The House will mark up a funding bill for the State Department and foreign operations Wednesday that would cut the international affairs budget by billions and restrict U.S. involvement in a host of international organizations.
The House Appropriations State and Foreign Ops subcommittee, led by Rep. Kay Granger (R-TX), unveiled its fiscal 2012 appropriations bill today in advance of tomorrow's markup. The bill would provide State and USAID with $39.6 billion in discretionary funding next year, which is 18 percent, or $8.6 billion, below the fiscal 2011 level. The fiscal 2011 level, which was reached as part of a deal to avoid a government shutdown in April, was already $8 billion less than originally requested by the Obama administration. The State Department did move about $3.5 billion from its regular budget to a new "Overseas Contingency Operations" account for the wars in Iraq and Afghanistan, so the apples-to-apples reduction is closer to $5 billion.
Democrats on the committee and NGO leaders reacted with frustration at the bill's cuts to dozens of State Department and foreign assistance programs, as well as its proposal to slash USAID operating expenses by more than a third.
"I am disappointed that the 2012 State and Foreign Operations Appropriations Act funds priorities that are critical to our national security and global leadership at inadequate levels, and includes divisive and partisan policy riders that are counter-productive to effective diplomacy and development," said subcommittee ranking Democrat Nita Lowey (D-NY) in a statement today. "At a time when the demands we place on our diplomatic and development workforce are increasing, it is short-sighted to downsize the Department of State and USAID."
House Appropriations Committee ranking Democrat Norm Dicks (D-WA) blamed the Republican leadership for not giving Granger enough total funds picture to properly support the development programs.
"Once again the Republican leadership has presented us with a completely inadequate subcommittee allocation that will reduce our influence overseas and damage the security of our nation," he said. "Core program funding in this bill... would mean layoffs at both the State Department and USAID."
The State and Foreign Operations appropriations bill usually enjoys wide bipartisan support, but this year will be an exception. House Democratic aides said that the bill was crafted in a way to satisfy GOP political priorities and without much consideration for comity or consensus across the aisle.
"The decision was apparently made that this would be a Republican bill," one House Democratic aide said.
For employees at State and USAID, the cuts could be particularly biting. The bill cuts the $1.35 billion USAID operations budget to around $900 million and would eliminate what's known as "localization pay" for diplomats abroad, which would immediately bring down their salaries.
"We're starting to see the kinds of cuts that will affect the ability of agencies to implement important tools of our foreign assistance and our foreign policy," said Mark Green, a former U.S. Ambassador to Tanzania and currently senior director at the U.S. Global Leadership Coalition. "We understand that every part of the government is on the table, but what we're looking at here is a very small part of the budget taking significant cuts."
The administration had requested $51.2 billion for State and USAID for fiscal 2012, but nobody is even discussing that number anymore, because the current debt crisis negotiations promise to change the amounts of funding available for all discretionary accounts.
The fluid fiscal situation also spells uncertainty for Granger's bill, which could probably pass on the House floor but would face resistance in the Democrat-controlled Senate. But due to the debt crisis, the Senate isn't planning to start work on appropriations bills until at least September, which doesn't leave a lot of time to work with the House to come up with a compromise before the fiscal year begins on Oct. 1.
The policy riders in the bill include a reinstatement of the Mexico City Policy, which would ban federal funding for organizations that promote abortion. This was also added to the House Foreign Affairs Committee's fiscal 2012 authorization bill, though that piece of legislation isn't expected to become law either.
The bill would defund U.S. contributions to the U.N. Human Rights Council, cap U.S contributions to U.N. peacekeeping at 25 percent of the overall peacekeeping budget (which would put the United States in arrears), blocks U.S. contributions to the U.N. Population Fund, cut funding for programs meant to address climate change, restrict 30 percent of U.S. future contributions to the United Nations until it publishes all of its internal financial audits online (which isn't likely), and rescinds already appropriated funds for the International Monetary Fund.
In a letter sent on Monday to Granger and Lowey, the U.S. Chamber of Commerce urged the committee not to cut funding for multilateral financial institutions or democracy-promotion programs abroad, both of which face cuts in the bill.
"The International Affairs budget and these agencies play a vital enabling role for U.S. companies to tap foreign markets and create jobs and prosperity at home," the Chamber wrote. "Although it represents less than 1.5% of the total federal budget, the International Affairs budget is critical to creating jobs, saving lives, protecting U.S. diplomats and embassies abroad, and fighting terrorism and the spread of weapons of mass destruction."
The committee recommended funding the Overseas Contingency Operations account at $7.6 billion, which is technically $1.1 billion less than requested, but that is because about $1 billion of Pakistan counterinsurgency funding was transferred back to the Pentagon's jurisdiction.
"This bill reforms and refocuses the way we spend our foreign aid. We have established tough oversight and accountability measures that will make sure my constituents' tax dollars are not wasted overseas while making sure we support our national security priorities and key allies," Granger said in a statement. "In this difficult geopolitical and economic climate, the American people deserve policies that are based on our principles."
The House Foreign Affairs Committee just spent two full days and nights marking up a State Department and foreign operations authorization bill in an effort that the committee's ranking Democrat says was a "waste of time" for a bill that has no chance of becoming law.
"There's no doubt that this was a bad bill as it started, and even though we knew it could get worse, we could not imagine it would get as bad as it did," Rep. Howard Berman (D-CA), said in a Friday interview with The Cable.
Berman said that the original draft of the bill, which included sweeping restrictions on foreign aid to countries around the world, was bad enough. But the over 100 amendments introduced by GOP congressmen sent an even more harmful signal to the world, he said -- namely, that the United States wanted to disengage from international forums and punish countries that don't always agree with the U.S. government.
"The thinking [on the GOP side] is, ‘something happens I don't like, and the way to deal with it is I throw a tantrum.' It's a series of tantrums," Berman said. "It's an absence of a notion between what we're doing and what the consequences of what we're doing are. It's operating from a gut instinct and them not using their heads."
What's more, since the bill has so many provisions and amendments that would undo the Obama administration's foreign policy, it's destined to fail in the Democrat-led Senate, much less be signed by the president.
"This bill's never going to be law. We spent from morning until late night, two straight days and hundreds of hours surrounding that markup, dealing with amendments and language on something that will have no impact on U.S. foreign policy because it will never come close to becoming law," Berman said.
He compared it to his time as a student in the Young Democrats movement in college, when the group would have spirited policy debates and issue resolutions just for the sake of theater and practice. "At the end of the day it was just a piece of paper, and that's what this is," he said.
But unlike the Young Democrats of the 1960s, the HFAC markup in 2011 does have a real and negative effect on U.S. power and influence, Berman said, because those watching the debate assume it has real implications.
"It was a waste of time, but people around the world in other countries and other governments don't know that it's a total waste of time and will never become law and they think this is where U.S. policy is heading and they are going to react," he said.
"So even the act of doing this hurt American interests, because it creates anger and hostility and makes all the things we need to do more difficult."
Berman highlighted an amendment to the bill sponsored by Western Hemisphere subcommittee chairman Connie Mack (R-FL) that would withdraw all U.S. contributions to the Organization of American States, calling it a "very extreme position."
Berman also criticized another amendment that would prohibit assistance to countries that vote against America at the United Nations a majority of the time on any and all votes, pointing out that amendment would prevent the United States from sending aid to Jordan -- despite the fact that Jordan is among the most pro-Western Arab countries and a supporter of Middle East peace.
"Passing an amendment to prohibits any assistance in any country where any government votes against us at the U.N. more than 50 percent of the time... whose interest is that serving?" Berman said.
The U.N. amendment would also make aid to Pakistan would be impossible because Pakistan would fall into that category. But Berman pointed out that directly contradicted the committee's message when the committee voted39-5 not to cut off all assistance to Pakistan, rejecting an amendment by Rep. Dana Rohrabacher.
"Faced with an opportunity to cut off all economic aid to Pakistan, they rejected it on an overwhelmingly vote. But in three other amendments that the majority supported, they cut off all aid to Pakistan," he said.
The bill also would impose a ban on funding for international organizations that offer abortion counseling to clients, a version of what's known as the Mexico City Policy. Berman called it the "Mexico City Policy on steroids," because it does not allow exemptions for HIV/AIDS funding.
Some of the bill's provisions that Berman thought most counterproductive were more local. For example, the bill would eliminate USAID's new budget office.
"We want a more efficient and focused development assistance, we want better controls, so let's make sure that the agency that's in charge of this can't function," said Berman, characterizing the provision as "going back to the goal of incapacitating USAID."
A spokesman for HFAC Chairwoman Ileana Ros-Lehtinen (R-FL) said she was unavailable for an interview on Friday due to her travel schedule.
The State Department and USAID are facing their toughest budget season ever as the GOP looks to international affairs accounts for major cuts. But the new Deputy Secretary of State for Management Tom Nides said that the State Department's argument this year will be that international affairs spending is crucial for America's national security and therefore can't be sacrificed.
"Taxpayers want to understand where our money is going. Our view of this is very simple, it is a national security budget," Nides told The Cable in an exclusive interview in his new office on the 7th floor of State's Foggy Bottom headquarters. "Our budget should be looked upon no differently than the department of defense's budget. The DOD budget is a national security budget, the State Department and USAID, likewise."
The Obama administration has long considered State and USAID spending part of the "security" budget, a view that congressional Republicans don't share. Secretary of State Hillary Clinton has been calling for a unified budget that would combine the Pentagon and State Department budgets into one big account, but that idea has yet to gain traction.
Some senior lawmakers, such as House Appropriations State and Foreign Ops subcommittee ranking Democrat Nita Lowey (D-NY) and Senate Appropriations State and Foreign Ops subcommittee ranking Republican Lindsey Graham (R-SC), have been arguing that certain parts of the foreign aid budget are certainly crucial to national security, especially the programs in Afghanistan, Iraq, and Pakistan.
Nides argues that all the funding should now be defended on national security grounds -- regardless of whether or not they are directly related to countries where the United States has troops on the ground.
"Let's be clear, the State Department and USAID have a national security mandate. We are helping countries through Feed the Future, Global Health Initiatives, climate change, economic support funding -- we're doing that because we're building up these countries to be more self reliant and have stronger economies. By doing that, that helps our national security," Nides said.
Already, the Obama administration has subjected the State Department to a disproportional amount of cuts compared to other departments when making budget deals with congressional Republicans. State's fiscal 2011 budget was cut by $8 billion in the budget deal the administration struck in April to avoid a government shutdown.
Meanwhile, the long-term budget announced in April by House Budget Chairman Paul Ryan (R-WI) would cut the budget for international affairs and foreign assistance by 29 percent in 2012 and 44 percent by 2016 -- while increasing the defense budget by 14 percent over the same timeframe.
Administration officials believe their $53 billion fiscal 2012 budget request reflects their first ever Quadrennial Diplomacy and Development Reivew (QDDR), an effort modeled after the Pentagon's QDR, and aligns resources with national security objectives while making tough choices in a difficult fiscal climate.
But there are signs that State is already thinking about giving up some authorities that it struggled to take from the Pentagon as part of the QDDR's overall drive to put diplomats and civilians back in charge of foreign policy. For example, State gave back control of the Pakistani Counterinsurgency Capability Fund (PCCF) in the 2011 budget deal in order to take that money off of its ledger. Nides said that was a one-time deal and State would take back that program next year.
"Fiscal year 2011 was an extraordinary year. The transfer back of [PCCF] funding for fiscal year 2011 [to the Pentagon] was just for fiscal year 2011 only. We don't believe it's an ongoing policy decision," he said.
He also pledged to keep a robust civilian presence in Afghanistan going forward, despite that Clinton recently said that the buildup of civilians there has peaked.
"We've got to keep all this in perspective. There are 100,000 military boots on the ground. We had 300 [civilians in Afghanistan], we're now at approximately 1,140 civilians. It's not easy to sustain the level of civilians in a voluntary situation of the level of talent that we need. Over time, we will see a leveling off to a more normalized number of diplomats," said Nides.
Of the 1,140 civilians in Afghanistan now, about 500 are from State, 300 are from USAID, and the rest come from various other government agencies.
Overall, State will continue to make the argument that international-affairs spending comprises only 1 percent of the federal budget and helps produce new economies that can become markets for American companies and goods.
But the main focus will be to identify America's diplomats and development experts and the front line soldiers in the ongoing battle to keep the country safe and secure, especially as instability due to food shortages and economic turbulence increases around the world.
"You have hungry people, which destabilizes your country. You have a destabilized country, all sorts of bad things happen. State and USAID work to prevent that," Nides said. "This is a very important frame and a very important view.
Almost every GOP legislator and presidential hopeful is attacking the foreign assistance budget, which is under unprecedented scrutiny this year. But former Minnesota Governor Tim Pawlenty may be the only GOP presidential candidate who intends to preserve full funding for U.S. aid abroad.
"These are difficult economic times and you have a significant part of the Republican Party calling for retrenchment. The governor doesn't accept that view and believes we ought to maintain defense spending and maintain the international affairs account," Pawlenty's senior foreign policy advisor Brian Hook said at yesterday's U.S. Global Leadership Coalition conference. "
"Governor Pawlenty believes very much in projecting an American foreign policy that is very much focused on clarity and strength, with the capabilities to back it up. And that means not cutting the international affairs account and defense spending," Hook said.
"Leaders need to be honest with voters and admit that we are not going to pay down the deficit with savings in the [international affairs] account.... He believes a strong and effective civilian capacity can help prevent conflicts before they occur."
Hook, a former assistant secretary of state for international organizations, was part of a panel that also included Mitt Romney advisor Ambassador Pierre-Richard Prosper, Jon Huntsman's advisor Ambassador C. Boyden Gray, and Rick Santorum's advisor Mark Rodgers.
Hook did criticize the Obama administration's use of foreign aid in specific circumstances. For example, he said Pawlenty would not have cut funding for Egyptian democracy programs or condition that aid on whether each recipient had been approved by the Mubarak regime, as the administration did in 2009.
In his June 29 speech at the Council on Foreign Relations, Pawlenty said, "We must redirect foreign aid away from efforts to merely build good will, and we must direct those efforts toward building good allies, genuine democracies governed by free people according to the rule of law. And we must insist that our international partners get off the sidelines and do the same."
Prosper said that Romney believes that soft power has been underutilized by the United States and that, as president, he would use diplomatic, economic, and business tools to effect change around the world. But he also indicated that Romney agrees with at least some of the GOP congressional criticisms about how State and USAID do business.
"[Romney] wants the aid to be focused, he wants to see better coordination," said Prosper, criticizing the fact that foreign assistance programs are now spread across many federal departments. "He feels we can be more effective by consolidating our approach ... where every dollar is spent well and accounted for."
Gray spoke about Huntsman's focus on the domestic situation inside the United States and linked success at home to America's ability to project power and influence abroad, including through foreign aid.
"We have a lot of repair work to do here at home," he said. "There's a sense that our aid programs, our diplomacy, are very less effective than they might be because our own internal model doesn't look like it's so successful at the moment. How can we say that our aid efforts are the solution when we're not doing so well here at home? We have to attend to our own garden as we try to maintain our leadership abroad."
All of the candidates' advisors said democracy promotion was important and also expressed support for more free trade agreements. None of them chose to endorse the idea of a unified national security budget that would join the Pentagon and State Department budgets together, as Secretary of State Hillary Clinton has repeatedly called for.
For its part, USGLC is pushing the argument that foreign aid is a net benefit for jobs in the long run, because building sustainable economies in the developing world creates markets for U.S. companies. Take a look at their adorable new video on the subject, narrated by children, here:
Freshman Sen. Marco Rubio (R-FL) is becoming an increasingly critical and hawkish voice on the Obama administration's foreign policy, but he is actually a supporter of U.S. foreign assistance programs and made the case for maintaining this funding to his constituents last week.
"We certainly have to be more careful when spending foreign aid.... On the other hand, sometimes in the press and in the minds of many, our foreign aid is exaggerated," Rubio said in an online question and answer session on June 29. "It really is a minuscule part of our overall budget and it's not the reason we have this growing debt in America."
Rubio was responding online to a letter from "Will," a 14-year-old constituent in Palm Bay, who asked the senator to consider the needs of people at home before sending U.S. taxpayer money abroad.
"I think it's crazy that we are spending all this money helping others when we are the ones needing help, wrote Will, "I understand others need help, but we've already done so much that we're hurting ourselves."
"Foreign aid is important. If it's done right, it spreads America's influence around the world in a positive way," Rubio responded.
Rubio praised the Bush administration's effort to provide HIV medicine and relief to Africa as a prime example of a successful foreign aid program. He said the program had not only saved lives but had increased U.S. popularity throughout the continent.
"These are allies that in the future can help us, not just in political struggles but who can be our partners in economic trade," he said. "A world where people are prosperous and free to grow their economies and pursue their own dreams and ambitions is a better world for all of us."
Overall, Rubio may not support the Obama administration's handling of the Libya war, its policy toward Russia and China, or its interactions with international organizations. But when it comes to foreign aid, Rubio and the Obama administration are on the same page.
"The real problem in America's spending is not foreign aid, which is a very small part of our budget," Rubio said.
Development funding is under attack, so 50 private corporations are joining together to establish a new mechanism for development advocacy, called the Coalition of International Development Companies (CIDC), which launches today.
"50 firms in development got together to see if there was any way as a coalition to make a case to have a dialogue with decision makers on issues of development," Charito Kruvant, president and CEO of Creative Associates International and chairman of the CIDC executive committee, said in a Wednesday interview with The Cable. "We found ourselves without a public voice and we found that the debate was divisive in the community and we just felt it was time for us to be part of the conversation and to have a unified message that would be helpful to speak with the administration and the Hill."
The firms involved are also members of other large coalitions of development advocacy organizations, but the CIDC is meant to focus on for-profit businesses that have a stake in development but until now haven't felt the need to establish their own advocacy in a public and organized manner.
"When policy decisions are being made at State Department or USAID, we want to have the opportunity to give them our insights," Kruvant said. "We found ourselves being left to the side. We were not at the dialogue table, because we thought naively that results count. But we now need to be sure that the results are shown and communicated."
Over the next few weeks, the CIDC is planning an extensive outreach to lawmakers and administration officials to make the argument that development is a crucial element of national security and economic prosperity. The member companies have so far committed about $300,000 to the effort and are also using their in house legislative staffs and communications staffs to help.
In another recognition of the need to be more public and do more outreach, the CIDC has hired the Podesta group to aid its public relations and media outreach effort.
"This is the critical time for development and it needs to be taken seriously. And the development companies have the experience to be a part of that goal," said Kruvant. She said that the ethos of the organization is to "Get it done, keep it simple, keep it humble, do the work, and increase the resources for the development."
The new fiscal 2012 budget request for the State Department and USAID made some tough choices, including ending or cutting foreign assistance to dozens of countries and delaying the goal of increasing the number of foreign service officers by 25 percent for years. But those cuts could be become much more drastic when Congress takes its turn slashing diplomacy and development funding for next year.
"We recognize that these are exceptionally tight times. With the resources outlined in this budget, the State Department and USAID can continue to protect our interests, project our values, promote growth, and above all, serve our national security," Deputy Secretary of State Thomas Nides told reporters at Monday's State Department budget briefing.
Development advocates praised the Obama administration's new budget request, arguing that it tackled the issue of government waste while still protecting the diplomatic and development programs that are crucial to U.S. national security. But they also warned the request may be dead on arrival in Congress.
"After two years of planning, review and reform, the Obama team has readied itself to make the best case possible for a robust international affairs budget," wrote Anne Richard, vice president of the International Rescue Committee, on the Stimson Center's budget blog.
"The good news: the departments and agencies that run these programs are better prepared than ever before to justify their budgets. The bad news: that may not matter."
The State Department is comparing its fiscal 2012 budget request numbers to fiscal 2010 levels because Congress has not passed a fiscal 2011 budget, even though the fiscal year began Oct. 1. The government has been running on a continuing resolution (CR) since then, which will expire March 4. The House unveiled an extension for the CR, which would provide funding for the rest of the fiscal year. Under the CR, State and foreign operations would receive $44.9 billion in fiscal 2011.
Secretary of State Hillary Clinton met with House Speaker John Boehner (R-OH) on the Hill on Monday morning and emerged from the meeting expressing grave concerns about the House's plans to slash fiscal 2011 spending for diplomacy and development in the 2011 CR, which would set a lower baseline for the 2012 budget as well.
"We would be forced to scale back significantly our mission in the frontline states of Iraq, Afghanistan, and Pakistan, where we work side by side with the American military. We would also be required to roll back critical health, food security, climate change, border security, and trade promotion efforts abroad as well," Clinton said. "We certainly understand the tight budget environment... But the scope of the proposed House cuts is massive."
In a Monday letter to House Appropriations Committee chairman Harold Rogers (R-KY), Clinton wrote that the proposed cuts, "will be devastating to national security, will render us unable to respond to unanticipated disasters, and will damage our leadership around the world."
A news release by House Appropriations State and Foreign Ops subcommittee Chairwoman Kay Granger (R-TX) praised the $44.9 billion figure and said it was a reduction of $3.8 billion, or 8 percent from total 2010 appropriations and a reduction of $11.7 billion, or 21 percent, from the president's 2011 budget request. Granger and GOP congressional leaders are promising to cut Obama's 2012 request even further.
Granger's Democratic counterpart, Rep. Nita Lowey (D-NY), issued a statement on Monday railing against the House Republicans' bill, hammering home the argument that diplomacy and development funding are key to national security.
"Even in these difficult economic times, we cannot afford to enact broad and haphazard cuts to key pillars of our national security. We must not allow our response to an economic challenge to create a national security crisis," Lowey said.
The entire State Department and USAID fiscal 2012 budget request, which can be found here, seeks just over $47 billion, which the Office of Management and Budget notes is a 1 percent increase over fiscal 2010 levels. The president is requesting a grand total of $50.9 billion for U.S. diplomacy and development efforts, after accounting for programs outside State and USAID, such as the Peace Corps, the Broadcasting Board of Governors, and the Millennium Challenge Corporation. That's $3.7 billion -- or 6.7 percent less -- than the $54.6 billion that was requested for the same accounts in fiscal 2011.
Obama is also requesting $8.7 billion in supplemental funding for the State Department and USAID in fiscal 2012, so that they can take on increased roles in Iraq, Afghanistan, and Pakistan. This represents a $2.3 billion increase over the fiscal 2011 request.
"We had to make tradeoffs. We had to cut some things to grow other things," Nides said. "The amount of money we are requesting reflects what we believe are the priorities for this department... This is a national security budget."
The State Department and USAID's plan to increase its cadre of foreign service officers by 25 percent, which was supposed to be completed in fiscal 2012, will now be delayed until at least fiscal 2014.
The administration eliminated or scaled back requested funding for dozens of small foreign assistance programs around the world. The request would eliminate funding for bilateral programs for six countries: North Korea, Tonga, Kuwait, Qatar, Saudi Arabia, and the UAE, for a total savings of $4.5 million. The funds allocated for North Korea -- which was being used to fund non-governmental organizations, not the North Korean government -- could still come out of general funds.
International Military Education and Training (IMET) program funding in the budget was abandoned for nine countries: Equatorial Guinea, Iceland, Kuwait, Madagascar, Qatar, Russia, Saudi Arabia, Somalia, and the UAE. These cuts represent a savings of under $1 million. Foreign Military Financing was eliminated in the request for Chile, Haiti, East Timor, Malta, and Tonga, for a savings of about $5 million.
"We're trying to move our budget toward less very small programs, because we are going to have less money down the road to allocate and we want to make sure we allocate it to the highest priorities," a State Department official said. "So the savings from these cuts are very small but you have to start somewhere."
Funding requested for Mexico assistance is $335 million, $250 million less than fiscal 2010, $282 million of which is designated for the Merida initiative. $400 million is requested for aid to Columbia. Both of these accounts were reduced because the programs are being transferred to more local control, a State Department official said.
Big cuts were proposed to development assistance to over 20 countries, including many in Europe, Eurasia, and Central Asia.
"Countries like Albania, Macedonia, Montenegro, Serbia, Cyprus, Poland, are all countries that we think we just can't afford to give the kind of assistance we have in the past," a State Department official said. "We can't fund everything, everywhere, any longer."
The administration requested $1.55 billion in aid to Egypt and $100 million in aid for the Lebanese Armed Forces, both at about the same levels as fiscal 2010.
Rajiv Shah, head of the U.S. Agency for International Development (USAID), has a message for those in Congress who want to slash development and foreign-aid budgets: Cuts will undermine U.S. national security.
On the heels of a major speech on the coming reforms to America's premier development agency, Shah sat down for an exclusive interview with The Cable to explain his vision for making USAID more responsible and accountable, an effort he said will require increased short-term investment in order to realize long-term savings.
But if Congress follows through on a massive defunding of USAID as the 165-member Republican Study Group recommended yesterday, it would not only put USAID's reforms in jeopardy, but have real and drastic negative implications for American power and the ongoing missions in Afghanistan and Pakistan, according to Shah.
"That first and foremost puts our national security in real jeopardy because we are working hand and glove with our military to keep us safe," said Shah, referring to USAID missions in Afghanistan, Iraq, Pakistan, Yemen, the Horn of Africa, and Central America, and responding directly to congressional calls for cuts in foreign aid and development.
The RSC plan calls for $1.39 billion in annual savings from USAID. The USAID operating budget for fiscal 2010 was approximately $1.65 billion. The RSC spending plan summary was not clear if all the cuts would come from operations or from USAID administered programs.
"That would have massive negative implications for our fundamental security," said Shah. "And as people start to engage in a discussion of what that would mean for protecting our border, for preventing terrorist safe havens and keeping our country safe from extremists' ideology … and what that would mean for literally taking children that we feed and keep alive through medicines or food and leaving them to starve. I think those are the types of things people will back away from."
The interests between the development community and U.S. national security objectives don't always align, and this tension is at the core of the debate on how to reinvigorate USAID. Short-term foreign-policy objectives sometimes don't match long-term development needs, and U.S. foreign-policy priorities are not made with development foremost in mind.
But Shah's ambitious drive to reform USAID seems to embrace the idea that development investments can be justified due to their linkage with national security. He is preparing to unveil next month USAID's first ever policy on combating violent extremism and executing counterinsurgency. He also plans to focus USAID's efforts on hot spots like Afghanistan, Pakistan, Sudan, and parts of sub-Saharan Africa, while transitioning away from other countries that are faring well and downgrading the agency's presence in places like Paris, Rome, and Tokyo.
Shah pointed out that Defense Secretary Robert Gates, Joint Chiefs Chairman Adm. Mike Mullen, and ISAF Commander Gen. David Petraeus have all come out in strong support of increasing USAID's capacity to do foreign aid.
"In the military they call us a high-value, low-density partner because we are of high value to the national security mission but there aren't enough of us and we don't have enough capability," he said. "This is actually a much, much, much more efficient investment than sending in our troops, not even counting the tremendous risk to American lives when we have to do that."
For those less concerned with matters of national security, Shah also framed his argument for development aid in terms of increased domestic economic and job opportunities: If we want to export more, we need to help develop new markets that are U.S.-friendly.
"If we are going to be competitive as a country and create jobs at home, we cannot ignore the billions of people who are currently very low income but will in fact form a major new middle-class market in the next two decades," he said.
One of the main criticisms of USAID both on Capitol Hill and elsewhere is that the agency has been reduced over the years to not much more than a contracting outfit, disbursing billions of dollars around the world to organizations that have mixed performance records. In Shah's view, if Congress wants USAID to eliminate waste, fraud, and abuse, it has to increase the agency's operating budget and allow the agency to monitor contracts in-house.
"It was the Bush administration that helped launch the effort to reinvest in USAID's capabilities and hiring and people, and the reason they did that is they recognized you save a lot more money by being better managers of contracts," Shah said. "We have a choice. We have a critical need to make the smart investments in our own operations … which over time will save hundreds of millions of dollars, as opposed to trying to save a little bit now by cutting our capacity to do oversight and monitoring."
Shah wouldn't comment on the latest and greatest USAID contracting scandal, where the agency suspended contractor AED from receiving any new contracts amid allegations of widespread fraud. But he did say that his office would be personally reviewing large sole-source contracts from now on, requiring independent and public evaluations, and that more corrective actions are in the works.
"I suspect you'll see more instances of effective, proactive oversight that in fact saves American taxpayers significant resources," he said.
As the budget battle inside the Republican Party heats up, a large group of conservative House Republicans called Thursday for a drastic defunding of the U.S. Agency for International Development and a host of other programs.
The Republican Study Committee (RSC), a loose conglomeration of 165 self-identified conservative GOP House members, unveiled their plan Thursday that they argue could save $2.5 trillion in federal spending over ten years. The proposal is centered around legislation that would slash or eliminate federal funding for USAID, the Corporation for Public Broadcasting, the U.S. Trade Development Agency, the Woodrow Wilson Center, the USDA Sugar Program, economic assistance to Egypt, and many other programs.
The RSC plan calls for $1.39 billion in annual savings from USAID. The USAID operating budget for fiscal 2010 was approximately $1.65 billion. The RSC spending plan summary was not clear if all the cuts would come from operations or from USAID administered programs.
The bill is being led by Rep. Jim Jordan (R-OH), the RSC chairman, Rep. Scott Garrett (R-NJ), chairman of the RSC Budget and Spending Task Force. Sen. Jim DeMint (R-SC) is expected to offer a Senate version of the legislation.
The RSC plan also calls for Republicans to fulfill their campaign promise to trim $100 billion from the budget this year by returning "non-security" discretionary spending to 2008 levels in the next funding bill for fiscal 2011, which is needed to keep the government running when the temporary funding bill expires March 4. It would also call for spending to be cut to 2006 levels and then remain flat for the next ten years.
"The current continuing resolution (CR) will expire on March 4th. Under your leadership during the campaign, House Republicans boldly pledged to cut federal spending by $100 billion by returning current spending back to FY2008 levels," read a letter circulated Jan 20 and addressed to House Speaker John Boehner (R-OH). "Despite the added challenge of being four months into the current fiscal year, we still must keep our $100 billion pledge to the American people."
The GOP plan to defund USAID goes even further than Majority Whip Eric Cantor's suggestion last October to halt foreign aid to countries that don't share U.S. interests, but Cantor gave a lukewarm endorsement to the RSC plan Thursday.
"I applaud the Republican Study Committee for proposing cuts in federal spending, and I look forward to the discussion on reducing spending that our country so desperately needs to have," Cantor said in a statement. "I look forward to these cuts and others being brought to the floor for an up-or-down vote during consideration of the CR, and I support that effort."
If the RSC plan was ever implemented, which is doubtful, the State Department would be in the firing line for huge cuts. Ileana Ros-Lehtinen (R-FL) announced, on her first day as chairwoman of the House Foreign Affairs Committee, that she wanted to take an axe to the State Department and foreign aid budgets. Her appropriations counterpart, House Appropriations State and Foreign Ops subcommittee chairwoman Kay Granger (R-TX) has made similar statements in the past.
Reached by The Cable Thursday, an aide to Granger said, "Everything is on the table for potential cuts. We appreciate the RSC's suggestions as a starting point and will consider their ideas going forward."
Of course, "everything" suggests that the defense budget, previously sacrosanct in the GOP, is now part of the debate over cuts. That's one key area where the divisions inside the GOP caucus will come to light, said Tom Donnelly, director of the American Enterprise Institute's Center for Defense Studies.
The House GOP leadership is caught between those in their caucus who want to slash and burn federal spending right now and those who want to have a more protracted debate over spending priorities to make sure key items like defense are protected, he said.
"The GOP House leaders have to take account of their new members. They also understand that the Tea Party impulse is not something they can manage, so they have to respond as well as lead and they can't dictate. It's not like 1994, where Newt Gingrich was a colossus who could dictate the landscape. This is a bottom up shift not a top down," Donnelly said.
The tensions inside the GOP caucus were on full display Wednesday evening, when freshman South Carolina Tea Party Rep. Tim Scott successfully added an amendment to the Republican's budget rule that removed flexibility in timing for the budget cuts. Scott was able to change the language from demanding a "transition" to 2008 levels to insisting that change be enacted right away, as was advocated by GOP Budget Committee Chairman Paul Ryan (R-WI).
The RSC plan is so drastic and extends its projected cuts so far out into the future that its chances for implementation are slim to none, Donnelly said. But the struggle inside the GOP on the issue is real.
"This debate will do a lot to define the nature of what conservatism is, going forward -- whether it's a more libertarian or Reaganite movement," he said. "The House Democrats are largely spectators at this point."
President Obama will unveil his administration's new overarching strategy on global development Wednesday in a speech at the United Nations.
"Today, I am announcing our new U.S. Global Development Policy -- the first of its kind by an American administration," Obama will say, according to prepared remarks. "It's rooted in America's enduring commitment to the dignity and potential of every human being. And it outlines our new approach and the new thinking that will guide our overall development efforts."
The president's speech will place global development in the context of his National Security Strategy released in May, which emphasizes the interconnected relationship of security, economics, trade, and health.
"My national security strategy recognizes development as not only a moral imperative, but a strategic and economic imperative," Obama will say. "We've reengaged with multilateral development institutions. And we're rebuilding the United States Agency for International Development as the world's premier development agency. In short, we're making sure that the United States will be a global leader in international development in the 21st century."
The White House was busy laying the groundwork in advance of the president's speech, touting the highlights of what it calls the Presidential Policy Directive on Global Development (PPD). A fact sheet provided to reporters laid out the basic ideas of the U.S. strategy, which includes a focus on sustainable outcomes, placing a premium on economic growth, using technological advances to their maximum advantage, being more selective about where to focus efforts, and holding all projects accountable for results.
The White House will not release the full text of this initiative, which was previously known as the Presidential Study Directive on Global Development (PSD-7).
On some specific items of contention, the White House has decided that USAID Administrator Rajiv Shah will not have a permanent seat on the National Security Council, as many in the development community wanted. However, he will be invited to attend its meetings when issues affecting his work are being discussed.
An executive-level Development Policy Committee will be created to oversee all interagency development policy efforts, as was outlined in a leaked copy of a previous draft of the new policy. There will also be a mandated once-every-four-years review of global development strategy, which will be sent to the president.
Obama announced the new policy during the U.N.'s conference on the Millennium Development Goals. "The real significance here is the fact that the President chose to unveil this at the U.N. and in the context of the MDGs," said Peter Yeo, vice president for public policy at the U.N. Foundation. "[I]t shows how closely the administration wants to work with the U.N. and U.N. agencies in implementing them."
Development community leaders reacted to the new policy with cautious optimism and a hope that implementation would go as planned.
"President Obama has delivered a big victory for the world's poor, our national interests, and the movement to make U.S. foreign assistance more effective," said George Ingram, a former senior official at USAID and current co-chair of the Modernizing Foreign Assistance Network. "Now the tough task of implementation begins, and we are ready to work with the Administration to ensure that key reform principles are applied and codified in law, because that is the real way to make this policy one of the President's great legacies."
Deputy National Security Advisor for international economics Michael Froman, in a Friday conference call with reporters, defended the White House's decision not to release the entire PPD. "It's general policy that we can release a detailed summary of it, but as I understand it the policy is not to release the PPD themselves," he said.
Development community leaders were nonetheless disappointed.
"We understand that NSC documents like this aren't normally released in full, but there are pitfalls in this approach," said Greg Adams, director of aid effectiveness at Oxfam America. "The Administration should make sure that enough gets out to not only provide the American people with a clear rationale for the new approach, but also make sure that our partners around the world understand how we plan to change the way we work with them."
On a Thursday conference call with development community leaders to preview the release, one senior administration official mentioned your humble Cable guy while requesting anonymity and asking the participants to hold the information close.
"I know that with this group it's a little unusual to do calls on background and embargoed... not that I think anybody on this line has ever talked to Josh Rogin," the official said.
The development community is up in arms about the persistent delays in the administration's two major reviews of development policy, as internal disagreements continue to plague the ongoing efforts to reconcile America's development and foreign-policy goals.
The administration's two major development reviews, the White House's Presidential Study Directive on Global Development (PSD-7) and the State Department's Quadrennial Diplomacy and Development Review (QDDR) are both missing in action as the administration crosses the 18-month mark. The interim report of the QDDR was never released and there's concern the final document might not be ready by the stated September deadline.
The PSD, a draft version of which was first published on The Cable, is being held up by a continuing and mounting disagreement between the White House and the State Department over how to divide power over development between Foggy Bottom and the U.S. Agency for International Development (USAID).
According to administration sources and development-community leaders, the dispute between the National Security Council and the office of the Secretary of State Hillary Clinton came to a head at a principals' meeting in late June, when a near-final version of the PSD was discussed. Clinton, our sources report, refused to sign off on the PSD because she disagreed with that document's determination that USAID should be the lead agency in charge of individual development missions in the field.
Multiple issues are still in dispute between State and the NSC concerning the reviews, including the role of USAID Administrator Rajiv Shah and what level of autonomy USAID will be granted in determining its own policies, budgets, and priorities. Shah has been rebuilding USAID's intellectual capacity, but the aid community fears that Clinton intends to consolidate real power inside her office despite her promise to "elevate" and "integrate" development as the third pillar of national security alongside diplomacy and defense.
Many believe that the White House launched a not-so-subtle salvo at Clinton by releasing a statement on development at the G-8, just days after the contentious principals' meeting, that closely tracks what's known about the PSD and declaring it as U.S. policy before the internal negotiations with State were completed.
Leading development community-voices are now openly venting their frustration with the delays in the process.
"Eighteen months into the administration, the federal government remains abysmally organized to address Haiti, Pakistan and other development challenges," wrote Nancy Birdsall, the president of the Center for Global Development, on the organization's website Thursday. "When it comes to global development, I'd give President Obama and his top advisors an A for strategic vision and a big fat F for failure to get on with it."
In an open letter to Clinton, National Security Advisor Jim Jones, and National Economic Council chairman Larry Summers, Birdsall raised several issues that resonate with development advocates. She called the Millennium Challenge Corporation "pathetically underfunded," lamented that no one seems to know who's in charge of big initiatives on food security and global health, and complained that USAID still has vacancies for several senior staff positions.
Birdsall's calls for giving USAID total independence and cabinet-level status aren't likely to be final recommendations from either the White House or the State Department.
But her overall anxiety about USAID's status is widely shared in the development community. A team of top development leaders including former USAID administrator Brian Atwood wrote today to protest the cuts in the foreign aid budget that Congress is calling for.
"We are grateful for the emphasis the President has placed on development and foreign assistance -- a tradition he continues from President Bush. And we strongly support Secretary Clinton's call to make USAID ‘the premier development agency in the world,' they wrote. "But this goal will only be achieved when USAID's personnel capacity is rebuilt and its funding enhanced."
World Food Prize Laureate Rev. David Beckmann, who co-chairs the Modernizing Foreign Assistance Network (MFAN), told The Cable, "The Obama administration is doing smart and creative things to help hungry and poor people around the world. But they are hung up by organizational confusion, and the president needs to make it clear that USAID, not the State Department, has lead responsibility for development."
MFAN even has a running counter on its website tracking the days since President Obama pledged to release his overall development policy.
Adding to the concern is the fact that two of the lead officials who are in charge of the QDDR will be departing the State Department soon. Deputy Secretary of State Jack Lew has been tapped to become the next director of the White House's Office of Management and Budget. Policy Planning chief Anne Marie Slaughter has made it known that her two-year leave from Princeton will require her to return to New Jersey at the end of the year.
State Department officials assure The Cable that the QDDR will be completed before Lew and Slaughter leave Foggy Bottom. Nevertheless, the delays are having an own effect of their own, said Birdsall.
"Time is not on our side," she told The Cable in an interview. "We're missing in action as a country."
So much discussion of the Iraqi town of Abu Ghraib focuses on the notorious Hussein-era dungeon there and the abuses by American soldiers, that the nearby powdered milk factory goes largely unnoticed. But not by the Special Inspector General on Iraq Reconstruction, which is all over the situation.
"Milk is essential in a balanced diet, especially for a country like Iraq, with an increasing overall population, a large youth population, and a high fertility rate," reads the newest SIGIR report, "However, Iraq does not have the resources necessary to provide dairy products to its increasing population."
Good to know. The report is filled with all sorts of interesting facts about those lactose seeking Iraqis. For example, Iraqis consume 120,000 - 200,000 tons of powdered milk each year, according to USAID.
Still, Iraqis drink roughly half the milk of other Gulf Cooperation Council countries, so powdered milk is really important. And here's the rub: The better the conditions in Iraq get, the more milk they are going to need.
So what else did SIGIR find out? Well, apparently the Iraqi Freedom Fund, a taxpayer funded pool of money, gave $3.4 million to construct a facility that could house new powdered milk production equipment that had sat uninstalled since before the 2003 invasion.
That's when the problems began. First of all, the contracting authority didn't provide enough detailed instructions to the contractor and "allowed the contractor to begin construction with an inadequate design." Next, the contractor didn't properly account for how the factory addition would handle things like plumbing and power.
Oh, and by the way, the walls aren't structurally sound, the steel beams are bending already, the floor is completely uneven, and the roof could cave in if there is too much wind or rain, SIGIR reported.
"This project had no oversight when we went out to visit it and we discovered that the design was flawed and could have resulted in the eventual collapse of the roof," said Special Inspector General Stuart Bowen, in an interview with The Cable.
The SIGIR investigation prompted a complete revamping of the building plan so now the roof won't fall in, he said, adding that such building design problems were prevalent in several of the inspections SIGIR has conducted.
Nice work, SIGIR! They also turned up this interesting bit of UN trivia. Did you know that the Abu Ghraib milk factory was also the target of an inspection only one month before the invasion?
"In February 2003, monitors from the UN Monitoring, Verification, and Inspection Commission made a surprise visit to the Abu Ghraib Dairy Plant in search of signs of biological weapons. The monitors took samples from the dairy plant equipment, but did not report finding any biological weapons at the dairy plant site."
Poison milk, eh? I'm beginning to understand why no one ever found those WMDs.
Office of the Special Inspector General for Iraq Reconstruction
The Cable goes inside the foreign policy machine, from Foggy Bottom to Turtle Bay, the White House to Embassy Row.