Reforming and Reorganizing U.S. Foreign Assistance

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Executive Summary

CSIS convened a bipartisan Task Force on Reforming and Reorganizing U.S. Foreign Assistance in response to the March 1, 2017, executive order asking all federal departments and agencies to submit reorganization plans that will “improve efficiency, effectiveness, and accountability” and to the president’s FY2018 budget request.¹ The Trump administration is right to question whether the current foreign assistance system is optimized to meet the challenges of the 21st century. Although many Americans believe that foreign assistance makes up 25 percent or more the federal budget, it is no more than 1 percent. However small a percentage, it is important to note that these funds do not represent pure altruism; they are smart investments that contribute to the national security and prosperity of the United States.

Though it intends to align priorities, strategy, budget, and work force, the Trump administration’s first budget proposal includes significant cuts to foreign assistance funding and runs the risk of having budgeted amounts—rather than U.S. national interests—drive creation of strategy and organization. This would produce suboptimal outcomes, particularly if the U.S. Agency for International Development (USAID) were to be subsumed into the Department of State as some have suggested. It is not in the national interest to remove the development leg from the U.S. national security stool.

No one, however, would argue that the U.S. development system is not in need of reform. There is no lack of ideas on how to reform foreign assistance, but thus far there has been a lack of political will to follow through on the tough choices needed to enact genuine reform and reorganization. Nevertheless, lessons learned from past exercises in restructuring USAID strongly suggest the need to fix it without breaking it. The Trump administration, in partnership with Congress, has an opportunity for bold reform—meaningful change that has eluded previous administrations—that recognizes the benefits of foreign assistance to the United States and our partner countries, aligns structure with goals, and ultimately leaves a lasting positive legacy at home and abroad.

The world 10 or 15 years from now will look substantially different than it does today. Private-sector-led trade and investment already far exceeds official foreign assistance. The future lies in paving the way for businesses to be more involved in the developing world, benefiting both the developing country and American companies that take advantage of new markets for products and services and create jobs at home to meet the new demand. To best meet the challenges of this changing world, foreign assistance is still vital. There are important roles that private-sector finance, remittances, philanthropy, and developing country governments may never take on, including addressing transnational threats, pandemic disease containment, and rule-of-law reform. The Trump administration should view our changing world as presenting opportunities to bring new countries into the rules-based international order, to strengthen friendships and partnerships, to counter threats to our security, to promote peace and stability, and to create new markets for U.S. goods and services.

The Department of State and USAID have been on the front lines in conflict and post-conflict settings over the last 20 years; over this time development and diplomacy have become linked—or even synonymous—in the minds of many policymakers. The result has been a proliferation of programmatic responsibilities for the State Department, responsibilities that have progressively pulled its personnel away from doing the things at which they excel: formulation and execution of U.S. foreign policy, state-to-state relations, alliance building, containment of global security threats, and international crisis management. Given this reality, and the long-term nature of these types of assistance programming, a strengthened USAID is a more suitable agency to lead these efforts. Development and diplomacy, though complementary and powerful when working together effectively, are two different disciplines with their own unique skills, cultures, and approaches.

Ultimately, putting American interests first means leading abroad. Any mission for U.S. foreign assistance should support the broader national security strategy to ensure that it maximizes its foreign policy impact and puts American interests first. The best, most effective foreign assistance has always been driven by a combination of enlightened self-interest and a desire to effect positive change in the world. The Trump administration is well-positioned to achieve these goals while increasing efficiency, effectiveness, and accountability. This task force hopes that the administration utilizes and benefits from this report—which offers context and recommendations on all three reform areas—in the preparation of its strategy.

To effectively reorganize and reform U.S. foreign assistance, the task force recommends the following (see Chapter 5 for more detail):

Recommendation 1: Maintain USAID as an independent agency overseeing federal foreign assistance efforts, develop a clearly articulated development strategy, and assign the USAID administrator as coordinator of foreign assistance.

1.1: Maintain USAID as an independent agency reporting to the secretary of state and designate the USAID administrator as the coordinator of foreign assistance.

1.2: The USAID administrator, in conjunction with other stakeholders including State and DoD, should lead the development of a clearly articulated U.S. development strategy that complements and supplements the U.S. National Security Strategy.

1.3: New foreign assistance initiatives should be overseen or implemented by USAID, absent a compelling case otherwise.

1.4: Transfer the F Bureau² from the State Department to USAID to support the USAID administrator in fulfilling his/her coordinator functions.

Recommendation 2: Address duplication of effort and generate budget savings while maintaining functional coherence when appropriate.

2.1: Address duplication of efforts across the various agencies and departments engaged in foreign assistance by identifying programmatic functions that should shift to USAID.

2.2: Generate budget savings by ending programs or missions, as agreed to by all relevant agencies, that are no longer central to a U.S. foreign assistance strategy.

2.3: Maintain the Development Assistance (DA) account as a separate account from the Economic Support Fund (ESF).

Recommendation 3: Modernize the personnel system, make the procurement system more efficient, and streamline reporting.

3.1: Reform the personnel system.

3.2: Reform the procurement system to clarify and strengthen the decisionmaking process.

3.3: Streamline reporting requirements to Congress and tie funds to country strategies.