Secretary of State Hillary Clinton may be headed for a significant fight with Congress over the future of U.S. development policy, just as USAID takes on its biggest humanitarian mission in years with the crisis in Haiti.

Clinton spent last week laying down her marker for how State wants the overhaul of the government's development effort to look, giving a major speech and presiding at the swearing-in of a new USAID administrator, Rajiv Shah. Over the next few weeks, State's policy review, which has a huge development component, will take shape and major structural decisions are in the offing.

But lawmakers will have their own version of what those changes should look like, and The Cable has obtained a draft version of a report by Senate Foreign Relations chiefs John Kerry, D-MA, and Richard Lugar, R-IN, that lays out their position on foreign aid reform -a position that will very likely be at odds with Clinton's State Department on several key issues, such as how independent USAID should be from State.

"If Hillary's speech was one way for her to foreshadow what will come from the QDDR, this is our way to weigh in," said a Senate aide.  "What we're trying to here is say, ‘here's why we think giving some separation and independence to USAID is important.'"

The main disagreements between Clinton and State and the senators are over whether USAID, and Shah specifically, will be given control over all State Department humanitarian relief functions; whether he will be given real power in the interagency process; and whether the "integration" of development with diplomacy and defense as announced by Clinton will dilute the development mission for the benefit of the other two.

"It is becoming an article of faith in the foreign policy community that development is a third pillar of U.S. national security, but in resources and stature, our assistance programs are poor cousins to diplomacy and defense," says the Senate report.

The report goes into detail about what that means -- a lot more detail than the State Department has offered about how it's thinking about these issues.

For example, the committee wants USAID to take back a lot of the authority it lost under the Bush administration, including control over its policy and budget, which was stripped when State's Bureau of Foreign Assistance (the F bureau) was created. As it currently stands, Shah is the nominal head of the F bureau, but the money is actually controlled by Deputy Secretary of State Jack Lew.

What's more, the committee wants Shah to have a seat a principals meeting, cabinet meetings, a direct line to OMB, and several other privileges. That would be quite a coup for the 36-year-old whiz kid Shah, to be able to sit across the table from giants like Clinton, Robert Gates, and Jim Jones.

But isn't Shah the government's point man for the biggest humanitarian mission in years? Well, the committee has some thoughts on that as well. You see, Shah doesn't really control all the humanitarian relief assets, notably the State's Bureau of Population, Refugees and Migration (PRM), run by Assistant Secretary Eric Schwartz. "Our sense is that since refugee issues and crisis response are interconnected, we think the administratin should consider consolidating it into one entity under Raj," the aide said.

The Kerry-Lugar foreign aid reform bill could be moving in the coming weeks, possibly with all or parts of it being folded into the soon-to-be-introduced State Department authorization bill.

Meanwhile, multiple sources tell The Cable that the National Security Council has agreed to delay issuance of its major development review, called the Presidential Study Directive (PSD), to allow State to release first the interim results of it Quadrennial Diplomacy and Development Review (QDDR).

This again shows how Clinton is maneuvering to make sure State's take on development policy comes out first to frame the debate. The interim QDDR results are expected in February but that's far from certain.

Meanwhile, there's no doubt that the development community is nervous that their lifelong effort to preserve independence from the military and the perennially short-term foreign relations policy game may be coming to a close. "It an ambiguous area right now," one development source said.  "We see a lot of signaling without a clear direction about what will be the role of USAID."

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