The Folly of Merging State Department and USAID: Lessons from USIA

The 2018 budget introduced by the Trump administration calls for a greater focus on U.S. security and economic growth; in practice, it will undermine those very goals by slashing programs that are vital to America’s interests. As part of its plan to cut $3.6 trillion in federal spending over the next decade, the administration proposed a 30 percent decrease in diplomacy and development expenditures, eliminating essential programs and gutting humanitarian relief and multilateral support. The potential spending cuts elicited vocal pushback from diplomatic, development, and national security experts , who are rightly concerned that such sweeping reductions in funding would irreparably erode U.S. influence around the world.

Yet, while policymakers and pundits debate the merits of the budget proposal—which several Republican leaders have proclaimed is “dead on arrival”—bigger and potentially more lasting changes are being contemplated by the administration. In response to President Trump’s request for reorganization proposals, the Department of State’s leadership is quietly reviewing various options to streamline the United States’ diplomatic and development operations. One of the proposals under consideration is a merger of the State Department and the U.S. Agency for International Development (USAID). Proponents of such a merger argue that it would save taxpayer dollars, reduce duplication of effort, and improve coordination on diplomatic and development objectives. While there are certainly changes that can be made at both organizations, a State Department/USAID merger—where personnel, procurement, programmatic, and budgeting functions are combined—would be a huge mistake.

To understand the risks and downsides of such a move, we can look to the experience of the merger of the U.S. Information Agency (USIA) into the State Department in 1999.

USIA was created in 1953 to provide a home for public diplomacy activities in support of U.S. foreign policy; in short, USIA took the lead in the war of ideas between the United States and the Soviet Union following World War II. The agency’s mission statement was to “understand, inform, and influence foreign publics in promotion of the national interest, and to broaden the dialogue between Americans and U.S. institutions, and their counterparts abroad.” It was, by all accounts, highly effective in its pursuit of that mission. The Cold War was won because the United States had a better economic system and because the United States had better ideas and values. USIA helped present those ideas and values, and USIA’s public diplomacy campaigns around the world played a major role in that victory.

After the fall of the Soviet Union, there was a broad perception that the U.S. foreign policy machine was no longer fit to purpose. It was the “end of history”— liberal democracy had emerged victorious over communism, and the United States was eager to reap the benefits of this peace dividend. Against this backdrop, policymakers and appropriators pushed to decommission agencies that were deemed superfluous or unwieldy. Without a major global ideological foe, many felt that USIA no longer needed to be a stand-alone agency, and by the late 1990s, momentum for change was growing.

The idea of restructuring USIA was first put forward in Vice President Al Gore’s Reinventing Government blueprint. The plan was to fold USAID, USIA, and the independent Arms Controls and Disarmament Agency (ACDA) into the State Department. ACDA was happy to merge with the State Department given that its functions were diplomatic in nature. In contrast, USIA and USAID had different functions and skills from diplomacy and resisted the consolidation. With strong support from Senator Jesse Helms, then chairman of the Senate Foreign Relations Committee, and the backing of President Bill Clinton, a deal was cut. USIA became a sacrificial lamb, and its cultural, educational, and informational functions shifted to the State Department under the newly created under secretary for public affairs and public diplomacy, along with ACDA. USAID survived as an independent agency but was formally linked to the State Department with the USAID administrator reporting to the secretary of state.

In its “Reorganization Plan and Report,” the Clinton administration said that the goal of the merger was “to strengthen public diplomacy through its integration into the policy process.” When implemented, the restructuring did the opposite. Dismantling USIA and shifting its primary functions to the State Department crippled U.S. public diplomacy operations in ways that have been lasting and profound—a self-inflicted wound from which the United States is still recovering. Even the Heritage Foundation, which is currently advocating for a consolidation of the State Department and USAID, called the USIA merger “misguided” and noted that it had caused the effective collapse of U.S. public diplomacy.

A primary reason for the failed integration of USIA stems from the vastly different missions and cultures of the two organizations. The State Department has traditionally focused on state-to-state relations and has a deep aversion to risk. These entrenched norms were not compatible with the culture of people-to-people engagement and experimentation that had made USIA such a success. A former under secretary described it as “grafting a foreign body onto a human body, and the human body rejected it.” USIA had recruited and retained thousands of employees with skills like sophisticated audience analysis and storytelling that were distinct from those appreciated within the State Department. These skills were ignored, marginalized, and atrophied after the merger. Only in recent years has the State Department started to remedy the situation, creating more pathways for public diplomacy officers to get promoted into senior roles.

State Department and USIA budget functions were also merged, meaning the State Department had to choose between “a new couch for the ambassador” or an additional dollar for public diplomacy. Public diplomacy was (and is) seen as a secondary or tertiary function of the State Department. Budgets, promotions, and priorities reflect its inferior status, and public diplomacy activities have been consistently subordinated to diplomatic goals. Public diplomacy dollars have also been scattered across regional bureaus where non–public diplomacy experts make resource allocation decisions. As a result, there is a scattershot effect on the use of these scarce resources.

The consolidation was also short-sighted. Less than two years later, the United States suffered the horror of the 9/11 attacks, launching the Global War on Terror. The country had unknowingly embarked on a new war of ideas with a determined global enemy but without a preeminent, well-resourced, expertly staffed, and functional public diplomacy apparatus. At the same time, global competitors, including China and Russia, made significant investments in their own public diplomacy operations—spreading their influence throughout Africa, Eurasia, and Southeast Asia at the very time that the United States was seen as retreating.

As a consequence, the United States has spent the last 15 years trying to rebuild its public diplomacy infrastructure. This process has taken significant time, money, and effort—and U.S. public diplomacy capabilities are still not back to where they started. While there have been improvements in recent years, the United States essentially gave its global competitors from Russia to ISIS a decade’s head start in the war of ideas. We cannot afford this kind of misstep when it comes to global development.

A merger of USAID into the State Department would do several things. Development dollars will ultimately compete with diplomacy dollars; development will lose out just as public diplomacy has. The competition for senior foreign service slots will be among development and diplomacy, and similarly, development professionals will suffer.

Like USIA, USAID has unique capacities and expertise that would be lost if it were folded into the State Department. A merger would remove a development voice from the policy table and degrade international development expertise. Career professionals flock to USAID as a global leader on development, poverty reduction, and democratic governance. These are jobs that require specific training and expertise and cannot be successfully filled by generalist foreign service or civil service officers.

Moreover, USAID’s organizational culture embraces innovation, partnerships, and learning—attributes that have helped it pioneer lifesaving technologies like oral rehydration therapies, resulting in 4 million fewer children dying of diarrheal diseases each year than three decades ago. These approaches are valued within the development field but would wither on the vine of the State Department’s diplomatic mission and more traditional culture. This loss would harm our ability to impact and influence a set of critical issues—the global refugee crisis, the threat of pandemics, violent extremism, among others—that USAID is uniquely suited to address.

The USAID brand, while linked to the U.S. government, allows partners who would not otherwise work with the United States to partner with us. USAID has generated billions in parallel investments from other donors—bilateral and multilateral—by virtue of its recognized leadership and independence. That ability to convince others to follow our lead would be lost in Africa and other regions, where China is waiting to step in—with a far different set of values and interests. Moreover, if the United States were to lose its bilateral development expertise, there would be a temptation to “outsource” development work to UN agencies and multilateral development banks. These multilateral agencies have an important role to play, but they do not directly represent U.S. interests.

Finally, in contrast to public diplomacy, which represents a set of tools to inform and engage international audiences about U.S. foreign policy and values, USAID’s value is not merely as an instrument of diplomacy. Development is a distinct and longer-term objective in and of itself. Of course development can and does help advance policy objectives—from improving security in Central America to countering violent extremism throughout Africa, from building trade capacity in Southeast Asia to strengthening democracy and the rule of law in the Middle East.

But, development, as a process for transforming socioeconomic and political conditions and lifting people out of poverty, cannot be achieved if it is exclusively tied to short-term and rapidly evolving policy imperatives. Development outcomes need time and consistency to come to fruition. The U.S. government’s efforts to combat malaria and HIV/AIDS—in which nearly 20 million lives have been saved—have required substantial and sustained investment over 15 years. Likewise, improving security and creating the conditions for a peace agreement in Colombia have taken almost 20 years. Such achievements would not have been possible had USAID been operating on the State Department’s one- or two-year timelines.

The world is as fast moving and dangerous as it has ever been. Now more than ever, we need our full tool kit to engage and shape the environment beyond our borders. Short-term savings and “efficiency gains” should not obscure the long-term value of a specialized, stand-alone development agency. U.S. security, prosperity, and values would be severely harmed if we eliminated or dismantled all or significant parts of USAID.

Shannon N. Green is a senior fellow and director of the Human Rights Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Daniel F. Runde holds the Schreyer Chair in Global Analysis and is director of the CSIS Project on Prosperity and Development.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2017 by the Center for Strategic and International Studies. All rights reserved.

Daniel F. Runde
Senior Vice President; William A. Schreyer Chair; Director, Project on Prosperity and Development

Shannon N. Green