A New Model for U.S. Foreign Assistance

Inception of Modern Foreign Assistance

Since the end of World War II, one of the key goals in U.S. foreign policy has been providing different forms of assistance to countries in need. One of the major post-World War II foreign aid programs was the Marshall Plan, designed to re-build the war-ravaged European continent. The goals of the Plan were to restore Europe to a state of self-sufficiency, rather than create a permanent source of funding. American political interests were also at stake with the potential advancement of communist Soviet Union into Europe. The Plan was set with a finite timeline of four years, and certain amounts of money allocated by the U.S. government. Congressional funding for the plan ended in 1951, partly due to other U.S. foreign policy priorities, such as the Korean War taking over. During the 1950s, there were various other aid programs, such as the Development Loan Program and the Food for Peace Initiative. Such programs were scattered and criticized as not entirely effective and coherent.

In 1961, the Kennedy Administration concluded that in order to generate public support and renewed push for interest in foreign assistance, any effort had to be newly created and separate from the bureaucratic and not widely understood efforts of the 1950s. This resulted in a foreign assistance initiative with three stated goals: to completely revise the existing plans which were not well designed or implemented and therefore unlikely to solve issues in the developing world as intended; to consider that the collapse of fragile economies in the rest of the world would have adverse consequences to the U.S.; and to establish interim assistance to move lesser developed countries into a state of self sufficiency. These premises resulted in the next major foreign aid initiative, the Foreign Assistance Act of 1961. The Act also created the U.S. Agency for International Development (USAID) to administer foreign aid allocated by Congress. A series of amendments in the early 1970s revised aid programs to focus more on providing U.S. training and expertise rather than just government to government transfers of money. The Act remains substantively the same since then.

There were multiple priorities of U.S. foreign assistance at that time as there are now. However those priorities have shifted over the years, with two major points of adjustment occurring, first in 1991 after the collapse of the Soviet Union and next in 2001 after the terrorist attacks of September 11. The status and staffing of USAID has also ebbed and flowed over the last couple of decades. Next year, 2011, marks several anniversaries: 20 years after the final disillusion of the Soviet Union, 10 years since the terrorist attacks on the World Trade Center and 50 years since the enactment of the original Foreign Assistance Act of 1961. These timelines also serve as a marker for a serious evaluation of our foreign aid policies, what they have achieved so far, what goals we hope for them to achieve in the next 50 years, and most importantly, how we can shape these policies in a manner most likely to achieve these goals.

Reviews of Foreign Aid

There are established critics of the model of foreign aid generally. Noted aid-watcher, Bill Easterly, has long advocated that foreign aid is administered by a Western world that does not really understand it. In debate regarding the complexity of foreign aid, he remarked, "The people who really need to hear [another speaker's] message of complexity are the aid planners who think they can transform the complex societies they don't understand from the outside through an injection of money into the complex politics they don't understand…Such a bureaucratic approach has never ended poverty and never will." His remarks go on to suggest "All an aid critic asks is that there be REAL accountability, not the meaningless kind that the eternally clueless aid agencies talk about…[1] While his manner is direct, he has be one of the lone voices pointing to a deficiency in the current way we think of foreign aid.

Even more significant are newer voices who echo this sentiment including Oxford educated, Zambian born Dambisa Moyo, author of "Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa." She asserts that in spite of the large sums of money transferred to Africa over the last six decades, per capita income is lower today than it was in the 1970s and that the rates of poverty have not decreased. Her solution is radical-- phasing out aid within five years-- adopting a "sink or swim" mentality to development on her home continent. Another young rising African, Kenyan born June Arunga, who has made several documentaries on doing business in Africa, expresses the sentiment that "money will go to Africa for charity—with no prospect of accountability whatsoever—but no one can wrap their head around investing in African business."[2] She has been trying to shift the perception of Africa as a destination for investment, rather than just a destination for charity and found that government to government aid can hamper progress in the development of the private sector.

These aid watchers pose the right questions. However, the answer need not be as dramatic as shutting off foreign assistance entirely to force development and in recognition of the fact that U.S. foreign aid serves strategic purposes as well as its human services intent.

Attempts to Reform Foreign Aid

There has been an on-going dialogue attempting to reform foreign aid provided under the Act by the State Department and USAID (and now more widely by other USG agencies as well). A number of studies and congressional testimony by various institutions and individuals discuss such reform. These suggestions focus largely on what can be done on the U.S. government side. Among the most often cited of the recommendations are things such as increased interagency and executive-legislative branch coordination, raising the status of development in U.S. policy, establishing a coordinated national aid strategy, giving USAID cabinet-level status, utilizing more field input in decision-making and increasing civilian resources. There have been efforts to categorize the different types of aid into various subject areas of importance and allocated funding in that manner.[3] The common factor among all of these suggestions is changes are ones that to be implemented by the U.S. government side. There is some mention of increasing "country ownership" of aid or permitting more decision making by countries on how aid resources should be spent based on their determination of needs. What has been missing is the suggestion that recipient governments be asked to take more responsibility for foreign assistance. Such responsibility should include an accounting of how assistance is spent and what results were achieved. An ultimate goal of our assistance from the human services perspective should be to create sustainability in governments and populations. Global self-sufficiency will also further our own strategic interests.

Current View of Foreign Aid

Targeted, effective foreign assistance could also counter some of the backlash that aid is receiving in the broader public. In the wake of a dismal global economy, and people disaffected with government generally, officials are looking for budget areas that can be minimized. Foreign aid spending, or "giving money to foreign governments when we have problems to fix here at homeCC as it may be viewed by an electorate, is an easy target. This is a sentiment currently ringing throughout Western economies that have pledged since World War II to provide assistance. It is not only creating debate in international policies, but in domestic politics as well.

The recent U.K. election was the subject of some focus with discussion over how American style televised debates changed the dynamics of the election, perhaps propelling a little known third party to relevance. In addition, similar to the U.S. political front, the issues of jobs, home ownership and deteriorating family finances were at the forefront. Such domestic concerns raise the question of what the government is doing to help its own people as opposed to what it's doing to help other governments.

British columnist Alec Van Gelder writes, "The manifestos of Labour, the Conservatives and the Liberal Democrats all commit the next Government to wasting taxpayers' money just so they can sound compassionate."[4] Another UK commentator, Bronwen Maddox starts with "Labour, the Tories and the Lib Dems have hitched themselves to a spending target for foreign aid that is outdated and makes no sense." And further states of the 0.7 percent target of national income to development, "No one dares to decry the target, for fear of seeming callous."[5] Mr. Van Gelder further expresses frustration at the U.K's native rock stars that have become world icons for saving the poor by saying "But the 0.7 per cent target makes no sense, except to rock stars and pressure groups." During election campaigning, each of the parties had indicated that it would continue to support the 0.7% towards foreign aid. Therefore, in this case, the criticism was not being used to elevate the status of one candidate over another, but rather to criticize in general the level of foreign assistance adhered to by the U.K. government.

Here in the U.S., there is an attempt to reduce the President's International Affairs budget request by $4 billion, which met with criticism from the established development and aid communities. We face similar domestic issues and foreign assistance is an easy target in demonstrating areas of the budget to be cut.

Ultimate Goal of the Foreign Assistance Act

Although one of the implicit goals of the Act was to provide aid in order to build capacity and develop self-sustaining governments, it does not contain much measurement and accountability, and very general indicators regarding the conditions upon which aid can be granted. The intent behind the Act is therefore strategic and humanitarian, but with no real measure of progress being made on the human services front. Many proposed reforms focus on what should be done differently on this end rather than the receiving end. These reforms are not inaccurate in their approach, but many may be longer term in their viability and therefore have not yet been fully embraced or adopted yet by relevant authorities.

A New Approach to Accountability

At present, the Act requires that the Executive Branch, through the State Department, provide to Congress an annual reporting of human rights conditions in aid receiving countries. It specifically states that a country which does not observe and protect internationally respected human rights shall be barred from receiving funds under the Act "unless such assistance will directly benefit the needy people in such country."[6] There is a presidential waiver, and no country has actually ever been designated a gross human rights violator in order to be barred from receiving funds under the Act. The intent of the report is to insure that aid is received by countries that protect human rights, and used to enhance human welfare of the populations of these countries. However, in practice, this report has generated political controversy, even with U.S. allies, and results in difficulty administering the provision as intended. It has not effectively furthered one of the implicit goals of the Act-- to provide aid to governments which are seeking to better the provision of human services to their populations, in particular women and children.

It is also difficult to propose achievable aid reform if the agency charged with aid is not operating at full capacity. The mission of USAID has been weakened and many of its functions are now carried out by contractors rather than actual USG personnel. The Foreign Assistance Revitalization and Accountability Act of 2009 addresses the weaknesses in AID by increasing capacity, and accountability.[7] An invigorated USAID with more key leadership positions would be more easily able to focus on some of the deficiencies and lack of accountability in the foreign assistance process.

Accountability in assistance programs could be further increased by requiring reporting and measurement in areas beyond what the act currently requires. Beyond the human rights evaluations, State Department and USAID officials in Washington and in the field could work with the local government, NGOs and international organization officials to determine what improvements have been made in provision of human services. Assessments could be conducted to determine what resources were most effective in making such improvements. If measurements indicate a decrease in certain areas, then the amount and quality of assistance could be directly targeted to reverse such decreases. Seeking more accountability would also provide the right incentive to increase resources at USAID, especially in the field. If there were a specific targeted goal and aim for reforming foreign assistance which requires greater manpower and resources, then it may be easier to achieve the goal of increased resources and capacity at AID. An increased focus on accountability of foreign aid may also serve to root out corruption. If results are demanded before more assistance is given, there will likely be less aid money for which there is no accounting. Civil society should also be included in increased accountability. NGOs receiving aid money should be asked to assist in determining what progress has been made. This process can be conducted on a collaborative basis with recipient governments. As the commentary in the U.K. indicates, there is a fear of seeming callous, but in reality, accountability is what will create the best path to increasing human services and achieving the ultimate goals of aid.

Strategic Goals of Foreign Assistance

integral component of our foreign aid will always be strategic interest of the U.S. This is reflected in decades of aid appropriations to various countries. It would be unfeasible to advocate that aid should be divorced from strategic goals entirely. However, now more than ever, our strategic and security interests can be tied directly to the human condition. Therefore, improving human services can contribute directly to our strategic goals as well. It is easier to recruit disaffected youths in resource deprived countries for illicit or terrorist activities. To the extent that we can rapidly accelerate the progress made through our assistance, and alleviate the conditions in countries that contribute to animosity toward the Western world, it will be in our strategic interest. Improving conditions more rapidly in border nations could also decrease the numbers of people seeking to cross the border illegally and ease some of the tensions surrounding the immigration debate. There are many U.S. interests which would benefit significantly if we could accelerate human services in developing nations.

Key Human Services Goal: Health Conditions

Among the human services goals of foreign aid is the general welfare of populations, with a good measure of such welfare being healthcare. The Act indicates specifically that "Good health conditions are a principal element in improved quality of life and contribute to the individual's capacity to participate in the development process, while poor health and debilitating disease can limit productivity."[8] It further specifies that assistance should be provided for health programs, on terms and conditions determined by the President, and that the emphasis shall be on "self-sustaining community-based health programs by means such as training of health auxiliary and other appropriate personnel, support for the establishment and evaluation of projects that can be replicated on a broader scale, measures to improve management of health programs, and other services and suppliers to support health and disease prevention programs."[9] Such programs do exist; however, a significant component which is missing is any reporting or metrics to determine if efforts and programs have been successful in achieving the goals of providing improved health conditions to populations, in particular, women and children, on a sustainable basis.

Key Human Services Goal: Education

Another key human services goal is increasing education. The Act indicates that "In order to reduce illiteracy, to extend basic education, and to increase manpower training in skills related to development, the President is authorized to furnish assistance on such terms and conditions as he may determine, for education, public administration, and human resource development."[10] It goes on to detail that assistance shall be used for improving different facets of education including adapting to the types of informational needs of rural families, and increasing the concept of formal education. In addition, there is a provision for advanced education and training in areas that will benefit public and private development activities. This is another area where measurement of progress would be of great value in directing and targeting assistance. Basic facts such as the existence of primary schools, and teachers and resources for those schools could be measured. And eventually, testing of students at different levels should occur, with knowledge based tests to be designed and administered by localities. There should also be assessment of gender parity and efforts to facilitate attendance of girls in schools.

Key Human Services Goal: Economic Opportunity

Human services advance when the overall economic status of societies advances. In the Act, Congress made findings that microenterprise is a key component to creating fair and open economic systems. The findings also indicate that it is "in the best interests of the United States to assist the access to financial services and the development of microenterprises in developing countries and to engage the United States private sector in that process."[11] The Act also creates the Overseas Private Investment Corporation (OPIC) to engage the U.S. government in economic and social development.[12] This firmly establishes another key human services goal of the Act and the theme of providing economic opportunity is woven throughout its provisions, and also with specific focus on integrating women into economies. The area of economic progress is one where measurement should not be a difficult task. Per capita incomes should be rising annually with the assistance of U.S. aid as well as the multiple international banks and financial institutions.

United Nations Millennium Development Goals

In 2000, the United Nations set forth eight Millennium Development Goals: (1) Ending Poverty and Hunger (2) Universal Education (3) Gender Equity in Education (4) Child Health and Reduction of Infant Mortality (5) Reduce Maternal Mortality (6) Combat HIV/AIDs and Other Diseases (7) Environmental Sustainability and (8) Global Partnership in Trade and Finance, to be reached by 2015. These goals coincide with the humanitarian and strategic objectives of our own bilateral foreign assistance policy, several of which are related to the above described human services goals. There is still a great deal of ground to be covered before reaching these 8 goals, and 2015 is quickly approaching. U.S. bilateral aid policy should reflect the Millennium goals and we should utilize the resources of international organizations when measuring and evaluating progress on the provision of human services. U.S. policies on accountability should include discussions with other aid-granting governments as well as recipient governments to ensure coordination among the various parties.


The U.S. government should commit to re-thinking administration of foreign aid beginning with a comprehensive revision of the Foreign Assistance Act. In addition to strengthening U.S. government resources, coordination and elevated status of aid, such revision should include a comprehensive plan to ask for accountability from recipient governments. Aid recipient governments should be responsible for demonstrating a commitment to enhancing government support for the provision of human services encompassing healthcare, education, and economic opportunity. These enhancements should be subject to verification and compliance with metrics adopted and applied jointly by the State Department and USAID as a material component of the assistance programs. This can be done in a collaborative manner with assistance from the U.S. government and civil society.

Implementing Recommendations

To emphasize the importance of re-thinking the current model of U.S. foreign aid, the following recommendations are submitted:

  1.  A bi-partisan panel, with chairpersons of significant stature, such as former Secretaries of State, should be commissioned to advise and provide policy guidance during the revision of the Act;
  2.  The Act should be revised to require the Secretary of State, in consultation with the AID Administrator, to provide Congress with reports on progress in human services and subsequent quantity and quality of assistance should be determined based on these metrics (sample Act revisions attached);
  3.  Congress should commission a GAO report to assess what metrics are currently utilized to measure the effectiveness of aid, and once the Act is revised, GAO should be tasked to work with the State Department and AID to measure progress in human services; and
  4.  Resources of the United Nations and civil society should be utilized fully in conducting assessments of progress in developing countries.


  • [1]Bill Easterly, “The Effectiveness of Foreign Aid” December 2006, Council on Foreign Relations On-line Debate.
  • [2]Mindy Belz, Alisa Harris, www.worldmag.org Oct 10, 2009.
  • [3]In 2006, the State Department and USAID categorized aid into 5 different subject areas: Peace and Security, Investing in People, Governing Justly and Democratically, Economic Growth, and Humanitarian Assistance.
  • [4]The Telegraph (www.telegraph.co.uk , April 28, 2010).
  • [5]Times Online (www.timesonline.co.uk, April 22, 2010).
  • [6]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 116 (a).
  • [7]S. 1524, Foreign Assistance Revitalization and Accountability Act of 2009.
  • [8]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 104(a).
  • [9]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 104(c).
  • [10]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 105(a).
  • [11]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 108(a)(1) and (2).
  • [12]Foreign Assistance Act, 22 U.S.C. 2151, Sec. 231

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