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An employee enters the State Department in Washington, U.S., June 2, 2017. REUTERS/Yuri Gripas - RTX38QZN
Future Development

Tillerson’s “Listening Report” reinforces that State and USAID should be separate

As a prelude to the Trump administration’s agency reorganization exercise, Secretary of State Rex Tillerson initiated a survey of the views and concerns of State and USAID employees. The resulting “Listening Report” highlights that development and diplomacy are distinct disciplines and that the Department of State and USAID need to be aligned but separate. It reinforces the aid redesign plan, “A New Foreign Aid Architecture Fit for Purpose,” issued in July by the co-chairs of the Modernizing Foreign Assistance Network (MFAN). 

According to the report, USAID employees understand and strongly believe in the agency’s mission. They believe in a clear delineation between State and USAID and therefore have deep concerns over reorganization efforts. In contrast, while proud of their work, State Department employees have less clarity about their mission given the wide scope of the department’s responsibilities. The report captures the distinction as State must avoid “rocking the boat.” In contrast, we know that to advance development, and the often-necessary accompanying reform, USAID must at times work with “boat-rockers.”

Employees at both agencies expressed frustration that the absence of a single authority on most issues—and hence the MFAN proposal to bring like functions into a common structure—leads to inadequate accountability due to unclear decision rights and diffuse authority. Despite the collective lack of sense of accountability, USAID respondents expressed a strong sense of responsibility for results and program impact.

While there are many different views among career State and USAID employees on the role of the two agencies, and how closely they should be aligned, there is a common concern on the issue of merging State and USAID, which is best illustrated by the report:

The people of USAID see a clear connection between USAID, diplomacy, national security, and American prosperity. There is a strong belief within USAID that the technical expertise and experience of the agency in areas of nutrition, disaster relief, environment, poverty, and education is a significant U.S. asset. This asset can be utilized to foster goodwill with countries where the United States sees strong relationships as vital to national interests. Nearly to a person, the people of USAID believe that, as the future unfolds, the extent to which the value of the agency is fully realized depends upon whether USAID is at the forefront of the United States’ development assistance in the world.

 Many, though not all, in each organization contend that USAID’s work must be aligned and coordinated with that of the larger Department of State. There is lack of agreement as to how closely USAID should be aligned with State, but few disagreed that the arrangement is most effective when development work is kept distinct from diplomacy.

These views of the career staff of State and USAID explain well the rationale behind the aid redesign plan, which was released by the MFAN co-chairs at an event at Brookings on July 11. The plan is designed around ensuring that development and diplomacy are separate structures focused on their core competencies but effectively aligned. It would eliminate duplication and redundancies, reduce inefficiencies, and consolidate similar functions through joining four existing agencies and multiple disparate programs into two new agencies with distinct missions.

The proposal would bring all humanitarian and development programs, including President’s Emergency Plan For AIDS Relief, the U.S. Millennium Challenge Corporation, and State Department economic assistance programs into a single agency, the director of which would have cabinet rank and a seat on the National Security Council. The secretary of state would provide foreign policy advice to and chair the advisory council of the new Global Development Agency in order to  provide close coordination between development and diplomacy.

The State Department would retain authority over economic security assistance but be relieved of programs not central its mission. This would allow the aid agency to provide a comprehensive approach to development and the State Department to focus on its core responsibility for diplomacy.

The second main feature of the plan would build a stronger U.S. development finance instrument through joining the Overseas Private Investment Corporation, the Trade and Development Agency, and USAID’s Development Credit Authority in a new Development Finance Corporation. The corporation would have greater use of its own revenues and additional authorities of equity finance and first loss.

At the Brookings event, former USAID Administrator Peter McPherson noted that, while development and diplomacy should be closely coordinated, it would be a terrible mistake for State and USAID to be merged or even for State to continue its current oversight of USAID programs. The State Department is predominantly a policy and engagement organization whereas USAID is operational. McPherson noted that these are the pressing issues for development, along with budgets.

Along the same lines, Brian Atwood, also a former USAID administrator, pointed to the differences in management systems, approaches, time horizons, and relationships with foreign ministries. They both noted that cabinet rank would provide the agency head with the authority to empower development with a strong voice at the senior policy table and would enhance the capacity of the agency head to coordinated assistance policies and programs.

Secretary Tillerson should be commended for initiating the “listening” process and giving the career professionals the opportunity to share their experiences and views. Let us hope he and others take the guidance they have provided that development and diplomacy must be aligned but separate.

This blog was first launched in September 2013 by the World Bank in an effort to hold governments more accountable to poor people and offer solutions to the most prominent development challenges. Continuing this goal, Future Development was re-launched in January 2015 at brookings.edu.

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