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Steve Krasner, Director of Policy Planning Staff at the Department of State, spoke on Transformational Diplomacy on Friday before a standing-room-only crowd at a CGD event (transcript) He argued that the creation of a new Deputy for Development in the State Department reporting directly to the Secretary of State Condoleezza Rice, announced the day before, would strengthen not weaken USAID and thus the effectiveness of U.S. foreign aid programs.

His logic: Development aid is about helping developing countries become "responsible sovereigns" (think Afghanistan and September 11, or Pakistan as the source of nuclear proliferation). So, he seemed to imply, national security is now mostly about development, and development is a national security imperative.
The theory is sound. That's why almost two years ago, the CGD-sponsored Commission on Weak States and U.S. National Security published a report (On the Brink: Weak States and U.S. National Security) that urged creation of a Cabinet-level Department of Development -- because development is a security imperative.
But much of the development community is skeptical about the new proposals, which stop well short of creating an independent Cabinet-level department. And some practical implications of the plan are indeed worrying. Development and foreign aid experts fear that this modest step ("transformation-lite" it has been called), will mean that U.S. aid money for intended for "long-term development" will instead be used for "short-term diplomacy." This is essentially the argument put forward in the past few days by my colleagues Stew Patrick and Steve Radelet and by Carol Lancaster, a CGD Board member (see these recent postings here).
We may find out quickly whether they are right. In Bolivia, the first ever elected President from the indigenous community, inaugurated yesterday, threatens to undo U.S.-financed coca eradication and upend privatization and other market reforms. Yet President Morales is also a pragmatist who has been trying to calm private investors. He will need plenty of help to address centuries-long problems of social injustice. (See NYT: For Bolivian Majority, A New Promise - password required).
Will Randall Tobias, the Director of Foreign Assistance and Administrator of USAID, have a major voice in shaping the U.S. strategy in Bolivia? Will Tobias influence use of Millennium Challenge Account money there (see MCA Monitor Bolivia page for the country’s current MCA status). Will USAID and State Department "security" money be redirected from coca eradication to rural roads, health, education and agriculture programs? Or will aid policy and money be used to reinforce the traditional and largely singular U.S. emphasis in the Andes on the drug war?
What about Pakistan? Will Tobias succeed in moving some of the money that supports military programs in Pakistan (and in Uzbekistan) to, say, co-financing of World Bank programs in provinces that are performing well in transparent results-based management of their health and education expenditures? Will Tobias, for that matter, have any influence on the extent and nature of U.S. coordination and cooperation with other major donors in Pakistan (where to date the U.S. has been, frankly, retrograde)? How will USAID resources be deployed the next time there is a social or political crisis in Kazakhstan, Tajikistan and the other stans of Central Asia?
Of course what is actually needed is a major overhaul of U.S. foreign assistance. Steve’s post (Sec. Rice’s Aid Reform Plan Falls Short and Carol Lancaster's Op-Ed in the Financial Times (see USAID and State = FEMA and Homeland Security) are right to complain that this announced "reform" is far from enough. Will this immediate change -- what looks from outside like a tweaking of reporting relations inside the State Department -- make subsequent fundamental reform politically and bureaucratically more, or less, likely?
It is clear the architects of the State Department effort feared proposing any change that would require legislation. And it is true that without a very big push from the White House, Congress would not treat any big reform of foreign aid well now, especially in view of the poor experience of the Department of Homeland Security and continuing controversy over the inter-agency management of U.S. intelligence. In the absence of support from President Bush, maybe this change is the best we can expect. That’s too bad, another opportunity for real leadership lost...

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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 is a nonpartisan, independent organization and does not take institutional positions.