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A story by Guy Dinmore in the Financial Times (Bush Plans Overhaul of US Foreign Aid System) makes public a rumor that has been circulating in Washington for months: The Bush administration is planning a sweeping reform of U.S. foreign assistance, including bringing USAID under the authority of the State Department.

President George W. Bush's administration is drawing up plans to carry out the biggest overhaul of the US foreign aid apparatus in more than 40 years in an attempt to assert more political control over international assistance, according to officials and aid experts.
The proposed reorganisation could lead to a takeover by the State Department of the independent US Agency for International Development. USAID was established by President John F. Kennedy in 1961, managing aid programmes, disaster relief and post-war reconstruction totalling billions of dollars each year.
Critics in the aid community fear the reorganisation will lead to a politicisation of foreign assistance, where aid will become subordinated to the Bush administration’s drive to promote democracy.
Supporters of the proposed reforms argue that USAID must be brought more in line with policy goals focused on post-conflict reconstruction and democratisation rather than pure development aid where they allege funds are squandered and the agency is driven more by efforts aimed at self-perpetuation.

In fact, the reform is the logical culmination of the paradigm shift enunciated in the September 2002 National Security Strategy, which established development (alongside diplomacy and defense), as one of the 3 pillars of U.S. national security. The aim is to actually put that rhetoric into practice, to ensure that U.S. development policy – and foreign aid more widely – is used strategically to advance broader U.S. foreign policy goals. The place to start, the administration thinks, is by rationalizing the incoherent and fragmented U.S. foreign aid apparatus. Today, U.S. foreign assistance pours out of nearly twenty separate aid spigots across the entire U.S. government, delivering everything from health interventions to law enforcement assistance, each hamstrung by congressional earmarks. The administration apparently wants to channel these multiple U.S. foreign aid streams into several categories that correspond to particular types of states, such as strategic countries (currently covered by Economic Support Funds), fragile and post-conflict states, and countries that are capable of “transformational development.”
Bringing USAID into State is bound to be controversial, particularly among those who would prefer to move in the British direction, toward a fully-fledged cabinet department, a la the Department for International Development (DFID). But since that objective is totally unrealistic in the current Washington environment, bringing USAID into State is clearly the next best move. USAID's problem today is that falls between two stools – it’s neither an independent department able to hold its own in interagency debates nor an institution co-located within the State Department. As a result, it is neither a powerful advocate for poverty alleviation nor an effective instrument U.S. foreign policy. Merging it back into State would at least advance the latter goal.
The big concern within the aid community is that a merger will lead to a further “securitization of the development agenda” – as attacking poverty gives way to the goals of the GWOT and leads to a lot of short-term aid interventions at the expense of building local capacity for sustained growth. This is a real risk. But there is another, more hopeful possibility: that bringing development professionals into State will help to expand the time horizons of foreign policy professionals -- for whom the “long term” is the next month or so – and ensure that policy is formulated alongside the people who will actually be responsible for designing and implementing programs.
All of this may be moot, of course, given the huge legislative obstacles to achieving anything close to the sweeping reform being contemplated. Rationalizing the U.S. foreign assistance structure will require a massive White House led effort, since there are myriad congressional committees whose rice bowls are at stake. Is President Bush really willing to commit his remaining political capital this sort of an effort, given ongoing challenges in Iraq and the approach of mid-term elections? Don’t bet the house on it.

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CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.