Restructuring U.S. Foreign Aid: The Role of the Director of Foreign Assistance in Transformational Development

Publication Date: January 2007

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: International relations

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Abstract:

The creation of a new State Department position -- Director of Foreign Assistance -- has sparked congressional interest regarding the management, budgeting, and proposals for reform of U.S. foreign aid programs. Charged with coordinating U.S. assistance programs, the Director of Foreign Assistance (DFA) will have authority over most State Department and U.S. Agency for International Development (USAID) programs, although major foreign aid programs, such as the Millennium Challenge Account and the Office of the Global AIDS Coordinator will remain outside of his scope. The DFA is also tasked with providing "guidance" to other agencies that manage foreign aid activities. Some assistance programs are scattered throughout numerous domestic policy agencies and the Department of Defense.

The restructuring is part of Secretary Rice's "transformational development" initiative, that seeks to use foreign assistance to transform recipient countries' economic development paths, and to graduate countries from a dependence on aid. Details of the restructuring have been unveiled with the release of a new Strategic Framework for Foreign Assistance. The Framework links strategic objectives with categories of countries that have shared characteristics or development challenges. Operational plans would design country-specific aid programs to meet those challenges. The FY2008 budget request has been developed by joint State Department and USAID teams to provide better coordination and coherence.

While the current restructuring requires no legislative action, it raises a number of questions with regard to the management of foreign aid programs, funding levels, and reform options that will confront the 110th Congress. Supporters argue that it is a long overdue reform of fragmented and uncoordinated assistance programs that will focus aid on strategic objectives and make programs more accountable. Some critics contend that its piecemeal approach will not result in comprehensive reform. Others fear that it will politicize aid programs, and put the focus on short-term objectives rather than long-term development. Administration officials have said that the current effort is the first step in a more thorough overhaul of U.S. foreign assistance.

Larry Nowels, who retired from CRS in 2006, was an original co-author of this report.

This report will be updated.