Home The Washington Diplomat May 2017 Trump Administration Eyes Major Reshuffling of USAID

Trump Administration Eyes Major Reshuffling of USAID

Trump Administration Eyes Major Reshuffling of USAID

From the White House’s proposed budget cuts to recent cruise missile strikes in Syria, the Trump administration has been clear that it will place a renewed emphasis on military strength at the expense of diplomacy and development. The focus on hard power over soft power has left the two institutions traditionally responsible for much of U.S. foreign policy — the State Department and USAID — scrambling to read the tea leaves.

a6.usaid.boxes.storyA proposed 2018 federal budget drafted by the White House calls for as much as a 31 percent reduction in international affairs funding. At the same time, it would boost defense spending by $54 billion (roughly the entire international affairs budget for one year) in part to fund new initiatives such as fighting terrorism in Syria, Iraq, Yemen and elsewhere.

Former USAID Administrator Andrew Natsios said he finds it interesting that the rationale given by Secretary of State Rex Tillerson and others for the drastic cuts is that the U.S. is no longer fighting as many wars.

“And then the same day the president ordered the secretary of defense to come up with a plan to destroy ISIS [Islamic State], and that’s what’s called a war plan,” he said, noting that the administration is also considering sending more troops to Afghanistan, in addition to the increased military presence in Syria and Iraq.

Natsios spoke at a recent panel event held at the Center for Strategic and International Studies (CSIS) that considered ways the Trump administration might reorganize U.S. soft power efforts.

USAID, which operates in over 100 countries, is set to take a particularly big hit under Trump’s “America first” agenda. On April 24, Foreign Policy magazine revealed a budget document detailing proposals to fold USAID into the State Department and shuffle funds from development assistance to promote national security objectives.

According to the article, the agency expects the proposal to force the elimination of 30 to 35 of USAID’s field missions, while cutting regional bureaus by 65 percent. A range of programs would be dramatically slashed in areas such as health and food security, and countries such as Ukraine and many in Central and East Africa would see their aid gutted. The plan would also divert development assistance, which funds 77 countries and regional offices, toward an economic support fund “tied to specific U.S. political or strategic objectives.”

Natsios told FP reporters that the move would be “an unmitigated disaster for the longer term,” predicting that, “We will pay the price for the poorly thought-out and ill-considered organization changes that we’re making, and cuts in spending as well.”

At the same time, Natsios was sanguine about the potential changes that USAID faces at the CSIS talk. He pointed out that the cuts will encounter stiff resistance on the Hill, and that the agency has been a perennial source of debate over the effectiveness of foreign aid since its inception in 1961. 

Natsios, who is now with the Bush School of Government and Public Service at Texas A&M University, served as USAID administrator from 2001 to 2006, managing reconstruction programs in Afghanistan, Iraq and Sudan. He argued that Trump’s proposed cuts don’t necessarily warrant the hysteria sweeping Washington, but he disagreed with the president’s vision to dramatically upend USAID and defended his former agency against the withering criticism it routinely comes under.

Natsios admitted that there is waste and inefficiency in the sprawling USAID bureaucracy, telling the CSIS audience that “frankly you could make a 10 percent cut in our aid programs and it would not damage our aid programs and might even help in some cases.”

a6.usaid.ladies.storyHe pointed out that budget cuts are often political decisions taken by both parties, and that aid budgets naturally fluctuate, sometimes rapidly, over time. Moreover, he doubts many of Trump’s proposed cuts will pass muster in Congress.

“Cuts can always be restored. In fact, they will be restored. I don’t care what anyone tells you. We will have a robust foreign aid program because we’re a great power,” he said. “We are in the world whether we want to be or not.”

He added: “A 31 percent cut is draconian to say the least, but, far more important in my view, is not the budget. It is the reorganization of the management of our aid programs.”

On that note, Natsios called this a decisive moment in the history of America’s development efforts. He said change is good, but only if it is done incrementally and wisely — warning that Trump’s plans to gut USAID could have long-lasting repercussions.

“There are rumors that there is a plan afloat to close perhaps 50 percent of USAID missions abroad and cut staff in some of the central bureaus by 50 to 75 percent. We went through a similar aid reorganization exercise in the 1990s,” Natsios said, recalling when the U.S. Information Agency was scaled back and merged with the State Department. “I think about 400 senior officers retired forcibly. And we closed eight missions.”

Natsios noted that 60 percent of USAID officers today have less than five years of experience under their belts. And with a slew of senior officers being pushed out the door, that leaves the agency bereft of competence and expertise.

“If these cuts and reorganization decisions are made imprudently, they will be restored in later years but at great cost in institutional cohesion and effectiveness. The damage done institutionally in aid in the 1990s took many years to repair and severely hampered our early efforts in Iraq and Afghanistan reconstruction,” he argued, noting that USAID had to eventually bring in a large number of retired officials to deploy into both warzones.

a6.usaid.natsios.storyLike USAID, the State Department also faces significant personnel cuts. Bloomberg reported on April 27 that State plans to eliminate 2,300 positions — about 9 percent of its U.S. workforce worldwide — through attrition and buyouts. Critics have called the cuts mindless and dangerous, while Republicans say a major reorganization is long overdue.

Natsios disagrees with the fundamental premise of Trump’s argument that centralization leads to greater effectiveness. In fact, he says Washington should loosen institutional constraints on USAID, not tighten them.

Natsios says that while it would be helpful to consolidate the government’s various development functions into one independent department, he supports decentralizing power and decision-making to field offices, where local workers should have the discretion to decide what works and what doesn’t. Similarly, other CSIS panelists encouraged Trump to give USAID operatives on the ground more latitude. Such a move would be in keeping with the president’s directives elsewhere. For example, under Trump, the CIA has been given more leeway to conduct drone strikes and counterterrorism operations.

“USAID used to be the most decentralized agency in the world, but it is now probably the most centralized,” Natsios said, citing studies showing that centralizing aid programs is often a waste of money.

He also opposes folding USAID into the State Department, as many Republicans have suggested, arguing that the two entities have completely different structures.

“If Secretary Tillerson proposed buying Microsoft and merging it with ExxonMobil, do you know what his board of directors would do? They would fire him,” Natsios quipped. “It is taking two cultures that could not be more unalike and merging them.”

Trump’s managerial style also emphasizes getting results quickly. But as Natsios pointed out, government agencies take longer to achieve their foreign policy objectives.

Demanding speed and results did not begin with Trump, however. It is a long-standing policy objective that Natsios argues weakens aid efforts.

a6.usaid.boots.home“What Washington demands is visible, rapid and demonstrable results. They want results in a year — Congress expects it, the White House expects it, State Department expects it, DoD expects it,” Natsios said. “I’m sorry to tell you this, but there’s absolutely no literature in [the field] that says development is principally visible or principally quick. Institutions are what development is about and institution-building takes a long time.”

Focusing on one example, Natsios — who has spent eight years preparing a soon-to-be published book on U.S. foreign aid policy — used the history of South Korea to make his point. At the end of the Korean War (1950-53), South Korea was one of the poorest countries in the world. As late as 1958, Natsios explained, a third of the country was acutely malnourished. Today, South Korea is the 13th-largest economy in the world, but it took nearly two decades and millions of dollars of U.S. aid to help achieve that transformation.

An emphasis on quarterly or even annual results like the kind required today would have been detrimental to South Korea’s evolution into one of the world’s most vibrant economies. “South Korea would be like North Korea today if that happened in the 1960s,” Natsios said.

In fact, the former USAID administrator suggested that the agency needs to brag about its successes more often to counter the narrative that it is a bloated, impotent bureaucracy. For instance, another long-term USAID campaign was the Green Revolution, which saw global agricultural production increase in the developing world between 1930 and 1970 thanks to new technologies and high-yield crops. The term “green revolution” itself was popularized in 1968 by former USAID Director William Gaud.

For all the success stories, Natsios admits that there have been plenty of failures. At the same time, he contends that USAID is held to a different standard than other government agencies. For instance, when the Defense Department loses a war or the CIA puts out inaccurate intelligence, their budgets aren’t slashed and no one talks about abolishing them altogether.

“The federal government is a human institution constructed by people who are flawed,” he said. “I think we should look at aid programs as a venture capital fund which is predicated on the assumption that some investments will succeed and some fail but successes will raise the bottom line to make the fund profitable.”

However, that does not mean taking on every project imaginable, Natsios cautioned. “We should give up on utopian schemes that are unachievable because when we fail, USAID will be called an ineffective agency.”

Rather, Natsios said aid programs should be broadly tied to America’s national interests — an approach that would resonate with Trump’s preference for hard power. Natsios criticized the Obama administration for narrowing USAID’s mission to focus exclusively on extreme poverty reduction. He says international development should instead be geared toward combating the threats and challenges Americans face — and there are a multitude of them, from Russia and North Korea to terrorism and pandemics.

“We will face a rising threat from disease and pandemics,” Natsios predicted, noting that the 1918 Spanish influenza pandemic infected one-third of the world’s population. “We’ve lost touch with that. You saw what happened with a little Ebola? [Imagine] the mass panic of a real pandemic.

“The best place to combat a pandemic is not at the borders but at the source, and 75 percent of all pandemics in the last 30 years are zoonotic diseases that mutate into people,” he added, arguing that this an area where development aid is essential.

Other interrelated threats that development programs tackle include deforestation, illegal narcotics, globalization, the migration crisis, terrorism, civil wars, population growth in poor countries and even changing diet patterns, in which people eat more protein, straining food supplies.

“We as Americans are not worried about this, but the fact is that we have to increase, at a minimum, the world food supply by 50 percent in the next 33 years,” he estimated. “There is no way it is going to happen.”

That in turn could spark widespread conflict. “Food cannot be detached as a humanitarian issue. It is a geostrategic issue of profound importance. We may be the most powerful food-producing country in the world but that doesn’t mean our allies are, because they’re not. And countries with large land armies that cannot feed their populations, they do very bad things.”

a6.usaid.mother.storyThere is evidence that some in the Trump administration recognize the usefulness of development in combating global threats. While many Republicans complained that the international affairs budget unduly increased under Obama, with little to show for it, it is difficult to determine how committed Trump will be to implementing the cuts he has proposed.

One example of this uncertainty is the President’s Emergency Plan for AIDS Relief (PEPFAR). The program was started by former President George W. Bush to tackle the HIV/AIDS epidemic and has provided life-saving antiretroviral treatment to over 11.5 million HIV-infected people, mostly in Africa.

According to the New York Times, the Trump team sent a questionnaire to State Department employees as part of the presidential transition asking questions such as: “Is PEPFAR worth the massive investment when there are so many security concerns in Africa?” and “Is PEPFAR becoming a massive, international entitlement program?”

At the same time, Vice President Mike Pence was an early supporter of the program, and Tillerson praised PEPFAR during his confirmation hearing. So perhaps it’s no surprise that one notable exception to Trump’s proposed budget cuts was PEPFAR, which was spared the ax.

Indeed, panelists agreed that some of the changes under Trump are likely to be cosmetic. Talk of “poverty reduction,” for instance, will be replaced with “economic growth.”

In fact, rather than an existential crisis, some in development circles see the cuts as an opportunity.

“Whenever you talk about structural reform, it’s very scary…. [But] this is something that people have been looking at for decades,” said Beth Tritter, a former vice president at the Millennium Challenge Corporation.

James Kunder, another former USAID official, offered his view on how USAID should be restructured. He believes the organization should be formatted around three different bureaus. One bureau would focus on international cooperation, public-private partnerships and similar cooperative efforts. Another bureau would focus solely on crisis amelioration. This bureau would handle everything from countering violent extremism to humanitarian disasters. The third would be a sort of policy laboratory where new ideas would be tested in the field and where USAID officials would learn from facts on the ground.

Whatever USAID winds up looking like under Trump, panelists agreed that reform is overdue because foreign aid itself is constantly evolving.

“This may be a harsh criticism … [but] sometimes the sectorial programs of USAID operate as though it’s still 1956 and what the U.S. is doing in health or education is the only game in town,” Kunder said.

But today, development is shaped by the private sector, trade and investment, NGOs, foundations, local partners and other nations such as China — dynamics that demand a re-evaluation, regardless of Trump’s budget cuts. 

“I know it’s threatening … but it is an opportunity for the development community and specifically USAID to take a good, hard look at itself,” he said. “If we were designing a USAID today, what would it look like?”

That’s the question everyone in Washington will be grappling with very soon.

About the Author

Anna Gawel is the managing editor of The Washington Diplomat. Joseph Hammond is a freelance writer in Washington, D.C.