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 You are in: Bureaus/Offices Reporting Directly to the Secretary > Policy Planning Staff > Secretary's Open Forum > Proceedings > 2001 - 2002

Advancing U.S. National Interests Through Foreign Assistance

Andrew S. Natsios, Administrator, United States Agency for International Development (USAID)
Washington, DC
September 28, 2001

Opening Remarks and Introduction by Alan Lang, Chairman of the Open Forum

Photo of Andrew S. NatsiosThank you very much, Alan, for your kind introduction. It is a pleasure for me to be here today at the Secretary's Open Forum. The purpose of the Open Forum, as I understand it, is to encourage discussion of the complex and often controversial topics that foreign policy professionals like you have to deal with every day.

Before I start, however, I need to make one sort of qualification in my remarks today. It will not be possible for me to make any comments about Taliban or al Qaida. That is the province of the President, and the Secretary of State and their spokespeople. Given the circumstances, I think all of you understand we are at a very sensitive time in the conduct of our foreign policy.

It is the case, however, that AID has been involved in Afghanistan, and the region, generally, for decades. We had a very active AID program in Kabul just prior to the Soviet invasion. We had to shut it down because of the invasion. This year, this year, prior to the events of September 11th, the United States was running its largest humanitarian relief operation in the world, $172-million program. Even the Sudanese and Congo programs are dwarfed by the size of the Afghan program.

I will talk about that a little later, but the reason for that simply is that there is a famine, and there was a famine. There has been 4 years of drought there. It is the worst humanitarian disaster in the world. Afghanistan has the highest child mortality rate in the world. Twenty-five percent of the children will die before they are 5 years old. It has the highest rate of female mortality, of mothers, maternal mortality rate. I think it has the highest percentage of amputees in the world from mines. In fact, there are 10 indicators of what we call the Human Misery Index, and Afghanistan is either the first or the second on all of those. It is a sad evidence of the problems of collapsed states around the world.

My topic, however, for today is not so much Afghanistan, specifically, but foreign assistance, generally. I would like to talk today about advancing our national interests through foreign assistance, a subject that I take very, very seriously. As Secretary Powell said, when he swore me in this past May, I quote, "A well-administered AID is an indispensable tool for advancing America's interests and values in this world, an indispensable tool for furthering our country's foreign policy objectives." So everything I say today and everything I do, as long as I am the Administrator of AID, should be taken in that context.

During most of the 20th century, there have been essentially two different schools of thought on the conduct of foreign policy and the way we approach foreign assistance. To a large extent, these schools are simply a reflection of the opposing tendencies that have been part of the American character since before we became a Nation: the practical realist and the moral idealist.

The first school, which is much older; it goes back to classical Greek times, is often called a realpolitik. It follows the practices of the great European diplomats of the past like Tallyrand, who survived the French Revolution to serve as Foreign Minister to Napoleon; Metternich, Prince Metternich; and Bismarck. And certainly Dr. Kissinger would come out of the realist's school of Foreign Affairs, and some would argue that Harry Truman and Dean Atcheson did, too, although it is debatable. Some of our Presidents fit into both categories, depending on the time in their presidency.

Realpolitik, of course, is based on a very unsentimental view of human behavior and the hard, cold pursuit of national security and economic self-interest. Unlike the idealist's school, realpolitik assumes that nations have specific interests and that it is these, not values, that a nation must promote.

The second, or the Wilsonian School, named after, of course, Woodrow Wilson, is primarily values driven, and there are debates as to who fits into this category. There is a large body of scholarship now that would argue that

Ronald Reagan was not a realist at all on foreign affairs, but a conservative Wilsonian, a term coined in a Heritage Foundation or American Enterprise Institute speech given by Newt Gingrich. He referred to himself as a conservative Wilsonian. I would call myself a conservative internationalist. But in any case, there is a whole broad group of neoconservatives--I am a neoconservative--who fit into a more conservative view of foreign policy that is value based, as opposed to purely national security based.

While Americans of this school, of the Wilsonian School, have focused since the end of the Cold War on the spread of democratic capitalism, its adherents pay considerable attention to the other countries' values and interests. Their approach, if not given over entirely to the naive cultural relativism of some, presumes that all societies share certain values and that our interests often lie in harmonizing our policies with others.

When I gave my speech before the Senate Foreign Relations Committee during my confirmation hearing, I argued that I believe, personally--this is not a foreign policy position of the U.S. Government--that there is a universal moral order. However difficult it may be to understand exactly what that means, it does exist, and for us to make foreign policy completely devoid of the moral context, it seems to me, is a dangerous notion, given that we are a country that has a deep altruistic side to its nature.

In short, these two schools are often incompatible, and the tension between them has made it difficult to sustain a coherent foreign assistance program. I would argue, however, that the end of the Cold War and the appointment of a highly experienced foreign policy team, absent me, in this administration has made it possible to adopt a new approach to foreign aid that combines the best of both schools, an argument I made in the book I wrote 4 years ago about complex emergencies in American foreign policy.

As a neoconservative, I believe that democratic capitalism is the preferred model for international development and the surest, but not inevitable, path to a more prosperous, peaceful, stable and, I might add, civilized world. President Bush was entirely correct when he addressed the World Bank this July and said, and I quote, "We have today the opportunity to include all of the world's poor in an expanding circle of development throughout all of the Americas, all of Asia and all of Africa. This is a great moral challenge, what Pope John Paul, II, called `placing the freedom of the market in the service of human freedom.'"

I take that as my marching orders: use the power of our freedom, our markets, our people, our institutions to help the developing nations of the world enter that circle of development. Still, we live in an era of tight budgets and many demands on taxpayer dollars, although some of that changed on September 11th, in terms of how people view the spending of money on institutions that deal with our foreign policy. If we want the support of the American people, we must be careful how we fashion our foreign aid program.

I have been working in this field for many years and would like to share with you five principles that will guide my thinking as AID seeks to tailor our programs to the opportunities and challenges of this new century.

The first principle that will guide my own thought processes is that we should avoid burdening our programs with incompatible demands. I sat at a meeting 10 years ago in this building, and I will not say who the senior officer was, nor will I say what the subject was, because you will probably guess what it was, but there was one program being discussed, and I remember a very senior officer said, "There are 13 objectives to this one program."

And I listened carefully and realized that the gentleman, who is a very smart person, was putting incompatible objectives in the same program, which meant it was inevitably going to fail, because if you attempted to accomplish all of those objectives at once, you inevitably would paralyze the program or make it into mush, so it didn't reach any objectives adequately. So I think we need to have a hardheaded analytical view of what our programs are designed to do.

Now I have argued, in other things I have written, that it is possible, for example, in the humanitarian relief area, while accepting the moral primacy of humanitarian relief as lifesaving interventions, to also have some other political consequences that can be desirable, or undesirable, that you can look at as subordinate objectives, but I think you have to decide what your principle objective is and focus on it.

Second, we should not try to accomplish too many tasks because excessive complexity can paralyze a program. We cannot be all things to all people. As an institution, AID cannot be all things to all people and, more importantly, it seems to me, when we make programs so complex that they can't be managed effectively, then they are doomed to failure.

There is a wonderful book, probably my favorite book in teaching public administration, by Aaron Wildavsky, a great neoconservative who died a few years ago, at UC Berkeley, I believe, and Jeffrey Pressman, a book called, "Implementation." It had nothing to do, whatsoever, with foreign assistance or foreign affairs or AID. However, the point is, without going into the details of the book, he analyzed a particular Federal program in which nothing happened for 7 years, even after a Federal agency had approved a huge amount of spending in it. And the conclusion of the book is that the two authors had discovered 362 points at which a yes or no decision had to be made in order to get to the next step, sequentially, in order for the program to be finished. The mathematical probability of 362 yeses appearing sequentially, using mathematical theory, is 1 in 3.5 billion, which means the program was not going to be managed or run and certainly not going to be concluded successfully.

I argue this constantly at state government level, at local government level, which I spent half my career in, and I also argue at the international level, that when we get programs so bogged down with such complexity that we paralyze them, we will inevitably have failure.

The third principle is that genuine systemic change takes time. Successful foreign aid programs take a very long time, and they require a lot of resources. I give you an example I used, once again, at my confirmation hearing, which is visiting my grandfather's village in Central Greece, when I was a boy, in 1963, with my father and mother. It was very depressing. People were much smaller than they should have been because they were not eating well. My grandfather was a foot smaller than my father. He was an immigrant to this country. He didn't eat well when he was back in the village, a very clear nutritional consequence of the diet in a very poor Third World country at the time. People were unhealthy. There were no vehicles in the town. Everybody used donkeys. It was very depressing to be there. That was in 1963.

1994, I took my wife and three children back. They had never been to Greece before. My wife is not a Greek American. And the village had no donkeys, no mules. Everybody had cars. I even saw three BMWs, much to my astonishment. Everybody used tractors in the field. It is the farming area in Central Greece. There were two new churches, a new school, new casinos and restaurants. It was a charming little village.

A friend of mine from Athens told me this story before I visited, and I said you must have my grandfather's village confused with some other village. He said, no, I don't. I go for my vacations there. I said, you couldn't possibly go there for vacation. It's too depressing. He said, go and see for yourself.

Now that was 30 years later. I asked my distant relatives in the village what made the difference. We built roads. The United States built roads. We built schools - it a very high literacy rate, even when Greece was a poor country. They did macroeconomic reform at the national level with an exchangeable currency and a relatively limited level of inflation. They joined the EU, and they began trading.

You create the infrastructure, you modernize agriculture. There were a lot of agricultural programs AID ran in the 1960s in Greece after the Greek civil war in the early '50s. There was a large AID program there. They joined the EU, and they started exporting their agricultural goods, and the per capita income went from $300 to $8,000. And one senior Greek once told me the $8,000 is not the real number because people don't pay their income taxes the way they do in the United States in most European countries, and the income actually is much higher than that, which was evident in that village, but it takes 30 years. You don't just do it overnight.

The same thing happened--it's not an isolated incident--the same thing happened to Japan. The same thing happened to South Korea, and Taiwan, and Malaysia. It happened, to some degree, in Indonesia. Obviously, there's been some reversal and some instability there, but Indonesia was enormously poor, at independence, and it has made, in spite of economic reversals, enormous progress, and Thailand has made enormous progress as well. So you can go through a list of countries that have, in fact, moved from Third World status to First World status through foreign assistance programs, plus economic growth.

The fourth principle is that sustained change will only occur when it is accompanied by economic growth, which makes the point I just made again. People must see the changes we are advocating bring tangible improvements in their daily lives and in family income. One of the problems, in my view, in the foreign aid program in the United States, has been the inadequate attention to family income and to programs, particularly in rural areas where much of the world's poor live, in equitably distributing economic growth.

We can't have economic growth as of the kind we have in Brazil--Brazil and Kenya have two of the most, the poorest distributions of wealth in the world. There is a corruption problem in Kenya, and in the case of Brazil, there has been unequal development between the rural areas in the North and the industrial areas in the urbanized South.

If you wish to have foreign aid work, there has to be a component that deals with economic growth, and in my view, that has to be connected to agriculture. Agriculture is an essential part, in our view, in new AID, of any development program in a developing country, except for countries that are primarily Arab. You would not run a large-scale agricultural program in Kuwait. If you do, you should have your economic credentials withdrawn.

But most poor countries are not in the same position as Kuwait. They have their oil. I am suggesting if they didn't have oil, what would you invest in? It wouldn't be in agriculture. It might be in herding, though, which is a form of agriculture, and so you need to look at the economic viability of the agricultural sector in a particular country and see where the investments ought to be.

But all of the major countries, with the exception of the great city-states of Asia, Singapore and Hong Kong, have begun with a large-scale investment in the agriculture sector, large surpluses, and then they build their economic growth in the industrial sector on that base. That is true for all of the European democracies and for the United States as well. We started out building large agricultural surpluses in the mid to late part of the 19th century, and then we built our Industrial Revolution on top of that.

The fifth principle, we have to be realistic. Without national political leadership in a developing country, these programs will be unsustainable. I want to emphasize this. Stable, honest, democratic Governments increase dramatically the prospects for success in development.

Joe Siegal just received his Ph.D. from the University of Maryland. He used to work with me as one of our senior agricultural economists at World Vision, and his dissertation, which he hasn't quite published yet, I don't think, but I've seen the summaries of it--he's a good friend of mine--connected for the first time, successfully, the question of democratic governance and economic growth. The scholars have been trying to prove a relationship for a long time, unsuccessfully. What he did is disaggregate democratic governance into categories. The part of democratic governance that makes the most difference, in terms of economic growth, is accountability, not elections, but accountability.

So we are going to begin to look at whether we should be focusing more attention on the accountability institutions of democratic governance, as opposed to pure elections, which do not appear to have any relationship to economic development, according to the models that he has developed, but there is more research that needs to be done on that, but it is an important and powerful argument.

The corruption problem in large parts of the developing world is more debilitating than almost any other problem they face because it means that even if you try to have economic-developing programs, you attempt to stabilize your economy, you have got your exchange rates right, you start exporting, the level of corruption can grossly distort the economy. Some countries have had such high levels of extortion by predatory governments that large parts of the gross national product simply get diverted and never appear to the people in terms of services or growth or infrastructure.

Now bearing these five principles in mind, AID is pressing forward with all our energy in order to build a new AID. Foreign aid has a major role to play in our country's foreign policy. It is the visible expression of the humanitarian impulse in the American people, it is the ethical dimension of our Nation, our people, and it shows both the pragmatic and the altruistic side of to American character. As you know, whenever there is a natural or man-made disaster--floods, famines, hurricanes or earthquakes--it is almost always the United States that shows up first and provides the most. This is true even in countries where we have no diplomatic relations and might even be regarded as our adversaries.

Who is the largest donor to the world food program that keeps the people of Sudan, North Korea, and Afghanistan alive? It is the United States. Fifty percent of all of the food that goes to the World Food Program I think this year came from the United States.

The United States is the most intensely watched nation in the history of the world. What we do and how we do it are matters of great interest to virtually every country. So these proactive humanitarian programs, whether they be in Northern Iraq, keeping the Kurds going after the Gulf War or in the Balkans today, they help people. They also show the world something about the nature of our country.

I could tell you a wonderful story. During the North Korean famine, the North Korean Government triaged the entire northeast region of the country. No food arrived in there for two and a half years, and there was widespread starvation. I think just in that region alone, a million people died of starvation during that terrible famine in the mid-1990s.

The first shipment of food that entered the northeastern region of North Korea was a U.S. Government ship with an American flag on it. When it arrived in port, the North Korean military said, "You have to take that down, that flag down, or you can't deliver the food."

And one diplomat told one of our people the reason was there would be a revolution in the city if the first food shipment, after being shut off from food by the Central Government for 2.5 years, came from our arch army, the United States. We had to argue it with them for days. They took the flag down because the disaster relief was first. Of course, it has on all of the bags that it comes from the United States.

It was delivered, and I asked the World Food Program logisticians in the city: did people know where the food came from? They said every person in the city knew where it came from, and they were enraged that their government had starved them.

And then one of them said to me -- I interviewed refugees going into China for a book I have written on the subject -- and the refugee said: we've been taught all of our lives the Americans and the South Koreans were our enemies. Now we go to China and find out what the reality is. We know, actually, the Americans have been feeding us in this famine, although many of us aren't seeing the food because the cadres, the Communist Party cadres, are diverting it but we wonder who our real enemy is. It isn't the United States. And what the refugee said is that many people now think the central government is their enemy.

So a food aid program can have a profound--it's a humanitarian program. That is why we are running it, but it had a psychological effect that was profound within that region of North Korea.

Our USAID missions and our people in the field are our watch posts, and in my view should be our early warning system as well. We dealt with the great southern African drought, which no one ever heard of in 1992, the worst drought in the 20th century in Africa. It threatened 22 million people in seven countries. We delivered 2.2 million tons of food. Seventy-two percent of all of the food that went into that region came from the United States. I directed the program very intensively, so I know. There were virtually no famine deaths because no famine took place because we caught it ahead of time. The reason we did is because the AID Mission Director, Ted Morris, in Zimbabwe, sent a cable in saying there is a 90-percent crop loss in seven countries. If we do not do something, there will be a famine. We acted quickly. We stopped the event from taking place before it was too late.

Now I will not claim we have learned all there is to learn about development assistance, but we do have considerable expertise in this country, and in AID, and in the private voluntary associations and in the U.N. system on what to do and how to do it. By taking advantage of this expertise and forming public-private partnerships that are at the heart of our development strategy, we have helped countries like I mentioned earlier, like South Korea, Thailand, Malaysia, Taiwan and Turkey.

A relatively new area that we are devoting considerable effort to is to help countries deal with the consequences of conflict. In this way, we lend important support to our diplomatic and military areas of our foreign affairs. In addition, just as the promise of foreign aid can be an important carrot to encourage negotiations, it also can be an important stick when we threaten to withdraw it, which we do all of the time, in terms of sanctions and that sort of thing.

Conflict prevention serves both our narrow and our broad interests in stabilizing countries on the verge of collapse. Conflict management poses similar, but distinct, challenges as we seek to contain ongoing crises and prevent them from spilling over into neighboring regions. Similarly, once a conflict has ended, there is a great need to feed and clothe people and help them rebuild their homes and their lives. More and more this means helping former combatants disarm and demobilize and removing the mines and explosives, too. The Angola peace agreement collapsed twice because the follow-up was not there to implement the peace agreements operationally on the ground.

Foreign assistance can also play an important role in the promotion of international trade by helping developing countries train their business people and their people in government to promote new products and to be part of the international trading system. All in all, there is no lack of things to do with the new AID. This was before the horrific events of the 11th of September.

But I do want to say that I think what the message is, from the 11th of September is, that--and I don't think there were people seriously arguing this in the United States even before, but it's simply in more careful focus--is that we can't cut ourselves off from the world. What goes on in the world affects us here. We know that to be true, and the polling data shows an overwhelming majority of the American people understands that.

I want to say that there has been confusion in the past as to whom the AID Administrator reports to. I report to Colin Powell. He is my boss. A very clear military hierarchy. It's very simple for me. If we have a dispute with the State Department, and we can't resolve it at a lower level, and it's an important principle, we will take it to him, and he will decide it.

The new USAID is firmly and fully committed to being part of the administration's foreign policy team that is headed by the Secretary. The changing nature of our work and the need to focus our resources more effectively has encouraged me to, very early in the administration, reorganize AID structurally around what we call the four pillars. The four pillars, quickly, are: First, the Economic Growth, Agriculture and Trade Bureau, a new bureau we just created; the Global Health Bureau, which is a new bureau we've created; the Humanitarian Assistance function, but we've added into it Conflict Prevention and Democracy in Governments; and the fourth is not a bureau, it is a concept. It's called the Global Development Alliance, which is an attempt to take the resources and expertise of AID and those of NGOs, with their private money, foundation money, money from universities and colleges in the United States, and most importantly from the business community, to see if we can take their resources in an area that they have a common interest with us on and then marry those resources into a coherent program. It does not mean we are going to give money to these organizations, it means they're going to put money in, and we are going to put money in.

Bill Gates, one of the largest foundations--the Gates Foundation--in the United States has a full-time staff person from his foundation who lives in AID. His office, I don't even know if it's a his or a her, a health person, lives in AID, and the reason is Bill Gates says: "You guys know how do this. Why should I develop a huge bureaucracy to find out how to invest our money in health programs around the world? You already know how to do it. I know what your program is. I like it."

So they do a lot of parallel investment, not through AID, but with AID in the field in these programs. Bill Gates just contributed a billion dollars from his foundation to the new GAVI, which is a global fund for vaccines and medical pharmaceuticals. By creating this global trust fund, basically it will allow us greater breadth in our programming. We put $50 million in, and he put a billion dollars in. I would say that is a pretty good deal.

So we have these four new pillars, and we are focusing our attention in these particular areas. It does not mean we are going the stop doing the things we have done before, it does mean there is going to be a focused attention on these particular areas.

Most importantly, we intend to step up and work more closely with the broad array, the matrix of private independent sector organizations in the United States. I am a thorough-going "Toquevillian," and I believe that the great strength of America is not the public sector, although it is very important -- it has to be strong -- but the private sector, and the profit-making sector, together with the nonprofit sector of our society, the charities, the associations that we create, as Toqueville described them in "Democracy in America."

None of us have a monopoly on wisdom, and all of us in all of these institutions have things that we can contribute. We are looking for alliances and more close relations with our other partners in the foreign policy apparatus of the U.S. Government, whether it be with the Defense Department, the State Department, the Congress, or the National Security Council, and so we are at the table in many of the major issues facing the United States on a regular basis, so that the development assistance portfolio, disaster relief portfolio and those issues that are important to them get heard.

Released on October 11, 2001

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