths derailed after publiclycriticizing USAID. One example involves for-mer Chief of Travel and Transportation ShirlHendley, who raised the alarm in 2002 thatUSAID travel practices violated federal rules.Despite being ignored by top USAID officials,who benefited from the rules violations (esti-mated to have cost U.S. taxpayers about$250,000 every year for two decades), Hendleyrefused to stay quiet. She was subsequently reas-signed because, according to her reassignmentletter, “you have chosen to do what you believeis correct, even if it contradicts the instructionsyou have been given.” A subsequent investiga-tion spearheaded by Senator Charles Grassley(R-IA) vindicated Hendley and stronglyrebuked top AID officials, including AndrewNatsios and Inspector-General Everett Mosley.

USAID in Global Health Policy

Despite its problems, USAID is a trend-setter in global development aid prac-tices, particularly in the health policy

arena. Though its leadership role is more subtletoday than it was when U.S. funding and

SUMMER 2006 117

THE TROUBLE WITH USAID

expertise dominated World Health Organization(WHO) disease eradication campaigns,Department of State figures for 2003 show thatAmerican contributions still constitute a quar-ter of the organization’s budget—by far thelargest single national share.

As the world’s most powerful nation, U.S.input remains the single most important influ-ence on global health policy. Ilona Kickbusch, aformer WHO employee and current head ofGlobal Health at Yale University, argues thatU.S. support for global health initiatives is socrucial that “many international documentsread as if they have been written for members ofthe U.S. Congress rather than for the broaderglobal health community.”1 As the develop-ment arm of the U.S. government, whosefinancial and political support is crucial forglobal health programs, USAID thus has con-siderable clout over policy design and strategy.Part of that clout flows from the fear of losingU.S. funds. Such fears are well grounded. InJuly 2002 the United States redirected $34 mil-lion from the U.N. Population Fund to USAIDsince the U.S. government opposed spendingon abortions and abortion rights.

USAID also acts as a role model for privatelending. Private donors to international causes,whose giving, according to the Hudson Institute,more than triples official U.S. government assis-tance, look to USAID as the arbiter of whichprograms and interventions to fund.Corporations, which value the good publicitygenerated from charitable contributions, arewary of crossing swords with official U.S. devel-opment policy. ExxonMobil, for instance, explic-itly endorses the failing approach of USAID’s co-sponsored Roll Back Malaria program and fun-nels its $1.5 million contribution to the battleagainst malaria through USAID-affiliated ITN(Insecticide-Treated Bed Net) programs. USAIDthus has influence over resources far exceeding itscongressional earmark.

In the case of the Roll Back Malaria pro-gram, which USAID shaped and continues toinfluence, USAID’s clout has actually harmedglobal health. Malaria rates have probably risensince 1998, when Roll Back Malaria was set upwith the goal of halving rates by 2010. Thispoor result is not for lack of resources; sinceRBM’s inception, USAID has increased its

malaria eradication budget from $18 million to$90 million (as of 2005). But the Agency’sflawed malaria control strategy has renderedpublic and private investment unproductive.

It is not clear exactly how these poor resultshave come to pass, again because USAID refus-es to release details of the contracts, grants andcooperative agreements used to disburse malar-ia funds. But from the documentation that isavailable and communication with USAIDstaffers and contract employees willing to speakoff the record, we know that USAID spendsvery little money purchasing the tools necessaryto fight malaria effectively. Three methods ofcombating malaria save lives: indoor residualspraying; insecticide-treated bed nets; and effec-tive medicines. Despite the Agency’s claims thatit takes a “comprehensive approach”, it spentless than 10 percent of its $80 million malariabudget for 2004 on purchasing these interven-tions (most on only one intervention—bednets).

So what of the other 90 percent? Somesleuthing reveals that about $10.5 million isdedicated to researching and testing a malariavaccine, and the rest is spent on “capacity build-ing”, “technical assistance” and “strengthening”or “supporting” government health ministriesin malaria-affected countries. USAID does notdisclose any details as to what these categoriesactually mean, but as Agency malaria staffersexplained to me, many involve U.S. consultantsgiving advice to government ministries. Forexample, the consultancy ManagementSciences for Health (MSH) received $64.3 mil-lion from USAID in 2003 (the last year forwhich figures are available) for dispensing suchadvice. MSH is active on many malaria proj-ects, and its 2003 IRS Form 990 illustrates howUSAID malaria funds are typically spent:Between 52 and 70 percent of MSH’s programexpenses are dedicated to compensation andtravel. That amount is separate from whatMSH designates as overhead.

Aside from their considerable expense,Western consultants are often ineffective

1Kickbusch, “Influence and Opportunity:Reflections on the U.S. Role in Global PublicHealth”, Health Affairs (November/December2002).

118 THE AMERICAN INTEREST

GETTING ORGANIZED

because they lack detailed knowledge of localconditions. During a $5 million malaria effortin cooperation with the ministry of health inthe Bungoma District of western Kenya, thelocal health staff ran into major problems whenUSAID’s consultants did not ever once visit theprogram area.

USAID claims that its comparative advan-tage lies in the institutional knowledge it candispense, and in the fact that it coordinates itstechnical expertise with organizations that pro-vide actual interventions, such as the GlobalFund and UNICEF. Unfortunately, except in afew isolated circumstances, USAID has notprovided any evidence of such complementaryand careful coordination. In some instances itsfailure to coordinate effectively has turned trag-ic. For example, the Vurhonga child survivalproject in Chokwe, Mozambique, a USAID-

funded child survival effort implemented bySave the Children, was all but wasted becauseno arrangement was made to buy medicines. Inthe final evaluation report submitted by Savethe Children to USAID, team leader of theproject Armand L. Utshudi noted that “fre-quent stock-outs and unreliable supply of essen-tial drugs at community-based health facilities”impeded the program’s operations. Although itused the well-designed community participa-tion technique developed at the Johns HopkinsSchool of Public Health, this project met onlyseven of its 36 objectives. It did raise the pro-portion of children with malaria symptomstreated within 24 hours from 2 percent to 50percent, but it failed to reduce the number ofchildren dying because they were given outdat-ed drugs. The project’s medical advisor, PeterErnst, says that efforts to convince USAID andUNICEF to persuade Mozambique’s healthministry to stock the proper drugs failed due tocost concerns—costs that USAID could easilyhave covered.

That we know anything of these projects is

highly unusual, as USAID generally does notcollect enough data to evaluate its own activi-ties. USAID can offer no evidence that its strictcapacity-building and technical assistanceapproach to malaria has yielded any dividends.The only outcome measurements offered to aSenate subcommittee are its statistics onincreases in mosquito net ownership: in Malawi(from 13 to 60 percent); Senegal (11 to 43 per-cent); Zambia (9 to 40 percent) and Ghana(zero to 21 percent). These figures were derivedfrom surveys from the $65.4 million NetmarkAfrica program run by USAID and its contract-ing partner, the Academy for EducationalDevelopment. However, while these figuresshow an increase in ownership of mosquitonets, they tell us nothing about how much pro-tection they provide (lower protection is theresult if: nets get ripped, which happens often;one emerges from the net, for example, to go tothe bathroom in the middle of the night; onedoes not go to bed at dusk). Repeated requeststo USAID from my colleagues and me, andfrom Senators Brownback and Coburn, formore information, which would includeUSAID’s contracts, have gone unmet.

Aside from poor basic data collection,USAID’s evaluation of program performance isalso inadequate. An internal review of the sub-stantial drop-off in USAID evaluations (from529 in 1994 to 167 in 2004) found that pastrecommendations for improving evaluation sys-tems have been systematically ignored by theAgency’s senior leadership, and that currentevaluation practice is rife with impropriety.Such practice includes allowing project man-agers to grade their own projects and to claimsuccess without offering evidence. The evalua-tor of the above-mentioned Save the Childreneffort inexplicably recommended that the pro-gram’s approach be “replicated in other parts ofMozambique.”

Change or Perish

If the malaria effort is any indication at all,USAID is failing to make a positive differ-

ence in an important facet of U.S. foreignpolicy and may well be a liability. USAID canand must improve. Transparency improve-

Western consultants often

lack detailed knowledge

of local conditions.

SUMMER 2006 119

ments should come first. Senator Coburn hassuggested posting all USAID contract andbudget details on a web site. If USAID isindeed actively cooperating with other agen-cies, measuring meaningful outputs and tai-loring programs to the needs of recipientsrather than to the needs of its contractors,USAID should delight in sharing this evi-dence with the politicians, policymakers, aca-demics and ordinary citizens concerned withAmerican efforts to fight poverty and diseasein the developing world. A refusal to be heldaccountable ought to be understood accord-ingly.

Fortunately, after the malaria battles of 2005many within USAID’s Global Health Bureauwant change—although recent improvementsin rhetoric on malaria have yet to be matched inother areas of Global Health or in any otherprogram. But change takes time and there is

undoubtedly good intent from manyappointees. And of course, as already noted,top-down reform is even now in train.

As these reforms proceed, it would be wise tokeep three key imperatives firmly in mind:First, do no harm; second, match means to ends(i.e., link development strategies to U.S. princi-ples and interests); and third, neither overesti-mate nor underestimate what organizationalreform can accomplish.

Do no harm: As William Easterly demon-strates in The White Man’s Burden

(Penguin, 2006), much aid has not only nothelped but has slowed development, proppingup odious dictators. It is ironic that USAIDwas set up in 1961 partly to streamline a disor-ganized clot of foreign aid agencies, for inrecent years it has become anything butstreamlined. One reason the Millennium

Former USAID administrator Andrew Natsios in Darfur, Sudan, September 17, 2004

© J. Carrier/Corbis

120 THE AMERICAN INTEREST

GETTING ORGANIZED

Challenge Corporation and the President’sAIDS initiative exist today is USAID’s poorperformance. It would be tragic if the relative-ly decent performance of these two new effortswas undermined by shortsighted policy“reforms.”

For example, the Millennium ChallengeCorporation actually refused to disburse fundsuntil the prospective recipient countries wereable to efficiently absorb them—a sensiblestance that would be unthinkable at USAID.But the MCC has come under pressure fromrecipient countries who wanted fewer aid hur-dles to jump over, as well as Republicans andDemocrats, especially in Congress, to speed upgrant disbursement, even though that wouldprobably mean in some cases providing moneyto countries ill equipped to spend it. PaulApplegarth, the first director of the MCC, mayhave been a casualty of that pressure. It is possi-ble that it took too long to establish proceduresat the MCC and grants can flow more easilynow. But it is still far too early to say whetherthe new approach of disbursing larger grantsunder the new MCC head, Ambassador John J.Danilovich, is the correct way forward. It wouldbe regrettable if reform were to diminish theCorporation’s ability to achieve its mission. Inher January 19 remarks Secretary Rice statedthat the Millennium Challenge Corporation,“which operates under unique, conditions-based standards for assistance”, as well as otheraid entities of the U.S. government, will fallunder the overall leadership of the newly creat-ed Office of Foreign Assistance in the StateDepartment. Pulling MCC under strongercontrol of the State Department to improvecoherence in foreign assistance operations cer-tainly makes organizational sense. Even so, asboth Director of Foreign Assistance andUSAID Administrator, Randall Tobias’ greatestchallenge will be to foster an environmentwhere MCC and USAID can work togetherwhile improving overall effectiveness.

M atch means to ends: It is essential thatthe Administration stick to its own

principles. Improved governance, both inrecipient nations and in financing and deliveryof western programs, is the key to using aidresources wisely. It is and always has been sim-

ply foolish to spend money just because it isavailable. As distinguished development econ-omist William Easterly put it:

Let’s not kid ourselves that spending moremoney on foreign aid accomplishes any-thing by itself. Letting total aid moneystand for accomplishment is like theHollywood producers of Catwoman,voted the worst movie of 2004, braggingabout their impressive accomplishment ofspending $100 million on itsproduction.2

The keys to matching means and ends indevelopment aid are setting measurable goals,and actually measuring them to inform contin-uation of aid and seeking constructive feedback.The Millennium Challenge Corporation’sapproach, using and thereby building civil soci-ety, effectively fosters constructive feedbackfrom local officials in recipient countries. At ameeting with African leaders in June 2005 forexample, President Bush pledged to “workharder and faster” to increase aid after receivingcomplaints about MCC’s bureaucratic bottle-necks that slow aid disbursement.3 It thereforemakes sense that USAID should work with theCorporation and remain open to local concernsas the MCC has done. Incentive structure mat-ters: If employees of an aid agency were penal-ized when an aid recipient complained aboutproject design and implementation, they wouldsoon become more responsive. Of course recip-ients have incentives to complain if they don’twant to implement what donors might think tobe sensible policy changes (for example, aid tiedto reductions in corruption), so feedback has tobe dealt with logically and criticism notassumed to be accurate or fair.

It also makes sense to prioritize aid accordingto a country’s strategic importance, which ofcourse is an argument for structurally reinte-grating foreign development aid with U.S. for-eign policy itself—even going so far as distrib-

2Easterly, “The Utopian Nightmare”, ForeignPolicy (September/October 2005).

3Andrew Balls, “Awkward Timing for US AidChief ’s Departure”, Financial Times, June 21,2005.

SUMMER 2006 121

THE TROUBLE WITH USAID

uting USAID’s current mandate within thegeographical bureaus of the State Department.That is precisely what the U.S. Commission onNational Security/21st Century (the Hart-Rudman Commission) recommended inMarch 2001.

When the story of the reorientation of U.S.aid policy first broke on the front page of theDecember 12, 2005 Financial Times, criticsargued that planned reforms would lead to thepoliticization of aid. This is a simplistic andnaive complaint. Implicit in the critique is theidea that development is a simple input-out-put exercise: more resources and technicalexpertise get you more development.Governance is usually the subject of diploma-cy. But the supposedly sharp distinctionbetween development and diplomacy is pure-ly artificial. USAID has always been political-ly driven, with the (partial) exception ofhumanitarian relief. While the critics may beright about the harm done by politicizing aidin the past—for example, aid given to the likesof Mobutu Sese Seko in Zaire—spending tax-payers’ money along the lines of U.S. strategicinterests might not be such a bad idea. At leastwe would have one metric by which to deter-mine success or failure.

It would also be useful to bring thePresident’s vision into all U.S. aid policy. Thatis not the case today. Current HIV preventionpolicies favoring abstinence over condom distri-bution are not routinely followed in the field byUSAID contractors. For instance, an excellentresearch project with sex workers in southernAfrica violated the explicit instructions of thePresident’s policy. While this policy or otherpolicies may or may not make sense, theyshould be adhered to for the sake of coherence.If a policy were fully implemented according topresidential edict, properly evaluated, and thenfound to be a failure, a better course of actionwould become clear. What we have now, moreoften than not, is an incoherent muddle.

N either overestimate nor underestimatewhat organizational reform can accom-

plish: Organizational reform can be a power-ful impetus for better performance. It canprovide a more efficient and rational use ofresources and a chance to capture and imple-

ment intellectual innovation. The mereexpectation of organizational reform can putthe fear of God and the fighting spirit insome bureaucrats, too. But organizationalreform cannot substitute for a lack of intellec-tual energy. It cannot easily change culturalbias and it may not lead to growth, even atMCC. If a new aid structure continues to relyexcessively on mostly unaccountable contrac-tors, it will very predictably do little or nogood.

And organizational reform cannot by itselfsubstitute for vision and determination inAmerican leadership. President Bush appearsto care deeply about all aspects of develop-ment. He has been personally involved inpolicy judgments like no other presidentsince Kennedy. There is no substitute forgood leadership; more is the pity that Bushhas not been as well served as he has deservedby the aid apparatus of the U.S. government.A lot is riding, therefore, on the boldness,wisdom and competent implementation ofrecent reforms. Lives literally depend onit.

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