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Before his tenure at CGD, Steve was deputy assistant secretary of the U.S. Treasury for Africa, the Middle East, and Asia from 2000 to 2002. He left CGD to become chief economist for the U.S. Agency for International Development.
Senior fellow Steve Radelet testifies before the House Foreign Affairs Subcommittee on Africa and Global Health about the challenges and opportunities to reform U.S. foreign assistance to Africa.
Download the testimony
From Radelet's testimony:
The Obama administration, Congress, military leaders and American voters have recognized that strong development policies and programs are critical to enhancing the U.S image in the world, achieving our foreign policy goals and increasing our national security. To reap these benefits from development, however, we must work with international partners and recipient governments in ways that demonstrate impact on the ground and show that we are reaching our key objectives in developing countries: stimulating economic growth and poverty reduction, promoting political stability and responding to humanitarian crises.
USAID IN THE 21ST CENTURY HEARING before the COMMITTEE ON FOREIGN RELATIONS UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS FIRST SESSION
Wednesday, April 1, 2009
Time: 9:30 A.M.
Place: 419 Dirksen Senate Building
The Millennium Challenge Corp. (MCC) has received wide praise for its innovative approaches to aid allocation and delivery but has not yet reached its full potential. Now, with the transition to a new administration, the MCC must take bold steps to achieve greater effectiveness, clarity of purpose, and integration with the broader U.S. foreign assistance framework. CGD analysts Sheila Herrling, Steve Radelet, and Molly Kinder offer timely suggestions, including introducing smaller, multiple compacts, reorienting the Threshold Program, and focusing exclusively on low-income countries.
CGD senior fellow Steven Radelet discusses how the IMF can be helpful to low-income countries that have maintained macroeconomic stability for several years and no longer require IMF financing. He suggests that the Fund move toward greater use of non-funded programs and play a less dominant role in overall conditionality, while continuing to work with countries to ensure an appropriate macroeconomic framework. He argues, however, that the Fund should not provide grants to these countries.
In a related paper (A Stability and Growth Facility -Working Paper 77), Nancy Birdsall and Kemal Dervis propose an IMF Stability and Growth Facility to help high-debt, mostly middle-income countries maintain credibility in the markets through fiscal discipline, in part to reduce their debt burden, while also addressing longstanding social needs.
A proposal calling for what amounts to a complete makeover of U.S. foreign assistance was launched Tuesday at a packed event on Capitol Hill featuring remarks from elected representatives from both political parties and the House and Senate. New Day, New Way: U.S. Foreign Assistance for the 21st Century is an urgent call for reform from members of the Modernizing Foreign Assistance Network, a group of the prominent foreign policy and global development experts who work in a variety of academic, policy, development and advocacy professions. CGD senior fellow Steve Radelet and Gayle Smith, a senior fellow at the Center for American Progress, are co-chairs of the Modernizing Foreign Assistance Network.
New Day, New Way argues that foreign assistance is a key element of U.S. foreign policy and the national interest but needs a dramatic overhaul to meet today's global challenges. It urges the next president, Congress, policymakers and the American people to take specific steps to bring U.S. foreign assistance up to date. The legislators attending expressed similar views.
New Day, New Way: U.S. Foreign Assistance for the 21st Century Proposal
Chronicle of Philanthropy Article
Other CGD Resources
Modernizing U.S. Foreign Assistance Initiative
A Funny YouTube Video about Foreign Assistance?
Video of the Report Launch
House Foreign Affairs Committee Chairman Howard Berman (D-CA) said he was energized and “flabbergasted” at the large turnout for the event—more than 250 people packed into the Rayburn Building’s House Foreign Affairs Committee hearing room. “I will take a very serious review [of this report],” he said. “It is my firm belief that this won’t just be another process of stating how we want the world to be. It will be a pick-up-and-run-with-it report,” he added.
Sen. Hagel (R-NE), a member of the Senate Foreign Relations Committee, said New Day, New Way covered “the most important issues that will face our country and world over the next 20 to 25 years” and that the reforms it advocates could help to reintroduce America to the world. “I have never believed that foreign assistance should be viewed as welfare,” he said. “It is an investment in America’s role in the world; an investment in stability in the world; an investment in a more peaceful world; and clearly in the interests of America to do this wisely.”
Rep. Nita Lowey, chairwoman of the House Appropriations Subcommittee for Foreign Operations, welcomed the report and the remarks of her congressional colleagues, saying that development issues are more critical than ever to U.S. foreign policy. “It is in the interest of the United States of America to pursue rigorous aid and development programs,” she said, adding that in order for this to happen “the diffusion of resources and responsibilities across agencies and departments must be examined.”
Citing the findings of the report, Radelet said that although some recent programs, such as those to fight HIV/AIDS and the Millennium Challenge Account, are welcome, the system as a whole is badly outdated. “At this point, no band aid approach can be effective," he said. "The organization, policies and practices of U.S. foreign assistance must be fundamentally overhauled to meet the challenges of the 21st century." Steps recommended in the report include articulating a U.S. national global development strategy, passing a new foreign assistance act as part of a "grand bargain" between the executive branch and Congress, streamlining organizational structures (ideally into a cabinet-level department for global development), and increasing funding and accountability for foreign assistance.
Smith said that the American public and foreign policy experts understand the importance of supporting development and poverty reduction abroad more clearly now then aver before. “People understand that this is both a moral imperative and a prerequisite for sustained U.S. national security," she said. The Foreign Assistance Act is badly in need of an overhaul because more than four decades have passed since President Kennedy signed it and "recent changes have brought more chaos than clarity," she added.
In her remarks, Rep. Lowey drew attention to an amendment to the 2009 defense authorization bill that she, Rep. Berman and Rep. Skelton (D-MO, and chairman of the House Armed Services Committee) have proposed that would establish a 12-member panel to review how the Defense and State departments, as well as USAID, collaborate on national security issues. The amendment was passed in the House and awaits Senate attention. Rep. Lowey said “now is the time for us to look at foreign assistance” and reinvent it to reflect the challenges and needs of the 21st century.
The New Day, New Way report says that U.S. foreign assistance has served the national interests in three ways: enhancing national security, expanding global economic opportunities, and promoting American values. "These interests are mutually reinforcing, and when the U.S. pursues them each strategically and in tandem it positions itself as a pragmatic and principled world leader," Radelet said.
The Millennium Challenge Corporation (MCC) currently uses 16 indicators of governance and policy performance to determine a country’s eligibility for Millennium Challenge Account (MCA) finance. The MCC is proposing several changes to its selection process this year. While most of these changes are modest, the addition of two natural resource management indicators, as "supplementary" data initially, is significant. This note focuses on the natural resource indicators; a subsequent analysis will examine the other proposed changes and the implications for country selection.
Read Sheila Herrling's Blog post: Shape the Debate on the MCC's FY2007 Eligibility Criteria
For all CGD research on the Millennium Challenge Account visit our MCA Monitor
Read MCC’s September 11, 2006 press release on the addition of the two new indicators