USAID: saved at the cliff edge?
by Jim Bishop June 2003

The US accounts for around a third of all humanitarian assistance. With the advent of George W. Bush’s administration in January 2001 came serious questions about the longevity of USAID. But the selection of Andrew Natsios as USAID Administrator has given the agency a new lease of life – at least for now.

USAID has been a frequent target of Republicans over the previous eight years, and an institution widely regarded among the American electorate and policy-makers alike as wasting the public’s money. New Administrator Andrew Natsios has embarked on a campaign focused on repackaging USAID for public consumption, while imple-menting major reforms that could reverse its slide towards oblivion. But can he succeed?

Natsios selection brings hope and confusion

Natsios was appointed in May 2001, but is no stranger to USAID. Under the first President Bush, he directed the high-profile Office of Foreign Disaster Assistance (OFDA) and subsequently the Bureau for Human-itarian Response (BHR), which then incorporated OFDA and the Office of Food for Peace. The latter’s responsibilities included the management of emergency food aid. Natsios had been an outspoken advocate on some humanitarian issues opposed by senior administration officials, for example the US intervention in Somalia. Back in the private world, as Vice-President for World Vision, Natsios took on the Clinton administration for its use of political conditionality in the targeting of food aid.

Natsios’ first public address as nominee for the USAID Administrator’s position was his opening statement to the Senate Foreign Relations Committee at his confirmation hearing. It was a bombshell. Instead of trying to keep the hearing as non-controversial as possible, Natsios acknowledged the obvious – that he had been tasked with trying to administer an agency in crisis. He also acknowledged that USAID’s central management systems were functioning so poorly that it had been unauditable for four years. He subsequently pledged to spend much of his first year in office trying to make these systems work.

On USAID’s presentation to the public, Natsios pledged to have it avoid further use of one of the aid industry’s favorite buzzwords, ‘sustainable development’. He pugnaciously declared that nobody outside the industry had any idea what the term is intended to convey. In fact, most Americans, he concluded, understood development to mean fundraising. Rather than use generic terms people find difficult to understand, USAID would emphasise that it is engaged in activities people can intuitively understand, for example agriculture, economic growth, environment programmes, health and micro-enterprise.

The ‘Four Pillars’

At his confirmation hearing, Natsios also identified ‘Four Pillars’ as USAID’s new concept of operations, organising principle and public image. He later acknowledged that the term had its roots in the Point Four programme of the Truman administration, America’s first post-war foreign aid initiative. The first pillar is Global Health, long a USAID point of strength in which it has maintained a leadership role through the decades. The second is Economic Growth and Agriculture, reflecting Natsios’ strong belief that there cannot be poverty reduction without economic growth, and that agriculture plays an essential role in the potential growth of most societies. USAID, Natsios insisted, had let its agricultural expertise and leadership melt away, devoting one billion dollars less to agriculture in 2002 than in 1985 (in 1985 dollars). USAID’s analytical capability in economics had suffered a similar fate, as USAID’s response to cuts in personnel funding had been to sacrifice technical expertise to preserve the jobs of managers. The third pillar was first announced by Natsios as Conflict Prevention, Democracy/Governance and Humanitarian Response. USAID’s website currently describes it as Conflict Prevention and Developmental Relief. What to do about the Democracy/Governance programmes of USAID and the State Department is still proving to be one of the tougher bureaucratic nuts to crack as policy moves from concept to operationalisation. The fourth pillar is what Natsios has labelled the ‘Global Development Alliance’. It is termed a process pillar, intended to change the way USAID does business throughout the institution.

A key question for Natsios is how these four pillars will be meshed with the existing structure of USAID and its current procedures. The first three pillars will encompass more programmes than their titles suggest, many of them currently run by USAID’s Global Bureau. Will the Global Bureau be abolished? No answer for the moment. Will there be centralised financial control as well as policy management from USAID’s Bureau of Policy and Program Coordination? This is another proposed option to which there has been no response. Will USAID’s geographic bureaux, the traditional foci for employee identification and advancement, and some of the fiefdoms which have long frustrated attempts at reform, allow themselves to be pushed out of the policy-making and resource-allocation processes? Natsios’ declared intention is to divest more authority to local mission directors. Will this help or hinder the reform of internal processes, the way USAID does business, and acceptance of the new priorities?

Changes and early successes

With the necessary support of Secretary of State Colin Powell, Natsios has won the President’s endorsement for a return to the needs-based approach to humanitarian disaster relief first formally made US government policy by Reagan. The Clinton administration reversed the policy, placing political conditions on famine relief for millions of starving North Koreans, then trying to persuade NGOs to distribute emergency food aid in Serbia on the basis of the political allegiance of municipal officials, and in Sudan proposing to use humanitarian food aid to feed the Africa Bureau’s favoured belligerents in the civil war. Sudan was the test case for the Bush administration. Powell won the President’s agreement to emergency feeding programmes in both north and south Sudan. This was the outcome of a heated debate in which it became clear to his opponents that it would not be wise to challenge the Secretary again on the underlying principle of a needs-based response to humanitarian crises.

Another major achievement for Natsios is the development of a strong partnership with Powell. There is no more of the struggle for autonomy that characterised the relationships between USAID and the State Department in previous administrations. Natsios volunteers at every appropriate opportunity that his boss is Powell. He also asserts with pride that he and USAID are serving US national interests, even when providing humanitarian assistance to what the Secretary refers to as ‘looser states’. There will always be tensions between institutions with different perspectives and objectives. But the Powell/Natsios bond holds the promise that on major issues there will be more mutual support. Natsios attends National Security Council and Deputies Committee meetings when decisions on issues with humanitarian consequences are under debate. Perhaps that status will become de jure instead of just de facto. Powell goes out of his way to acknowledge USAID’s importance in the conduct of American policy, and to express his appreciation for Natsios’ initiatives. He has let it be known that he will support a significant increase in USAID’s budget for 2003. That will be the first year in which the new administration will be working on the basis of its numbers, rather than those inherited from its predecessor.

Another early Natsios achievement has been to help put Africa back on the list of the administration’s strategic interests. Africa is clearly the part of the world of greatest interest to him personally, a consequence of his extensive first-hand involvement while heading ODFA and BHR, and later as Vice-President of World Vision. He went there on two missions in the two months following his swearing-in.

Within USAID itself, there is appreciation for the fact that Natsios, unlike many of his predecessors, actually understands what USAID does, and has the managerial ability to help it become an effective agency. He also has international acceptance as a leader in disaster response, and appreciation as a principled leader unlikely to sit quietly while the US government hides from its international legal obligations. Natsios, a man of substantial intellectual depth and a broad range of interests, actually likes public management, has an MA in the subject from Harvard, and prior to his appointment was running one of the largest public works projects in the US, the ‘Big Dig’, a tunnel underneath Boston costing about $15 billion.

Natsios is very serious when speaking about making greater use of faith-based organisations to dispense aid, as well as paying more attention to religious leaders abroad. His own extensive field work has convinced him that religiously affiliated organisations can be very effective providers of emergency and social services. He also systematically includes local religious leaders among those with whom he consults on his missions abroad. We in the West are the ones out of step with most of humanity, he insists. Most of the world’s population identifies itself as religious, integrates religious belief systems very consciously into their personal and public lives, and are proud, not bashful, about their religious identification.

Challenges ahead

Natsios faces challenges both within and without USAID. Internally, he faces a confused and apprehensive workforce. His blunt criticism of the performance of the central support systems was not just about the adoption of a $100 million information system that does not work, fiscal systems so dissimilar that they cannot talk to each other, and a personnel system that undermines the procurement system by allowing a 25 per cent vacancy rate to persist among procurement specialists. It also is about a bureaucracy in which external criticism, a counterproductive incentives system, and disengaged leadership have created low morale and stifled initiative. Cynicism and apathy remain high internal barriers to institutional reform.

Externally, the challenges are political. The US Congress is a full partner with the administration in the formulation and implementation of national policy. Sometimes issues are debated on their merits, but often politics dominate. Special-interest groups are believed by many to dominate the legislative processes. These include, of course, domestic NGOs. Even dissatisfied civil servants have their ‘congressional clout’. A politician himself, Natsios nevertheless has thrown down the gauntlet by stating publicly that he will try to have some of the approximately 240 ‘congressional earmarks’ removed from foreign aid legislation. At least 60 of these are widely believed to be impediments to a coherent foreign aid policy. But many also require USAID to undertake programmes of great interest to powerful members of Congress. Throughout the spring and early summer, Congress has focused on domestic issues, making it hard to predict how it will react to Natsios’ proposed four pillars and their bureaucratic consequences.

NGOs are not all allies as Natsios tries to resurrect USAID. The coalition of American NGOs operating abroad, InterAction, called early on for ‘The administration of US bilateral assistance by a stronger, revitalized federal agency to meet the challenges of the 21st century’. But this is one of the few points on which there is broad consensus among NGOs. With USAID still fighting for its life, and aid levels anticipated to remain static this year and to grow only modestly in the 2002 financial year, NGOs are insisting on higher funding for their activities.

Many of Natsios’ proposed reforms are hostage to Congressional approval. They could become a bargaining chip in more important debates, subject to retaliation by members of Congress unhappy with the administration for unrelated reasons, or voted down on their own merits. It will take many months before we can decide whether Natsios has indeed halted USAID’s slide.

Jim Bishop has been associated professionally with USAID for over three decades. He is currently a senior staff member of the NGO coalition InterAction. This article is an expression of his personal views, and the author is not speaking for InterAction or for any of InterAction’s members. Website: www.interaction.org The USAID website is at: www.usaid.gov.

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