Economic Policy Program

International Development

Policy Brief
December 2011

Summary: The role the United States plays in world affairs is heavily dependent on how Americans choose to invest in the elements of national power. But distorted public perception of foreign assistance, combined with an economic recession and an austere budget environment, threaten to deprive the United States civilian foreign affairs agencies of the resources needed to project U.S. influence globally. The purpose of this paper is to contribute to a more thoughtful discussion of the international affairs budget by: 1) highlighting the increasingly challenging environment for international affairs funding; 2) outlining the components of the international affairs budget and mapping them against U.S. national interests and values overseas; and 3) challenging the conventional wisdom regarding international affairs funding and considering the tradeoffs that would result from significant cuts to the international affairs budget.

Making the Most of 1 Percent

Investing in Americas Global Role through the U.S. International Affairs Budget
by Jim Kolbe, Glenn Nye, and Dodie Jones
The role the United States plays in world affairs is heavily dependent on how Americans choose to invest in the elements of national power. Activities of the Department of State (DOS) and the U.S. Agency for International Development (USAID), alongside those of the more traditional instruments of security like the Department of Defense (DOD), are increasingly seen as key influencers of the United States ability to shape world affairs and protect its national security. But distorted public perception of foreign assistance, combined with an economic recession and an austere budget environment, threaten to deprive the United States civilian foreign affairs agencies of the resources needed to project U.S. influence globally. Americans and the policymakers that represent them in Washington are faced with difficult decisions about how to reduce spending on a large range of government initiatives, at the same time there is little in terms of a natural constituency for international affairs funding. This divergence becomes more acute when demands for international programs are pitted against domestic programs with more visible local impact and seemingly higher urgency. The purpose of this paper is to contribute to a more thoughtful discussion of the international affairs budget by: 1) highlighting the increasingly challenging environment for international affairs funding; 2) outlining the components of the international affairs budget and mapping them against U.S. national interests and values overseas; and 3) challenging the conventional wisdom regarding international affairs funding and considering the tradeoffs that would result from significant cuts to the international affairs budget. The Global Environment: What Role does the United States Wish to Play? Any assessment of the appropriate level of resources required for Americans to devote to international affairs first requires a definition of what U.S. policy intends to achieve in the international arena. At its most basic level, foreign affairs resources are used to project military and civilian power to protect the safety of Americans at home and abroad. This includes responding to immediate threats as well as anticipating and countering emerging ones and supporting alli-

1744 R Street NW Washington, DC 20009 T 1 202 683 2650 F 1 202 265 1662 E info@gmfus.org

Economic Policy Program

Policy Brief
ances that contribute to shared security. In a more subtle fashion, these same resources are used to protect U.S. economic interests, grow trade, and build markets. In addition, the United States projects its values through interventions that promote democracy and human rights and assist people struggling from disease and natural disasters. The United States provides assistance that reinforces and maintains peace between neighbors in many regions. Many of the factors motivating these investments will remain in place for the coming decades. Some will diminish while others will grow in importance. But all play a part in defining how the United States maintains its global role. Over the past decade, efforts to stabilize Iraq and Afghanistan, using a range of counter-insurgency strategies, have been a key focal point of U.S. international affairs resources. The civilian side of counter-insurgency makes up a significant portion of the investments there and will continue to grow as the United States draws down its military forces operating in those countries. Much of the resources Americans have devoted to stabilization in Iraq and Afghanistan were designed to counter global terrorist groups like al Qaeda. Even as U.S. investments in Iraqi and Afghan stability decrease, the threat of global terrorism continues. Even with greatly diminished resources and a decimated leadership structure, al Qaeda and its allies need only willing recruits and a willing or weak state in which to prepare for future attacks. That fact has already drawn U.S. attention to places like Yemen, Somalia, and Sudan. The goal is for U.S. interventions in those and other areas to prevent global terrorists from threatening U.S. security without requiring large-scale military action. But to be achieved, such interventions require U.S. civilian initiatives like stabilization and economic assistance in the place of military forces. Both are key elements of the international affairs budget. Current developments in the Middle East, notably sweeping political changes resulting from Arab Spring revolutions, are likely to have substantial impact on U.S. foreign policy challenges for many years. U.S. policy has moved quickly to respond to developments in Libya and Syria. The ability of Tunisians and Egyptians to transition to stable democratic states will have powerful repercussions on the stability of the region. The policies Egypt chooses to pursue with its neighbors, including Israel, will have profound impacts on how successful U.S. policies in the region will be. As the

Interventions require U.S. civilian initiatives like stabilization and economic assistance in the place of military forces. Both are key elements of the international affairs budget.
region continues to evolve, Americans will need to decide how and how much they want to invest in influencing what the landscape of Middle East will look like a decade from now. The path taken by the United States to help shape the region will in turn be a key determinant for shaping the role of the Unites States in the rest of the world. As a global power, the United States has a wide range of interests supported by the development of relationships across the world. It faces profound opportunities and challenges in Asia, both in providing militarily support for regional allies, and also in developing key trade relationships that will bring growth to the United States economy. Americans have interests in their immediate southern neighborhood, promoting beneficial trade links with Central and South America, combating drug cartels and countering the spread of anti-U.S. political ideologies. The United States targets assistance to Africa to combat the spread of diseases and stem civil conflicts that threaten to destabilize the region, as well as to develop trading relationships in a globally competitive environment. These issues represent a portion of key U.S. interests that must be considered when deciding what resources should be devoted to international affairs. Investments in development programs that build institutions and support better local governance and economic growth among future trade partners yield benefits to U.S. long term security. Greater public understanding of what U.S. policy intends to achieve, and what the international affairs budget represents, is vital in maintaining support for the resources needed to accomplish key goals.

Economic Policy Program

Policy Brief
The International Affairs Budget Components: What the 1 Percent Funds The American publics doubt about the value of foreign assistance is deep, but not new. General George C. Marshall designed and led one of the most recognized and well-regarded foreign assistance programs in U.S. history. In order to build public, media, and congressional support for what would arguably become the most successful foreign policy initiative in the 20th century The Marshall Plan he acknowledged and understood this skepticism and proceeded to actively explain to the public why this plan was important to the United States future. The Marshall Plan Mission Statement captures that explanation and is a reminder of the reasons why Americans supported foreign assistance in the first place: To promote world peace and the general welfare, national interest, and foreign policy of the United State through economic, financial, and other measures necessary to the maintenance of conditions abroad in which free institutions may survive and consistent with the maintenance of the strength and stability of the United States.1 Figure 1

Average of FY 2010 and 2011

MCC 1.87% USAID Admin 2.97% Multilateral Aid 4.61% International Organizations 6.86% State Admin 22.36% Food Aid (P.L. 480 & McGovern-Dole) 3.49% International Broadcasting 1.39%

Security Aid 15.26% Bilateral Economic Aid 41.20%

Source: U.S. Department of State 2012 budget documents, House and Senate Appropriations Committees 2012 appropriations documents, U.S. Congressional Research Service. State, Foreign Operations, and Related Programs: FY2012 Budget and Appropriations (R41905; August 4, 2011), by Susan B. Epstein and Marian Leonardo Lawson.

What is less understood is the remarkable consistency in the core priorities of the international affairs budget since implementation of the Marshall Plan in the years following the Second World War. The changing landscape of foreign policy since then the end of the Cold War; the spread of HIV/AIDS; severe food shortages; wars in Korea, Vietnam, The Gulf, Iraq, and Afghanistan; and the emergence of religious extremism have brought with them new and shifting accounts in the international affairs budget, and yet, U.S. foreign assistance remains as strategic as it is humane at its basic foundation. It continues to promote peace and security, economic growth and stability, and democratic and humanitarian values abroad that are deemed vital to protecting U.S. interests at home. What differs today is not the core priorities or the instinctive distrust of foreign aid, but the increasingly complex and opaque nature of the international affairs budget and a lack of understanding about what Americans get in return for
1

their investment and its significance to the United States future. Breakdown of Accounts and Priorities Collectively, the international affairs accounts are known as Function 150 of the United States budget. Despite stubborn public misconceptions as to its size, Function 150 constitutes just over 1 percent of the U.S. annual budget. It includes funding for the U.S. Department of State and its diplomatic corps; the U.S. Agency for International Development; the Millennium Challenge Corporation (MCC); international organizations, such as the United Nations; multilateral development banks, including the World Bank and Asia Development Bank; health programs like the Global Health Initiative; international broadcasting activities; and the U.S. Department of Agricultures (USDA) international food aid programs. The percentages in Figure 1 indicate the priorities of the international affairs budget and are taken from two fiscal

Act of April 3, 1948, European Recovery Act [Marshall Plan]; Enrolled Acts and Resolutions of Congress, 1789-1996; General Records of the United States Government; Record Group 11; National Archives.

Economic Policy Program

Policy Brief
year budgets (Fiscal years 2010 and 2011). Over 55 percent of the Fiscal Year (FY) 2010 and 2011 budget is accounted for in bilateral economic assistance and security programs. Operating expenditures for the DOS and USAID, which include funding to construct, maintain, and staff U.S. embassies, consulates, and missions abroad account for approximately 25 percent of the budget. The remaining approximately 20 percent is spread throughout specific democracy and governance assistance programs, such as the National Endowment for Democracy and international broadcasting operations; humanitarian assistance programs, such as food aid and refugee support; and multilateral banks and organizations, such as the World Bank and various arms of the United Nations. Bilateral Economic Assistance: Economic Growth and Stability The largest portion of the international affairs budget (over 40 percent of FY11 and FY12) is designated for bilateral economic assistance accounts that fund programs for the poorest nations in the world. Taken together, these accounts are a kaleidoscope of programs focused on economic growth, trade, agriculture and food security, governance, health, education, institutional and human capacity, and humanitarian assistance. USAID administers the majority of these programs, but DOS and the MCC2 also provide bilateral development assistance. Economic development assistance is designed to help transform developing nations into developed nations through such tools as economic development, trade capacity building, and health and basic education initiatives. Although the United States has always recognized and acted on a moral obligation to help the worlds poorest, such aid is not solely or perhaps even primarily given for charitable reasons. It is strongly motivated by the view that a nation with a clear development path will be a stronger trading partner, provide more opportunities for foreign direct investment and economic growth, and be less likely to harbor terrorists. These economic development programs honor most the legacy of the Marshall Plan with compassionate but hard-nosed strategic objectives.
2 The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping lead the fight against global poverty. Created by the U.S. Congress in January 2004 with strong bipartisan support, MCC is changing the conversation on how best to deliver smart U.S. foreign assistance by focusing on good policies, country ownership, and results.

Although the United States has always recognized and acted on a moral obligation to help the worlds poorest, such aid is not solely or perhaps even primarily given for charitable reasons.
In terms of actual dollars, the majority of bilateral economic assistance from FY 2010 and 2011 falls into two accounts the Global Health and Child Survival (GHCS) account and the Economic Support Fund (ESF).3 However, the characterization of ESF as purely bilateral economic assistance is somewhat deceiving. The Office of Management and Budget (OMB) classifies ESF as security assistance, while Congress classifies it as bilateral economic assistance. In reality, it is a cross section of both. It assists U.S. allies and nations transitioning to democracy, such as Afghanistan, Pakistan, Iraq, and Egypt, in an effort to support U.S. foreign policy and security objectives, and it creates stable economic structures in failed, near-failed, and developing states such as Haiti, South Sudan, and Liberia. Taking that into account, the two most significant bilateral economic assistance accounts are Global Health and Child Survival (GHCS) and Development Assistance (DA).4 GHCS programs address the spread of such diseases as HIV/AIDS, Tuberculosis (TB), and Malaria and support additional health initiatives. It has long existed as one of the core accounts in the international affairs budget, but grew exponentially when the Presidents Emergency Plan for AIDS Relief (PEPFAR) was added to part of this account in 2009. Although a much smaller account, DA includes funding for programs such as basic education, governance, micro-enterprise development, agriculture, and trade capacity building. The remainder of the economic assistance covers development/humanitarian nexus accounts such as
3 U.S. Department of State 2012 budget documents, House and Senate Appropriations Committees 2012 appropriations documents 4 U.S. Department of State 2012 budget documents, House and Senate Appropriations Committees 2012 appropriations documents

Economic Policy Program

Policy Brief
migration and refugee and international disaster, famine assistance programs, and funding for large scale food security (Feed The Future) and climate initiatives. In addition to bilateral economic assistance, the United States contributes to multilateral development banks and other international organizations such as the United Nations development programs that invest in developing nations throughout the world. The United States is the largest shareholder in the World Bank, the worlds leading development bank, which includes several arms that make conventional loans or grants and one, the International Finance Corporation, which advances private investment in nations and regions where it is nonexistent or severely lacking. A variety of smaller agencies are funded in the international affairs budget, including the Export-Import Bank, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, and the U.S. International Trade Commission, all of which promote U.S. investment in and U.S. exports to international markets. Security Assistance: Peace and Security As most Americans would expect, the Department of Defense plays a considerable role in U.S. security-related funding, but they may be surprised to learn that a substantial amount of foreign assistance is administered through DOD. Since 2001, DOD has been the lead implementer of certain foreign assistance projects in what are now considered frontline states due to coordination and capacity issues and its ability to reach areas where it was unsafe for USAID and DOS officials to work. Beginning in FY03, all military aid for Iraq and Afghanistan shifted to the DOD budget. Accordingly, DODs spending levels significantly impact the spending levels of DOS and USAID security assistance as part of wartime and post-war operations. To underscore these linkages between accounts, DOD managed 22 percent of U.S. development assistance in 2005 (peak year) and implemented only 8 percent in 2009.5 The international affairs budgets security and military assistance programs averaged around 15-20 percent of the budget (if portions of ESF funding are included, that percentage increases).6 The core security programs focus
5 DOD, DOS, and USAID 2005 and 2009 budget documents, House and Senate Appropriations Committees 2005 and 2009 appropriations documents 6 DOS 2012 budget documents, House and Senate Appropriations Committees 2012 appropriations documents

primarily on foreign military aid to and training for strategic allies, like Israel; assistance in frontline states, such as Afghanistan, Pakistan, and Iraq; anti-terrorism, nonproliferation and demining efforts; peacekeeping operations; and international narcotics trafficking and related crime programs mainly in Central and South America. Seven out of the top ten recipient countries of U.S. foreign assistance in FY 2010 received security funding or were a part of what is now Oversees Contingency Operations Funds (OCO). President Obamas FY 2012 budget request differentiates funding for Afghanistan, Pakistan, and Iraq from the core budget for the first time in the international affairs budget. It proposes to create a new OCO account that DOS characterizes as extraordinary and temporary security, diplomatic, and, to a lesser extent, economic development operations in the frontline states. This separate account now aligns with DODs budget and is intended to better coordinate DOS, DOD, and USAID budgets more effectively in these countries. Democracy and Humanitarian Assistance: Supporting U.S. Values Democracy and humanitarian assistance funding is found throughout the international affairs budget as a part of numerous accounts already mentioned. It represents the building blocks of an American value system that include beliefs in democratic institutions, human rights, and a moral obligation to help those in need. At its core is U.S. humanitarian assistance, which is grounded in the ability to assist those in crisis situations through international disaster and famine assistance and food aid programs. The budget also funds the National Endowment for Democracy and international broadcasting operations like Voice of America and the Middle East Broadcasting Networks, which promote democratic principles. Although the operating expenses of the international affairs budget appear on paper as simply DOS and USAID overhead, their significance is also found in the presence that U.S. embassies, consulates, missions, and the extensive foreign service have throughout the world. That presence provides the United States with the ability to look after its interests and contribute to and protect democratic and humane ideals abroad.

Economic Policy Program

Policy Brief
The Domestic Environment: The Struggle over the United States Priorities Even while the international affairs budget is proposed by the president and approved by Congress each year, the U.S. public and its elected leaders are engaged in a debate that at its core is about defining national priorities. In addition to having fewer resources available to them as a result of the economic recession, U.S. policymakers are also compelled to confront an unsustainably large public debt, the accumulated result of decades of deficits and growth in entitlement programs. In the current austere environment, all agency budgets are feeling the pinch. Annual spending caps through FY2021 were enacted as part of the Budget Control Act of 2011 (BCA), which also called for further debt reductions to be offered by a special congressional committee and voted on by the full Congress. Although the special committee ultimately failed, efforts continue to significantly reduce the public debt; a process likely to take several years. The American public will be required to make tough decisions about what areas of spending are more important than others. Finding a high funding priority for international affairs has always been difficult at best, suffering from numerous natural disadvantages. One is a series of enduring public misconceptions about the size and scope of the international affairs budget, and especially its foreign assistance components. Among these misconceptions are the following notions: 1. The international affairs budget makes up a large share of the U.S. budget. Many Americans believe the international affairs budget accounts for somewhere between 15-25 percent of federal spending.7 In reality it represents only about 1 percent of the federal budget, and therefore will never provide a major source of savings that legislators could use to balance the budget. 2. Foreign assistance has no real impact. Many indicators of country stabilization are improving steadily, such as education of females8 and leveling of population growth rates.9 Moreover, the evidence of assistance helping propel countries such as Taiwan, South Korea, or Turkey onto a path of spectacular economic growth is very persuasive. But many Americans believe all foreign aid is just wasted dollars. Slow and steady progress rarely makes headlines. 3. Foreign assistance is an endless drain on resources. Though many aid recipients, such as India, Brazil, South Korea, and Poland are now aid donors,10 the large number of countries who receive assistance gives the impression that aid is a perpetual windfall for recipient countries. 4. Foreign assistance funds are handouts that dont benefit the United States. In reality, a very small portion of U.S. assistance is cash transferred to foreign governments. Much of foreign assistance money is used to hire and deploy Americans to carry out development programs and incentivize local economic activity that often promotes trade with U.S. companies. This is often not the prevailing image. 5. Most aid is wasted. This view is not much different from how the public views domestic spending programs. Nonetheless, the very fact that it is tax payer dollars being spent abroad makes the waste argument more powerful and difficult to dispel. Overcoming public misconceptions about foreign affairs funding just exacerbates the difficulty of those who argue international affairs deserves an equitable budget priority. Competition with domestic programs puts the international affairs budget at a natural disadvantage in terms of developing a domestic constituency for investing in foreign affairs. Most Americans have little direct knowledge of how foreign affairs funds are spent, and most have no direct contact with the U.S. professionals who carry
8 Empowering Women, Developing Society: Female Education in the Middle East and North Africa Population Reference Bureau, October 2003 http://www.prb.org/Publications/PolicyBriefs/EmpoweringWomenDevelopingSocietyFemaleEducationintheMiddleEastandNorthAfrica.aspx 9 World Population Growth World Bank, June 10, 2004 http://www.worldbank.org/ depweb/english/beyond/beyondco/beg_03.pdf 10 S. Korea: http://blog.usaid.gov/2011/03/from-u-s-aid-recipient-to-donor-partnerthe-republic-of-koreas-health-ministry-honors-usaid/; India: http://blogs.cgdev.org/ globaldevelopment/2010/10/india-emerges-as-an-aid-donor.php; Brazil: http://ipsnews. net/news.asp?idnews=55281; Poland: http://www.usaid.gov/press/frontlines/fl_jun09/ p7_hungary060918.html

In one recent poll respondents were asked Just based on what you know, please tell me your hunch about what percentage of the federal budget goes to foreign aid. The mean response was 21 percent. Published by the Program for Public Consultation, February 3, 2011
7

Economic Policy Program

Policy Brief
out the civilian side of national security policy. This is especially true when comparing the roles of foreign affairs professionals staff of the DOS and USAID with their military counterparts. Each branch of the U.S. military has bases located all across the United States, while DOS and USAID staff is almost exclusively located in Washington or overseas. Though they come from all over the country, DOS and USAID personnel are small in number compared to the ranks of the military. Most Americans know someone with a family member in the military, they have a general understanding of what the military does to protect the United States, and are constantly exposed to media coverage of military activities, television shows, and feature films showing military personnel at work. The same cannot be said about our diplomatic corps or foreign assistance professionals, even though many of them also put their lives at risk in conflict environments. This lack of a natural domestic constituency makes building support for foreign affairs funding more difficult. The Road to a National Security Budget Recently, the competitive environment for the international affairs budget has begun to change. The Budget Control Act of 2011 (BCA) mandates spending caps that reduce the overall amount of funds available for federal spending. At the same time, the act codifies the concept of evaluating the foreign affairs budget together with the defense budget in a national security category. This is significant in that it enshrines in a bipartisan agreement the notion that diplomacy and foreign assistance funding should be considered an element of national security in the same way we look at military funding. The notion of creating a unified national security budget had been gaining some momentum in the years prior to the BCA. The idea was part of the Department of States 2010 Quadrennial Diplomacy and Development Review.11 The general concept is now enshrined in law. Though this step does not represent a shift in the permanent mechanics of budget requests or adjust the jurisdiction of congressional committees, it can be seen as an important step toward that eventuality. The BCA establishes, for fiscal 2012 and 2013, two categories for the purposes of dividing spending cuts between accounts defined as national security and all other accounts. This has the effect of forcing policymakers to assign priorities between and within those
11

Military leaders have supported assertions made by civilian leaders that foreign affairs funding not only contributes significantly to the United States national security but actually saves money overall by preventing military conflict.
two categories. The significance for the international affairs budget is that instead of competing with all domestic accounts and the military budget simultaneously, foreign affairs is now grouped with defense and others in the national security category when it comes to competing for those resources. Another important development over recent years has been recognition and public acknowledgment by military leaders of the value of investing resources in civilian foreign affairs. These military leaders have supported assertions made by civilian leaders that foreign affairs funding not only contributes significantly to the United States national security but actually saves money overall by preventing military conflict, which is costly both in terms of human life and use of resources. As then-Defense Secretary Robert Gates put it, development is a lot cheaper than sending soldiers. He posed the question, how do you prevent conflict, how do you create the conditions so we dont have to send soldiers? His answer: through development.12 Secretary Gates went so far as to lobby directly for more funds for the DOS in the 2010 budget. As reported in the Marine Corps Times, Senate Budget Committee Chairman Kent Conrad said Gates argued in a phone conversation with him that it was in the Pentagons interest to have a healthier foreign aid budget. Underscoring the precedent-setting nature of the
12 Roundtable Discussion on the Administrations New Global Policy at the Annual Global Leadership Coalition Conference. September 28, 2010

http://www.state.gov/documents/organization/153142.pdf

Economic Policy Program

Policy Brief
call, Conrad said, I have never before in my 22 years on the budget committee had the secretary of defense call me to support the budget for the State Department.13 General David Petraeus, commander of international security forces in Afghanistan, made the same point, describing in testimony in the U.S. Senate the importance of civilian resources to match military resources in the field: I am concerned that levels of funding for our State Department and USAID partners will not sufficiently enable them to build on hard-fought security achievements of our men and women in uniform. Inadequate resourcing of our civilian partners could, in fact, jeopardize accomplishment of the overall mission [in Afghanistan].14 General Petraeus later made a broader appeal for continuing the United States commitments to multilateral institutions as well, such as the World Bank and the Asian Development Bank, saying of their contributions in Afghanistan, we need these critical enabling institutions, and further U.S. support for them will ensure that they are able to continue to contribute as significantly as they have in the past. He added: this category is really a national security funding issue, not just an issue of foreign assistance or some other element,15 thus recognizing the key role of development activities in supporting security and strengthening the argument for combining the military and civilian elements of national security budgeting. The current secretary of defense, Leon Panetta, has followed the same line as his predecessor, saying: Our national security is our military power, our Defense Department, but its also our diplomatic power and the State Department.16 Those words take on more significance in light of congressional action to combine the foreign affairs budget in a national security category with Department of Defense funding. Of course, Secretary Panetta has spoken out strongly against further deep cuts to defense spending, and as the pressure to find budget savings mounts, he will certainly remain primarily an advocate for his own agencys funding. At less than one-tenth the size of the defense budget, the international affairs budget will remain overshadowed by its military counterpart. But with a continuing appreciation by military leaders of the important national
13 14 15 16

security role of international affairs funding, and an explicit recognition by military leaders of the fact that investments in development and diplomacy save money over the long term, the foreign affairs budget seems better positioned to compete for scarce resources within the national security category than outside of it. Conclusion The international affairs budget determines what tools the United States will have to influence world events and contribute to national security in the same way DOD funding determines how and where the United States can bring force to bear on international events. The level of international affairs funding clearly produces real tradeoffs in the capabilities the United States can bring to the global stage. Policymakers struggle constantly with trying to find the balance between domestic interests and national security to find the right amount of funding for international affairs. That determination can only be made after the public expresses its own views about national priorities through the ballot box. But, it is the view of the authors that prudent decisions must grow from an understanding of what the international affairs budget entails and how each element connects with national goals. It is an understanding that must be informed by factual information that counters the widely held misconceptions that unfortunately poison perceptions of foreign assistance. Armed with this knowledge, the American public and its elected officials can make intelligent choices about spending priorities, but it must be more than a debate over funding levels for specific agencies. It must also recognize and support the need to maximize the efficiency of every taxpayer dollar appropriated to each priority. The current period of budget austerity reasserts the need for better coordination with allies to maximize the impact of development assistance. The number of international players in assistance programs, with potential conflict between short- and long-term development strategies, and often divergent national goals, has always presented coordination challenges. However, the United States has engaged in a robust set of internal and external discussions on aid coordination. External discussions focus on how donors should coordinate their assistance, the degree to which assistance programs should be driven by a recipient country,

Rick Maze, Marine Corps Times, March 30, 2009. Testimony given before the Senate Armed Services Committee, March 15, 2011 Testimony given before the House Armed Services Committee, March 16, 2011 Remarks at the National Defense University, August 16, 2011

Economic Policy Program

Policy Brief
the relative value of bilateral and multilateral programs, and how to make greater use of public/private partnerships. One way to increase the connection between the U.S. public and the international affairs budget is lodged in the interior, or domestic, debate over how to make the work of these agencies more transparent and streamlined. Major reform initiatives are in various stages of implementation. Within the Executive Branch, the DOS Quadrennial Diplomacy and Development Review to rethink the organization of assistance programs and agencies, the USAID Forward program to retarget efforts on the most critical areas of U.S. interest overseas and to reorganize internally to meet those challenges more efficiently, and the White Houses PPD to put assistance programs front and center in the broad setting of foreign policy deserve mention and praise. There is also a current set of legislative proposals, which, if enacted, would make either discreet or comprehensive reform to the United States array of foreign assistance programs. These proposals include measures intended to increase the effectiveness of assistance dollars, provide greater transparency and accountability, increase efficiency, and leverage private sector involvement. Some of the efforts place emphasis on providing detailed information on the measurable impact of development projects to counter the perception that a large share of assistance money is wasted, and to better guide future investment. There can be little doubt that foreign assistance is a cornerstone of both our foreign policy and national security. But there is also no doubt that these programs are widely misunderstood by the public as to their size and distrusted by legislators as to their efficiency. Intelligent decisionmaking rests on greater understanding of the goals and the component parts of foreign assistance. The U.S. public must accept the responsibility to gain this understanding and give direction to their elected officials. Elected officials must respond accordingly and shape assistance programs in the most effective manner. Our national security, economic growth, and our safety depend on doing no less.
About the Authors
Jim Kolbe and Glenn Nye and both former Members of Congress and Senior Resident Fellows at the German Marshall Fund of the United States. Dodie Jones is a Senior Program Officer for Congressional Affairs at GMF working primarily with GMFs Economic Policy Program. The authors would like to express their gratitude to Jonathan White, Larry Nowels, and Seth Lippincott for the contributions to this brief.

About GMF
The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm.