A Progressive Strategy for Reforming Foreign Aid

To: Interested Parties

Last Wednesday, Secretary of State Condoleezza Rice unveiled the Bush administration’s long-awaited plan for reforming the United States’ foreign assistance program. The plan calls for the creation of a new office under Secretary Rice’s direct supervision to oversee the numerous agencies and bureaus that dispense some $19 billion in aid each year.

While the Bush administration is right that the current foreign aid system is broken, it is wrong to think that simply moving the USAID administrator into the State Department and consolidating programming authority are enough to fix the problems.

As President Bush noted in the 2002 National Security Strategy, the United States faces an increasing threat from weak and impoverished states that are unable to provide for their citizens or protect their borders from terrorist or criminal infiltration. The new threats and challenges we face have fostered efforts to overhaul our intelligence systems, transform our military, and create entirely new government departments and functions. Only a similarly comprehensive overhaul of our foreign assistance program will enable us to promote economic development, develop functional economies and new markets, knit together regional markets, and build capable, democratic states.

Going beyond the Bush administration’s bureaucratic reshuffling, the Center for American Progress has a bold new strategy for reforming foreign aid that calls for:

  1. Rewriting the 2,000-page 1961 Foreign Assistance Act – which now includes 33 objectives and 75 priorities – to include the consolidation of all foreign aid programs under a single Department for International Development headed by a cabinet-level Secretary and a clear, strategic focus on building capable states.
  2. Providing line-item contingency funding, set at no more than 10 percent of the aggregate budget, to allow for prompt investments in transitions or other targets of opportunity and to expand budgetary flexibility, including by expanding notwithstanding authorities; providing the authority to pool resources and harmonize aid delivery with other bilateral donors; and reducing earmarks.
  3. Increasing America’s share of international development financing to 0.7 percent by 2015.
  4. Initiating a public-private partnership with major financial firms to create Global Development Bonds that can generate increased capital investments in the developing world.
  5. Devoting increased intelligence resources to monitoring and analyzing key weak and failed states.

Read the full report by clicking here.

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