The United States Agency for International Development (USAID) is officially an independent federal agency that manages US foreign assistance to countries recovering from disaster, trying to escape poverty and engaging in democratic reforms. USAID has long had the mission of helping advance the economies and social institutions of other nations. But under the administration of President George W. Bush, USAID has become a tool of US national security, foreign policy and the War on Terrorism. With control of USAID now in the hands of the State Department, USAID’s work in development joins diplomacy and defense as one of three key pieces of the nation’s foreign policy apparatus. USAID claims to “promote peace and stability by fostering economic growth, protecting human health, providing emergency humanitarian assistance, and enhancing democracy in developing countries,” but many critics have argued that some of the agency’s programs have been used by the White House to achieve political goals in countries whose governments are antagonistic toward the US.
Prior to the outbreak of World War II, foreign assistance was not a prime concern of the United States, whose isolationist tendencies prevented policymakers from involving themselves with the status of economic conditions in other countries. But after WWII ended, and US officials saw how ravaged Western Europe was in the wake of the six-year conflict, American foreign policy began to shift dramatically on the issue of foreign aid. Concerned over the threat the Soviet Union posed in exploiting war-torn economies by promoting its socialist message, American officials decided to spearhead several important measures designed to rebuild and develop foreign economies that maintained the capitalist model.
First, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank) were officially created on December 27, 1945, by leaders of the US and Western Europe. These two permanent organizations were set up to provide foreign loans to countries seeking assistance in developing their economies. A more short-term, emergency plan launched by the United States in April 1948 was the Economic Cooperation Act, otherwise known as the Marshall Plan (named after George C. Marshall, commander of the US military during WWII). The goal of the Marshall Plan was to stabilize Europe’s economies to prevent Soviet-backed socialist movements from taking hold in key countries like France, Great Britain and then West Germany.
Although the Marshall Plan ended on June 30, 1951, US officials were still afraid that foreign governments might fall under the rule of Communism. Motivated by this worry, Congress authorized new programs designed to unite military and economic programs with technical assistance. On October 31, 1951, the first Mutual Security Act was adopted, creating the Mutual Security Agency.
In 1953, the Foreign Operations Administration was established as an independent government agency outside the Department of State to consolidate economic and technical assistance on a worldwide basis. Its responsibilities were merged into the State Department’s new International Cooperation Administration (ICA) one year later. The ICA administered aid for economic, political and social development purposes. But as part of the State Department, ICA’s functions were subject to the Cold War policy aims of the department.
Unhappy with the first Mutual Security Act, Congress adopted another in 1954 which blended development assistance, security assistance, a discretionary contingency fund, and guarantees for private investments into one program. Congress then approved yet another Mutual Security Act, in 1957, which lead to the creation of the Development Loan Fund (DLF). This new fund became the lending arm of the ICA. The DLF’s primary function was to extend loans that the Export-Import Bank and other donors were not interested in or prepared to underwrite, namely those repayable in local currencies. The DLF financed everything other than technical assistance but was most noteworthy for financing capital projects.
By 1960, public support for foreign assistance programs had dwindled, thanks in part to the novel, The Ugly American, by William J. Lederer and Eugene Burdick, which described America’s arrogance, incompetence and corruption in Southeast Asia, and how the United States was losing the struggle against Communism.
Foreign aid became a campaign topic in the 1960 presidential race between Richard Nixon and John F. Kennedy. After Kennedy was elected, his administration made reorganization of American foreign assistance programs a top priority. Kennedy was by no means motivated purely by altruism. The President was just as interested in stemming the threat from Communism as was Nixon or Eisenhower, and he saw foreign aid as an important tool to achieve this aim.
On September 4, 1961, Congress passed the Foreign Assistance Act, which reorganized foreign assistance programs into military and non-military divisions. The act mandated the creation of an agency to administer economic assistance programs, and on November 3, 1961, President Kennedy established the US Agency for International Development (USAID) as an independent federal entity not under the authority of the State Department.
USAID became the first foreign assistance organization whose primary emphasis was on long-range economic and social development assistance efforts. The agency unified already existing American aid efforts, combining the economic and technical assistance operations of the International Cooperation Agency, the loan activities of the Development Loan Fund, the local currency functions of the Export-Import Bank, and the agricultural surplus distribution activities of the Food for Peace program of the Department of Agriculture.
Under USAID, development assistance consisted primarily of two programs: (1) a Development Loan Fund whose primary purpose was to foster plans and programs to “develop economic resources” and increase capital infrastructure; and (2) a Development Grant Fund to focus on “assisting the development of human resources through such means as programs of technical cooperation and development” in less developed countries.
Three other significant economic assistance programs were: A guaranty program (now the Overseas Private Investment Corporation) to provide protection assuring United States business against certain risks of doing business overseas; a “supporting assistance” program (now the Economic Support Fund program) to support or promote economic or political stability; and an appropriated contingency fund.
USAID focused on long-term country-by-country planning and a commitment of resources on a multi-year, programmed basis. The new focus of development was to achieve economic growth and political stability in the developing world to combat both Communism and the threat of instability arising from poverty.
One of the first programs undertaken by USAID was the Alliance for Progress. Set up in the fall of 1960 by the Act of Bogota and confirmed by the Charter of Punta del Este (Uruguay) in early 1961, the alliance was a hemisphere-wide commitment of funds and effort to develop the nations of the Americas. The alliance became the basis for USAID’s programs in Latin America throughout the 1960s.
In Asia, USAID’s efforts were aimed at countering the spread of Communism, particularly the influence of the People’s Republic of China. This quickly ballooned into a large program of assistance based on counter-insurgency and economic development in Vietnam, which lasted until the withdrawal of American troops in 1975. In Africa, USAID focused on such initiatives as the “education” of the leadership of the newly-independent countries and meeting other economic and social imperatives.
In the 1970s, USAID struggled to hold onto its funding and support from Congress, which had grown weary of foreign assistance programs in the wake of the Vietnam War. In 1971, the Senate rejected a foreign assistance bill authorizing funds for fiscal years 1972 and 1973. The defeat of the 1971 bill represented the first time that either house of Congress had rejected a foreign aid authorization since before the Marshall Plan. Many lawmakers felt foreign aid programs were too concerned with short-term military considerations and that the aid was a giveaway producing few foreign policy results for the United States.
Attempts to reform the foreign assistance program were led by the House Committee on Foreign Affairs. Assistance for the poorest sectors of developing nations (“basic human needs”) became the central thrust of the reform. To extend assistance directly to the recipient nation’s population, Congress replaced the old categories of technical assistance grants and development loans with new functional categories aimed at specific problems such as agriculture, family planning and education. The aim of bilateral development aid was to concentrate on sharing American technical expertise and commodities to meet development problems, rather than relying on large-scale transfers of money and capital goods or financing of infrastructure.
Senator Hubert Humphrey (D-MN) introduced legislation in 1978 to reorganize the foreign assistance management structure. In the Humphrey bill, an International Development Cooperation Agency (IDCA) would coordinate foreign assistance activities as they related to bilateral programs administered by USAID, multilateral programs of international lending institutions then under the purview of the Department of the Treasury, voluntary contributions to United Nations agencies then administered by the Department of State and food programs then administered by USAID. An International Development Institute would be established within IDCA to address, among other things, private and voluntary organizations and with one of the institute’s constituent parts being the Peace Corps.
The Humphrey bill was not enacted into law. Bureaucratic obstacles within the Executive branch and in Congress operated to limit the statutory impact of the bill to changes in the policy statements contained in the Foreign Assistance Act and less sweeping administrative changes. The IDCA, however, was established by Executive Order in September 1979 by President Jimmy Carter. For a brief time, IDCA assumed some of the powers held by the Secretary of State in dictating how economic foreign assistance was administered. But when President Ronald Reagan was elected, IDCA became essentially defunct, as the administration provided no staff for the agency, and it faded quickly from the scene. Those administrative powers given to IDCA returned to the Secretary of State.
Beginning in late 1988, the House Committee on Foreign Affairs (HFAC) began an examination of the foreign assistance program and in particular the continued relevance of the Foreign Assistance Act. At the same time, numerous outside interest groups also began a similar review. The product of the HFAC review was the Hamilton-Gilman Task Force Report of 1989, which restated many of the same themes that President Kennedy had raised almost 30 years earlier. The report’s major recommendation was to repeal the Foreign Assistance Act and start fresh with an act that was more focused than current law.
The legislation that was drafted by the committee had as its major economic assistance themes economic growth, poverty alleviation, environmental sustainability and promotion of political pluralism. The bill also attempted to be more results-oriented in its approach by streamlining Congressional notification procedures and encouraging a more active role for program evaluation. The draft legislation was vetted informally with the Bush White House which, although leery about the ultimate outcome, did not discourage the process from continuing. But the committee’s leadership was unable to sell the bill to lawmakers, who watered down the legislation until it was little more than a collection of pork-barrel items and certification requirements.
In 1991, the administration of President George H. W. Bush submitted to Congress its own attempt at rewriting the Foreign Assistance Act. Some members of Congress balked at the proposal which would have increased the Executive branch’s power over foreign aid spending, and the plan never went anywhere.
The House Foreign Affairs Committee attempted a compromise by combining elements of its 1989 plan with the Bush administration’s 1991 proposal. But again, stumbling blocks kept a rewrite of the Foreign Assistance Act from being passed. President Bill Clinton took his own shot at revamping federal legislation governing foreign assistance by introducing the Peace, Prosperity, and Democracy Act (PPDA) of 1994, which would have implemented a radical new account structure for foreign assistance programs. The bill never made it out of a House committee and died quietly.
Instead of submitting a plan to rewrite the Foreign Assistance Act, President George W. Bush used his executive authority to drastically alter USAID’s autonomy. On January 19, 2006, Secretary of State CondoleezzaRice announced fundamental changes to the agency, arguing that “the current structure of US foreign assistance risks incoherent policies and ineffective programs and perhaps even wasted resources.” Rice said that existing foreign assistance programs were too fragmented to plan coherent policy or align such spending with foreign policy goals, especially the goal of preventing failed states such as Afghanistan was prior to US intervention.
To remedy these problems, the top official in charge of USAID was moved to a position within the State Department. This effectively ended the agency’s longstanding separation from the State Department by making the administrator of USAID hold the dual title of Director ofForeign Assistance, a position with a status level of DeputySecretary of State. Critics of the Bush administration saw the move as an attempt to give the President even greater control over how foreign assistance is doled out and help shape policy aims geared toward thwarting overseas terrorism.
Rice named Randall Tobias, a former pharmaceutical and telecommunications executive who was serving as President Bush’s AIDS czar, to serve as the new director of foreign assistance for both the State Department and USAID—a move that left foreign aid advocates further shaking their heads. Tobias was given authority over planning, implementing and overseeing all foreign assistance spending by the department and USAID—about 80% of all such US spending, which totaled $19 billion in 18 separate programs. Tobias, however, didn’t last long in this new position after he was implicated in a prostitution scandal (see Controversies).
The US Agency for International Development (USAID) provides assistance throughout the world to help developing countries improve their economic and social conditions. USAID is distributed across sub-Saharan Africa, Asia, the Near East, Latin America and Europe. With headquarters in Washington, DC, and field offices scattered around the globe, USAID works in 100 developing countries and in partnership with private voluntary organizations, indigenous groups, universities, American businesses, international organizations, foreign governments, trade and professional associations, faith-based organizations and other US government agencies.
The types of assistance USAID provides include technical assistance and capacity building, training and scholarships, food aid and disaster relief, infrastructure construction, small-enterprise loans, budget support, enterprise funds and credit guarantees.
Presidential Initiatives
Over the past eight years, USAID has implemented more than a dozen new initiatives at the direction of the administration of President George W. Bush. The administration’s National Security Strategy has placed international development in line with defense and diplomacy as the “third pillar of US national security,” according to USAID. In other words, foreign assistance is viewed as a tool in the fight for the hearts-and-minds of citizens in other countries where terrorist organizations maybe trying to develop and bolster anti-American sentiments.
Of the 19 initiatives announced since 2001, results from 12 were consolidated by USAID to produce a status report for FY 2004 (PDF). Thirteen of the initiatives highlighted by the agency are:
Country Programs
Asia
With 18 offices in Asia, USAID operates in 22 countries and territories in the region.
Central Asian Republics
South Asia
East Asia
Middle East
USAID operates seven country programs and a regional program in the Middle East and North Africa. The Middle East Bureau was created in March 2008 from the former Asia and Near East Bureau.
Europe/Eurasia
USAID efforts in this part of the world focus on fighting international terrorism, opening markets and tackling cross-border issues such as the spread of HIV/AIDS and human trafficking. Regional stability in Southeast Europe and the Eurasia sub-regions remain one of the underlying principles of USAID engagement in this part of the world.
Sub-Saharan Africa
USAID currently has 23 bilateral field missions and three regional missions in sub-Saharan Africa. Regional missions provide vitally needed technical and programmatic support services to client USAID bilateral missions, government and non-governmental organizations (NGOs) and private entities throughout the region.
Latin America and Caribbean Countries
Over the past several years, the Latin America and Caribbean region has faced increasing development challenges that “threaten the national security and economy of the United States.” Contracting economic growth rates, extensive poverty, unemployment, skewed income distribution, crime and lawlessness, a thriving narcotics industry and a deteriorating natural resource base continue to undermine the stability of the region.
Bolivia
Brazil
Caribbean Regional
Central America Regional
Colombia
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
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Afghanistan
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$2.79 billion
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Israel
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$2.38 billion
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Egypt
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$1.70 billion
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Iraq
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$1.56 billion
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Jordan
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$940 million
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Pakistan
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$800 million
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Kenya
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$590 million
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South Africa
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$570 million
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Colombia
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$540 million
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Nigeria
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$490 million
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Ethiopia
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$460 million
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According to USAID, the agency works with more than 3,500 companies and over 300 US-based private voluntary organizations. It spends millions of dollars each year on private contractors that provide a wide range of services that support USAID programs and initiatives.
For example, in November 2004, Booz Allen Hamilton announced it received a $2.4 billion contract from USAID to “help establish sustainable legal and institutional frameworks in transition and developing countries over the next five years.” The Indefinite Delivery Indefinite Quantity contract, called Commercial Legal and Institutional Reform (CLIR), included nine subcontractors: Crimson Capital Corporation; Development Associates; Emerging Markets Group Ltd.; International Programs Consortium; Lark Horton Global Consulting; Mendez England & Associates; National Center for State Courts; QED Group, LLC; and Weidemann Associates. In support of US reconstruction efforts in Iraq, USAID announced in 2004 the awarding of a multi-million dollar Iraq Basic Education contract to Creative Associates International. The contract provided funding up to $56.4 million over 24 months for the company to provide technical assistance to the Ministry of Education, create model schools in each of the 81 sub-districts, train primary and secondary school teachers and procure supplies and equipment for school children of Iraq.
That same year the agency announced a $20 million award to BearingPoint, Inc to assist in reforming tax, fiscal and customs policies as well developing an International Monetary Fund-based monetary policy through building the capacity of Iraq’s Central Bank.
In March 2008, USAID awarded a two-year, $55 million contract to ARD, a subsidiary of Tetra Tech, Inc. located in Pasadena, CA, to improve the economic and social infrastructure in western Afghanistan. The program was part of USAID’s alternative development efforts to promote productive agriculture and shift local farmers away from growing poppies for opium production.
In January 2008, the agency gave Development Alternatives, Inc. a contract to improve economic and social conditions in the Federally Administered Tribal Areas (FATA) of Pakistan. The contract was valued at $43 million over a three-year period, with an initial funding of $15 million.
In August 2007, USAID
awarded
six companies a $200 million, five-year contract designed to support the President’s Emergency Plan for AIDS Relief. The six companies were Abt Associates, BearingPoint, Booz Allen Hamilton, Management Sciences for Health, Social Sectors Development Strategies and the Training Resources Group.
Little to Show for Billions in Aid to Egypt
After 40 years and $50 billion in assistance, US foreign aid to Egypt had done little to reform the longtime ally in the Middle East. The money has long been used to bolster Egypt’s stability, support US policies in the region, US access to the Suez Canal and peace with Israel.
But some critics questioned the aid’s effectiveness in spurring economic and democratic development in the Arab world’s most populous country. “Aid offers an easy way out for Egypt to avoid reform,” said Edward Walker, the US ambassador to Egypt from 1994 to 1998. “They use the money to support antiquated programs and to resist reforms.”
Egypt’s economy has been deeply troubled. Unemployment has climbed to 25%, foreign investment is at a 20-year low and the currency was losing value. Rather than helping, American aid was “depressing the need for reform,” according to Walker.
The Hosni Mubarak regime had done little to advance political reform and democratic pluralism. “[USAID] is distributed by the Egyptian government in an anarchic way, through personal contacts and political influence,” claimed one Egyptian official.
Each year USAID gives $200 million to the Egyptian government in cash handouts to do with as it pleases. The money is theoretically conditional upon economic reforms in problem areas such as deregulation, privatization and free trade.
USAID Used to Subvert Governments in Latin America
Critics in Latin America have argued that the US government has used USAID programs to “penetrate and infiltrate all sectors of civil society” in countries deemed either an economic or strategic interest. In Venezuela, which is led by President Hugo Chavez, a highly outspoken critic of President Bush, USAID has spearheaded “counterrevolutionary subversion” in the country. As of June 2007, more than 360 “scholarships” had been granted to social organizations, political parties, communities and political projects in Venezuela through Development Alternatives Inc., a USAID contractor.
USAID also had funded opposition political parties, such as Primero Justicia (Justice First), Un Nuevo Tiempo (A New Time), Acción Democrática (Democratic Action), COPEI, MAS (Movement Towards Socialism).
Another USAID contractor, Freedom House, had sponsored events such as “The threats to freedom of expression in the 21st century” involving Marcel Granier, president of the television station RCTV, who was implicated in an aborted coup against Chavez, and Karen Hughes, the Under Secretary of State for Public Diplomacy and Public Affairs and close friend of President Bush.
In Bolivia, USAID had focused its efforts on combating and influencing the Constituent Assembly and the separatism of regions rich in natural resources, such as Santa Cruz and Cochabamba. A USAID program supported autonomy for certain regions of the country in an attempt to destabilize the country and the government of Evo Morales.
USAID Provides Help to Terrorists
In 2007 the inspector general for USAID released a report that concluded the agency’s policies and procedures were not sufficient to prevent aid from winding up in the wrong hands—namely terrorists. The audit was triggered after gun battles at Islamic University in Gaza pitted Fatah forces loyal to Palestinian President Mahmoud Abbas against their rival, Hamas, which controls the university and had been designated a terrorist group by the United States. After the shooting stopped, Fatah displayed large caches of weapons recovered from inside the university, and the Washington Times reported the school had received more than $140,000 in USAID funding.
The audit found two other troubling cases. USAID learned it had granted $180,000 to a Bosnian group whose president had been on a “watch list” since 1997. Also, a man sentenced to four years in prison for lying about his dealings with a disciple of Osama bin Laden had been part of a group that received $1 million from USAID.
USAID Head Resigns After Prostitution Disclosure
Randall L. Tobias, USAID’s top official, resigned in 2007 after it was revealed his name had come up in an investigation of a suspected Washington prostitution ring. Tobias publicly acknowledged being a customer of the escort service, but insisted he had only been provided “massage services.”
Tobias, a former chairman and chief executive of Eli Lilly & Company and AT&T International, was a major donor to various Republican campaigns. Before being appointed to the leadership of USAID by President Bush, Tobias had served as the administration’s AIDS czar, during which time he advocated for a policy that emphasized abstinence to help stem the AIDS crisis. “The heart of our prevention programs is what's known as ABC: abstinence, be faithful, and the correct and consistent use of condoms when appropriate,” remarked Tobias at the time.
USAID Computer Hacked with Porn
In December 2007, the USAID server in Tanzania was hacked, causing it to be filled with pornography links. An USAID official was quoted as saying, “We do have security standards written into all our (Web-hosting) contracts. … Those standards were broken in this case … and we are reviewing the contract.”
USAID Tanzania server hacked
(by Michael R. Farnum, Computerworld)
USAID Pushes for Terrorist-Vetting Program with Contractors
In the summer of 2007, USAID announced plans to implement a sweeping information-gathering and recordkeeping measure called the Partner Vetting System (PVS). The measure, known internally as the Anti-Terror Vetting System, would screen individuals, officers or other officials of nongovernmental organizations (NGOs) who apply for USAID contracts, grants, cooperative agreements or other funding. The new system would require all organizations working with the agency to submit detailed information about their personnel including full name, date and place of birth, government issued identification information, address, phone and fax numbers, country of origin and/or nationality, citizenship, gender and profession.
After considerable opposition was voiced by many NGOs, USAID agreed to delay implementation of the rules to gather more public input. In the spring of 2008, the agency announced it intended to move forward with PVS, which alarmed many NGOs despite some changes made to the program.
For PVS:
USAID and the Bush administration insist the new system is needed to ensure that no American tax dollars go towards helping terrorists or their allies. Members of Congress also have called for some kind of information-vetting program. A 2005 Government Accountability Office study of the West Bank and Gaza assistance program found inconsistencies in its implementation, particularly with AID’s scrutiny of sub-awardees and consulting agreements. AID’s office there responded by collecting more complete biographical data and verifying information provided by awardees.
AID officials told the GAO that six organizations that had been cleared to receive US assistance were later found to have possible links to terrorists, including Hamas. One group never received any funds, three of the projects had already been finished, one contract was canceled, and the remaining one was cleared to continue after further investigation.
One significant change to PVS that was added in the spring of 2008 will allow applicants that are denied a grant to appeal within USAID.
Against PVS:
NGOs have protested this proposal, claiming there has been no evidence that USAID funds are going to terrorist organizations. They point to a USAID Office of Inspector General report (PDF) that stated, “OIG oversight activities … did not identify any instances where terrorist organizations received USAID funds.” Instead, opponents argue USAID audit procedures should be enough to prevent terrorist financing.
NGOs oppose the vetting system because it would violate civil rights protected by the Privacy Act; put the lives of American citizens and foreign nationals working for NGOs at greater risk because staff may be perceived as representatives of US law enforcement or intelligence-gathering agencies; violate organizational policies and practices that demand protection of privacy of staff and board members; potentially violate the privacy laws of the countries in which NGOs work; and add undue administrative burden, draining time and attention from critical work
Background:
USAID Tells NGOs It Will Proceed with Plan to Use Secret Watch List
(OMB Watch)
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Founded: 1961
Annual Budget: $4.6 billion
Employees: 8,000
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United States Agency for International Development (USAID)
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Fore, Henrietta
Administrator
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Henrietta H. Fore has served as the administrator of the US Agency for International Development (USAID) since November 2007. In this capacity, she concurrently serves as the director of US Foreign Assistance. Fore is also the first female administrator of USAID.
Fore has a Bachelor of Arts degree in history from Wellesley College and a Master of Science degree in public administration from the University of Northern Colorado. She has also studied international politics at Oxford University and studied at Stanford University Graduate School of Business.
Earlier in her career, Fore worked in the private sector, as chairman and president of Stockton Wire Products, a manufacturer and distributor of steel products, cement additives and wire building materials for the American and European construction industries. She served on the corporate boards of the Dexter Corporation and HSB Group Inc.
Fore was first appointed to USAID by President George H. W. Bush in 1989, serving as assistant administrator for private enterprise and then as assistant administrator for Asia. She left in 1993.
Fore joined the administration of George W. Bush in 2001 as director of the United States Mint in the Department of Treasury. She held this post until August 2005, when she was appointed Under Secretary of State for Management.
In addition to her government service, Fore has held leadership positions in numerous international non-profit organizations. She was a trustee and executive committee member at the Center of Strategic and International Studies; chairman of the Audit Committee and member of the Executive Committee of the Aspen Institute Board of Trustees; and trustee or director of the Asia Society, The Asia Foundation, The Institute of the Americas and the United States Committee of the Pacific Economic Cooperation Council.
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