The United States Agency for International Development (USAID) is officially an independent federal agency that manages U.S. 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 U.S. 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 U.S. The agency has also been embroiled in numerous controversies, including extensive problems pertaining to its use of contractors.
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 U.S. 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 U.S. 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 U.S. 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, U.S. 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 were Nixon and Eisenhower, and he saw foreign aid as an important tool to achieve this aim.
On September 4, 1961, Congress passed the Foreign Assistance Act (pdf), 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 U.S. Agency for International Development (USAID) as an independent federal entity not under the authority of the State Department.
The 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 the agency, 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 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, the agency 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, the 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-Minnesota) 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 the 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 the USAID. An International Development Institute would be established within the 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, the 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, it became essentially defunct, as the administration provided no staff for the agency, and it faded quickly from the scene. Those administrative powers given to the 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 Condoleezza Rice 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 U.S. intervention.
To remedy these problems, the top official in charge of the 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 the agency hold the dual title of Director of Foreign Assistance, a position with a status level of Deputy Secretary 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 the USAID—about 80% of all such U.S. 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).
In 2007, the USAID launched the Development Leadership Initiative, designed to double the number of Foreign Service Officers by 2012, bringing their rank to 2,000.
In July 2009, under the incoming Obama administration, the State Department launched the first Quadrennial Diplomacy and Development Review (QDDR), a study to be done every four years that analyzes the blueprint for the USAID and State Department diplomatic and development efforts abroad, and initiates reforms needed to increase USAID’s ability to meet development goals.
That year the Senate passed a “Sense of the Senate” requesting the strengthening of USAID and the expeditious nomination of an Administrator to serve as the chief advocate for U.S. development capacity in national security deliberations. The USAID Administrator position remained vacant for almost the entire first year of the Obama presidency, and in July Secretary of State Hillary Clinton called the appointment process “a nightmare” and “frustrating beyond words.” Alonzo Fulgham had been serving as Acting Administrator, but in November, with only a week left for him to legally remain in that position, Dr. Rajiv Shah was nominated as Administrator. He was easily confirmed and sworn in on January 7, 2010. With the USAID under fire for various controversies, Dr. Shah spearheaded an effort to bring overdue reforms to the embattled agency.
In June 2010, the USAID launched a new division called the Bureau for Policy, Planning and Learning (pdf), which is independent of the State Department and whose purpose is to evaluate which crises—from refugee situations to natural disasters and civil unrest— most urgently require the agency's help. Then in November 2010, the agency created the Bureau of Food Security, designed to manage President Barack Obama’s Feed the Future initiative (pdf), USAID’s program to develop the agricultural sectors of various developing countries. It also set up the USAID Forward initiative, which defined a specific action plan to achieve the broader policy goals defined in the QDDR, and to achieve a series of reforms within the agency.
In July 2010, the USAID formed the Development Innovation Ventures (DIV) Fund, for which it received 104 proposals and awarded 13 grants; among the projects were plans for building an affordable fuel-cell powered bicycle, improving rural solar access, and developing a new monitoring platform to reduce election fraud. Also in July, the agency and the State Department kicked off the Foreign Assistance Dashboard, an online means for the public to view State and USAID budget and appropriations data from FY 2006 to FY 2011.
On September 22, 2010, President Obama signed Presidential Policy Determination (PPD) on Global Development, a classified document detailing the planned rebuilding of the USAID as “the U.S. Government’s lead development agency.” In December, Secretary of State Hillary Clinton released the new QDDR, which addressed the bolstering of USAID Foreign Service staffing and planned transfer of health sector assistance back to the USAID from the State Department.
The U.S. 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 D.C., and field offices scattered around the globe, the agency 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 U.S. 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.
USAID programs support efforts to improve Democracy & Governance, Economic Growth & Trade, the Environment, Education and Training, Global Health and Humanitarian Assistance. The agency involves itself with a wide variety of Global Partnerships. Some parts of its work is implemented through cross-cutting programs that cover Transition Initiatives, Private and Voluntary Cooperation, Conflict Management, Urban Programs, Civilian Response, the Cooperative Development Research (CDR) program, Water and Gender Equality & Women's Empowerment.
Presidential Initiatives
The USAID implemented more than a dozen new initiatives at the direction of the administration of President George W. Bush. The administration’s National Security Strategy 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. Additional initiatives have been launched under the administration of President Barack Obama, including the Feed the Future Initiative, the Forward Initiative, and the Presidential Policy Determination on Global Development.
Of the 19 initiatives announced between 2001 and 2007, results from 12 were consolidated by USAID to produce a status report for FY 2004 (pdf). The 19 initiatives launched in those years included:
- Africa Education Initiative
- African Global Competitiveness Initiative
- African Growth and Opportunity Act
- Centers for Excellence in Teacher Training (pdf)
- Clean Energy Initiative (pdf)
- Congo Basin Forest Partnership
- Digital Freedom Initiative (pdf)
- Faith-Based and Community Initiatives
- Feed the Future
- Global Development Alliance
- Global Fund to Fight AIDS, Tuberculosis, and Malaria
- Global Health Initiative
- Initiative to End Hunger in Africa
- President’s International Education Initiative
- President’s Malaria Initiative (pdf)
- Trade for African Development and Enterprise (pdf)
- U.S. President's Emergency Plan for AIDS Relief
- Volunteers for Prosperity
- Water for the Poor Initiative
Country Programs
Asia
With 18 offices in Asia, USAID operates in 25 countries and territories in the region.
Central Asian Republics
South Asia
East Asia
Regional Development Mission for Asia (RDMA)
Middle East
The 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.
Regional Programs in the Middle East and North Africa
Europe/Eurasia
The 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.
Albania
Armenia
Azerbaijan
Belarus
Bosnia-Herzegovina
Cyprus
Georgia
Ireland/Northern Ireland (UK)
Kosovo
Republic of Macedonia
Moldova
Montenegro
Russia
Serbia
Ukraine
Sub-Saharan Africa
The 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 nongovernmental 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 RegionalCentral America Regional
Colombia
Cuba
Dominican Republic
Eastern Caribbean
Ecuador
El Salvador
http://www.usaid.gov/country/honduras/Guatemala
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
From the Web Site of the USAID
According to the United States Agency for International Development (USAID), the top 20 recipients of foreign aid in FY2011 were:
Pakistan $343,698,200
West Bank/Gaza $168,674,476
Haiti $133,601,639
Jordan $100,249,366
Democratic Republic of Congo $92,438,351
Iraq $60,688,407
Afghanistan $57,610,006
Sudan $37,239,593
Ethiopia $27,219,396
Nigeria $23,333,516
Indonesia $17,848,628
Uganda $11,850,768
Georgia $10,405,429
Egypt $8,242,346
Liberia $8,070,512
Kenya $5,580,373
Mozambique $4,379,934
Tanzania $3,134,891
South Africa Republic $1,953,872
Israel $504,696
The USAID states that it works with more than 3,500 companies and more than 300 U.S.-based private voluntary organizations. It spends billions of dollars each year on private contractors that provide a wide range of services that support USAID programs and initiatives. It has been reported that the $5.1 billion was spent by the agency on contracts in FY 2010 and, according to USASpending.gov, during the past decade USAID spent $36.14 billion on more than 61,000 contractor transactions. The top five services paid for by USAID were technical assistance ($18.2 billion), miscellaneous professional services ($2.5 billion), personal services contracts ($1.7 billion), management support ($1.35 billion), and education ($1.15 billion).
The top five contractor recipients of USAID spending between 2002 and 2011 were:
1. Development Alternatives Inc. $3,647,519,505
2. Chemonics International Inc. $2,813,168,276
3. Berger Group Holdings Inc. $2,320,107,560
4. BearingPoint, Inc. $1,943,210,495
5. Creative Associates International $1,865,579,769
The top five contractors for FY 2011 were:
1. Chemonics International Inc $374,181,997
2. World Food Program $330,829,134
3. Partnership for Supply Chain Management $157,700,000
4. Development Alternatives Inc. $128,014,798
5. Family Health International $127,095,245
As an example of USAID contracts, 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 U.S. 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, California, 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, the 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.
Under the Obama administration, USAID implemented the Operational and Procurement Improvement Plan, an outgrowth of the USAID Forward initiative, designed to bring reforms to its contractor outsourcing. The upshot of this appears to be a trend toward increased contracting of local businesses around the globe, and fewer large contracts with major development firms.
In 2011, the USAID more than doubled the number of organizations that it has suspended from receiving new contracts—from 18 in 2010 to 39 in 2011. The Academy for Educational Development (AED), its 10th largest contractor, which held about $640 million in USAID contracts, was barred in December 2010 from conducting additional business with not only the USAID, but also any U.S. government agency. As a result, AED sold its assets and went out of business, with its assets subsequently acquired by FHI 360. USAID’s action against AED was taken due to a Pakistan-based procurement controversy on the part of AED. The increase in contractor suspensions is a result of a 2009 USAID inspector general report faulting the agency’s handling of such suspensions, and USAID’s subsequent intention to respond more vigorously to contractor improprieties. Additional controversies included USAID’s continued use of various contractors in spite of “unsatisfactory” ratings given to those contractors by the agency, and apparent efforts by the agency to cover it up.
According to the FY 2013 U.S. Department of State Executive Budget Summary (pdf) and the FY 2013 Congressional Budget Justification for Department of State Operations (pdf), USAID’s $1.3 billion operating budget includes the following areas of administrative costs for the management of its programs: salaries and benefits, overseas and Washington operations, human capital initiatives, security, and information technology. Funding is applied to the following areas:
Overseas Operations (covers salaries and benefits for overseas $822,900,000
Foreign Service Officers and costs associated with mission
operations in Afghanistan, Pakistan, and Iraq)
Washington Operations (covers salaries, office support, $330,500,000
and advisory services for Washington employees)
Central Support (covers IT, office space, and other mandatory $218,200,000
services for Civil Service personnel in Washington)
Capital Investment Fund (funds improvement of IT systems $134,900,000
and construction of overseas USAID buildings)
Overseas Facilities Construction $104,500,000
Inspector General Operating Expenses $50,500,000
Development Leadership Initiative (supports operational $33,700,000
expenses and salaries, including the recurring costs of
100 Foreign Service Officers)
Information Technology $30,400,000
USA Forward (supports salaries for 70 Civil Service staff $16,000,000
and operational expenses for procurement reform, and
investment in science, technology, and innovation)
Where does USAID's Money Go? (USAID FY 2011 Budgetary Obligations)
The number of contractors barred by USAID has more than doubled this year (by Michelle Jamrisko, Washington Post)
USAID shifts away from large contracts and looks to build internal capacity (by Dave Algoso, Find What Works)
USAID Online Post about Kabul Bank Is Pulled as Classified
In March 2011, the inspector general (IG) for the U.S. Agency for International Development (USAID) issued a scathing report on corruption in the Afghan Central Bank. Two months later, however, USAID pulled the report from its Web site after it decided to retroactively classify some parts of the report.
The IG report said poor oversight allowed a widespread pattern of fraudulent loans to be handed out by the Kabul Bank, which was advised by the Deloitte accounting firm. Deloitte, which had been hired by the USAID, didn’t warn the agency about the shenanigans at the bank. As a result of the fraudulent loans (with no documentation or collateral) to some 207 insiders, including people in parliament and other government officials, the central bank lost at least $850 million and nearly collapsed.
The bank’s former governor, Qadir Fitrat, fled to the United States after he went public about the fraud. President Hamid Karzai of Afghanistan demanded the U.S. extradite Fitrat to face charges, while ignoring any role his own brother, Mahmoud Karzai (a major shareholder), played in the scandal.
Report on Kabul Bank Corruption Is Classified, Taken Offline (by Steven Aftergood, Secrecy News)
Report (U.S. Agency for International Development Inspector General) (pdf)
Fraud at Kabul Bank (by Jean MacKenzie, GlobalPost)
Karzai Says Foreigners Are Responsible for Corruption (by Alissa Rubin, New York Times)
Afghan Bank Commission Absolves President’s Brother in Fraud Case (by Rod Nordland, New York Times)
USAID Doubles the Number of Contractors Barred from Doing Business
Beginning in 2010 and continuing into the following year, the USAID cracked down on contractors failing to live up to their lucrative agreements with the agency. The USAID barred 18 companies in 2010 from receiving new contracts, and during just six months of 2011, another 39 were prohibited from new deals.
The biggest example of the agency’s crackdown was the Washington-based nonprofit Academy for Educational Development (AED). The organization held about $640 million in USAID contracts and grants and had about 2,500 employees in the U.S. and 150 other countries when it was restricted from receiving new government awards. The USAID cited “evidence of serious corporate misconduct, mismanagement, and a lack of internal controls,” as well as “serious concerns of corporate integrity” for cutting AED off from future contracts. AED quickly unraveled after that. Its CEO resigned and four other top executives also left. By March 2011, the 50-year-old nonprofit announced it would sell its assets and dissolve itself.
The Number of Contractors Barred by USAID Has More Than Doubled This Year (by Michelle Jamrisko, Washington Post)
Contract Killer (by Christopher Beam, Slate)
USAID Suspends District-Based Nonprofit AED from Contracts Amid Investigation (by Dana Hedgpeth and Josh Boak, Washington Post)
Contractor Controversy in Afghanistan—Not SPOT On
The federal government in 2009 hoped to do something about weak oversight of contractors working in Afghanistan by requiring them to submit information to a centralized database. Three of the largest federal agencies that rely on contractors were asked to use the Synchronized Pre-deployment Operations Tracker (SPOT) database. The State Department and the Department of Defense agreed to use SPOT, but the USAID balked.
The Government Accountability Office (GAO) urged the USAID to join in, explaining SPOT would help the government better manage and oversee contractors. But the agency said it couldn’t, due to a lack of manpower. To oversee its 10,000 contractors, the USAID had only seven staffers to make sure the government was spending its money properly.
The USAID continued to ignore SPOT the following year. This came as surprising news to one U.S. senator, Claire McCaskill of Missouri, who had a meeting with eight companies performing work in Afghanistan. None of them were filing documents with SPOT, the contractors told McCaskill, because the USAID did not require them to do so.
By 2011, the USAID was still struggling to develop strong management and oversight for its contractors, according to the GAO, putting billions of dollars at risk.
USAID Missing the SPOT on Contracting Oversight (by Samuel Knight, OhMyGov)
Lack of Oversight for USAID Contractors in Afghanistan Is Not a New Story (by Sananda Sahoo, Inter Press Service)
State and USAID Struggle with Contractors, Putting Billions at Risk (by Laurel Adams, iWatch News)
USAID Repeatedly Used Contractors it Rated “Poor”
The U.S. Agency for International Development has repeatedly given contracts to companies that it criticized for doing a lousy job on other projects in Afghanistan. For example, Black & Veatch was given poor ratings by the USAID for helping build a power plant outside Kabul. The contractor also was dinged for its work examining the viability of developing a natural gas field in the Sheberghan region in northern Afghanistan.
When asked by the media about Black & Veatch’s performance, the USAID dragged its feet for a year. As it turned out, the agency gave the company “unsatisfactory” ratings in 2008 and 2009 on the quality of its work, management, and its adherence to a schedule on the gas study. Black & Veatch also were rated “poor” and “unsatisfactory” for its work on the Kabul power plant. The bad ratings did not stop the USAID from awarding a $266 million sole-source contract to Black & Veatch for refurbishing the Kajaki hydroelectric dam in southern Afghanistan.
Another example included DAI, a Maryland-based company that won a $150 million agreement, even though its previous Afghanistan contracts were criticized by USAID’s inspector general. The inspector general faulted DAI for not having an “overall strategy” pertaining to a $164 million contract to promote local governance in the war-torn country.
U.S. Contractor with Poor Ratings Hired for More Afghan Work (by Marisa Taylor, McClatchy Newspapers)
Faulted Firm Gets Afghan Aid Work from USAID (by Ken Dilanian, USA Today)
Struggling for Power in Afghanistan (by Glenn Zorpette, New York Times)
USAID Money Used for Religious Activities
Beginning during the Bush years and continued by the Obama administration, the USAID has directed some of its funding toward religious organizations overseas, provoking both criticism and lawsuits. In February 2010, the American Civil Liberties Union (ACLU) filed a lawsuit against USAID to find out just how much support the agency gave to foreign-based abstinence-only-until-marriage programs. The ACLU went to court after the USAID inspector general reported the agency had unconstitutionally promote religiously infused materials and messages.
The following year, the USAID stirred more trouble when it sought to ease existing federal regulations so it could help fund the construction and upkeep of religious institutions overseas. Current rules forbid taxpayer dollars from being used for the “acquisition, construction, or rehabilitation of sanctuaries, chapels,” or any other houses of worship. Civil rights activists and Jewish organizations opposed the change, calling it a violation of the First Amendment’s Establishment Clause.
Giving federal funding to foreign religious groups has backfired on U.S. officials. In 2009, the State Department gave $36,000 to the Sunni Ittehad Council to organize anti-Taliban rallies. The decision was intended to support what appeared to be a religiously moderate organization in Pakistan. But then the council led demonstrations in support of Mumtaz Qadri, who had assassinated Punjab Governor Salman Taseer.
ACLU Sues To Obtain Information About Taxpayer-Funded Religion In Abstinence-Only Programs Overseas (American Civil Liberties Union)
Should USAID Use Public Funds For Religious Entities Overseas? (by Nathan Guttman, The Jewish Daily Forward)
ADL, Reform Blast Proposed USAID Bid To Fund Houses of Worship (JTA)
US Aid to Sunni Ittehad Council Backfired (By Huma Imtiaz, The International Herald Tribune)
USAID and the Foreign Condoms Controversy
Both the foreign buying and promotion of condoms got the USAID into trouble during 2009 and 2010. For years, the USAID purchased millions of condoms from Alatech, an Alabama-based company, for its overseas public health programs. But in 2009, after enduring delivery problems from its supplier (and claiming that the international community wanted thinner condoms), the agency decided to stop doing business with Alatech.
The USAID turned to condom manufacturers in South Korea, China, and Malaysia. This did not sit well with some in Washington as the nation struggled to produce more American jobs to aid the ailing economy. And the question of quality was also raised (some Chinese condoms were described as thick, uncomfortable, and inferior).
The company, which risked losing 300 jobs, sued the USAID, saying that the agency violated a statutory requirement to buy domestic products. The court remanded the case to “a contracting office authorized to administer this contract” on behalf of the USAID, and a subsequent breach of contract case was thrown out as premature because the agency’s contract administrator hadn’t finalized that contracting decision.
Government Contracting: It’s Amazing What Statutes and Rules There Are That Can Be Violated in a Procurement (by John Ahlers, Ahlers & Cressman)
Outsourced Condom Production Could Shut US Factory (by Ben Evans, Associated Press)
Stimulus? U.S. to Buy Chinese Condoms, Ending Alabama Jobs (by Mike McGraw, Kansas City Star)
Little to Show for Billions in Aid to Egypt
After 40 years and $50 billion in assistance, U.S. 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 U.S. policies in the region, U.S. 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 U.S. 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, the 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.
$50 billion later, taking stock of US aid to Egypt (by Charles Levinson, Christian Science Monitor)
USAID Used to Subvert Governments in Latin America
Critics in Latin America have argued that the U.S. 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 George W. 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. The Obama administration has approved the use of $20 million to fund opposition groups’ campaigns against Chavez in the 2012 Venezuelan elections, the first time a sitting U.S. president has included such an item in the national budget. USAID has funded such opposition political parties as Primero Justicia (Justice First), Un Nuevo Tiempo (A New Time), Acción Democrática (Democratic Action), COPEI, MAS (Movement Towards Socialism). It has been reported that, since 2002, the USAID and the State Department have collectively spent more than $100 million to support media campaigns and opposition candidates working to unseat Chavez.
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 in Bolivia and Venezuela: The Silent Subversion (by Eva Golinger, venezuelanalysis.com)
$20 million in U.S. aid to Venezuela's rightwing opposition for 2012 (by Eva Golinger, DemocraticUnderground.com)
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 the agency.
USAID Inadvertently Funneled American Tax Dollars to Terror Related Groups (by James Rosen, Fox News)
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.
Federal Official Resigns in Escort Service Inquiry (by Matthew L. Wald, New York Times)
Abstinence Bushie Busted! (by Timothy Noah, Slate)
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)
U.S. Foreign Aid Needs to be Reorganized
In May 2008, the InterAction Forum, a collection of nongovernmental organizations, called for Congress to reorganize the rules and procedures that govern the distribution of U.S. foreign aid. They argued for “streamlining, consolidating, and elevating into a more powerful agency” the 20 different government bodies currently involved in foreign assistance.
This kind of foreign assistance reform would in turn facilitate the goal of building “a more integrated, holistic approach” to alleviating poverty from the grassroots level up. Currently, the federal government’s system for foreign assistance is too segmented, InterAction argues. However, poor peoples’ lives are not segmented into issue-categories, and so one of the main objectives of the forum is to develop a more integral way to empower people in terms of environmental challenges, hunger, health, and education.
InterAction’s call for reforms came on the heels of an assessment of the Bush administration’s own reforms of the U.S. Agency for International Development (USAID) and American foreign assistance in 2006. The Carnegie Endowment analyzed the administration’s reforms in Assessing Secretary of State Rice’s Reform of U.S. Foreign Assistance (pdf), by former senior USAID official Gerald Hyman.
Hyman said, “The old system was a fractured, nonstrategic, hodgepodge of bureaucratic satraps in need of a fundamental fix. Greater coherence was certainly necessary. But the Rice reform is deeply, perhaps irredeemably flawed. There were available corrections far short of, and far better than, this foreign assistance reform.”
Hyman’s key conclusions were:
- The new system confuses strategic decisions, which should be made in Washington, with tactical ones better suited to context-knowledgeable field officers. Reforms also require that any change made to a foreign assistance project receive approval from the newly created Director of Foreign Assistance (DFA) position, creating huge potential for gridlock.
- In the quest for greater strategic control, the reorganization actually diminishes Washington’s ability to evaluate the objectives and successes of foreign assistance projects. Detailed narratives which provided rationale for programs under the old system have been replaced by a complex, numbered grid system that lacks critical information, making a serious assessment of projects in Washington difficult.
- The reorganization was led by “core country teams,” the members of which, in many instances, had only a passing knowledge of the country they were to plan for. The implementation process also failed to involve many key stakeholders, including ambassadors, USAID missions, and congressional leaders.
- The reorganization was instituted due in large part to the Secretary’s inability to answer Congressional inquiries regarding U.S. spending on democracy promotion. The new system places an exaggerated emphasis on the ultimately futile attempt to instantly report on U.S. foreign assistance expenditures and detail the outcomes of an $11 billion program.
US Urged to Reform Foreign Aid (by Ida Wahlstrom, One World net)
USAID Pushes for Terrorist-Vetting Program with Contractors
In the summer of 2007, the U.S. Agency for International Development (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.
Considerable opposition was voiced by many NGOs, who complained that PVS violates their neutrality by using them to collect information, turning USAID grantees into investigative arms of U.S. intelligence agencies. Changes were made to the program but opposition remained, so the 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, and in September 2011 it presented NGOs with a plan to proceed with a pilot program in five countries: Kenya, Guatemala, Lebanon, Philippines, and Ukraine.
For PVS:
The USAID and the State Department 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 U.S. 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 allows 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 U.S. 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 Rule Changes Postponed (Global Health Council)
USAID Temporarily Delays Implementation of Partner Vetting System (OMB Watch)
USAID Partner Vetting System will Negatively Impact Organizations (EngenderHealth)
Foreign Aid Groups Face Terror Screens (by Walter Pincus, Washington Post)
USAID Tells NGOs It Will Proceed with Plan to Use Secret Watch List (OMB Watch)
USAID Must Consider Alternative Vetting Approaches (Charity and Security Network)
Partner Vetting System (PVS) Pilot Program Status Report (USAID, U.S. Department of State) (pdf)
USAID Announces Pilot Partner Vetting System in Five Countries (Charity and Security Network)
Henrietta Fore
Henrietta H. Fore served as the administrator of the U.S. Agency for International Development (USAID) from November 2007 to 2009. In that capacity, she concurrently served as the director of U.S. Foreign Assistance, with the equivalent rank of Deputy Secretary of State. Fore was also the first female administrator of the 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.
Fore is currently the Chairman of the Board and Chief Executive Officer of Holsman International.
In addition to her government service, Fore has held leadership positions in numerous international nonprofit 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.
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
- Comments
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