Even though the administration's two major policy reviews on development are missing in action and the U.S. Agency for International Development is still full of senior vacancies, USAID Administrator Rajiv Shah is moving ahead with his promise to give the agency back its capability to think strategically by building an official policy planning staff.

"This new bureau, bolstered by the agency's many technical assets, represents an essential step toward achieving President Barack Obama's and Secretary Clinton's vision of regaining USAID's status as a premier development agency," Shah wrote in an email to all USAID employees Monday.

For now, Lawrence (Larry) Garber will head up the effort as the acting assistant to the administrator for the brand new Bureau of Policy Planning and Learning. Garber will be one of two deputy assistant administrators in the bureau, Shah said. He has had a long career in development, including as CEO of the New Israel Fund from 2004 to 2009.

The new policy bureau will essentially consolidate policy-planning functions that were previously spread out in various parts of USAID, but good spots are still open ... so USAID employees, there's still time to get your applications in.

Some top jobs, however, are already taken. They include:

Leticia (Tish) Butler as acting director, Office of Policy

Alex Dehgan as director, Office of Science and Technology

Jason Foley as director, Office of Strategic and Program Planning

Karen Turner as acting director, Office of Donor Engagement

Julie Kunen as senior advisor

Shah also said USAID will also establish an Office of Budget and Resource Management soon, although it's not clear whether that office will actually control USAID's budget.

Hey, development community readers, have you been wondering what ever happened to the QDDR interim report, which was supposedly being released in March? As it turns out, the interim report was finished, but is not going to be publicly released at all.

Administration sources confirmed to The Cable that the State Department's first-ever Quadrennial Diplomacy and Defense Review is chugging along toward its target completion date in September. The review will set policy for all sorts of important issues relating to the way that the State Department and the U.S. Agency for International Development (USAID) operate.

But although State repeatedly promised outside groups interested in the QDDR that they would get a public report halfway through the process, back in April the decision was made not to release an interim report at all. Here's what went down.

The interim report was originally scheduled for release in January. But as it made its way through the interagency process, it got bogged down because various stakeholders wanted various changes. The date got pushed back again and again until early April.

At that point, the White House was finishing up its own overall development policy review, the Presidential Study Directive on Global Development (PSD-7), and getting into the final stages of the writing of the National Security Strategy (NSS), another huge interagency process. (A draft version of the PSD-7 was published exclusively on The Cable here and the NSS was also published first on The Cable here.)

According to administration sources, at an April deputies committee meeting, it was decided that the sequencing for the documents should be NSS first, PSD-7 next, and QDDR interim report after that. The NSS was released in late May. The final version of PSD-7 is also missing in action, but could be released anytime, although not necessarily to the public.

Given all that, by the time State would be able to release the QDDR interim report, it wouldn't really represent the current state of play, sources explained. Moreover, the time and effort required to roll out the thing would have taken the whole schedule off course.

The interim report covered "Phase 1," which is all about identifying the problem, not specifying solutions. Today is actually the due date for reports on "Phase 2," and now State has added "Phase 3," or the wrap-up phase, which will commence shortly. The interim report is now only being used internally to inform the other phases, officials say.

There's also been a drop-off since April in consultations with Capitol Hill, and some staffers reported that they hadn't heard anything from State about the QDDR in weeks. Administration sources said that consultations with select staffers were ongoing and would pick up again when they process got a little further along.

Meanwhile, not everybody outside the administration is thrilled that they won't actually see the interim report as promised. "They hyped the interim report and now they're saying it's worthless so we shouldn't care," said one slightly bitter development leader. "Nice."

"Our sense is that the lack of communication regarding the QDDR is due to the fact that the administration continues to lack consensus at higher policy levels about what it intends to achieve both with the White House-led PSD process and with State/AID's QDDR," said one congressional aide. "We had hoped that at this juncture we would receive a clearer signal about the direction and shape of foreign aid reform, but clearly there continues to be much disagreement and discussion over in the executive just what the best path forward is."

As he works to overhaul a Cold War agency long neglected and widely described as in desperate need of reform, USAID Administrator Rajiv Shah says there's a player in the development game: women farmers.

"We know the people who matter most aren't the financiers, or the agriculture ministers, or the assistance workers and farmers. They are the women farmers who are the untapped solution to this problem," Shah said in a speech Thursday.

"Women are responsible for 60 to 80 percent of the food in countries where we work and when women receive gains in income, they are far more likely to spend those gains improving their families' access to health and education," he said.

Crediting the personal involvement of Secretary of State Hillary Clinton and her ambassador for global women's issues, Melanne Verveer, Shah said, "We now focus on women in everything we do."

How do they do that? For example, by focusing on farm products that "enhance" the standing of women, such as on sweet potatoes and legumes, and increasing financial services and educational support targeted at women.

Ambassador William Garvelink has been tapped to implemented the new Feed the Future initiative, along with a Deputy Coordinator for Diplomacy, which includes ensuring FTF is aligned with other food security-related programs and policies across the government. USAID is the lead implementing agency for this initiative.

Shah was speaking at a symposium put on by the Chicago Council on Global Affairs, which released a report Thursday entitled "Renewing American Leadership in the Fight Against Global Hunger and Poverty." The report proposes ways the U.S. government can help the 600 million rural poor in Africa and South Asia who depend on agriculture for their livelihoods.

"The solution to their plight lies in a sustained, long-term effort to increase agricultural productivity on smallholder farms," the report states. "Lacking for too long has been firm and sustained leadership from the U.S. president and Congress that commits America to strong partnerships with African and Asian institutions in a frontal attack on this critical cause of global poverty."

Shah said USAID is working to shift its focus to more locally driven approaches to food security and agricultural development, giving recipient countries more input into the aid process. And he hailed the Chicago Council's focus on improving agricultural yields. "The Chicago Council report ... asks the U.S. to lead a second green revolution, and we completely agree," said Shah.

The White House is moving closer to finishing a sweeping review of U.S. development strategy that aims to put development on par with diplomacy and defense as a "central pillar" of U.S. national security, according to sources familiar with the issue.

The Cable has obtained a draft copy (pdf) of the review, which is titled "A New Way Forward on Global Development" and is known internally as the Presidential Study Directive on Global Development or PSD-7.

"The Obama Administration recognizes that the successful pursuit of development is essential to our security, prosperity, and values," the draft document reads. It promises a "new approach to global development that focuses our government on the critical task of helping to create a world with more prosperous and democratic states."

Sources cautioned that the draft document was presented at a deputies committee meeting two weeks ago and has been updated since. But they said that certain key passages have already exacerbated tensions between the National Security Council and the State Department, which is finalizing the interim report for its own wholesale policy review, the Quadrennial Diplomacy and Development Review (QDDR). The NSC declined to comment.

One important section of the seven-page document would establish an interagency "development policy committee"  -- moving the responsibility for coordinating U.S. policy on development out of the State Department.

At issue is whether Foggy Bottom should have the ultimate authority over development policy or whether oversight should be done by the new interagency body, which reports up to the president.

The draft document also calls for an overall review of U.S. development strategy every four years (separate from the QDDR), and the design of country and/or regional strategies to "organize U.S. engagement and inform resource allocation."

The idea of a government-wide, independent committee to oversee development is one that Senate Foreign Relations Committee heads John Kerry, D-MA, and Richard Lugar, R-IN, also support.

The draft also outlines of how the relationship between State and USAID should work  -- and those outlines don't jive with how we hear the QDDR is shaping up. For example, the document says that USAID should have "responsibility and accountability for a core development and humanitarian assistance budget," as well as a robust policy planning staff, a leadership role in setting strategies and the "mandate, where appropriate, to lead U.S. government development efforts in the field."

USAID Administrator Rajiv Shah would "be included in NSC meetings where  appropriate" if this draft document's recommendations were adopted, but he would also still report up to Secretary of State Hillary Clinton, not directly to the White House as some might hope.

Officials have indicated that in State's QDDR, USAID would also get its own policy planning staff but would probably not control its own budget. State Department officials argue that by keeping control over USAID's budget, they would be in a stronger position to advocate for it.

"You can see many things here that try to establish more balance and reorient the authority over  development back toward the NSC and the White House," said one development leader closely observing the process. "Each of those things could invite some pushback from State."

Overall, the document is a good draft, this observer said, noting that it could go through several revisions before being finalized. "We're not hugely supportive of the USAID administrator reporting to the secretary of state, but a lot of this is largely positive in terms of strategy and overall direction."

The QDDR is led by Shah and Deputy Secretary Jack Lew, with heavy input from Policy Planning chief Anne-Marie Slaughter. The PSD-7 is led by top NSC aides Gayle Smith, Michael Froman, and Jeremy Weinstein.

The interim report of the QDDR is expected to be released soon. There has never been a promise from the White House that the PSD-7 would be released publicly.

A top Obama military policy advisor and Afghanistan war veteran is moving from the Pentagon to take up a senior position at the US Agency for International Development.

Craig Mullaney was a key Obama campaign advisor and part of Obama's Pentagon transition team. Until today, he was the principal director for Afghanistan, Pakistan, and Central Asia at the Office of the Secretary of Defense policy shop. Starting Monday, he will be USAID Administrator Rajiv Shah's senior advisor on Afghanistan and Pakistan issues.

The move is a step up for Mullaney, who was a natural fit for the OSD policy job but always had a preference for intellectual policy work over the largely administrative tasks that a desk officer is subsumed with on a daily basis.

"The job he's had in the Pentagon was to make the trains run on time, which was great for learning the interagency process, but at USAID he will more of an opportunity to be doing more of the policy work he loves," said Andrew Exum, a friend who also works at the Center for a New American Security.

Before signing on the Obama presidential campaign, Mullaney was a West Point grad, Rhodes scholar, and Army Ranger. He earned the Bronze Star and several other medals during his time leading an infantry rifle platoon on the Afghanistan-Pakistan border in 2003.

After coming home from war, he taught at the Naval Academy and wrote the book "The Unforgiving Minute: A Soldier's Education," which his personal website describes as "an unforgettable portrait of a young soldier grappling with the weight of his hard-earned knowledge while coming to grips with becoming a man," and the New York Times described as Mullaney's "attempt to reconcile the precombat lessons that seemed so clear to him with the exigencies of battlefield experience."

While at Oxford in 2000, Mullaney met his future wife Meena Seshamani, a key player in Obama's healthcare initiative and the Director of Policy Analysis at the Office of Health Reform at HHS.

Here is the video trailer for Mullaney's book:

Find him on twitter here.

Following the highest-level meeting yet on Barack Obama's as-yet-unsettled development policy, there is still no resolution of some key differences between the State Department and the National Security Council, multiple sources told The Cable.

The meeting came as some in the development community expressed a mix of encouragement at the high-level attention and frustration at the administration's failure thus far to express a clear vision laying out the overarching goals of U.S. development policy.

The Tuesday Deputies Committee meeting was supposed to resolve differences between State's overall policy review, the Quadrennial Diplomacy and Development Review (QDDR), led by Deputy Secretary Jack Lew and USAID Administrator Rajiv Shah, with heavy input from Policy Planning chief Anne-Marie Slaughter, and the NSC's Presidential Study Directive on Global Development Policy (PSD-7), led by top NSC aides Gayle Smith, Michael Froman, and Jeremy Weinstein. Following the meeting, there is still no firm schedule for releasing the QDDR interim report, which had been expected.

While it's not clear what all the differences are right now between the QDDR and the PSD-7 --and the two reviews serve different functions -- one issue in dispute is whether or not there should be an independent body to oversee and evaluate all development programs and policies established outside the State Department. Sources said President Obama has shown personal interest in the reviews and has had meetings to talk about foreign assistance reform, but it's not clear at what level of detail.

Senate Foreign Relations Committee chairman John Kerry, D-MA, and ranking member Richard Lugar, R-IN, called for the creation of the new independent group, which would be known as the Council on Research and Evaluation of Foreign Assistance (CORE), in their foreign aid legislation.

"We need a better way to evaluate which development programs work, which have minimal impact, and what factors determine success or failure. Our current system is unable to provide this analysis," a committee fact sheet on the bill explains. "This evaluation group would be based in the executive branch, but it would operate independently under the auspices of an interagency board."

Congressional sources said that they aren't expecting the interim report soon because they were told they would be briefed before the release and no briefing has yet been scheduled.

"State was looking to brief us very soon and now because of the fact that there wasn't a resolution [at the deputies meeting], the schedule is being re-evaluated," one congressional aide said.

Patrick Cronin, a former USAID official now with the Center for a New American Security, said that although the meeting didn't resolve all tensions between the QDDR and PSD, that doesn't mean the process isn't a healthy one.

"It seemed to be a positive meeting on both sides in many ways. But bureaucratically there are some tough fights," he said. "If you make the strong case for development, you are already in tension with a State Department that wants to put all development within the umbrella of State Department policy."

Sources tell The Cable that State is adamant about retaining oversight of development policy and that Secretary of State Hillary Clinton may become personally involved in advocating for that position -- motivated in part by a desire to amass as many budget resources under Foggy Bottom's umbrella as possible. Ultimately, President Obama will have to decide whether to side with State or the NSC, according to these sources, who are not directly involved in the process.

Meanwhile, the question of how the State Department wants to implement its stated goal to "integrate" the diplomacy and development missions is crucial, as many observers worry that development could become subsumed by the State Department's overall foreign-policy agenda.

Paul O'Brian, vice president for policy at Oxfam America, said it was important that both the QDDR and the PSD-7 avoid subordinating long-term development goals like access to education and clean water to U.S. security needs.

"People are going to look very hard at both documents and ask: Is the State Department serious about elevating development or is it politicizing it?"

"You have to be serious about development for development's sake."

USAID is already reconstituting the policy planning staff that it lost years ago and Administrator Rajiv Shah is expected to announce that formally in the coming weeks. But the question of whether or not USAID will get control of its budget, now under the purview of Deputy Secretary Jack Lew, remains unanswered.

The QDDR interim report, which covers "Phase 1" of the process, is not expected to address that issue directly.

"Phase 1 of the process was a strategic thinking exercise involving State, USAID, other U.S. Government agencies, and external stakeholders," reads a new State Department fact sheet on the QDDR. Phase 2 is focusing on the operational and institutional changes required to develop recommendations and put them into practice." 

State says the final QDDR report will be out in September.

The need to reform USAID and the overall U.S. approach to development and foreign aid is the one thing that all sides can agree on.

"Many describe U.S. aid programs as fragmented, cumbersome, and not finely tuned to address the existing needs and U.S. national security interests," the Congressional Research Service wrote in an April 12 report.

"Criticisms include a lack of focus and coherence overall, too many agencies involved in delivering aid with inadequate coordination or leadership, lack of flexibility, responsiveness and transparency of aid programs, and a perceived lack of progress in some countries that have been aid recipients for decades."

NSC spokesman Mike Hammer declined to comment, citing the NSC's policy of not talking about internal meetings.

Ambassador Richard Holbrooke, the administration's Special Representative for Afghanistan and Pakistan, will travel to New York Thursday to undergo angioplasty due to possible clogged heart valves.

Steve Clemons, New America Foundation's foreign policy head and editor of the Washington Note, broke the news with Holbrooke's permission after he informed his staff at meeting Tuesday morning. From Steve's post:

Yesterday at 2 pm, Richard Holbrooke was told that he may have some clogged heart valves -- and is going in Thursday for an angiogram and further treatment in New York. He was supposed to travel with Jack Lew, Rajiv Shah and others with General David Petraeus on a major AfPak trip this week, but will have to forego that trip.

Holbrooke assured me that this kinds of things are routine now. He shared the news with Secretary of State Clinton last night -- and was in the process of contacting General Petraeus during our meeting.

When at the end of his staff meeting he conveyed this personal news to the 50 members of his team, he was very low key and laughing about it. There were looks of concern around the room -- but he looked at them in his paternal way paused and said with a wry grin as if he'd never offered this sort of thing to them before "Come talk to me. I want you to share all of your angioplasty stories with me."

We send along our best hopes and wishes to Holbrooke for a healthy diagnosis and speedy treatment. Holbrooke told Clemons he plans to be back to work on Monday.

As if the endorsement of Defense Secretary Robert Gates weren't enough, the development community has rounded up 50 senior retired military officers to support its drive to shift money and authorities from the Pentagon to Foggy Bottom.

"While our military power can provide the logistics and organizational support to help those in need in times of humanitarian crisis, as demonstrated by our current efforts in Haiti, it can only help create the conditions necessary to allow the other tools of statecraft - our diplomatic, development and humanitarian programs - to effectively address these issues," reads a letter to Congress organized by the U.S. Global Leadership Coalition, a network of more than 400 businesses and non-governmental organizations.

The group is trying to protect the president's $58.5 billion fiscal 2011 budget request as it winds its way through the legislative process. That's the biggest request ever for foreign operations and international assistance, but in this time of fiscal peril, lawmakers are expected to try to use that part of the budget request to fund other priorities.

Among the letter's signatories is retired Gen. Michael Hagee, who was commandant of the U.S. Marine Corps from 2003 to 2006, and retired Adm. James Loy, commandant of the U.S. Coast Guard from 1998 to 2002. Hagee and Loy sat down Tuesday morning to explain their activism on behalf of the diplomatic and development community to The Cable.

Hagee said the letter is remarkable because it represents the opinions of "50 retired three-and-four-star good-old boys," who have seen first-hand the military's encroachment upon traditional development issues, which was unavoidable but now needs to be addressed.

Many have expressed doubt that the State Department has the capacity to take on these missions, such as managing foreign military training or supervising crisis money disbursement.

"But you can't get the capability and the capacity unless you get the resources," Hagee explained.

Loy said the military officials represent a broader swath of senior officers that agree with Gates's pledge to rebalance the tools of American statecraft because using the military to do development is just not the right way to do business.

"Our collective experience from lots of time in uniform and in very significant positions around the world in military jobs have convinced us that the notion of American influence has to be dealt with in multiple ways," he said.

We're hearing that Congress is planning to take up the fiscal 2011 State Department and foreign operations budget bill in May.

While the Sudanese government was busy striking a peace deal with the Darfuri people of western Sudan, back in Washington, Obama's point man on the issue was holding a tense meeting with members of the Darfuri diaspora that has since touched off a fierce controversy.

A coalition of Sudan groups has been complaining that inside the Jan. 26 meeting, which was held off the record at the United States Institute of Peace, Special Envoy Scott Gration -- who outraged Darfur campaigners last September when he said the Khartoum regime was more likely to respond to incentives than threats -- made several statements that veered far from the Obama administration's official policy. Others deny that account.

While the exact content of his remarks are in dispute, "clearly the meeting between Gration and the Darfuris was a disaster," according to one Washington-based advocacy leader, who was not in the meeting but communicated with several attendees.

"Every time Gration speaks, he seems to churn up a whole damage-control exercise," the advocacy leader said.

An open letter (pdf) sent to President Obama in mid-February by 35 mostly smaller Sudan-related groups alleges that, inside the Jan. 26 meeting, Gration said the Sudanese government didn't intentionally kill civilians in Darfur and that the U.S. government is planning to shift some $2 billion in funding from that region to South Sudan. The letter calls for Gration's removal as Sudan envoy.

But according to multiple sources, those groups are twisting Gration's words to make them seem more out of step than they actually were. The Cable spoke with several of the participants in the meeting, all of whom asked for anonymity because they had agreed to keep Gration's remarks off the record. The consensus was that the letter to Obama mischaracterized much of what the special envoy actually said.

It may be impossible to determine exactly what Gration did say, since no transcript exists and there were language and communications difficulties to boot. Only four of the 35 groups in the letter actually had a representative in the meeting, the Washington-based advocacy leader pointed out. Gration's office did not respond to requests for comment.

Several attendees acknowledged there was palpable frustration at the end of the meeting, however, due to a perception that Gration chose mostly to explain his own thinking rather than have a genuine exchange of views.

The differing accounts of the meeting highlight a growing divide among Sudan groups over how to deal with Gration. One faction mostly outside Washington wants to force his ouster, whereas another faction, mostly consisting of larger institutions inside the Beltway, assumes that he's not likely to be thrown overboard any time soon and worries that his sacking would only create a vacuum at a critical time in U.S. diplomacy.

These larger groups hope that before 2011, when the autonomous South Sudan region is due to hold a referendum on whether to secede altogether, the White House will assign ownership of this issue to senior officials in the State Department and the National Security Council, wresting some control away from Gration.

Advocacy leaders worry what might happen if the fragile truce in Sudan falls apart, the South votes for independence, and the U.S. is forced to take sides. They see Gration's reaction to the latest agreement as an indication he is too inclined to give Khartoum the benefit of the doubt.

"We have had agreements in the past; most have failed," Gration said last week in Doha, the Qatari capital. "I think this is different."

Last week, however, U.N. officials accused the government of Sudan of increasing its attacks on Darfur civilians, despite the new truce.

The Millennium Challenge Corporation is getting ready to announce a new deputy vice president for policy, Jim Greene. But a huge proportion of senior appointed positions at the agency remain vacant, held up by the Obama administration's famously onerous vetting process.

Greene, who served for 17 years as an advisor to then Senate Foreign Relations Committee chairman Joseph Biden, will work under Vice President for Policy and International Relations Sheila Herrling, formerly with the Center for Global Development. Greene's long experience on Capitol Hill will be a huge asset to the MCC as its $1.28 billion budget request makes its way through the legislative process.

"Jim brings a wealth of policy and political experience to his position on the management team at MCC," Chief Executive Officer Daniel Yohannes will say in a soon-to-be-released statement.

But MCC's position for vice president for congressional and public affairs is still vacant, as are four other vice president positions at the agency. In fact, Herrling is the only VP in place; the rest of the departments are run by acting VPs. Vacant slots include the vice president for the Office of General Counsel, the vice president for administration, and the chief of staff.

An MCC official told The Cable on background that the White House vetting process was the primary reason for the vacancies. It just takes so long to get choices through the system and receive approval on the other side, the official said.

Two more senior MCC appointments could be coming soon, but "the way things are going, who knows," the official said.

In the Senate, Greene handled legislation on international financial institutions, bilateral investment treaties, tax treaties, development assistance, and international energy and environmental issues including climate change.

Previously, Greene has taught at both Texas A&M University and the University of Houston.

The global health and humanitarian aid communities are pleased but not thrilled by the Obama administration's new budget request, which saw modest although lower-than-expected increases in a number of development accounts.

According to calculations by the U.S. Global Leadership Council, an umbrella NGO for the aid community, the overall international affairs budget will see an entire increase of 2.8 percent over fiscal 2010 in the fiscal 2011 budget request, including supplemental funding. And that's if Congress fulfills the request as is, which is by no means a certainty.

Overall operating accounts for USAID and topline funding for major programs like the Global Health initiative are set to rise significantly in the budget request. But the request signals a shift in priority within the international affairs budget away from longer-term programs and those that have gotten increases in recent years toward smaller, more focused accounts that could show short-term results.

"We are looking forward to Congress accepting this, supporting it in a bipartisan manner as we have seen throughout the last decade," said USGLC's executive director Liz Schrayer. "Particularly when at least 250 members of Congress sent a letter to the president last month calling for a robust international affairs budget."

The budget keeps Obama on track to double U.S. foreign assistance by 2015, said Larry Nowels, a USGLC consultant who worked previously for the Congressional Research Service. The baseline for that promise was a foreign assistance budget of $26 billion and this year's request falls short at about $41 billion. But even that number is somewhat misleading because a lot of the increase is earmarked just for Afghanistan and Pakistan.

"If you look at the 2011 request, it's more than what we anticipated and more than what Obama campaigned on for Pakistan and Afghanistan," he said. "What will be really challenging is getting the rest of the money.... The question is on getting Congress to appropriate the funds."

Larger operating budgets for both State and USAID are a positive step toward another administration pledge, to eventually increase the number of Foreign Service officers by 25 percent. But Deputy Secretary of State Jack Lew admitted yesterday that the timing on this goal has been stretched out in the new budget release.

"We have had to extend the period, but we haven't changed the goal," Lew said Monday. "We need to grow. And I think the budget gives us the ability to continue to grow. And the pace of hiring, you know, will only slow down slightly. It will not be a dramatic change."

The request for the Global Health Initiative, a worldwide program targeting major disease epidemics, was viewed as a mixed picture. The overall account was increased from $7.8 billion to $8.5 billion requested, which is substantial. But within the subaccounts there were winners and losers.

"This budget will get you to about 38 percent of the $63 billion proposal," said Nowels, referring to the overall pledge for GHI funding. "So there is a lot of work ahead and a lot of assumptions at stake that in the next three years you can come up with the additional resources."

Maternal and child health funding is going from $550 million to $900 million, with a lot of the new funds focused on nutrition. Neglected tropical diseases accounts could go from $65 to $155 million, reflecting the priority of that issue in the minds of the administration.

Requests in other areas were more modest. Family planning accounts could receive a $65 million increase, which isn't much, and funding for HIV/AIDs would rise only 2.5 percent in the budget request, much less than previous years' increases.

The $1 billion request for the Global Fund, an international financing institution also focused on major disease epidemics, is actually less than the $1.05 billion Congress gave for that account in fiscal 2010 money.

Nevertheless, the $600 million or 25 percent increase in USAID's part of the GHI and the $460 million or 18 percent increase in what's known as the "development assistance" account show a huge commitment to expanding the development mission, said Sam Worthington, president and CEO of Interaction, a coalition of more than 150 aid organizations. But the modest 2 percent increase in humanitarian assistance is less encouraging.

Despite the rising need for refugee assistance and disaster relief, as evidenced by the Haiti crisis, funding for refugees was cut by 5 percent and USAID's Office of Transition Initiatives was cut by 13 percent. The request for contributions for international organizations would mean an 11 percent decrease or $43 million cut if Congress goes along.

"Interestingly, an administration committed to multilateral work may be looking to work more through the World Bank or other places," Worthington said.

But overall, the increases requests for operating expenses and staffing at both State and USAID are "clearly a signal of intent for building institutional capacity," he added. "They're saying in their request that they want to make a serious investment."

"For the programs that are accustomed to very steep increases, this is the slowing of the growth rate but it's still a growing trajectory," said J. Stephen Morrison, director of the Global Health Policy Center at the Center for Strategic and International Studies, "It's not going to make everyone happy, but it's a pretty robust proposal."

"The one message to take away from this is stay tuned."

As officials at the State Department and USAID continue to wrangle over what to do with America's top development agency, lawmakers are pushing their own ideas for reform. Soon, the State Department could have its first authorization bill since 2002, a policy blueprint that could include significant input from Capitol Hill.

Senate Foreign Relations Committee leaders John Kerry, D-MA, and Richard Lugar, R-IN, introduced a State Department policy bill for both fiscal 2010 and fiscal 2011 today. The introduction comes just days before the release of the administration's fiscal 2011 State Department budget request and in the middle of important foreign operations policy reviews both at State and in the White House.

"This is the first time in eight years that the Foreign Relations Committee will pass a State Department authorization bill, and we do so at a critical moment," Kerry said in a statement. "This is precisely the moment when our investment in diplomacy is most needed and this bill provides our diplomatic corps with essential tools, authorities and resources to succeed in the tough jobs we continually require of them."

Here is the text of the bill and a fact sheet put out by the committee.

The question remains whether or not this authorization bill will become the vehicle for the Kerry-Lugar foreign aid reform bill that their committee marked up in November. That legislation has very different ideas of how to structure USAID than what's expected to come out of the two main reviews related to U.S. development policy, State's Quadrennial Diplomacy and Development Review and the NSC's Presidential Study Directive on Global Development.

Lugar gave a major speech on the Senate's ideas about foreign aid reform at last night's gala event hosted by the Society for International Development, where he emphasized the Senate's view that development and diplomacy should be distinct and separate.

"Differences of opinion exist with regard to who should be performing development functions and how these activities should be integrated into our broader foreign policy efforts. We have not reached a consensus within our government on who should be doing what, where, when and why," Lugar said.

"As we debate these issues, we should keep in mind that diplomacy and development are two distinct disciplines. Although diplomacy and development often can be mutually reinforcing, at their core, they have different priorities, resource requirements, and time horizons."

Lugar's message was basically directed at State Department officials who have been talking about the "integration" of development and diplomacy, an idea that the development community is resisting. Lugar also said USAID must have control over its own budget and policy formations, both functions that were stripped from the agency during the Bush administration.

State's Policy Planning chief Anne-Marie Slaughter tried to allay the fears in the development community about the upcoming QDDR in remarks at an event Thursday hosted by the U.N. Development Programme.

"Integrating is not the bad word that many people fear it is. It doesn't at all mean collapsing development and diplomacy into one another or subsuming one to the other," she said.

But she would not say whether she supported USAID having the authority to made budget or policy decisions on its own.

The entire international affairs budget will be exempted from the spending freeze that President Obama will announce in his State of the Union speech Wednesday night.

When the news broke about the pending freeze, people in the aid community were worried that programs such as global health or food security initiatives might fall under  the "non-security discretionary funding" designation that makes programs subject to the freeze. But those programs are safe from this particular threat.

"The entire 150 account will be exempted," from the three- year freeze, Rob Nabors, deputy director of the Office of Management and Budget said on a conference call Tuesday.

The “150 account” refers to the international affairs budget request, which will be the basis  for the State, Foreign Operations, and Related Agencies appropriations bill. This includes spending on global economic, diplomatic and humanitarian programs by the State Department, USAID, and the Millennium Challenge Corporation, among others.

Of course, foreign-aid programs could be cut anyway; there's no guarantee. Or they could receive only modest increases due to the shift of Iraq and Afghanistan obligations into the foreign ops accounts. Most insiders expect that when the budget request comes out on Monday, the foreign affairs topline will look like a big increase, but non-war related accounts will get little new money.

On the larger picture, the freeze doesn't mean all non-exempted departments will feel the pain. "Not every agency that is subject to the freeze is being frozen," Nabors said. He also brushed off the reservations of some lawmakers, who will surely want to test the boundaries of the freeze.

"I understand the appropriators' initial reaction," said Nabors. "But there's a lot of time before these bills start moving."

The Pentagon has won a major internal battle over control of foreign assistance funding, delaying the Obama administration's pledge to demilitarize foreign policy, multiple sources tell The Cable.

DOD and State have been fighting vigorously over who would be in charge of large swaths of the foreign assistance budget, billions of dollars in total that are used to aid and work with governments all over the world. Both Defense Secretary Robert Gates and Secretary of State Hillary Clinton have emphasized the need to rebalance national security spending away from the military and toward the diplomatic core, but behind the scenes their offices have struggled to determine where the lines should be drawn.

"For too long we have focused more heavily on one of the so-called three Ds - namely defense - and less on the other two, diplomacy and development... And it has been my goal since becoming the 67^th Secretary of State to do all that I could to make sure that diplomacy and development were elevated alongside defense.," Clinton told the U.S. Global Leadership Coalition.

One big chunk of funding at issue is in foreign security assistance, known as the "1206" account, which could total about $500 million next year. This is money used to do things like military training and joint operations with countries outside of Iraq and Afghanistan, such as Indonesia and Somalia.

Since the military doesn't have the lead in those countries, the funding should flow through State, right? Well, not in 2011. The president's budget will keep those funds in the Pentagon's purse in its Feb. 1 budget release, following a pitched internal battle in which the State Department eventually conceded.

"That literally is the result of vigorous arm wrestling within the administration," one source familiar with the discussions said. The battle had been waged primarily between the shops of Under Secretary of Defense for Policy Michèle Flournoy and Assistant Secretary of State for Political-Military Affairs Andrew Shapiro, but finally Deputy Secretary of State Jack Lew got involved.

"Eventually State backed off," the source said. "They're not sure they have the capacity to actually run the 1206 programs."

The capacity issue has hampered State's ability to take over many of the programs it professes to want to own. In a related case, top senators wanted to give State control over another fund, called the Pakistani Counterinsurgency Capabilities Fund, but couldn't do so last year because State wasn't prepared to take on the mission.

"My hunch is there are some real procedural problems that need to be worked out before the shift can take place," Senate Armed Services Committee chairman Carl Levin, D-MI, told The Cable. "There's probably an effort being made to build their capacity so that they are better positioned the next time this comes around," he said, referring to the State Department.

Insiders working on the issue also suggested that State didn't match up bureaucratically inside the fight. The Pentagon just has so many more people and resources to bring to bear, and besides, the State Department's strategy review, the QDDR, isn't complete.

Meanwhile, the window for Foggy Bottom to get its act together may be closing. Despite the internal wrangling, this Pentagon is more willing to give away authorities than others have been or might be.

"The State Department has an unusually strong advocate in Secretary Gates in that regard," Levin noted.

In fact, Gates floated a memo last month proposing that State and DOD share about $2 billion worth of foreign assistance money and administer the accounts jointly. But Hill staffers, who would be the ones appropriating the money, said there was no follow-through. Many saw the memo as a decoy and not really operative in any sense.

Besides the 1206 funds, there are still large accounts in the foreign assistance realm that could be adjusted when the budget request comes out in February. For example, State could be awarded the approximately $1 billion in the Iraqi Security Forces Fund, considering the U.S. Embassy in Baghdad will be taking over large parts of the training mission in Iraq soon.

In one other account focused on development, called the 1207 account, State is expected to be given that $100 million worth of budget authority, which had been housed at DOD. But since the 1207 money was already being spent by State after being channeled through the DOD accounts, that's not really such a big change after all.

Overall, State is expected to receive a hefty increase in its top-line budget request for fiscal 2011, but much of that money will be for Iraq and Afghanistan, allowing little growth in the rest of the State-USAID accounts.

The slow pace of rebalancing national security spending and the lack of a comprehensive strategy for guiding that process is the subject of a new book by former OMB national security funding chief Gordon Adams, entitled Buying National Security: How America Plans and Pays for Its Global Role and Safety at Home.

"The tool kit is out of whack," Adams told The Cable. "There's been a major move over the last 10 years to expand the Defense Department's agenda, which has been creeping into the foreign-policy agenda in new and expensive ways."

Officials from the White House's Office of Management and Budget declined to comment about the budget details ahead of the release.