[Senate Hearing 111-164]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-164
 
     THE CASE FOR REFORM: FOREIGN AID AND DEVELOPMENT IN A NEW ERA

=======================================================================

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 22, 2009

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                              (ii)        

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page

Beckmann, Reverend David, president, Bread for the World, co-
  chair, Modernizing Foreign Assistance Network, Washington, DC..    16

      Prepared statement.........................................    18


Kerry, Hon. John F., U.S. Senator From Massachusetts.............     1


Lugar, Hon. Richard G., U.S. Senator From Indiana................     3


McPherson, Peter, president, the Association of Public and Land 
  Grant Universities, former administrator of USAID, Washington, 
  DC.............................................................     5

      Prepared statement.........................................     7


Sachs, Dr. Jeffrey D., director, The Earth Institute, Columbia 
  University, New York, NY.......................................     9

      Prepared statement.........................................    12




                                 (iii)

  


     THE CASE FOR REFORM: FOREIGN AID AND DEVELOPMENT IN A NEW ERA

                              ----------                              


                        WEDNESDAY, JULY 22, 2009

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:38 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry 
(chairman of the committee) presiding.
    Present: Senators Kerry, Menendez, Cardin, Shaheen, 
Kaufman, Lugar, Corker, and Wicker.

           OPENING STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. The hearing will come to order. I apologize 
for being a little bit late.
    We are here today to continue an ongoing conversation on 
foreign aid reform. For the past 6 months, the administration 
has been busy laying the groundwork for a new development 
agenda.
    First, the President issued a bold 2010 international 
affairs budget that significantly increases funding for vital 
programs in Pakistan and Afghanistan, begins to rebuild our 
diplomatic and development capacity, and renews our commitment 
to essential programs from education to HIV/AIDS efforts and 
hunger.
    Then, earlier this month, President Obama and other G8 
leaders announced a $20 billion food security partnership to 
provide small farmers in poor countries with the seeds, 
fertilizers, and equipment they need to break a decades-long 
cycle of hunger, malnutrition, and dependency.
    Finally, the State Department unveiled plans for a 
Quadrennial Diplomacy and Development Review, a comprehensive 
assessment designed to improve policy, strategy, and planning 
at the State Department.
    And while we are still awaiting a nominee to head the U.S. 
Agency for International Development, I am confident that a 
name will be forthcoming soon.
    These are all welcome changes that demonstrate the 
administration's commitment to a vigorous reform process and a 
bold development plan. Congress intends to be a strong partner 
in those efforts--to provide the resources, to legislate and 
ensure that our development programs are funded and designed to 
meet our priorities.
    We look forward to actively working with the administration 
to shape the Quadrennial Diplomacy and Development Review and 
other important priorities. And while there is some debate as 
to what form foreign aid reform ought to take, there is a broad 
consensus in the development community as to why reform 
matters.
    Experts agree that the strength of our development programs 
is directly linked to success or failure in frontline states 
like Afghanistan and Pakistan. They agree that USAID is more 
critical to achieving our foreign policy objectives than ever 
before, yet it lacks the fundamental tools, capacity, and 
expertise to fulfill its mission.
    They agree that too often decisionmakers lack basic 
information about the actual impact of our development 
programs, and they also agree that excessive bureaucracy and 
regulations and fragmented coordination are hampering our 
efforts to swiftly and effectively deliver assistance. And they 
agree that even as we plan for broad fundamental reform, there 
are many steps we can take in the interim to dramatically 
improve the effectiveness of our foreign aid efforts.
    I might add I don't know how many folks here--and I have 
recommended this book to a number of people recently, but 
``Three Cups of Tea'' by Greg Mortenson is an exquisite example 
of the disparity sometimes in how to deliver aid and how 
effective we are. And all you have to do is read that book and 
look at the efforts that he has made to open over 300 schools 
in Pakistan and Afghanistan, probably each of them built at 
about 20 percent of, and certainly a quarter of, the cost of 
schools formerly built under USAID or other programs and with 
much greater impact because of the way in which local 
communities and leaders were invested in those efforts.
    I don't want to go on and on about it, but I have to tell 
you it is just a dramatic example of the way in which creative 
efforts could be so much more effective at doing the kinds of 
things that we try to do.
    We assembled a small bipartisan Senate working group to 
formulate legislation that makes short-term improvements while 
setting the stage for longer term reform, which we understand 
we need.
    Senators Lugar, Menendez, and Corker, and I have been 
developing initial reform legislation that we believe goes a 
long way toward improving our short-term capacity to deliver 
foreign aid in a more accountable, thoughtful, and strategic 
manner. One provision in the bill that we believe is 
particularly important establishes an independent evaluation 
group based in the executive branch to measure and evaluate the 
impact and results of all U.S. foreign aid programs across all 
departments and agencies.
    This new institution can address a fundamental knowledge 
gap in our foreign aid programs, and quite simply, it will help 
us to understand which programs work and which do not and why.
    I want to emphasize that this legislation really only 
represents the first step in a longer reform process, but we 
believe it sends an important bipartisan signal that foreign 
aid reform will be a priority for the committee in the years 
ahead.
    I am delighted to welcome our three witnesses to this 
hearing, three of America's top development professionals. The 
Hon. Peter McPherson is a former USAID administrator, who has 
served as president of Michigan State University and chairman 
of Dow Jones. His understanding of how foreign aid works in the 
developing world has been shaped by years of service, beginning 
with the 2 years he spent right out of college as a Peace Corps 
Volunteer running a food distribution program in a Peruvian 
village.
    Dr. Jeffrey Sachs heads The Earth Institute at Columbia 
University and is a special adviser to the U.N. Secretary 
General Ban Ki-moon on the Millennium Development Goals and a 
friend of mine from Massachusetts days. At age 29, Dr. Sachs 
became one of the youngest economic professors in the history 
of Harvard, where he taught for over 20 years. So he is not 
only one of the world's leading voices on sustainable 
development, he has got the virtues of being a longtime 
constituent.
    Reverend David Beckmann is president of Bread for the World 
and a cochair of the Modernizing Foreign Assistance Network. 
And Reverend Beckmann is a clergyman as well as an economist, 
brings a religious and moral perspective to this, and I have 
worked with him and have great respect for his significant 
policy expertise. And we are grateful for your efforts to help 
the world's poorest.
    I look forward to an important and engaging dialogue here 
today.
    Senator Lugar.

              STATEMENT OF HON. RICHARD G. LUGAR, 
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Mr. Chairman, I thank you for calling the 
hearing, bringing together such distinguished witnesses and 
very dear friends, and we appreciate your coming.
    The State Department, as you have pointed out, is currently 
engaged in the Quadrennial Review of Diplomacy and Development. 
This review is likely to have far-reaching implications for 
foreign assistance policy and organization. The basic question 
with regard to development is how we can best strengthen the 
capacity of USAID to run effective foreign assistance programs.
    Earlier this month, Secretary Clinton stated, ``I want 
USAID to be seen as the premier development agency in the 
world, both governmental and NGO. I want people coming here to 
consult with us about the best ways to do anything having to do 
with development.''
    I share her sentiments, and I have confidence in the 
extraordinary development expertise housed at USAID. But during 
the past two decades, decisionmakers have not made it easy for 
USAID to perform its vital functions. Development resources 
declined precipitously in the 1990s, and decisions to 
reorganize in pursuit of better coordination between the 
Department of State and USAID resulted in the latter's loss of 
evaluation, budget, and policy capacity.
    Events since 2001 have spurred greater investments in 
foreign assistance, but many of these resources have been 
located outside USAID. Roughly two dozen departments and 
agencies have taken over some aspects of the foreign 
assistance, including the Department of Defense.
    I believe the starting point for any future design of our 
assistance programs and organizations should not be the status 
quo, but rather the period in which we had a well-functioning 
and well-resourced aid agency. To be a full partner in support 
of foreign policy objectives, USAID must have the capacity to 
participate in policy, planning, and budgeting. These functions 
have migrated to the State Department, feeding the impression 
that an independent aid agency no longer exists.
    The President has advocated doubling foreign assistance 
over time. If the administration pursues this goal, it is 
crucial that Congress has confidence that these funds will be 
used efficiently. USAID, the Agency housing most of our 
Government's development experience, must have the capacity to 
evaluate programs and disseminate information about the best 
practices and methods, and it must have a central role in 
development policy decisions.
    With these objectives in mind, it has been a pleasure to 
work with the chairman, Senator Kerry, with Senator Corker, 
with Senator Menendez, and others on a bill that will 
strengthen USAID. We will introduce this bill soon. The draft 
bill has received strong initial support from outside groups, 
led by the Modernizing Foreign Assistance Network. Our 
witnesses today have all received a draft of the bill, and we 
look forward to their comments on it.
    The legislation that we have developed promotes capacity, 
accountability, and transparency in U.S. foreign assistance 
programs. There are three deficiencies we are trying to 
address.
    First, the evaluation of assistance programs and the 
dissemination of knowledge have deteriorated in the last couple 
of decades. While USAID was a respected voice in this regard 
during the 1980s, an evaluation capacity has been allowed to 
wither.
    The bill strengthens USAID's monitoring and evaluation 
capacity with the creation of an internal evaluation and 
knowledge center. The bill also reestablishes a policy and 
planning bureau, a function that has migrated to the State 
Department. It is crucial that USAID be able to fully partner 
with the State Department in decisions relating to development.
    Second, U.S. foreign assistance programs are littered among 
some two dozen agencies with little or no coordination. We do 
not have adequate knowledge of whether programs are 
complementary or working at cross-purposes.
    The bill requires all Government agencies with a foreign 
assistance role to make information about its activities 
publicly available in a timely fashion. It designates the USAID 
mission director as responsible for coordinating all 
development and humanitarian assistance in country, and it 
creates an independent evaluation and research organization 
that can analyze and evaluate foreign assistance programs 
across Government.
    Third, staffing and expertise at USAID have declined since 
the early 1990s, even as the funding for foreign assistance 
programs has increased. This decline in capacity has resulted 
in other agencies stepping in to fill the gap. While Congress 
has begun to provide the necessary resources to rebuild this 
capacity, the Agency does not have a human resources strategy 
to guide hiring and deployment decisions.
    The bill would require such a strategy and a high-level 
task force to advise on critical personnel issues. The bill 
also encourages increased training and interagency rotations to 
build expertise and effectiveness.
    It is especially important that Congress weigh in on this 
issue because the administration has yet to appoint a USAID 
administrator or to fill any confirmable positions in the 
Agency. Without an administrator in place, USAID is likely to 
have less of a role in the current State Department review than 
it should have. The State Department review process should 
include strong voices advocating for an independent aid agency, 
and it is not clear that this is happening.
    Both Congress and the State Department should be offering 
proposals on how to improve development assistance. Our 
legislation does not rule out any options that the State 
Department may propose as a result of its review.
    But ultimately, Congress will have to make decisions on 
resources for development programs. And given budget 
constraints, it is essential that Congress have confidence in 
how development resources are spent. Building capacity at USAID 
will be an important part of this calculation.
    The issues that we face today--from chronic poverty and 
hunger to violent acts of terrorism--require that we work 
seamlessly toward identifiable goals. I look forward to working 
with colleagues on this committee to advance this bill and to 
support the development mission that benefits our long-term 
security.
    I thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Lugar.
    I would just say to my colleagues that Senator Levin has 
asked me to come to the floor to introduce an amendment, which 
I need to do at some point here in the near term. But I will 
leave the gavel in the hands of our good ranking member, and we 
have terrific bipartisan support for this. I thank Senator 
Corker and Senator Menendez and others for their input on it.
    Mr. McPherson, if you would lead off, and then we will just 
run down the table and then open it up for a period of 
questions. If you could do a summary of your total statement, I 
think it is helpful to the committee. And then we will put your 
full statement in the record as if read in full. And that way, 
we can have more time for a little give and take.
    Mr. McPherson. I will do exactly that, Senator.
    The Chairman. Would you push your mike button there?

  STATEMENT OF PETER McPHERSON, PRESIDENT, THE ASSOCIATION OF 
  PUBLIC AND LAND GRANT UNIVERSITIES, FORMER ADMINISTRATOR OF 
                     USAID, WASHINGTON, DC

    Mr. McPherson. I will do just that, Senator. It is good to 
be before this committee again. I compliment the committee for 
this process. I do hope, as you proceed, that the committee 
will act on this bill because I think it is such an important 
topic.
    A few comments about the structure of the foreign aid 
program itself. I applaud your provisions concerning personnel. 
We need to have senior technical and career leadership in the 
Agency to be able to do what we wish to achieve.
    I urge that the Agency look at some retirees. I spoke to 
the AID retirees just last week. I know there is some real 
interest there. There is some outstanding leadership I believe 
available. Look at some senior faculty at some of the 
universities around the country who have managed projects, 
people that could do an outstanding job. And my organization, 
which is Public and Land Grant Universities, would be happy to 
help.
    I would urge that the committee in some fashion discuss 
with the Agency their use of so-called administrative-
determined ``AD'' authority. This authority has been on the 
books for decades. I remember using it extensively. It is 
specifically for the purpose of bringing in mid-career or above 
people for the Agency. All you have to do is get the security 
clearances. Otherwise, you can bring in people a lot more 
quickly.
    It has been used historically, sometimes, for political 
appointees, but often for the technical and leadership 
capacity. I can think of a number of people that I brought in 
for exactly that purpose.
    I believe, as you have mentioned, that AID having its own 
policy capacity is critical. I believe it needs a budget 
capacity as well, and that a budget capacity doesn't preclude 
State having an oversight role engagement on the budget. 
Frankly, an agency without budget and policy is sort of a super 
contractor and not really an agency at all. You won't keep the 
coherence that you absolutely need.
    I think the focus of this bill on evaluation is very 
important. It was too bad, really most unfortunate, this was 
substantially cut out of AID because of budget concerns and 
other issues. An agency that can't learn from its mistakes 
inevitably becomes sterile and ineffective. The lessons learned 
provision, Senator, that is in the bill is complementary. And 
by the way, I think those two offices should be under the same 
substructure.
    The bill also has, as was mentioned, a cross-agency 
evaluation function. My thought is that you might think about 
that becoming kind of a ``think tank'' function. That, outside 
the academy, doesn't have a great name, I suppose. But a cross-
agency board, which you have in here, to keep it vital and 
focus on some key issues I think would--might well do a very 
good job. And you need some way to tie these places together in 
terms of policy.
    I worry a little bit the cross-agency evaluation function 
could fairly quickly morph into another IG or GAO, and I know 
there is some thought about this. But a think tank function, 
and perhaps a better word, can really help drive places, 
particularly if it is outside, but not totally.
    I agree with the bill's proposal that someone in a country 
needs to be responsible for all of the development activity of 
the U.S. Government reporting to the ambassador. Logically, 
that would often be the USAID mission director. In days past, 
that was fundamentally the way it worked.
    As I go around the world, these days I find so often that 
the people in a country, the ministries are confused as to who 
is in charge of what. It is almost embarrassing, but more 
importantly, it is ineffective.
    I think the Quadrennial Diplomatic and Development Review 
is a very good idea, long overdue. I agree with you, Senator, 
that we need to have an AID administrator in place and we need 
to have that review, have senior development people. Otherwise, 
it will simply not accomplish what was expected.
    Let me compliment you, Senator Lugar and this committee, on 
the Lugar-Casey bill, which has passed the committee and I hope 
gains substantial more sponsors and ultimately becomes law. 
There is a companion bill in the House. This is very important. 
It really reflects our beginning to right the balance that over 
the last 20 years or so where AID has become more and more of a 
humanitarian, immediate relief agency and not a long-term 
development agency.
    These short-term needs are critical. If you are one of the 
parties benefiting from them, you surely think they are 
critical----
    The Chairman. Mr. McPherson, could you just bring the mike 
a little toward you? Pull it toward you. Just pull it toward 
you. There you go.
    Mr. McPherson. You surely think it is critical. But the 
requirement is that you have long-term development so to 
achieve the goals that you wish.
    One last point, and then I am through, Senator. I believe 
that there is huge merit in the U.S. Government having a means 
to listen to what the country wants to have done. When you look 
at countries that have made the most progress over the last 
generation, it is largely countries that have had leadership 
that wish to make progress for their people and which had taken 
their own destiny in their own hands.
    There was outside help, but they drove it. And the central 
idea, which was a very good one in the MCC, was this concept of 
what do the countries need and want?
    I would recommend, and I choose this word carefully, that 
our AID programs, our development programs there be a 
presumption, a ``presumption'' that what a country's agenda is 
should be our agenda. It has to be a presumption because there 
are a lot of other factors, including within the country.
    But somehow or the other, we need a way to structurally--
structure in listening to what a country needs. It is not just 
kind of a politically correct thing to say. It has, in fact, 
been where we have made real progress.
    Again, I congratulate this committee on legislation, the 
Lugar-Casey bill, the convening of this meeting for this bill, 
and I urge you to take action, as you obviously are deeply 
inclined to do.
    And I thank you.
    [The prepared statement of Mr. McPherson follows:]


                 Prepared Statement of Peter McPherson

    I am pleased to appear before this committee again and I appreciate 
the attention the committee is giving to foreign aid reform.
    Let me start by urging the committee to pass out of committee the 
legislation you now are considering that would increase accountability; 
strengthen and coordinate U.S. foreign assistance in the field; and 
augment the technical capacity and human resources of the U.S. Agency 
for International Development (USAID). I have some specific suggestions 
and I think it is important the committee act on these matters.
             the organization of usaid and related matters
    Former USAID administrators Brian Atwood, Andrew Natsios, and I 
provided our view in detail in the November 2008 edition of Foreign 
Affairs. We argued that a strong independent USAID is important for 
development to play its appropriate role in the three ``Ds'' of 
Defense, Diplomacy and Development. I think our views are widely held 
in the development community, with many believing that the head of 
USAID should be a member of the cabinet.
    I personally feel it is practical for the USAID administrator to 
report to the Secretary of State but otherwise be separate from the U.S 
State Department. That was the structure when I was administrator for 
almost seven years in the 1980s. I worked hard to respond to the needs 
of the Secretary of State but also led the development work. I had 
strong support from both Secretaries of State under whom I served. I 
know there were times when my greater freedom of action and 
independence was appreciated, e.g., some of our approaches to famine 
issues, etc.
    The Obama administration has apparently decided a somewhat 
different approach to the State Department-USAID relationship and, of 
course, I respect their right and responsibility to do so. However, I 
feel there are a number of steps that can be taken, many of them 
reflected in the bill before this committee, that can greatly 
strengthen USAID and benefit the State Department in leading U.S. 
foreign policy.
    It is important that the technical and senior career leadership of 
USAID be augmented with additional people. Not enough can happen 
without these people. In fact, if USAID had the sizeable technical and 
senior leadership workforce today that it did 20 years ago there would 
be less need for the legislation you are considering here. I believe 
the committee, appropriators and the State Department support USAID's 
Development Leadership Initiative, as do I. This is a major step toward 
rebuilding USAID's technical capacity. I applaud these provisions in 
the bill.
    Augmenting staff must be more than adding junior people. USAID 
needs to bring in senior staff while a new, younger workforce gains 
experience. A priority should be placed on recruiting excellent 
retirees for senior staff positions during the next few years. For 
example, USAID should look to senior university faculty with long 
experience working on agricultural issues in the developing world. I 
know this is easier to suggest than actually do, but our universities 
are populated with many experienced faculty willing to serve. My 
organization of the large public and land-grant universities would be 
happy to help USAID identify appropriate university people. USAID 
should consider using its administrative determination authority 
positions to make these appointments. This is a decades old authority 
for the explicit purpose of bringing in senior technical staff. The 
legislative authority is, however, fairly broad and has been used to 
recruit political appointees as well as technical people and senior 
leadership. It is a flexible tool that is faster and more certain than 
the usual process and should be helpful for immediately building senior 
technical and leadership strength.
    It is critical that USAID have its own budget and policy 
capability, preferably in the same USAID office. USAID needs to be able 
to argue a coherent overall budget to the State Department in order for 
there to be a full voice for development. Budget and policy drive each 
other and are inextricably linked. I have both a management and finance 
background and know that USAID/development must have a role in creating 
their budget in order to sustain a coherent and sustained structure. A 
USAID budget function will not detract from the State Department's 
ability to consider those proposals for the whole foreign affairs 
budget.
    USAID must have a strong policy office to be a creditable 
organization, as your bill recognizes. The development agency has to be 
able to provide well-reasoned analysis and recommendations for the 
State Department to consider. I support the bill's provision to 
reestablish a Bureau of Policy and Strategic Planning at USAID.
    The fear of a merger/closer integration of USAID into the State 
Department has always been that the immediate foreign policy concerns 
of the more powerful State Department would generally undermine the 
long-term development goals of USAID. Without budget and policy 
strength at USAID that scenario is more likely to happen. While foreign 
assistance is part of overall U.S. foreign policy, development must 
have a strong voice to articulate how a development strategy 
strengthens foreign policy goals.
    I applaud the bill's focus on evaluation. The function should never 
have been cut back at USAID. An organization that does not learn from 
its mistakes is bound to become sterile and ineffective. I suggest that 
the strong evaluation function be within USAID itself. It takes senior 
level attention but I think appropriate staffing can avoid some of the 
institutional bias and engender much genuine independent and 
constructive analysis. The evaluations, as suggested in the bill, 
should focus on a few key outcomes as recommended in the bill, not 
process and inputs.
    I support reestablishing the lessons learned center suggested in 
the bill, probably associated with the evaluation office.
    I also suggest that additional reflection be given on the bill's 
cross-agency evaluation function. Even given the bill's safeguards, I 
think it could easily evolve into overlapping its functions with the 
Inspector Generals and Government Accountability Office (GAO). Instead, 
I recommend that the cross-agency office undertake major studies of 
issues and problems. I believe there is some thinking along these lines 
in the committee. This office could be something of a ``think tank'' 
that is kept vibrant and relevant by a board from several agencies. 
This certainly is not full agency coordination, but it could contribute 
to that goal. A National Academy model could be considered, for 
example.
    Overall, I support the bill's recommendation of coordination in the 
field. There needs to be someone in the field, frequently the USAID 
mission director, who is responsible for the overall coordination of 
U.S. assistance programs, and in turn, reports to the ambassador. The 
lack of this person is a major problem in many countries. I realize 
this gets complicated in individual countries but the problem must be 
dealt with.
    I applaud Secretary of State Hillary Clinton for the decision to 
undertake a Quadrennial Diplomacy and Development Review. This is a 
long overdue. It is important for development to have a senior voice in 
that review to achieve its goals.
                         the development agenda
    I applaud the committee's leadership earlier this year in passing 
S. 384, The Global Food Security Act, authored by Senators Richard 
Lugar and Bob Casey. While a number of factors were responsible for the 
acute global food crisis last year, one of the major causes was 
agricultural productivity in many developing countries. S. 384 will 
commit the U.S. to increase investment in agriculture, in part by 
engaging U.S. colleges and universities in collaboration with higher 
education institutions in developing countries to build their research, 
training and outreach capacities. The President's and the Secretary of 
State's leadership on this issue is wise and also deeply appreciated.
    In general, I believe that during the last 20 years USAID has moved 
away from long-term development and more toward transferring goods and 
services. The issue is not easy because the immediate needs are so 
great. But it is important that long-term development not be crowded 
out and that is why I am pleased by the support for agriculture. 
Sustained progress usually comes by building human resources; creating 
and distributing technology; and building institutions, stable 
governments and reasonable economic policies. Often infrastructure 
plays a key role. There clearly needs to be a balance between programs 
for addressing urgent short-term human needs and longer term 
development activities to sustain progress. That is why the food 
security legislation passed earlier this year is so important.
    I note that much of the progress around the world in the last 
several decades has been in countries where leadership wanted to see 
better lives for their people and where the country has taken control 
of their own future. We need to do a better job of listening to these 
countries and how they define their needs to the extent practical as we 
plan our development program. This is the real strength of the 
Millennium Challenge Corporation (MCC). But we should not limit giving 
full consideration to needs as set forth by only MCC countries. There 
should be a ``presumption'' that we will support a country as it sees 
its needs. Note that this is a ``presumption'' only because there may 
be other factors that are critical.
    I close by again congratulating the committee for considering 
foreign aid reform legislation and for its earlier passage of S. 384.


    The Chairman. Thank you very much, Mr. McPherson.
    Professor Sachs.

 STATEMENT OF JEFFREY D. SACHS, DIRECTOR, THE EARTH INSTITUTE, 
               COLUMBIA UNIVERSITY, NEW YORK, NY

    Dr. Sachs. Mr. Chairman, Senators, thank you for the 
opportunity to be here, and I am, indeed, a longstanding and 
delighted constituent of yours and a great fan also.
    And I thank all of you for taking on this issue, which 
sometimes seems a little bit beside the point or out of the 
mainstream or esoteric. But it is my feeling, after 30 years of 
work in the international arena and in development, that this 
is absolutely vital to successful foreign policy. And a lot of 
our greatest difficulties and challenges are going to remain 
unsolved unless we dramatically increase and improve the extent 
and quality of our development programs.
    It is striking that the big picture in today's New York 
Times, which, if you haven't seen it yet, runs the headline 
``Radical Islamists Slipping Easily Into Kenya.''
    We are working, as part of a project that I direct for the 
U.N., exactly in this area, in Garissa district in northeast 
Kenya. It is an extreme drylands area. It has a baseline where 
90 percent of the children are not in school. There is no 
water. There is no viable livelihoods.
    There is absolutely no way to maintain law and order, to 
guard against Islamist extremists slipping into an area like 
this, to avoid recruiting of violence and so forth, if these 
places remain in the path of deterioration that they are in 
now.
    Now in the project that we are involved in, for a very, 
very small amount of funding, by putting in bore wells, 
clinics, schools, the situation can be dramatically changed. We 
have done that in a community of about 15,000 people, and the 
school attendance has gone from about 10 percent to about 90 
percent, including the girls. This is a matter of what directed 
effort can mean.
    We face these problems over a large part of the world right 
now. We are there because of private philanthropy, not because 
of a U.S. program right now. But this is the kind of effort 
that absolutely is central to our most core needs, whether it 
is Afghanistan, Somalia, Sudan, Kenya, or Haiti, where I was 
last week, and many, many other parts of the world.
    Let me quickly summarize 10 specific recommendations, if I 
might? First, I believe that the focus of U.S. official 
development assistance--ODA, as it is called--should be 
sustainable economic development, meaning the integration of 
environmental and economic development objectives. If we do not 
integrate the climate and environment with the development, as, 
Chairman, you have so eloquently led on and advised our country 
on for so many years, we will fail.
    So I think we should be explicit because this is not a 
traditional way of thinking of USAID--that climate, water, 
environmental, sustenance, biodiversity are a core part of the 
development agenda. And if you look at the inside picture of 
this story, these dust storms, this is the reality of the world 
where we face the greatest challenges right now. So all of 
these issues are interconnected. I would like to see the 
legislation make sustainable economic development an explicit 
cornerstone of our legislation.
    Second, I believe that the United States should explicitly 
embrace the globally agreed development goals, starting with 
the Millennium Development Goals and the goals of the U.N. 
Framework Convention on Climate Change. I would add the U.N. 
Convention to Combat Desertification and several U.N. and G8 
commitments on global health.
    For some reason, our country has steered away from 
championing the very goals as they are described by the whole 
world community, starting with the Millennium Development 
Goals. To my mind, this has put the United States outside of 
the potential for our leadership and our leveraging, and I 
think it is something that we could--it is waiting desperately 
for the United States to pick up. The world wants the U.S. 
leadership on the Millennium Development Goals, also on climate 
change.
    And I believe that the legislation would be strengthened by 
making it clear that as we have signed on, and as we have said 
in summit after summit, meeting after meeting, general assembly 
resolution after general assembly resolution, that we are part 
of the world's shared objectives in these goals.
    Third, focus development assistance on low-income regions 
in greatest need, including sub-Saharan Africa, Central Asia, 
Haiti, and the Andean region. This may seem obvious, but 
development aid often gets diverted by the short-term emergency 
rather than the long-term development need. And I hope that we 
can keep our focus on these critically important impoverished 
areas that are stuck right now.
    Four, launch a specific sustainable development initiative 
for the drylands, and the New York Times picture and story is 
exactly in line with this. Across the Sahel, the Horn of 
Africa, the Arabian Peninsula, Western Asia, and Central Asia, 
addressing the intersecting challenges of hunger, disease, 
livelihoods, energy, and water scarcity. We have a swath of 
about 10,000 miles from roughly Mali to Afghanistan, which is 
all in a shared ecological zone where livelihoods have crumbled 
and where extremism and violence and terrorism and local 
conflict are pervasive.
    My experience working in this region for 20 years is that 
this is no coincidence. This is a region under greater stress 
than any other part of the planet, and we need a development 
focus that understands the ecological underpinnings of this 
crisis.
    This is not primarily starting as an ideological crisis. It 
may be ending there. It is starting as an ecological disaster. 
Hungry people, collapsed livelihoods, water scarcity, bulging 
populations, and we are not there, I know it, in development 
terms almost anywhere in that whole region. And that is where 
our troops are, and we need to understand better the underlying 
ecological and developmental challenges of the drylands.
    Fifth, rebuild the analytical capacity of USAID to diagnose 
the obstacles to sustainable economic development, including 
the cross-disciplinary expertise in agriculture, climatology, 
hydrology, disease control, ecology, physical infrastructure, 
economics, and other areas.
    We have dropped the ball by focusing too much on my 
profession, economics, and not enough on the ecological, the 
disease control, the agricultural, the other underpinnings of a 
health society and a healthy economy.
    Sixth, reorganize the aid programs to put official 
development assistance under one programmatic roof, and that is 
the leadership of USAID. This, of course, is the purpose of the 
legislation. As strongly as you can do it, I would urge you to 
do it. This absolutely dispersed and nonstrategic orientation 
now produces far less than the sum of the parts in terms of 
U.S. leverage, leadership, consistency, coherence, and, of 
course, results.
    Seven, in my very strong view not shared by everybody, 
place the USAID administrator at Cabinet rank and with a direct 
report to the President.
    About half of the donor countries in the world have a 
Cabinet rank for this position. In my view, we would do well to 
have a Cabinet member leading the world effort. It would give 
confidence, leveraging of U.S. political substantive 
development, knowledge, influence, authority to have the USAID 
administrator be of Cabinet rank.
    Eight, focus activities on a few strategic objectives, 
including sustainable agriculture, health, education, 
infrastructure, climate change, and business development. The 
list is not long, but we leave out many items on that list, 
unfortunately.
    Nine, certainly not a favorite in this country, adopt a 
target of 0.7 percent of gross national product in official 
development assistance by 2015, in line with the timetable 
adopted by the European Union. The current goal is to reach 
approximately 0.35 percent of GNP.
    The official goal adopted now 39 years ago by the United 
Nations and agreed to, though not with much fanfare, by the 
United States in the Monterrey Consensus in March 2002 is that 
the international target is 0.7 percent of GNI, gross national 
income, or GNP, and that countries should ``make concrete 
efforts to achieve the international target.''
    We signed on to that. Of course, no one ever mentioned it 
again, but we did sign on to that in a thoroughly negotiated 
document in 2002.
    Europe has set a timetable by 2015. This is a few parts of 
1 percent of GNP. I believe that we should move part of our 5 
percent of GNP of the military budget, a small fraction of 1 
percent, to official development assistance to recognize the 
centrality of this category for national security, and that we 
would get huge benefits--political, geopolitical, 
developmental, and national security--by adopting this goal.
    Finally, leverage U.S. leadership in finance through 
increased use of multilateral institutions that pool donor 
finances in support of country-led plans of action that are 
bolstered by independent technical review, monitoring, and 
evaluation. And I have two such programs in mind as models.
    One is the Global Fund to Fight AIDS, TB, and Malaria, 
which, in my view, is a model of how development assistance can 
be delivered. And the second is the Global Alliance on Vaccines 
and Immunizations. Both of them pool donor resources. Both of 
them invite country plans. Both of them review country plans 
for their technical merit, and then both of them monitor and 
evaluate the actual delivery in quantitative terms so the money 
doesn't go missing.
    And I think it is a very good model that could, again, 
leverage U.S. finances 3 to 1 if we did more through the 
multilateral mechanisms.
    Thank you very much, Senators.


    [The prepared statement of Dr. Sachs follows:]

            Prepared Statement of Professor Jeffrey D. Sachs

    Mr. Chairman and members of the Committee, thank you for the honor 
of allowing me to testify today, and for your leadership in addressing 
the reform and upgrading of U.S. official development assistance (ODA). 
ODA is an integral part of U.S. foreign policy. Yet it is currently too 
poorly directed, too small in scale, and too fragmented to play the 
role that it should. I make several specific recommendations to correct 
these problems.\1\
---------------------------------------------------------------------------
    \1\ Please note that I use the term ODA in the technical sense 
agreed on by the Development Assistance Committee (DAC) of the 
Organization for Economic Cooperation and Development (OECD). It 
overlaps closely with the Government 150 account and some other 
aggregate measures often referred to as ``US foreign assistance,'' but 
is limited to grants and low-interest loans with a development 
objective, as opposed, for example, to military support programs, aid 
to middle-income countries, and loans at market interest rates.
---------------------------------------------------------------------------
              direction of official development assistance
    The core purpose of ODA should be to help low-income countries to 
overcome obstacles to Sustainable Economic Development. Sustainable 
economic development means the long-term process of economic 
advancement consistent with environmental and social sustainability. 
Obstacles to sustainable economic development may include: low levels 
of agricultural productivity, absence of infrastructure, vulnerability 
to natural conditions (climate, water, disease), excessive fertility 
rates and population growth, extreme deprivation of girls, women, or 
ethnic minorities, and poor public policies.
    Development assistance is highly effective when it is focused on 
these specific objectives. It is much less effective when it is diffuse 
and lacking in clear and quantified goals. There are countless 
development aid successes in recent years, including disease control 
(malaria, measles, leprosy, guinea worm, and others), improved school 
enrolment and completion, increased agricultural output, and deployment 
of community health workers. The key to success is to combine good 
science, cutting-edge technology, and solid management of aid efforts 
at country level. The new $20 billion G8 initiative to promote 
smallholder agriculture could become another great success story, 
producing an African Green Revolution with the same significance as 
Asia's Green Revolution of the 1960s and 1970s.
    Part of the job of a good foreign assistance program is to diagnose 
the obstacles facing countries in achieving sustainable economic 
development. Diagnoses in the past have been simplistic, ideological, 
and narrowly focused on market reforms, rather than holistic, evidence 
based, and focused on environment, infrastructure, disease control, and 
science and technology, in addition to market reforms.


    Priority regions in need of U.S. ODA include:

   Sub-Saharan Africa

   Central Asia

   Haiti

   The Andean Region


    A special focus should be given to the Dry Land regions stretching 
across the Sahel of Africa (Senegal, Mali, Chad, Niger, Sudan, 
Ethiopia), the Horn of Africa, the Arabian Peninsula, Western Asia 
(Iran, Iraq), and Central Asia. The Dry Land region suffers multiple 
assaults of poverty, hunger, drought, and disease that lead to 
instability, conflict, human suffering, and vulnerability to terrorism. 
The conflicts in Darfur, the Ogaden desert, Somalia, Yemen, Iraq, 
Afghanistan, and the Northwest Frontier Provinces of Pakistan, are all 
examples of dry land crises. The overlap of global crisis and the dry 
lands is illustrated in Figure 1, taken from my recent book Common 
Wealth: Economics for a Crowded Planet.
    In order to maximize effectiveness, global leadership, and 
leveraging of U.S. taxpayer dollars, the U.S. foreign assistance 
program should specifically embrace major global development objectives 
to which the U.S. is a signatory. Most importantly, these include:


   The Millennium Development Goals, adopted in 2000 to be achieved by 
        2015

   The UN Framework Convention on Climate Change,

   The UN Convention to Combat Desertification

   Various G8 and UN General Assembly commitments on hunger, disease, 
        environmental sustainability, and poverty alleviation By taking 
        the lead on global goals, especially the Millennium Development 
        Goals and climate change, the U.S. would achieve remarkable 
        leverage in promoting rapid improvements in living standards 
        and environmental sustainability. The world is hungering for 
        that kind of U.S. renewed leadership and engagement.
             scale of u.s. official development assistance
    The scale of official development assistance, currently at around 
0.20 percent of GDP and around 0.7 percent of U.S. budget spending, is 
far too low. Doubling ODA by 2015 is a very worthy and politically 
challenging goal, but is unlikely to be sufficient to meet U.S. foreign 
policy objectives. A part of the current military outlays, at roughly 5 
percent of GNP, should be redirected to ODA, since effectively deployed 
ODA will give the U.S. much more security than the marginal budget 
dollar spent on the military.
    The U.S. is committed, as a signatory to the Monterrey Consensus 
(March 2002) to ``make concrete efforts towards the international 
target of 0.7 percent of GNP as official development assistance.'' 
(Paragraph 42). This target is almost unknown in the Congress and the 
American public, but is deeply embedded in international commitments, 
at the UN, G8, and other forums. 16 of the 22 donor countries in the 
OECD have set a timetable to reach 0.7 by 2015. America's failure to 
date to acknowledge this international target is a point of continuing 
weakness of American global leadership.
    The 0.7 percent of GNP, which stretches back to 1970, and has been 
repeatedly confirmed in international gatherings, is not taken out of 
the air. Several comprehensive studies, including the UN Millennium 
Project report on Investing in Development: A Practical Plan to Achieve 
the Millennium Development Goals, have shown that 0.7 percent of GNP 
from all major donors is the magnitude of assistance needed to achieve 
the Millennium Development Goals and to address global emergencies 
requiring urgent foreign assistance.
    The global need for official development assistance in future years 
will rise, not fall, as climate shocks, rising population pressures, 
environmental degradation, and needs to adopt sustainable energy and 
water systems gain urgency. The U.S. should be preparing now for this 
inevitable scaling up of needs.
    I strongly urge that the U.S. adopt a strategy of meeting the 0.7 
target by 2015, along side the European Union, which has set a specific 
timetable for accomplishing this target.
                overcoming fragmentation of aid efforts
    The current ODA efforts are divided among a dozen or so departments 
and agencies. There is a lack of strategy in directing our funds to 
foreign governments, multilateral agencies, and non-governmental 
organizations. The result is that the U.S. development assistance 
programs achieve less than the sum of the parts in terms of U.S. 
leadership, leveraging of taxpayer dollars, and efficacy of development 
programs.

    I recommend the following corrective steps:

    First, official development assistance programs should be 
reconstituted within a single agency, presumably the U.S. Agency for 
International Development (USAID). The Administrator of USAID should be 
of cabinet rank, with a direct report to the President, as are at least 
half of the development ministers in the rest of the DAC donor 
countries. Of course, the Secretary of State would have final authority 
on foreign policy on behalf of the President, so that in practical 
terms the USAID Administrator would be subordinate to the Secretary of 
State in the implementation of ODA.

    Second, the U.S. should recognize that it achieves maximum 
leverage, leadership, legitimacy, and efficacy when it operates its aid 
programs through multilateral institutions, as long as the U.S. voice 
in those institutions is adequate. Great ODA successes in recent years 
include the Global Fund to Fight AIDS, TB, and Malaria (GFATM) and the 
Global Alliance for Vaccines and Immunizations (GAVI). Both GFATM and 
GAVI are donor pools, in which the U.S. plays an important funding, 
steering, and leadership role. The new G20 initiative on smallholder 
farming is perfectly suited to such a multilateral approach.


    Successful multilateral initiatives, like GFATM and GAVI, have the 
following characteristics:


   Donors pool their financial resources

   Low-income countries submit National Action Plans (NAPs) for 
        funding

   An Independent Technical Review Panel vets the NAPs for scientific, 
        financial, and managerial coherence

   Cutting-edge and appropriate technologies are deployed (for 
        example, medicines, high-yield seeds, innovative irrigation 
        systems, renewable energy sources)

   Private-sector companies and NGOs are invited as participants in 
        the national action plans

   The NAPs are specific, detailed, quantitative, and subject to 
        review and audit

   All programs are monitored and evaluated


    Third, the U.S. should reorganize a considerable amount of its 
development efforts around a few strategic programs linked to 
sustainable economic development, including:


   Agricultural productivity in low-income, food-deficit countries

   Primary health care and disease control

   Education for all

   Sustainable energy

   Sustainable water

   Basic infrastructure (roads, power grid, ports, airports, rail, 
        connectivity)

   Integrated rural development

   Promotion of sustainable businesses

   Climate change adaptation


    In each of these areas, the U.S. should champion a rigorous, 
scaled, multilateral effort consistent with achieving the Millennium 
Development Goals, the Climate Change objectives, and the other 
globally agreed development objectives.
Ten Specific Recommendations


   1. Focus U.S. official development assistance on sustainable 
            economic development, and make this goal explicit in U.S. 
            legislation

   2. Embrace the globally agreed development goals, including the 
            Millennium Development Goals, the UN Framework Convention 
            on Climate Change, the UN Convention to Combat 
            Desertification, and several UN and G8 commitments on 
            global health

   3. Focus development assistance on low-income regions in greatest 
            need, including sub-Saharan Africa, Central Asia, Haiti, 
            and the Andean region.

   4. Launch a specific sustainable development initiative for the dry 
            lands stretching across the Sahel, Horn of Africa, Arabian 
            Peninsula, Western Asia, and Central Asia, addressing the 
            intersecting challenges of hunger, disease, livelihoods, 
            energy, and water scarcity.

   5. Rebuild the analytical capacity of USAID to diagnose the 
            obstacles to sustainable economic development, including 
            cross-disciplinary expertise in agriculture, climate, 
            hydrology, disease control, ecology, infrastructure, 
            economics and other relevant areas.

   6. Reorganize the aid programs to put ODA under one programmatic 
            roof, under the leadership of USAID

   7. Place the USAID Administrator at cabinet rank with a direct 
            report to the President

   8. Focus aid activities on a few strategic objectives, including 
            sustainable agriculture, health, education, infrastructure, 
            climate change, and business development.

   9. Adopt the target of 0.7 percent of GNP in official development 
            assistance by 2015, in line with the timetable adopted by 
            the European Union. Reallocate part of the military budget 
            (currently around 5 percent of GNP) for this purpose.

  10. Leverage U.S. leadership and finance through the increased use of 
            multilateral institutions to pool donor finances in support 
            of country-led plans of action, bolstered by independent 
            technical review committees, audits, and monitoring and 
            evaluation of programs.
            
            



    Senator Lugar [presiding]. Mr. Beckmann.

 STATEMENT OF DAVID BECKMANN, PRESIDENT, BREAD FOR THE WORLD, 
COCHAIR, MODERNIZING FOREIGN ASSISTANCE NETWORK, WASHINGTON, DC

    Reverend Beckmann. Ranking Member Lugar, members of the 
committee, I am David Beckmann. I am the president of Bread for 
the World. I am also cochair of the Modernizing Foreign 
Assistance Network.
    Thank you for the work that you are doing on foreign 
assistance reform, for this hearing, and for the legislation 
that Senators Kerry, Lugar, Menendez, and Corker have 
developed.
    I especially appreciate the fact that you are working on 
this in a bipartisan way. Whether people are liberal or 
conservative, we want to use our money well. And this 
committee, by working on this in a bipartisan way, is helping 
us get a good result and a result that will be long lasting.
    I think now is the time. Under President Bush's leadership 
and now under Obama's leadership, we are expanding U.S. foreign 
assistance. It is the right thing to do. It is the smart thing 
to do. Even in this economy, voters favor--a large majority of 
voters favor increased funding for effective programs that 
reduce hunger, poverty, and disease.
    But all of us know that U.S. foreign aid could be made more 
effective. And if this Congress and this administration can 
work together to make it more effective, we will use our 
dollars better for decades to come, and voters for decades to 
come will be more supportive of further increases in 
assistance.
    I really applaud the Obama administration and this Congress 
for the attention that you have shown to international 
development. We have got lots of problems, and you could have 
given it a pass--it would have been wrong--but this Congress 
and the Obama administration have done a lot on international 
development.
    When I last testified before the committee, you were 
considering the surge in world hunger that we have suffered and 
the Global Food Security Act. And now, President Obama and 
Secretary Clinton have launched a global food security 
initiative. As the chairman mentioned, they have also put 
forward a budget that provides for increased funding for 
international affairs, foreign assistance, and notably 
increased funding for the capacity in the State Department and 
AID.
    I think the administration and both houses of Congress have 
started work on foreign assistance. The Secretary has called 
for a Quadrennial Diplomacy and Development Review. In the 
House, the House has passed its State Department 
reauthorization bill and a Pakistan bill. Chairman Berman says 
that foreign assistance reform is his top priority for this 
Congress. The Initiating Foreign Assistance Reform Act that he 
and Mark Kirk introduced now has 83 House Members, members of 
both parties, as cosponsors.
    On the Senate side, I wish Chairman Kerry were here to tell 
him how much I liked his speech at the Brookings Institution. I 
think it really laid out an exciting vision for what needs to 
happen in strengthening diplomacy and development for the 
United States. And the bill that he and Senator Lugar and 
Senator Menendez and Senator Corker have developed is really an 
important step forward and along the lines of the chairman's 
vision.
    In the bill itself, I especially love the statement of 
purpose. It says that as we go into foreign assistance reform, 
we should really be driven by trying to make our foreign 
assistance more effective in support of global development and 
the reduction of hunger and poverty. That is right.
    Most of the bill is about strengthening AID. And Senator 
Lugar, in his opening remarks, made it clear why that is so 
important. Secretary Clinton has said that one reason why we 
don't have an administrator so far is that several qualified 
candidates didn't want to take the job because the Agency is so 
weak. So that strengthening of AID, it makes sense.
    I think the transparency section of the bill is also really 
good. We don't want to go back to the AID of the 1980s. 
President Obama has called for a 21st century development 
agency, and one of the hallmarks of a 21st century agency is 
transparency and responsiveness.
    A much more transparent foreign assistance program will 
involve the American people. It is one way to facilitate 
public-private collaboration and to facilitate the involvement 
of people in the developing countries in the programs that we 
help to finance. And as Senator Kerry mentioned, that 
involvement by the local people is the best way to assure the 
effectiveness of what we are trying to do to help them.
    My main request is that you introduce this bill just as 
soon as possible. There are a lot of organizations--Bread for 
the World, Oxfam, the ONE Campaign, InterAction, Women Thrive 
Worldwide--several of the major think tanks, lots of other 
organizations have been engaging their nationwide networks in 
understanding why foreign assistance reform is important.
    And so, tens of thousands of concerned Americans are eager 
to have a chance to weigh in and have their say in this debate. 
And once this bill is introduced, they can speak to their 
Members of the Senate, whether they are on the committee or 
not, and say, ``We want you to cosponsor this bill.'' So that 
gives them a chance to help build broad support in the Senate 
for the important and very difficult work that this committee 
is doing.
    I do think now is the time. And one reason that now is the 
time is because of you, actually. I think you and the other 
people in place in the key leadership roles on this issue are 
the right people to do the job. We have a President and a 
Secretary of State who are really committed to reducing global 
poverty. They are both committed to foreign assistance reform.
    The House has shown that they can move this issue through 
the House. This committee is extraordinary in your ability to 
work across the aisle on complex issues that are important for 
our Nation and the world.
    So I thank God for the leadership we have got, including 
you, and I pray that God will continue to guide and bless your 
steps as you work on this really important issue.


    [The prepared statement of Mr. Beckmann follows:]

               Prepared Statement of Rev. David Beckmann

    Chairman Kerry, Ranking Member Lugar, and members of the Committee, 
thank you for inviting me to testify. I am David Beckmann, president of 
Bread for the World, a collective Christian voice urging our nation's 
decision makers to end hunger at home and abroad. I also serve as co-
chair of the Modernizing Foreign Assistance Network, a broad coalition 
of groups and individuals working to make U.S. foreign aid more 
effective in support of global development and the reduction of 
poverty.
    I am grateful for this hearing and for the draft legislation that 
Senators Kerry, Lugar, Menendez, and Corker have developed. I 
especially appreciate the fact that you are working in a bipartisan way 
on this issue. The institutional changes you legislate will be better 
and more long-lasting if members of both parties, conservatives and 
liberals, contribute their points of view.
    Now is the time for foreign aid reform. President Bush led a major 
expansion of foreign aid, and President Obama proposes to double 
foreign aid. A substantial majority of U.S. voters favor spending more 
on effective programs to reduce hunger, poverty, and disease in 
developing countries. It's the right thing to do and the smart thing to 
do. But we all know that foreign aid could be spent more effectively. 
If this administration and Congress manage to improve the effectiveness 
of U.S. assistance, our dollars will do more good for decades to come, 
and voters will continue to support increases in funding.
    In a recent survey, 85 percent of registered voters agreed that we 
``need to modernize how foreign assistance is currently organized and 
implemented.'' In a poll last November--in the depths of the economic 
crisis--87 percent agreed that ``in a time like this, we need to make 
foreign assistance more efficient and get more of our aid to people who 
really need it.''
    I applaud the Obama administration and this Congress for the 
attention you have already devoted to international development, 
including foreign assistance reform. When I testified before this 
Committee in March, you were considering the terrible setback in 
progress against world hunger that has taken place over the last 
several years. You passed the Global Food Security Act. In his 
inaugural address, President Obama promised people in poor countries to 
``help make your farms flourish,'' and the administration--led by 
Secretary Clinton--has now launched a global food security initiative. 
The President was able to convince the other G8 nations to work with 
the United States to help farmers in poor countries increase their 
production.
    The administration's 2010 budget request puts us on the path to 
doubling foreign assistance by 2015, including a major investment in 
global health and increased investment in agriculture. The 
administration's budget also proposes to bolster the capacity of USAID 
and the State Department to carry out their development and diplomatic 
missions.
    Secretary Clinton recently announced that the State Department and 
USAID are undertaking a quadrennial diplomacy and development review 
(QDDR). It will provide a short-, medium-, and long-term blueprint for 
our country's diplomatic and development efforts. This process will 
articulate a clear statement of foreign policy and development 
objectives, recommend management and organizational reforms, and 
propose performance measures. The QDDR process will incorporate 
perspectives from across the government, from Congress, and from 
nongovernmental experts.
    The House of Representatives has already passed a State Department 
Reauthorization Bill and a Pakistan bill. Chairman Howard Berman's 
stated priority for this Congress is foreign assistance reform, and, as 
of today, a bipartisan group of 83 members of the House have signed on 
as cosponsors of the Initiating Foreign Assistance Reform Act, H.R. 
2139. Mr. Berman's staff are already working on a rewrite of the 
Foreign Assistance Act.
    Chairman Kerry, in your foreign policy address at the Brookings 
Institution in May you articulated the case for strengthening U.S. 
diplomacy and development assistance. With regard to foreign assistance 
reform, you called for clear goals, improved coordination, stronger 
development expertise and capacity, streamlined laws to untie the hands 
of aid professionals, and the empowerment of country teams to shape 
programs based on local needs.
    The draft legislation you have now developed with Senators Lugar, 
Menendez, and Corker is a major step forward. I love the statement of 
policy. It calls for a reform of USAID and related agencies in order to 
better serve the U.S. commitment to global development and the 
reduction of poverty and hunger.
    Much of your bill is focused on building the capacity of USAID, 
which is urgently required. USAID's operational capacity has decayed. 
It no longer has budgeting or planning authority. It is not currently 
represented on the National Security Council. The Administrator 
position is still vacant, partly because several candidates have 
declined to take charge of such a weak agency.
    Under this administration, the State Department has demonstrated a 
deep commitment to global development and poverty reduction. But it is 
crucial that some funding be dedicated single-mindedly to development. 
When we try to achieve defense and diplomatic goals with the same 
dollars, aid is usually much less effective in reducing poverty. In my 
mind, that's the basic reason we need a strong development agency, with 
its own capacity to plan and carry out programs. These programs should 
be coordinated with other foreign policy purposes, but distinct from 
them.
    Your bill's section on transparency is especially important. 
President Obama has called for an ``elevated, streamlined, and 
empowered 21st century U.S. development agency'' that will be 
``accountable, flexible, and transparent.'' The reform of U.S. foreign 
assistance gives us a chance to create a development agency that will 
be transparent to all Americans--to encourage public support and 
involvement in global poverty reduction and to facilitate public-
private partnerships. Even more importantly, the transparency section 
of the bill will help people in developing countries know about U.S. 
assistance programs. If local people are more aware and involved, our 
aid programs will be more effective.
    My main request is that you introduce this bill as soon as 
possible. Quite a few organizations have helped their networks across 
the country understand that foreign assistance reform is important to 
future gains against hunger, poverty, and disease. These organizations 
include Bread for the World and many religious groups, InterAction, 
Oxfam, the ONE Campaign, Save the Children, Women Thrive Worldwide, 
Mercy Corps, CARE, the U.S. Global Leadership Coalition, World Wildlife 
Fund, the Centre for Development and Population Activities (CEDPA), the 
Center for Health and Gender Equity (CHANGE), the International Center 
for Research on Women, the International Women's Health Coalition, the 
Global AIDS Alliance, and RESULTS. Our coalition also includes opinion 
leaders at the Center for Global Development, the Center for American 
Progress, and Brookings. Thus, tens of thousands of people around the 
country are now informed and eager for a chance to have their say. Once 
your bill is introduced, they can ask their senators to cosponsor, thus 
building broad support for this Committee's work on foreign assistance 
reform.
    As I said at the outset, now is the time for foreign assistance 
reform, and the main reason is leadership. We have a President and 
Secretary of State who are committed to reducing hunger and poverty in 
the world and to making our programs of assistance more effective. Your 
counterparts in the House have demonstrated their leadership on this 
issue. And this Committee has demonstrated exceptional ability to work 
together across the aisle on complex issues that are important to our 
nation and the world.
    May God continue to bless your leadership.


    Senator Lugar. Well, thank you very much.
    We will proceed now with questions. The chairman suggested 
a 7-minute time limit, if that is preferable for all. And I 
will commence the questions.
    Secretary Clinton recently announced the start of a 
Quadrennial Diplomacy and Development Review, which we have 
talked about today, a process similar to the QDR at the 
Pentagon. I believe that most members of our committee are 
supportive of this initiative. But as this is a new process for 
the State Department, I would ask any of you what elements do 
you believe are important for its success? What should we be 
looking for, as members of this committee?
    Yes, Mr. Beckmann.
    Reverend Beckmann. I think it is an important process, a 
positive step, and the memo in which the Secretary laid out 
what they are going to do lays out a number of steps that can 
make it effective. So it is particularly important that AID and 
MCC have an important role in the process, that they plan to 
reach out to other Cabinet departments, that they plan to reach 
out to Congress, nongovernmental actors, and that this review 
is supposed to be followed by a whole of Government review 
because, clearly, trade policy, agriculture policy, all of 
these things interact.
    It seems to me, as you, Senator Lugar, and Mr. McPherson 
both said, what is going to be important is that they figure 
out a way to get a strong voice for development in the review 
because AID is so crippled. If they just invite a few AID staff 
to the meetings--in the recent meetings where I have been 
together with State Department and AID, the AID staff are 
clearly there to speak when spoken to. They are not strong 
actors in the discussion. And so, Deputy Secretary Lew will 
have to figure out some way to get a strong voice for 
development in the process.
    One way to do that--I mean, one way to do it is to get the 
administrator in place. But even then, the administrator will 
just be getting oriented as this thing gets underway. So one 
possibility would be to bring in some strong nongovernmental 
voices into the process, people who are trusted, people who 
will be team players but can speak from the perspective of 
people who are primarily concerned about development.
    Because it is clear that in some situations, our other 
foreign policy objectives are intermingled with what is good 
for development. And so, we need some people in this process 
who speak up and talk about how do we set up structures so that 
we do a good job on development as well as on our other foreign 
policy objectives.
    Senator Lugar. Having heard your statements today and the 
chairman's statement, it appears to me that we should lend 
these statements to the review process, with the hope that this 
kind of core function might be restored.
    Let me just ask a second question along these lines. USAID 
used to have robust evaluation programs, according to many 
observers. And they conducted evaluation and widely 
disseminated the findings. And now the development community 
seems to be missing these findings presently.
    You have all touched upon this in a way, but how can a 
restored USAID be influential throughout the development 
community, which goes well beyond the State Department, the 
Government, even private groups such as some you have been 
with? Can you give us some thoughts about that?
    Yes, Mr. McPherson.
    Mr. McPherson. It is necessary to reestablish with an 
adequate budget the structure, but you also need to have very 
senior field operational staff run it, really. A mission 
director in a couple of countries who had been at this business 
for 20 years can see things that an academic interest would not 
be able to see. So, the proper leadership is important.
    And when the evaluation has worked well over the years, and 
it hasn't always--the administrator has to pay attention to 
this, has to ask, has to direct it to do some areas. It is 
almost like when I have been chair of a major board with the 
internal audit. That audit had to report regularly.
    Senator Lugar. As you could testify from your own 
experience.
    Mr. McPherson. Absolutely. Absolutely. I mean, this has to 
be seen by the leadership of the Agency as an important tool. 
You have to be willing to admit mistakes, learn some lessons, 
and that is a mindset of a whole place. And it isn't a cookie 
cutter way to do it, but to start with, somebody that is 
respected by the field to run it.
    Now I think today, as opposed to not many years ago at all, 
there is a method to communicate lessons. I mean, the Web site 
that pulls up the work you have done, that pulls back into 
projects so you can really work it through. The World Bank has 
some of this. There needs to be some linkages between--this is 
an area where these agencies can work together, the MCC, AID, 
other agencies.
    I think with technology, it will take a little resources. 
But frankly, this cross-agency board think tank could kind of 
force that issue, I think.
    Senator Lugar. Dr. Sachs, let me just ask, as my time is 
coming to an end, in your testimony, you suggested that 
assistance should be reorganized around a few strategic 
objectives. One of these might be the food security objective 
of our bill, the Global Food Security Act of 2009, that has 
been reported out of committee. But touch upon again those 
objectives that you would start with as we reorganize this 
process.
    Dr. Sachs. Thank you, Senator.
    I think both on evaluation and on the substance, we lack 
clear goals right now of almost all of the foreign assistance. 
We have a couple of programs like PEPFAR and the President's 
Malaria Initiative, which have clear goals. Most of the rest is 
very scattered, very difficult to evaluate because we don't 
even have a clear idea of what we are doing.
    And I would like to emphasize that we are so marginal in so 
many areas right now because of lack of scale, lack of clarity, 
that ambassadors all over the world routinely pull me aside and 
say, ``Can you help us get any kind of program going in this 
country because we don't have anything really happening.''
    So I have identified in my own testimony five areas that I 
think--or six areas that I think are central--agriculture, 
health, education, infrastructure, business development, and 
climate change. These are the core of the Millennium 
Development Goals. They are the core of our climate and energy 
challenge worldwide.
    They go to the crux of the extreme deprivation, poverty 
that leads to the instability and violence that the New York 
Times refers to today. And I think that they constitute a kind 
of framing.
    Now they also come with clear international goals that have 
been put forward that the United States could be party to and 
then evaluate our programs against.
    Senator Lugar. Thank you.
    Senator Menendez.
    Senator Menendez. Thank you, Senator Lugar.
    Let me say I am really pleased that we are having this 
hearing today. This is a topic that I have worked on for 
several years, and I am encouraged by the progress that we are 
making in the legislation.
    As the chair of the subcommittee on all of our foreign 
assistance, it has been great to work with Senator Corker and 
with you, Senator Lugar, and with the chairman on this. And I 
really think we are moving in the right direction here.
    I also appreciate the broader community that is out there 
that has been engaged on this issue, from organizations that 
have for their existence been out there promoting the 
importance of our development and foreign assistance, as well 
as citizens who have really engaged in this. It is critical 
because this is not--for many people in our country, the nexus 
between what we do and our foreign assistance and development 
assistance to their lives is not clear to them. Therefore, the 
advocacy for this is incredibly important, and this is where 
citizens make a difference.
    To me, this isn't just an issue of morality or an issue 
that is driven by a sense of doing what is right for the most 
disenfranchised around the world, although those, in and of 
itself, they are both moral and correct and desirable. But they 
are also issues that are directly in the national interests and 
the national security of the United States. I think we have 
every reason in the world to understand that every time we 
provide credit to a farmer who is displaced or training to a 
woman who wants to run a business out of her home that we are 
creating stability and security throughout the world, and that 
is in the national interest of the United States.
    When we provide an effective alternative to illicit 
economic activity, we are making a blow against drugs coming 
into this country from others who have no alternatives in terms 
of poor coca farmers to decide whether I will do that to 
sustain my family or I will have a sustainable development 
alternative.
    So I think all of these issues are incredibly important, 
and I think they come right back to many of the issues we are 
debating here in the United States Senate and the Congress, 
whether it is about undocumented immigration. People leave 
their countries for only two reasons--civil unrest or dire 
economic necessity. Change those dynamics, you won't have that 
pressure.
    If you, in fact, want to ensure that we do not face the 
challenges of terrorism in the hemisphere, create stability 
because terrorism works best under the cover of chaos. If you 
want to ensure that there are more American goods and services 
to be sold throughout the world, create an economic class that, 
in fact, has the goods--has the wherewithal to purchase those 
goods and services, and therefore, it is in our economic 
interests. If we want to meet the challenges of global health, 
where diseases know no boundaries or borders, then, in fact, 
this is a critical issue.
    So I really think that this is one of the most important 
things we can do, and reforming it so that, in fact, the 
American people can see the results is incredibly important. 
That is why I have suggested the idea of some of our 
independent monitoring mechanisms for evaluating the impact of 
our foreign assistance program.
    I think there is a great difference between saying that we 
handed out 500 textbooks or trained 200 teachers. But it is far 
different to say that we have improved the aptitude of 
schoolchildren and that these improvements helped connect them 
to meaningful employment, which raise their household incomes, 
allow them to eat better, access medical services, and on and 
on.
    Finally, I really do think that AID, we need the 
institutional ability to deliver these services. In my personal 
view, AID has been decimated over the last several years in a 
way that that is very difficult. I have focused on building 
USAID from the inside out, and I think this bill does that in a 
coherent and strategic manner as well.
    So for all those reasons and many more, I think we are 
headed on the right course. And I really appreciate the 
bipartisan spirit here because that is going to be necessary to 
make this happen.
    With that, I do have one or two questions. I mentioned this 
independent evaluation and research innovation group for 
foreign assistance appears to be a step toward establishing a 
consistent evaluation scheme across the Government foreign 
assistance programs. What are your views in terms of having 
such an independent group that can look across the spectrum of 
U.S. Government programs?
    Is that a good thing? Are there problems with it? How would 
you structure it? I would be interested in hearing your views.
    Mr. McPherson. I think that there needs to be a strong 
evaluation office led by a strong field-oriented person at AID. 
This bill was overwhelmingly, in my view, correct, and I 
congratulate you for its work.
    I would tinker a little bit with the wording, at least as I 
understand it, for this cross-agency evaluation or at least 
think carefully about how to make sure it doesn't become 
another IG or GAO. Those organizations play important 
functions, but I suspect the Agency heads--MCC, AID, and so 
forth--will feel like it is another outside group to issue its 
reports and so forth.
    I think, as mentioned a moment ago, the internal auditor 
ultimately needs to be somebody management uses to drive 
improvements. Evaluation is something that needs to be a tool 
to drive improvement.
    I think the cross-agency--I called it a think tank a moment 
ago. I think you need some cross-thinking. You need some 
independence. There are some great issues here that people 
haven't really dug into, and I don't know that they should be 
associated with evaluation, but they don't need to be 
primarily.
    So I would make the cross-agency function or organization 
have a somewhat different focus and a very strong, probably 
reporting to the administrator, evaluation function within the 
agency. We are getting into the weeds in all these things, and 
I probably have almost too many views, having worked and 
worried about these issues for decades. But I want to be clear 
that the focus on a much--on a very strong evaluation.
    I like to say an organization that can't learn from itself 
is inevitably a sterile and, in due course, dysfunctional 
structure.
    Senator Menendez. Dr. Sachs.
    Dr. Sachs. Yes, I would like to start by stressing that the 
biggest problem in our development assistance has been the lack 
of scale and the lack of clear goals and the lack of ambition. 
So unless we solve those problems by adopting a view that we 
are going to scale up significantly, take on bold objectives, 
pursue them assiduously, evaluation won't solve the problem.
    It is not that we have been doing a huge amount, but doing 
it poorly. We have doing relatively little and scattershot 
without clear objectives, except in a couple of programs, and 
not knowing what we are doing.
    I think the idea of an independent evaluation office is a 
good one. I think the experience of the World Bank with such an 
office has been a very good one because it has helped to 
correct directions that that institution has taken over the 
years and help get them back on course. So you might look at 
the World Bank experience as a kind of a model of how that can 
function.
    But I do want to emphasize that our biggest need is a 
scaled-up program that adopts bold objectives, and I would 
urge, once again, that we start with the Millennium Development 
Goals because those are the globally agreed objectives. The 
United States has signed on. If USAID would champion those, we 
would find that there are 191 other U.N. member governments and 
21 other donor governments that would be natural--at least the 
21 other donors, let me put it that way, that would be natural 
partners because we are all signed on to the same objectives.
    And USAID needs to be a more goal-based, goal-focused 
institution. From there, we can evaluate how we are doing 
toward explicitly set objectives.
    Senator Menendez. Mr. Chairman, my time is up. I just 
appreciate your answer, and I understand your advocacy for 
greater financial engagement, and I am an advocate of that 
myself.
    I would just say that we based our independent evaluation 
model on the World Bank's view. So I am glad to hear that that 
is something that you think is important.
    I will wait to see if we have a second round, Mr. Chairman.
    Senator Lugar. Thank you, Senator Menendez.
    Senator Corker.
    Senator Corker. I, too, want to thank you for your 
testimony and certainly what you do on a daily basis and all 
the many experiences we have to draw on here.
    I am very excited about this legislation and certainly 
appreciate the opportunity to work with the other three 
Senators and many others and want to say that I know much has 
been said about the bipartisanship. It truly has been that. I 
mean, it has been a great piece of work so far.
    I am sure there will be amendments when it actually goes to 
the floor. Well, actually, someone mentioned about moving it 
along. We actually haven't introduced the bill yet, and yet we 
are having a hearing. So I can tell you we certainly are 
anxious to get it to the floor and get it done in a proper way.
    Because each of you are supportive and have very positive 
comments about the bill, I am going to wander off the script 
just a little bit and ask some other questions. I was just in 
Darfur and Kenya, Mr. Sachs, and saw some of the 
destabilization that is occurring there with many people coming 
in across the border and the concerns that exist. And 
obviously, I am very supportive of foreign aid efforts being 
focused and efficient and being goal driven. So me asking this 
question is not an indication of my own attitude.
    But while I was visiting, and we went to several other 
countries, there was a Wall Street story Dambisa Moyo wrote 
about our aid efforts. And she--I will just use a quote from 
her. ``It enables corrupt governments, grow debt, discourage 
foreign direct investment, and ultimately makes the countries 
poorer.''
    While I was there, it was interesting. One of the leaders 
of one of the countries acted like they embraced this view. I 
will say simultaneously was asking us for more aid, just for 
what it is worth. [Laughter.]
    But I wonder if you all might just weigh in? I know you 
have to, because of what you have done, read some of the things 
that she has said and done. And she focuses on tax incentives 
and other kinds of things that should be done internally, and I 
think all of us know that economic growth has to occur in these 
countries. But just wondering if you might say a few words 
about some of her views and some of the response in Africa 
itself?
    Dr. Sachs. I think that the key to success is that the aid 
is well targeted, well monitored, specific, and quantitative. 
There are many kinds of aid programs that have failed, and 
there are many kinds of aid programs that have succeeded 
splendidly. And so, any broad brush is asking the wrong 
question.
    The right question is how can aid succeed to achieve the 
outcomes that we are looking for? It is never to hand over 
money. That is the worst. It is never just general trust. It is 
targeted efforts in the core areas of agriculture support; the 
health system; education; infrastructure, meaning roads, power, 
safe drinking water, sanitation; business development in ways 
that you can follow the money.
    And when that is done, the results are extraordinarily 
powerful for very little money. Measles deaths have come down 
by more than 90 percent in this decade because of a targeted 
immunization effort. Leprosy is nearly eliminated. 
Schistosomiasis is under dramatic control in many places. 
Malaria, because of the President's Malaria Initiative, being 
well targeted--bed nets, erythromycin and combination drugs, 
community health workers, rapid diagnostic tests--is plummeting 
in places like Ethiopia.
    If you were in Rwanda, I don't know if--that was a country 
that where we have had this interesting colloquy----
    Senator Corker. I just happened to be in that country.
    Dr. Sachs. I know President Kagame very well. And while he 
might say one thing or another, half his budget is aid-
dependent right now. And I have followed the aid there. I have 
worked to help him get support for the successes he is 
achieving.
    Senator Corker. Which are amazing. He has done an 
incredible job there.
    Dr. Sachs. Yes. That is an aid success story. The idea that 
it has been turned around in the public mind as something else 
shows how peculiar the atmospherics around this issue are. 
President Kagame should be explaining to the world aid works. 
``Look at my country. I got help. It supports half my budget. 
It helped me build roads. It helped me build water.''
    But instead, he went off on attack, which confuses the 
public in a very unhelpful way, and I have said it to him, and 
I will say it again to him. Tell the truth of what happened, 
and then we can all understand why this is a good thing. Nobody 
is after creating dependency. We are trying to break dependency 
by solving the poverty problem so countries can graduate.
    Nobody wants long-term aid. We want graduation from aid, as 
has been done with Korea, with Taiwan, with many, many other 
countries. And the whole episode of this Moyo and President 
Kagame and so forth is a confusion.
    There is no simple generalization. You have to do the aid 
right. And to say I am against aid when half your budget 
depends on it and it has allowed your country to reestablish 
growth after a genocide is only to confuse our public with what 
is going on. I don't get it.
    The fact of the matter is when you press President Kagame, 
whom I know very well for many, many years, he says, ``No, no, 
no. Don't cut it off. Don't cut it off. Just let us do it 
right.'' And that, I think, is the true answer of this issue.
    Senator Corker. That was such a comprehensive answer that 
maybe we will be brief. But thank you, go ahead.
    Mr. McPherson. Yes, I think Rwanda clearly has made great 
success.
    Senator Corker. Absolutely.
    Mr. McPherson. And it needs to be recognized here and 
there. I think, however, that those who--some of those who are 
concerned about AID at least have some argument. I am not 
talking about this particular writer. But frankly, when you 
look at long-term success in countries, it is because human 
resources were built. It is because institutions within those 
countries in which those human resources could work. It is the 
creation and distribution of technology. It is reasonably 
stable, engaged governments, and it is reasonably sound 
economic policies.
    I am not talking about a cookie-cutter set of policies. 
Human resources, technology, and infrastructure, as we have 
found from our own country. And frankly, over the last near 
generation, we have forgotten about the human resource 
component.
    In the mid 1980s, when I used to testify in front of 
Senator Lugar, we were educating--we had long-term education in 
this country of 15,000 to 18,000 a year. The last figures I 
saw, and they were about a year old, we had about 1,000.
    In the end, you look at your own communities. It is people 
with education and skills that drive what happens in your 
state, and it is technology. It is institutions. And I think 
that too often we have been worried about the transfer goods 
and services, and that helps immediately, but it doesn't help 
long term.
    Now I do believe that sometimes quite targeted campaigns 
can have a huge impact. I concur with what has been just said. 
And Senator Lugar, you remember my being up here, working on 
oral rehydration therapy, which had a huge impact of saving 
lives. And we were able to somewhat more or less quantify that.
    But I think we can never forget that ultimately 
development, as my old president John Hanna, president of 
Michigan State who was administrator before I was, came to see 
me that early day and sort of tapped me on the knee and said, 
``Peter, just don't forget it is about people.''
    So I think that the criticism we sometimes get is that we 
don't do enough on these long-term economic growth components. 
We need growth, and we need economic growth.
    Senator Corker. Mr. Chairman, I know I asked one question, 
and I am already 2 minutes over my time. I had several others, 
but I do want to say I thank you very much for your testimony.
    And I know that there are people listening in places we 
don't know right now. I think both of us would hold President 
Kagame up as a role model as far as what he has done, and we 
are only referring to a comment made that was confusing. What 
they have done in Rwanda is remarkable, and I think we all 
respect and admire that. And I know you do, too.
    Dr. Sachs. Absolutely, Senator.
    Senator Lugar. Thank you very much, Senator Corker.
    Senator Shaheen.
    Senator Shaheen. Thank you very much, Mr. Chairman. And 
thank you to you and Chairman Kerry for holding this hearing 
today and to all of our panelists for appearing.
    As everyone has pointed out, foreign assistance is critical 
in promoting U.S. interests across the globe. It is one of our 
best and most important nonmilitary instruments of power, and 
it is an investment in our country's national security and 
economic prosperity.
    But as everyone has pointed out, like every investment, we 
need to make sure that we are getting the most for our money. 
We need to do it in a way that makes sense.
    I want to commend Senators Lugar, Corker, Menendez, and 
Kerry for your efforts to deal with USAID reform and certainly 
applaud Secretary Clinton's initiative to establish the 
Quadrennial Diplomacy and Development Review initiative. And I 
think that her efforts and the leadership that Secretary Gates 
have shown to talk about the importance of revitalizing our 
foreign assistance efforts gives us an opportunity that we have 
not had in a very long time to really address how we look at 
foreign assistance. So thank you for all of your efforts in 
this regard.
    But let me ask because there have been countless reports 
and commissions and attempts to overhaul U.S. foreign 
assistance policies over the years. So what have been and what 
do you see as the major impediments to reform this time? And 
what are the most urgent priorities that this committee and 
Congress should look at as we are trying to be supportive in 
the effort to reform our foreign assistance efforts?
    Reverend Beckmann. I think partly what has happened is that 
President Bush wanted to put more money into development, but 
was deeply--he and the administration were deeply suspicious 
about whether AID could do it. And so, he proposed a bold AIDS 
initiative, an excellent Millennium Challenge Account 
initiative: Bread for the World campaigned to help get that 
established because he wanted to do more to reduce disease and 
poverty around the world but didn't think AID could do the job.
    So, in effect, we set up two major new agencies to do those 
two purposes. And I think, on balance, they have done a great 
job. It was a good step.
    But now, moving forward, AID was sort of left to decay. And 
then we have this transition between the administrations. We 
have no administrator. They are in some kind of limbo at the 
moment. So the decay has accelerated.
    So it is just clear now that the next step forward needs to 
be to get some consolidation, some coordination, and I think a 
strong development agency. It can't just be mushed into the 
State Department. It needs to be coordinated with the other 
things that our Government is doing. But we need a separate and 
strong development function for the reasons that many people 
have mentioned.
    So I think the impediments, it is just history. It is the 
way it worked out. But now maybe the main impediment to reform 
is just it is a little bit complicated. There are maybe some 
bureaucratic toes that need to be stepped on in order to pull 
things together.
    I think it is remarkable to me how much consensus there is 
among the members of the committee who have spoken also. It is 
to be noted that Jeff Sachs and Peter McPherson are pretty much 
on the same page on this issue. [Laughter.]
    Reverend Beckmann. So there is a lot of agreement about 
what needs to be done. There is a lot of agreement about what 
needs----
    Senator Shaheen. I agree with that.
    Reverend Beckmann. There is a lot of agreement about what 
needs to be done, and I think it is mainly just what we need is 
what you are doing right now, the political will to tackle very 
complicated issues and change institutions in ways that will 
pay off for the next 10, 20 years.
    Senator Shaheen. Go ahead, Dr. Sachs.
    Dr. Sachs. Thank you.
    Just in a little bit of perspective that I think is 
helpful. By the end of the 1990s, our aid program had shrunk to 
almost nothing. As it started to recover in this decade, it was 
one main program that started it off, which was PEPFAR. The 
President's Malaria Initiative, which is much smaller scale, 
was also targeted and very important and leveraged a lot of 
international resources.
    My own view is that the Millennium Challenge Corporation 
never got off the ground, and I would fold it back into USAID. 
Frankly, I don't believe that it serves a purpose as an 
independent organization anymore, just to be on the record.
    I believe we have lacked adequate financing, first of all. 
And this is my experience, which I mentioned a moment ago, in 
80 or 100 countries around the world is an incredibly 
frustrated U.S. diplomatic service, Ambassadors constantly 
pulling me aside, every mission, every trip that I take. ``We 
don't have any resources here. Can you help us in Washington?''
    That is the actual truth today, still today. We do not have 
an effective aid program other than in a couple of war zones or 
AIDS as a disease. Other than that, the budgets are tiny.
    Second, we have lacked a strategy. The Bush administration 
was not too keen on harnessing the global effort around the 
Millennium Development Goals. This was a loss of opportunity to 
leverage our authority, power, and money. We lost the 
leveraging because they didn't want to be associated with U.N. 
goals, as it were.
    We lost the ability to lead on climate and infrastructure 
because the administration, the past one, didn't want to touch 
that. So we have lacked a strategy. Any clear goals other than 
in AIDS and malaria, I would say, two important contributions 
of the last 8 years, but other than that, pretty much aimless.
    And the third thing is implicit in that. We have lacked the 
leveraging. There is a desperate hunger for the United States 
to lead conceptually. We are inherently the largest donor 
because we are the largest economy in the world. And others 
will join in. When we said agriculture a month ago, everyone 
jumped in and said, okay, we are in agriculture also. That is 
the authority of the United States to lead.
    So if we finance, strategize, and leverage, we are going to 
have a completely new capacity in this country.
    Senator Shaheen. Thank you.
    Mr. McPherson. I would say, Senator, that we have got to be 
very careful AID doesn't go the way of USIA. And I think that 
just didn't work, and we are sliding that way.
    I don't think that Secretary Clinton would want that, but 
we have a very--we have a situation that began actually when 
Russia and the new republics were taken out of AID. You 
remember that, Senator, and that was the first major weakening. 
It went downhill over the years.
    I mean, this is--you ask a wonderful question, and I agree 
there clearly needs to be vision and a number of things. But I 
would keep my eye on are we going to get new senior technical 
and leadership people into the Agency? I am not talking about 
the political appointments, and that is important. But look at 
that AD authority. You remember? That was an authority that was 
really very important, and it is still there.
    So I say, first, people. Second, if AID doesn't have its 
own policy and budget office that is well staffed and strong, 
it will be USIA as it now is. It is just that you cannot have 
an operation with muscle without budget and policy.
    So I have got a lot of ideas, but I would look at senior 
people. I am not talking 10 of them. I am talking a few of 
hundred. And the budget and policy.
    There are a lot of other things I would like to do. Atwood 
and Natsios, two former administrators, and I had an article in 
Foreign Affairs in November, where we laid out our views, which 
absolutely I think would be consistent with this committee's 
expectations.
    That is what I think.
    Senator Shaheen. Thank you.
    Mr. Beckmann.
    Reverend Beckmann. If I can just--I should have said also 
as an obstacle, I think there is this historical, just the 
bureaucratic process. But the other thing is that there is a 
real issue about a temptation to sort of suck up development 
money and also use it for other purposes.
    So many of the dollars in USAID are supposed to serve some 
other foreign policy interest and also help poor people. So if 
you look at what countries the money goes to, if you are just 
trying to reduce poverty and hunger or promote development, you 
would invest primarily in low-income countries, especially 
those with good governments. But AID money is going mainly to 
other countries that really are serving our interests.
    Now some of the money, some foreign aid money can go to 
those countries to serve our interests, but if it is, in fact, 
the policy of the United States to promote global development, 
reduce hunger and poverty, which I think it is, we need some 
money that is single-mindedly focused on development and 
reducing hunger and poverty. Because if you try to hit two 
birds with one stone, poor people will get the short end of the 
stick, to mix my metaphors.
    Senator Shaheen. Thank you. [Laughter.]
    Senator Lugar. Thank you very much, Senator.
    I gather that at least two of our Senators perhaps have 
additional questions, Senator Menendez and Senator Corker.
    I wanted to recognize Senator Corker and, at the same time, 
pass the gavel on to Senator Menendez because I need to go to 
another destination at this point.
    Senator Corker, would you proceed?
    Senator Corker. In a show of our great bipartisanship, I am 
going to let Senator Menendez go first.
    Senator Lugar. Very well.
    Senator Corker. I have to stay anyway. [Laughter.]
    You know, one of the things that one can't help but notice 
real quickly out in the field is people are entrepreneurial 
within USAID, as they need to be. And you look at the PEPFAR 
program, which is where the money is. All of a sudden, almost 
every issue that exists has to do with HIV, right?
    I mean, so all of a sudden, PEPFAR moneys are used in 
microfinance. They are used in all kinds of other things 
because if there is not poverty, then there is not this. I 
mean, just wondering with you all's experiences, what is the 
best way to keep us from having mission creep?
    Again, all the things that are being attempted are good 
things, OK? But they do take away from I think what each of you 
have talked about, and that is having a very focused goal for 
each of these efforts. But you have worked inside or served 
today caring for people. What is the best way to make sure that 
these dollars actually continue to go for their intended 
purpose and are not subsumed into other things where there is 
not enough money?
    Mr. McPherson. Well, you probably need--you need to be 
rigorous in looking at that. On the other hand, it is also true 
that some things are critical to feed into it.
    For example, if you are going to deliver health care, the 
HIV/AIDS care, you probably have to train some people to do it. 
Hence, the work with some universities for doctors, for nurses, 
for health care providers. If people don't--they may have the 
AIDS in abeyance, but if they are near starvation, it is a real 
problem.
    I do believe, as Jeff has so often said and said here again 
today, that there is great merit to a driving set of goals--
tuberculosis, polio--that you can measure success. On the other 
hand, such driving goals tend to suck up everything else, too.
    I mean, we find the HIV/AIDS program hires all the doctors 
or other care deliverers so there isn't somebody to take care 
of the delivery of children. I am overstating perhaps, but you 
ask a question for which I don't think there is a clear answer, 
but which is important to be diligent about.
    I hope that is not so fuzzy it is unresponsive, but----
    Senator Corker. No, I don't think there is a concrete 
answer. I just want to raise it as an issue because out in the 
field, you see it constantly. And actually, you kind of admire 
the folks who are figuring out ways of that is what happens 
inside government or inside budgets.
    But on the other hand, it does take away from the targeted 
goal that the moneys are allocated for. And by the way, does 
away with some degree of discipline, let us face it. Yes?
    Mr. McPherson. And measurable results.
    Dr. Sachs. I think one of the great strengths of PEPFAR has 
been that we can count the number of people on treatment, and 
we can assign targets. And that is a tremendous plus.
    Most things that are needed in development are actually of 
that kind, in my view--accountable, measurable. And 
establishing clear targets can really work and make a big 
difference.
    Now within those targets, it may be, as Peter just said, 
you can't take the medicines if people can't eat, if they don't 
have enough to eat. That is actually just biological. So there 
may be an added component that is intrinsic to the program.
    You are talking about something even beyond that, though. 
There is money. Let us do something good. I think the real 
answer to that, frankly, Senator, is that we funded well one 
initiative in the last 8 years. We did not fund well 
microfinance or children's education or safe drinking water or 
agriculture. Now agriculture is being added. That is extremely 
important.
    A true success in development by nature will involve a 
holistic approach. It doesn't mean that everything is in it, 
but it does mean a focus on infrastructure, health, education, 
and a few components. We have not gotten that balanced program 
yet in USAID mainly because of budget and assignment of targets 
so far.
    So your problem that you observed will be reduced certainly 
if we have a stepped up and better designed overall aid 
strategy. Then PEPFAR can get on with doing what PEPFAR is 
supposed to do. And I would say that the subcomponents of our 
program should have clear targets, measurable, monitorable, 
verifiable, subject to audit.
    The taxpayers deserve it. The programs work better that 
way.
    Mr. McPherson. I want to take this on just a little bit. We 
have the Millennium Challenge Goals, which I endorse, have this 
measurable goal--count the outcomes. But it has been part of 
why--and I support them. But it has been part of why we have 
moved away from long-term development.
    If you can't--when you educate somebody to be a scientist, 
if you work on agriculture policy, if you do a number of these 
critical kind of structural things, mostly human resources, 
technology, when you put money into new technology, which only 
part of the time pays off, all those things are harder to 
measure than how many people didn't get polio.
    And the counting approach, which I believe in, I mean, I 
mentioned this oral rehydration a moment ago, which we--it was 
to deal with diarrhea in kids, and it was tremendous. But I 
think that we too often are so focused on outcome numbers we 
miss the long-term investments, and those long-term investments 
tend to be what make--create the long-term growth, as it does 
in our own country. And I think we have gotten too much into 
short-term counting without the balance.
    Reverend Beckmann. Just going back to your question, I 
think partly that when I observe that, I do give credit to the 
local people for figuring out what really needs to be done. And 
part of the way to--part of the problem is here, that Congress 
and the President and Washington generally, including a lot of 
NGOs, are giving mandates to people in the field that we want 
you to do $30 million of biodiversity. And whatever is 
necessary in the country, the guy has got a mandate to do $30 
million of biodiversity.
    Or, we want you to do AIDS. Now maybe when you get to the 
community--I know a program in Kenya. It is an AIDS program, 
but it was clear that people didn't have enough food to eat. 
The AIDS patients didn't. So they got into community gardening 
and agriculture because they were responding to the real needs 
of the community.
    So part of the problem is that our aid programs are 
excessively stovepiped, restricted with mandates from 
Washington so that by the time our people get to Mozambique, 
they have got to do AIDS. They have got to do all these other 
sectoral mandates.
    So part of the reform needs to be to focus on broader 
goals, fewer goals, and make the aid programs responsive to 
local needs. If it is a decent government, what does that 
government want at the community level? What does the community 
really need?
    So part of the answer to your question, part of the 
conundrum is--part of the answer to your question is for 
Congress and the President and NGOs to quit being so specific 
and trust local people to do what is really needed locally.
    Senator Corker. Thank you for your testimony.
    Mr. Chairman, I am going to turn it over to you. I have not 
done well. I have asked two questions, but I have had some 
great responses, and I thank you for your testimony.
    Senator Menendez [presiding]. You have had very full 
responses.
    Senator Corker. Thank you all.
    Senator Menendez. We are going to keep this record open, I 
am sure, for some other questions to be submitted.
    Let me just ask you, Mr. McPherson, you said something that 
I think is very important here. We need a strong AID, and one 
of the things we need is an AID administrator sooner rather 
than later. It is already late.
    And I really hope the administration--I know they are in 
the midst of their vetting process. We need an AID 
administrator because here is my concern. I applaud Secretary 
Clinton on her quadrennial review, but isn't it true in this 
quadrennial review, we want development sitting alongside of 
diplomacy, but not subservient to diplomacy. They go hand in 
hand. Is that a fair statement?
    Mr. McPherson. Absolutely.
    Senator Menendez. Is that a fair statement? Anybody 
disagree with that?
    So, in order for that to happen, then we have the diplomacy 
part of this pretty well down in terms of its leadership. We 
need the development leadership to be sitting alongside so that 
we can have the type of advocacy we need. So that is incredibly 
important.
    The other thing is, Dr. Sachs, did you have this session 
listed as one of your classroom opportunities at Columbia? 
Because I see a lot of young people in the audience, so I was 
just wondering whether this was a must----
    Dr. Sachs. They are all welcome to class. [Laughter.]
    Senator Menendez. You mentioned the Millennium Challenge 
Account several times, and I think I understood you--I just 
want to make sure for the record. If I heard you correctly, you 
say the goals of the Millennium Challenge Account are 
desirable. But my concern is obviously not every country, at 
least as the Millennium Challenge Account procedure is 
presently written, is eligible for the MCC.
    And my concern is, is that there will be plenty of 
countries for which we will have legitimate development 
assistance desires to be helpful that would not otherwise 
qualify for the MCC. We would like to all see them graduate to 
an MCC level.
    But you are not promoting that the eligibility for MCC be 
the standard that we should achieve? I am trying to nail down 
exactly what you mean.
    Dr. Sachs. Actually, this is a very important question and 
a good opportunity for me to clarify. I am referring to the 
Millennium Development Goals, which are the internationally 
agreed objectives.
    Senator Menendez. OK.
    Dr. Sachs. So that is what I think we should subscribe to. 
If you look around the world, almost all governments, the 
United Nations, the World Bank, the IMF, the other donor 
agencies have organized around these eight Millennium 
Development Goals. If the U.S. would do so as well to a much 
greater extent, we would be able to leverage our influence far 
greater than we do.
    Now, in addition, and this is the point of confusion, we 
have something called the Millennium Challenge Corporation, 
which actually is not based on the Millennium Development 
Goals. It uses the same word in front. The Millennium Challenge 
Corporation was a good idea to try to give more funding to 
qualifying countries.
    In my view, and it is a complicated subject, lots of 
opinions, I do not believe it has succeeded, and I do not 
believe it is worthy of continuing in its current form. Most 
people disagree with me, I have to say. But I think that is 
inertia.
    It never found a strategy. Simply asking countries let us 
work on something, in my view, is not good enough for what we 
spend our development assistance dollars on.
    I would wrap up that money into the USAID budget, expand 
the general USAID portfolio, have clear objectives of USAID, as 
I have mentioned many times, around the Millennium Development 
Goals, around the climate change goals, and so forth. But I 
would not keep a separate corporation. I don't see any logic of 
separating that or of holding it at bay.
    And in practice, these qualifying scores, for a lot of 
reasons, turn out to be arbitrary in practice. But worse than 
that, if you actually look at an MCC program--there are a dozen 
or so at this point--there are often 500 pages of legal 
boilerplate. It became an incredibly burdensome, poorly 
targeted effort, and I think that it is a clear case of 
fragmentation that should be eliminated to bring back the 
budget within a USAID context.
    Senator Menendez. If you can answer briefly, then I think 
we are going to have a vote, and I still want to give Senator 
Shaheen--she stayed. So I assume she has some questions here.
    So----
    Reverend Beckmann. I do disagree strongly with Dr. Sachs on 
the Millennium Challenge Account. It is an important--what is 
distinctive about it, it is responsive to the local government, 
and there are clear development criteria and there is a 
decisionmaking process so that we don't end up just giving 
money to strategically important countries, whether they are 
middle income, whether they have got prodevelopment governments 
or not. I think it is working very effectively.
    So there needs to be some kind of coordination or 
connection between the MCA and AID. But if anything, AID ought 
to be more like the MCA, not MCA merged into AID.
    I agree that as we--the United States would do well to be 
part of the international development goals. And with 2015, 
2015 is when the goals--they were targeted as 2015 goals. The 
world has changed. So there is an opportunity right now for the 
United States to provide leadership and rearticulate those 
goals for the next 10 or 15 years in a way that will--they are 
good goals. The world is on one track, but that would put us as 
part of the world family.
    That would be a good----
    Senator Menendez. On the first part of your answer, though, 
let me just say can we not create country ownership, without 
necessarily--and create, as Jack Lew has talked about, giving 
the partners more of a say on how the resources are targeted by 
either building capacity so that they have the ability to do 
that themselves and/or by focusing on projects that are aligned 
with the recipient countries' needs and interests as they see 
them.
    But if we hold everybody up to the Millennium Challenge 
standards to get in, there are few countries that are going to 
be able to achieve it, at least in the first instance. And that 
would leave many of the very people you are concerned about, 
some of the poorest people in the world who won't be able----
    Reverend Beckmann. Sure.
    Senator Menendez [continuing]. Because they live in 
countries, the happenstance of which they won't be able to meet 
that standard.
    Reverend Beckmann. Sure, not every country can qualify for 
the Millennium Challenge Account--for those criteria. But 
establishing the criteria, and then they have this transition 
country program to help countries who don't quite qualify get 
into the program. But what it does is focuses on the policies 
of the government so you get prodevelopment policies. I think 
it has been effective in encouraging prodevelopment policies in 
poor countries. And in some of those countries, then it is 
providing important funding for programs that the governments 
asked for.
    So it is interesting. I think half the MCA compacts include 
major investments in agriculture. Our Government is just now 
finally saying, hey, we ought to be doing more in agriculture. 
But the Government of Ghana, the Government of Honduras, the 
Government of Cape Verde 3 or 4 years ago, when they finally 
got a chance to tell the United States what they wanted, said 
help us with agriculture.
    Senator Menendez. All right.
    Reverend Beckmann. So I think there is a lot there to be 
preserved.
    Mr. McPherson. I associate myself with David's views.
    Senator Menendez. I appreciate you doing that. [Laughter.]
    We have a vote that is going on.
    Senator Shaheen.
    Senator Shaheen. I will be very quick. We had a hearing 
yesterday here on the connection between climate change and 
national security, and our panelists testified that those 
countries most affected by climate change also tend to be the 
poorest, most conflict-ridden. And so, as we are thinking about 
how we look at our foreign aid efforts and revise them for the 
future, how should we be factoring climate change in and 
coordinating with what we need to do in that area?
    Mr. McPherson. I think one of the things that we need is to 
have capacity in countries. It is not just us telling them how 
to do it. We need to have the intellectual structural capacity 
to be able to diagnose their own problems, and that takes 
effort. But it can be done.
    Dr. Sachs. Senator, I think, indeed, it is important to 
define our objectives in this area as sustainable economic 
development, which includes the environmental and the climate 
component because development will be profoundly undermined by 
these trends. That is the picture today. These are drylands.
    Incidentally, it is going to deeply affect our own 
development in this country if we don't get on top of this 
because we are not so effective at responding to the climate 
change either. So this is a global threat to development in a 
fundamental way, and USAID ought to have in its agenda that 
integrated assignment of linking the global climate adaptation 
and resiliency to the other development challenges.
    Senator Shaheen. Thank you.
    Anything you want to add, Mr. Beckmann?
    Reverend Beckmann. I associate with Jeff Sachs.
    Senator Shaheen. OK. Thank you all very much. We have to go 
vote.
    Senator Menendez. OK. With that, let me thank you all on 
behalf of the chairman for your testimony.
    The record will remain open an additional day for members 
who may want to submit questions for the record. If you do 
receive them, we would ask you to answer them as soon as 
possible.
    And with the thanks of the chairman, the committee is 
adjourned.
    [Whereupon, at 4:20 p.m., the hearing was adjourned.]
                              ----------                              

              Additional Material Submitted for the Record

       Responses to Additional Questions Submitted for the Record

      responses to additional questions submitted for the record 
                  by senator lugar to peter mcpherson
    Question. Quadrennial Review. Secretary Clinton recently announced 
the start of a Quadrennial Diplomacy and Development Review (QDDR) 
process similar to the QDR process at the Pentagon. As this is a new 
process for the State Department, what elements do you believe are 
important for its success?

    Answer. Former USAID administrators Brian Atwood, Andrew Natsios 
and I recommended in the November 2008 edition of Foreign Affairs that 
the administrator chair an interagency foreign assistance committee to 
coordinate policies among agencies that have other foreign assistance 
programs, and produce a Quadrennial International Development Review. 
Clearly the State Department and the National Security Council should 
have an important role in the review but we recommended that it be lead 
by the administrator. We wrote that the review present a government-
wide strategy for addressing international development including trade, 
finance, the environment, and agriculture policies. It should identify 
the major development challenges that will need to be addressed and 
discuss a variety of potential scenarios depending on global 
conditions. It should provide analyses on how the United States will 
need to change its foreign assistance policies and programs to address 
the problems identified.


    Question. Evaluation. Many observers note that USAID used to have a 
robust evaluation program. The agency conducted impact evaluations and 
widely disseminated its findings among the development community. What 
are your recommendations for restoring this capacity?

    Answer. I applaud the bipartisan bill's focus on evaluation. The 
function should never have been cut back at USAID. An organization that 
does not learn from its mistakes is bound to become sterile and 
ineffective. I suggest that the strong evaluation function be within 
USAID itself. It takes senior level attention but I think appropriate 
staffing can avoid some of the institutional bias and engender a 
genuine independent and constructive analysis. The evaluations should 
focus on a few key outcomes as recommended in the bill, not process and 
inputs.
    Similarly, I support reestablishing the lessons learned center 
suggested in the bill, probably associated with the evaluation office. 
We need to look at what does work and what does not work. However, 
reasonable risk taking should not be discouraged. We need to ensure 
creative and innovative efforts are encouraged.
    I also suggest creating a ``think tank'' for cross-agency 
evaluation that would undertake major studies of issues and problems 
and would be kept vibrant and relevant by a board from several 
agencies. A National Academy model could be considered, for example.


    Question. Doubling U.S. Foreign Assistance. President Obama has 
pledged to double U.S. foreign assistance. Given the current state of 
affairs--programs spread among some two dozen agencies and less than 
optimal capacity at the State Department and USAID--do you believe the 
current structure can handle this level of increase?

    Answer. Doubling foreign assistance would be appropriate if 
properly allocated and managed. The administration should be commended 
for making the case publicly. It must, however, be well thought 
through. Increased foreign assistance levels must happen in conjunction 
with rebuilding USAID's technical and management capacity. Putting more 
money into the system without increasing technical capacity will simply 
result in the continuation of USAID implementing development programs 
through mega-contractors, which has been found wanting. Programs and 
policies are only as good as the people implementing them. USAID is a 
shadow of its former structure and is circumvented when a new challenge 
arises. Rather than creating workaround solutions, we must confront the 
core problem and recognize that we need to build our core development 
capability with more and better trained personnel. I applaud the 
request from the administration and your support for additional 
technical and management staff at USAID.


    Question. Aid Objectives. Some observers, including Dr. Sachs, urge 
that U.S. assistance should be reorganized around a few strategic 
objectives. I have drafted legislation with Senator Casey--the Global 
Food Security Act--in which we advocate that development assistance be 
reoriented toward hunger and poverty alleviation. In some countries, 
this would mean focusing more on agriculture, in others on nutrition, 
and in still others on education, but the goal of poverty and hunger 
reduction would be the overarching objective. Do you believe that this 
type of focus would be effective?

    Answer. I applaud the leadership you and Senator Casey have shown 
in introducing S. 384 and getting it passed through the Committee. The 
university community is strongly behind your legislation. Focusing on 
hunger and poverty alleviation through increasing agricultural 
productivity is essential. It is a critical element in economic growth, 
which will lift people out of poverty. A key feature of the bill is to 
create partnerships between U.S. and host country colleges and 
universities for the human and institutional capacity building, which 
is critical to long-term development. This legislation is particularly 
timely in light of the President's efforts to double funding for 
international agriculture development with a major role for land-grant 
universities. S. 384 will implement most of the President's priorities 
for international agricultural development and improved global food 
security. I think a refocus on agriculture can work well. However, I am 
uneasy about a massive reorganization beyond that because it usually 
takes a couple of years for a major reorganization to shake out. 
Strengthening budget and policy capabilities plus bringing in many 
senior technical and management people must be done.
    Institutions of higher education in the United States have 
historically played a key role in international development, 
particularly in agriculture. Universities are essential in building the 
human and institutional capacity in developing countries necessary for 
sustained economic growth. Unfortunately, during the past 20 years, the 
U.S. foreign assistance strategy has underinvested in agriculture and 
under-leveraged the resources of colleges and universities to help 
address critical global development problems. While a number of factors 
were responsible for the acute global food crisis last year, one of the 
major causes was a flattening out of agricultural productivity in many 
developing countries especially Africa. Your bill goes a long way in 
reversing the underinvestment and will help avert major food shortages 
in the long-term.


    Question. Independence of USAID. Some observers have suggested that 
USAID is on the verge of being turned into an implementing agency, 
rather than a full partner with the State Department in achieving U.S. 
foreign policy objectives. Would you please speak to the value of an 
independent aid agency? What role do you believe the State Department 
should play with regard to foreign assistance policy?

    Answer. Defense, diplomacy, and development must work together, 
with each providing an appropriate role for our foreign policy and 
international relations. Although this doctrine assumes some balance 
among the three ``D's,'' in practice this has not been the case, and 
development has been the weakest link. Most foreign policy observers 
acknowledge that balance must be restored. There is substantial 
evidence that poverty contributes to conflict, the breakdown of order 
and even the likelihood of state failure. Advancing development in 
other countries is in-and-of-itself a core national interest of the 
United States.
    The pursuit of that interest requires a separate, vigorous and 
restructured U.S. development agency--the U.S. Agency for International 
Development (USAID)--along with a strong State Department, and a clear 
division of responsibilities between civilian agencies and the 
Department of Defense. It is appropriate for the administrator of USAID 
to report to the Secretary of State but it should not otherwise be 
subordinated into the Department. Over many years, USAID has been 
essentially neutered by staff cuts and the allocation of functions to 
other parts of the government thereby weakening the coordination and 
coherence of foreign assistance. Recent administrative actions have 
essentially folded USAID into the State Department, which has 
diminished the development role of USAID and proved otherwise 
unsuccessful.
    In brief, the status quo does not work. Reinvigorating our 
development capabilities and providing a more robust and coherent 
foreign assistance program will require action by both Congress and the 
Executive Branch.
    There needs to be consistency, clarity, and coherence between the 
State Department and USAID. U.S. foreign assistance policies and 
programs should remain within the U.S. foreign policy and national 
security strategy, as determined by the President and the Secretary of 
State, and the development activities in a country will fit under the 
oversight of the ambassador as the president's representative. The big 
organization issue cannot crowd out the subordinate matters.
    The division of responsibilities between the State Department and 
USAID are complicated, but I have a number of suggestions based on my 
experiences. I believe we need a strong separate agency reporting 
directly to the Secretary of State. The Secretary needs to have some 
policy involvement and oversight with the largest source of program 
monies traditionally available to him or her. U.S. foreign assistance 
activities must, to the fullest extent possible, be consistent with and 
supportive of overall foreign policy goals. Moreover, the Secretary of 
State is almost always going to be more powerful within the Executive 
Branch and with Congress than a development administrator or cabinet 
member. USAID often needs the active support of the Secretary of State.


    Question. Policy Capacity. Some have argued that USAID does not 
need a separate policy and planning bureau since this function is being 
carried out by the State Department's F Bureau. Others believe that 
diplomacy and development are two distinct and different missions and 
require their own policy approaches. What is your opinion on how the 
State Department and USAID can work together to ensure that the 
development and diplomacy pillars support U.S. foreign policy 
objectives?

    Answer. It is critical that USAID have its own budget and policy 
capability, preferably in the same USAID office. USAID needs to be able 
to argue a coherent overall budget to the State Department in order for 
there to be a full voice for development. Budget and policy are 
inextricably linked. USAID must have a role in creating their budget in 
order to sustain a coherent structure. A USAID budget function will not 
detract from the State Department's ability to consider those proposals 
for the whole foreign affairs budget.
    USAID must have a strong policy office to be a creditable 
organization, as the bipartisan draft bill recognizes. The development 
agency has to be able to provide well-reasoned analysis and 
recommendations for the State Department. I support the draft bill's 
provision to reestablish a Bureau of Policy and Strategic Planning at 
USAID.

                               __________

      responses to additional questions submitted for the record 
                   by senator lugar to david beckmann
    Question. Quadrennial Review. Secretary Clinton recently announced 
the start of a Quadrennial Diplomacy and Development Review (QDDR) 
process similar to the QDR process at the Pentagon. As this is a new 
process for the State Department, what elements do you believe are 
important for its success?

    Answer. I am hopeful that the QDDR will consider development not 
just as a tool, but also as a goal, of U.S. foreign policy. There are 
important relationships and synergies between our diplomatic and 
development efforts, and in order for both to be most effective, they 
must operate in a coordinated manner. However, because they are 
distinct in nature and in how they are executed, they also need to be 
viewed and approached as distinct elements of U.S. foreign policy that 
must be individually strong and separate when considering U.S. 
engagement with the world. With respect to foreign assistance designed 
to achieve poverty alleviation and other long-term development goals, I 
hope that the QDDR will explore ways to ensure this funding is walled 
off from funds devoted to achieving more short-term, diplomatic 
objectives. Our global development efforts will only succeed if they 
are supported with consistent and predictable funding over time.

    Answer. Poverty, disease, and a lack of opportunity anywhere in the 
world present challenges to U.S. national interests as well as U.S. 
national security. President Obama has acknowledged the centrality of 
achieving global development goals to the U.S. in pledging to make the 
Millennium Development Goals America's goals. While we certainly 
believe supporting sustainable development in hot-button countries 
should be a priority of the U.S., we also believe that, even in 
countries that are not at the top of the list of strategic threats and 
partners, the U.S. should join host governments and other donors in 
doggedly pursuing global development goals. We are hopeful that the 
QDDR's assessment of the range of global threats, challenges, and 
opportunities will acknowledge that global poverty--in and of itself 
and quite apart from any diplomatic considerations--is a primary 
concern of the U.S.


    Question. Evaluation. Many observers note that USAID used to have a 
robust evaluation program. The agency conducted impact evaluations and 
widely disseminated its findings among the development community. What 
are your recommendations for restoring this capacity?

    Answer. As with any significant investment of taxpayer funds, we 
need to know that dollars devoted to global development are well spent 
and are achieving the intended objectives in both the short and long 
terms. Efforts by the United States to evaluate the impact of our 
development programs have been spotty at best. Recent trends-including 
the F process, PEPFAR implementation, and the Defense Department's 
increased involvement in development and reconstruction efforts-have 
focused significant attention on creating and reporting on short-term 
outputs for monitoring purposes (i.e., how many people are being fed/
treated/attending school), rather than evaluating the longer-term 
impact of these efforts. By disregarding longer-term impact evaluation, 
we have lost the opportunity to learn what kinds of programs are 
effective or wasteful and what programs are successful enough to be 
expanded and replicated. Financial and staff resources devoted to 
impact evaluation generates huge returns: identifying best, and worst, 
practices can leverage spending by other agencies and by developing 
countries themselves, making each dollar spent more effective at 
helping those who need it most around the world.
    An effective evaluation system generates different kinds of 
information for different purposes. Operations and process evaluation 
involves in-house experts engaged with practitioners and provides 
managers with efficiency information. Output evaluation--counting 
numbers of schools built, vaccines given, etc.--helps with managerial 
decisions and resource accountability and is best done with a 
combination of in-house staff and external review. Impact evaluations, 
which consist of broader targets -better educated students, lower child 
mortality rates, etc.--are not needed for every program but should 
focus on new interventions and popular existing approaches that have no 
evidence of effectiveness.
    The U.S. can improve evaluation of global development programs and 
make these programs more effective by: (1) Creating an independent 
office for evaluating the impact of foreign aid programs across federal 
agencies; (2) Identifying strategic programs for evaluation, focusing 
on the costly or controversial; (3) Appointing an independent external 
advisory group to provide oversight; (4) Creating a help desk to 
support foreign aid programs that wish to undergo impact evaluations; 
(5) Requiring that all impact evaluations undergo external peer review; 
(6) Joining the International Initiative for Impact Evaluation (3ie) 
and using it as a source of technical expertise and independent 
technical review; and (7) Appointing head officials in development 
agencies who are committed to learning and will modify approaches based 
on evaluation results. Legislation that you helped craft and recently 
introduced, the Foreign Assistance Revitalization and Accountability 
Act of 2009 (S. 1524), goes a long towards achieving these goals by 
calling for the creation of an independent Council On Research and 
Evaluation of Foreign Assistance that would reside in the Executive 
Branch and be responsible for objectively evaluating the impact and 
results of all development and foreign aid programs undertaken by the 
U.S. Government. In addition, the bill would create an Office for 
Learning, Evaluation, and Analysis in Development in USAID's 
reestablished Bureau for Policy and Strategic Planning (as called for 
in the legislation) that would link evaluation and research results to 
strategic planning and policy options, coordinate the evaluation 
processes of USAID bureaus and missions, develop a clearinghouse 
capacity for dissemination of knowledge and lessons learned to the 
wider community, and closely consult with the Council. These are very 
strong steps for restoring USAID's evaluation capacity.


    Question. Doubling U.S. Foreign Assistance. President Obama has 
pledged to double U.S. foreign assistance. Given the current state of 
affairs--programs spread among some two dozen agencies and less than 
optimal capacity at the State Department and USAID--do you believe the 
current structure can handle this level of increase?

    Answer. U.S. global development efforts have yielded successes and 
continue to be successful in several areas. However, we can always do 
better, and our global development efforts are no exception. Good 
intentions have led to fragmented management of our foreign assistance, 
policies that don't quite match up, and a maze of rules, regulations, 
and objectives. Now is the time to streamline how we approach these 
programs to maximize effectiveness and ensure that U.S. taxpayers are 
getting the most for their money and that recipients of aid are getting 
what they need to lift themselves up out of poverty and build their 
communities.
    We can appropriate more funds without any reform at all and 
programs will continue to help people around the world, but we'd be 
remiss not to take the opportunity that has presented itself--intense 
interest in development from both chambers of Congress and the new 
administration--to make things work better. One way to achieve that is 
a wholesale rewrite of the outdated and unwieldy Foreign Assistance Act 
(FAA) of 1961, which serves as the current legislative authority for 
U.S. foreign assistance. The Act simply does not reflect current 
challenges confronting the United States. Hundreds of amendments have 
added multiple objectives and priorities that in some cases conflict 
with one another, rendering the FAA irrational from a policy 
perspective, administratively burdensome, and wholly lacking in 
strategic vision. Multiple foreign aid laws, separate from the FAA, 
have been enacted, sometimes intended to achieve work-arounds of the 
core 1961 Act, but resulting in a enormous body of fragmented and 
disconnected statutes directing policy.
    The Obama administration should work with Congress to plan, design 
and enact a new FAA. The new Act should clearly outline the objectives 
of U.S. foreign assistance programs; consolidate decision making and 
implementation functions; specify the roles and responsibilities of 
other Cabinet agencies where appropriate; clarify the coordination of 
oversight responsibilities and functions; adjust regulatory 
requirements to fit the reality of implementing assistance programs; 
and discourage political and bureaucratic constraints (such as earmarks 
and presidential initiatives).


    Question. Aid Objectives. Some observers, including Dr. Sachs, urge 
that U.S. assistance should be reorganized around a few strategic 
objectives. I have drafted legislation with Senator Casey--the Global 
Food Security Act--in which we advocate that development assistance be 
reoriented toward hunger and poverty alleviation. In some countries, 
this would mean focusing more on agriculture, in others on nutrition, 
and in still others on education, but the goal of poverty and hunger 
reduction would be the overarching objective. Do you believe that this 
type of focus would be effective?
    One of the primary problems with our current global development 
system is the lack of clear objectives and goals which is one of the 
reasons the Modernizing Foreign Assistance Network is calling for a 
National Strategy for Global Development. In recent years, the goals of 
our assistance, whether they are humanitarian, political, development 
or military, have become conflated, making it impossible to properly 
measure or hold accountable programs for specific results. I agree that 
development assistance should be focused on alleviating hunger and 
poverty with a firewall between these longer-term funds and those meant 
to achieve shorter-term political objectives. By involving the 
developing countries themselves in the determining of development 
priorities, we can assure that this overarching goal is tailored to 
meet different countries' needs. I believe this would go a long way to 
making our country's development assistance both more effective and 
accountable. More closely aligning U.S. efforts with internationally 
agreed goals, such as the Millennium Development Goals, would be one 
way to do this.
    On June 10, 2009, the State Department issued a Fact Sheet on the 
Obama administration's whole-of-government approach to their new food 
security strategy. While the strategy is still being drafted, they have 
identified six principles to guide them, which is an example of how we 
can apply certain universal principles in carrying out U.S. development 
assistance across all sectors.


  1. Support sustainable solutions to hunger.

  2. Invest in country-led plans.

  3. Strengthen coordination.

  4. Adopt a comprehensive approach.

  5. Work together through multilateral institutions and mechanism.

  6. Long-term commitment to achieve our goals.


    Question. Independence of USAID. Some observers have suggested that 
USAID is on the verge of being turned into an implementing agency, 
rather than a full partner with the State Department in achieving U.S. 
foreign policy objectives. Would you please speak to the value of an 
independent aid agency? What role do you believe the State Department 
should play with regard to foreign assistance policy?

    Answer. Addressing today's global challenges requires that all 
three pillars of our foreign policy strategy--defense, diplomacy, and 
development--can operate at optimum capacity and effectiveness. We must 
ensure that all three pillars are equally strong, independent, and 
effective, and that the differing perspectives they bring to the table 
are given equal voice. Development is distinct from diplomacy--it 
provides longer-term strategic investments in economic stability and 
social welfare rather than tending to the shorter-term requirements of 
diplomacy, security, and commercial interests.
    The State Department should continue to take the lead on U.S. 
diplomatic policy--its core competency--including determining the 
strategy for and implementation of foreign assistance for political, 
diplomatic and security purposes. State's strength, however, is as a 
policy, negotiating and reporting agency--not as an implementing agency 
managing programs in the field--and its mission is to serve immediate 
political needs rather than longer-term development objectives. We will 
only realize the full impact of global development if our development 
agencies are empowered to think and act strategically about how 
development can contribute to our national interest and best help those 
in need.


    Question. Policy Capacity Some have argued that USAID does not need 
a separate policy and planning bureau since this function is being 
carried out by the State Department's F Bureau. Others believe that 
diplomacy and development are two distinct and different missions and 
require their own policy approaches. What is your opinion on how the 
State Department and USAID can work together to ensure that the 
development and diplomacy pillars support U.S. foreign policy 
objectives?

    Answer. Overall, despite some achievements in the framing and 
reporting of foreign aid, the addition of the F Bureau has contributed 
to: the weakening of USAID and country-driven development; 
counterproductive, Washington-based micromanagement of field-level 
strategy and budgeting; and the fragmentation of responsibility for 
development programs.
    Given the appointment of Jack Lew as Deputy Secretary of State for 
Management and Resources, and the need to reestablish the USAID 
administrator as the key development policy advisor in the U.S. 
Government with direct reporting to the Secretary of State, the 
position of Director of Foreign Assistance should be eliminated. The F 
Bureau's staff and responsibilities should be split appropriately 
between the Office of the Deputy Secretary and USAID.
    Creating a strong development agency requires restoring 
responsibility for overall development policy strategy and authority to 
an empowered USAID. In particular, development assistance strategies, 
sectoral strategies and country strategies should be under USAID's 
authority. The policy function (formerly PPC) currently resident in the 
F Bureau should be transferred back to USAID to facilitate long-term 
thinking and planning on development policy, and USAID should regain 
the capacity to design its programs in-house. Legislation that you 
helped craft and recently introduced, the Foreign Assistance 
Revitalization and Accountability Act of 2009 (S. 1524), would do just 
that by reestablishing the Bureau for Policy and Strategic Planning at 
USAID.
    Thank you, Senator Lugar, for your support.

                               __________

      responses to additional questions submitted for the record 
                  by senator corker to peter mcpherson
    Question. Do you believe that the number of agencies that we have 
working in development, particularly where there is a mission overlap, 
enhances or detracts from our ability to effectively coordinate a 
development strategy? Would it make sense reduce the number of agencies 
or to ``divvy'' up the responsibilities so that each of our agencies 
can establish an expertise in their function rather than being jacks-
of-all-trades? For instance, the MCC and USAID perform many overlapping 
functions, particularly in the MCC Threshold Program, creating 
competition among agencies. Should this overlap in program function be 
deconflicted?

    Answer. As practical there should be a central place in the U.S. 
government that has the responsibility for driving an overall foreign 
assistance program to provide coherence and maximize efficiencies. I 
feel that this should be USAID. For example, I think there needs to be 
greater coordination of USAID and the Millennium Challenge Corporation 
(MCC). If the MCC is to be kept separate then I think that the USAID 
administrator should be the chair of the board of MCC rather than the 
Secretary of State. We have to be careful not to further build up mini 
USAID-like programs throughout the government because domestic 
expertise does not automatically translate into international expertise 
and the management problems are compounded. The reality is that some 
programs are already established and some are making important 
contributions and will not be disbanded. I suspect that coordination by 
the State Department and USAID alone of these separate programs is not 
possible, especially with DOD. Therefore I feel that consideration 
should be given to a White House Development Council co-chaired by a 
NSC senior staff person and the USAID administrator. The Council would 
be made up of departments and agencies with foreign assistance programs 
and interests. At the country level there must be someone with broad 
powers, reporting to the Ambassador in the field and to the appropriate 
USAID staff in Washington, who coordinates U.S. assistance work in the 
country. Usually this would be the USAID mission director. This is a 
pressing need. These ideas and needs underline the requirement that 
management and technical staff of USAID need to be rebuilt and that 
USAID must have its own budget and policy capability.


    Question. Reporting to Congress has been the traditional way of 
ensuring accountability but can be overly burdensome: a 2007 SFRC 
report found that staff and consultants working for USAID in Mozambique 
spent over 600 work days planning their work and reporting to 
Washington that year. When asked about U.S. aid to Africa at a hearing 
in March Secretary Clinton said, ``I don't know where a lot of it ends 
up. And our transparency and our accountability measures are not 
adequate.'' Can we increase transparency without increasing reporting? 
How do we reduce duplicative reporting that doesn't tell us whether our 
aid is working, and focus on the results that matter most?

    Answer. Most experts acknowledge that USAID spends an inordinate 
amount of time responding to requests from Washington. However, part of 
the problem stems from the declining technical expertise in the Agency. 
As more field work has become performed by large contractors, and as 
confidence in USAID has declined, there has been a requirement for more 
detailed oversight of the agency. ``More is better'' has often been 
self-defeating. We needs to strengthen the agency and then have sound 
oversight. The Agency's Development Leadership Initiative is certainly 
a step in the right direction to rebuild the technical expertise of the 
Agency. USAID should also use the administrative determination 
authority positions to make senior technical staff appointments. It is 
a flexible tool that is faster and more certain than the usual process 
and should be helpful for immediately building senior technical and 
leadership strength. In addition, a more streamlined administrative 
foreign assistance structure, with USAID as the lead foreign assistance 
agency (partly discussed in the previous question) would help. As the 
foreign aid apparatus becomes less confusing and more streamlined, 
greater accountability will follow. Finally, greater collaboration 
between the administration and Congress is ultimately necessary to 
ensure Congress gets the information it needs, while weeding out 
unnecessarily oversight.


    Question. In Giles Bolton recent book, ``Africa Doesn't Matter: How 
the West Has Failed the Poorest Countries and What We Can Do About 
It,'' he offers the DFID (UK Department for International Development) 
model of greater budget support where the government receives more 
money to provide basic services for its people and fewer project-
specific dollars as one formula for making foreign assistance more 
effective. In your evaluation, would greater budget support provide 
more tangible, long-term results?

    Answer. Critical for development in the long-term is the building 
human resources. Building human capacity in developing countries serves 
as the foundation of economic growth and sustainable societies. Also 
important is creating and disseminating technology. Sometimes budget 
support can be appropriate but it is generally not the best use of 
outside money.


    Question. What is your assessment of the F Bureau? Is it 
functioning in such a way as to promote effectiveness and efficiency in 
our foreign assistance or does it create an unnecessary bureaucratic 
layer to the process?

    Answer. The ``F'' budget in the State Department in the last 
administration was the classic case of how to do it wrong. They had so 
many inputs and outcomes to report that everything and nothing ended up 
to be important. By one measure ``F'' was asking for information on 400 
inputs and outcomes. There apparently is some rollback of all this but 
I suspect not enough. There is lots of experience and much written 
about this type of problem in government and non-profits. The key is to 
think hard about what is critical to measure and fight off doing more.

                               __________

      responses to additional questions submitted for the record 
                  by senator corker to david beckmann
    Question. Do you believe that the number of agencies that we have 
working in development, particularly where there is a mission overlap, 
enhances or detracts from our ability to effectively coordinate a 
development strategy? Would it make sense reduce the number of agencies 
or to ``divvy'' up the responsibilities so that each of our agencies 
can establish an expertise in their function rather than being jacks-
of-all-trades? For instance, the MCC and USAID perform many overlapping 
functions, particularly in the MCC Threshold Program, creating 
competition among agencies. Should this overlap in program function be 
deconflicted?

    Answer. Consolidation of U.S. foreign assistance programs would 
improve organizational capacity, streamline bureaucracy, and strengthen 
the contribution that U.S. global development initiatives make to our 
foreign policy. One of the consequences of having such an outdated U.S. 
development system is that it has been easier to add more and more 
layers than address underlying inefficiencies. The proliferation of 
programs and agencies is compounded by the lack of an overarching 
strategy with no single person being truly accountable for the U.S. 
government's efforts in global development.
    Foreign assistance today is administered by over 50 governmental 
offices, through more than 20 agencies and 12 departments, and lacks a 
coherent National Strategy for Global Development (NSGD). A NSGD is 
needed to set priorities for the selection of development initiatives 
and to coordinate the development activities of relevant government 
agencies. Given the limited resources available for foreign assistance 
worldwide and the variety of problems to address, it is essential that 
the United States think systematically about the most effective ways to 
reduce global poverty while advancing its national interests.
    MCC is currently undertaking a review of the Threshold Program to 
evaluate what the future of the program should be, and I look forward 
to seeing their results.


    Question. Reporting to Congress has been the traditional way of 
ensuring accountability but can be overly burdensome: a 2007 SFRC 
report found that staff and consultants working for USAID in Mozambique 
spent over 600 work days planning their work and reporting to 
Washington that year. When asked about U.S. aid to Africa at a hearing 
in March Secretary Clinton said, ``I don't know where a lot of it ends 
up. And our transparency and our accountability measures are not 
adequate.'' Can we increase transparency without increasing reporting? 
How do we reduce duplicative reporting that doesn't tell us whether our 
aid is working, and focus on the results that matter most?

    Answer. To be effective and sustainable, U.S. foreign assistance 
must be transparent and available to all parties. This is important to 
ensuring sustained political support, proper oversight, and overall 
accountability. Making U.S. foreign aid transparent is not just 
important to U.S. taxpayers; it's fundamental to smart development. 
Unless recipient countries receive comprehensive, timely and comparable 
information from donors, intended recipients can't hold their 
governments accountable, and those governments can't plan, prioritize 
or explain what they are doing to their populations.
    Reports are certainly one way to disseminate information. However, 
years of reporting requirements have led to a system that is frequently 
overlapping and increasingly burdensome. Any reform should include 
simplified and streamlined reporting requirements with a determination 
of what information and analysis would truly be useful and do away with 
those that are not.
    One of the reasons so many reporting requirements exist is the lack 
of overall transparency of our programs. Using newly available 
technology tools, we can make a great deal of information publicly 
available through websites and other means, decreasing the need for 
superfluous and time-intensive reports on basic program attributes and 
activities.


    Question. In Giles Bolton's recent book, ``Africa Doesn't Matter: 
How the West Has Failed the Poorest Countries and What We Can Do About 
It,'' he offers the DFID (UK Department for International Development) 
model of greater budget support where the government receives more 
money to provide basic services for its people and fewer project-
specific dollars as one formula for making foreign assistance more 
effective. In your evaluation, would greater budget support provide 
more tangible, long-term results?

    Answer. There are cases where budget support has been used very 
effectively. However, it is not a panacea and can't be used responsibly 
in many circumstances. However, the U.S. should look creatively at how 
our development programs can help build institutional capacity in 
developing countries while still ensuring accountability to the U.S. 
taxpayer through effective programming. The Millennium Challenge 
Account has sought to achieve this while also determining best 
practices. Other donors, such as the International Fund for 
Agricultural Development (IFAD), use a different model to work through 
country systems while maintaining fiscal control. These are tools that 
the U.S. development program should take advantage of depending on each 
country's context.


    Question. What is your assessment of the F Bureau? Is it 
functioning in such a way as to promote effectiveness and efficiency in 
our foreign assistance or does it create an unnecessary bureaucratic 
layer to the process?

    Answer. Overall, despite some achievements in the framing and 
reporting of foreign aid, the addition of the F Bureau has contributed 
to: the weakening of USAID and country-driven development; 
counterproductive, Washington-based micromanagement of field-level 
strategy and budgeting; and the fragmentation of responsibility for 
development programs.
    Given the appointment of Jack Lew as Deputy Secretary of State for 
Management and Resources, and the need to reestablish the USAID 
Administrator as the key development policy advisor in the U.S. 
Government with direct reporting to the Secretary of State, the 
position of Director of Foreign Assistance should be eliminated. The F 
Bureau's staff and responsibilities should be split appropriately 
between the Office of the Deputy Secretary and USAID.
    Creating a strong development agency requires restoring 
responsibility for overall development policy strategy and authority to 
an empowered USAID. In particular, development assistance strategies, 
sectoral strategies and country strategies should be under USAID's 
authority. The policy function (formerly PPC) currently resident in the 
F Bureau should be transferred back to USAID to facilitate long-term 
thinking and planning on development policy, and USAID should regain 
the capacity to design its programs in-house. The legislation that you 
helped craft and recently introduced, the Foreign Assistance 
Revitalization and Accountability Act of 2009 (S. 1524), would do just 
that by reestablishing the Bureau for Policy and Strategic Planning at 
USAID. Thank you, Senator Corker, for your support.

                               __________

      responses to additional questions submitted for the record 
                   by senator corker to jeffrey sachs
    Question. Do you believe that the number of agencies that we have 
working in development, particularly where there is a mission overlap, 
enhances or detracts from our ability to effectively coordinate a 
development strategy? Would it make sense reduce the number of agencies 
or to ``divvy'' up the responsibilities so that each of our agencies 
can establish an expertise in their function rather than being jacks-
of-all-trades? For instance, the MCC and USAID perform many overlapping 
functions, particularly in the MCC Threshold Program, creating 
competition among agencies. Should this overlap in program function be 
deconflicted?

    Answer. We should reduce sharply the number of separate programs, 
and put them under the USAID umbrella. MCC should be folded into USAID, 
ending it as a separate program (though of course continuing the 
existing MCC programs under USAID management).


    Question. Reporting to Congress has been the traditional way of 
ensuring accountability but can be overly burdensome: a 2007 SFRC 
report found that staff and consultants working for USAID in Mozambique 
spent over 600 work days planning their work and reporting to 
Washington that year. When asked about U.S. aid to Africa at a hearing 
in March Secretary Clinton said, ``I don't know where a lot of it ends 
up. And our transparency and our accountability measures are not 
adequate.'' Can we increase transparency without increasing reporting? 
How do we reduce duplicative reporting that doesn't tell us whether our 
aid is working, and focus on the results that matter most?

    Answer. We would increase transparency by have a few large, 
significant, and well-targeted programs. The key sectors should 
include: agriculture, health, education, infrastructure, and business 
development. In many more cases than now, we should be pooling U.S. 
funding with that of other donor countries, as we do in the Global Fund 
to Fight AIDS, TB, and Malaria.


    Question. In Giles Bolton's recent book, ``Africa Doesn't Matter: 
How the West Has Failed the Poorest Countries and What We Can Do About 
It,'' he offers the DFID (UK Department for International Development) 
model of greater budget support where the government receives more 
money to provide basic services for its people and fewer project-
specific dollars as one formula for making foreign assistance more 
effective. In your evaluation, would greater budget support provide 
more tangible, long-term results?

    Answer. Budget support makes sense in one condition--that we have a 
clear agreement with the recipient government about what the budget 
support will actually support (and we monitor and audit the results). 
It is not good--politically, managerially, or developmentally--to hand 
over money as a blank check, even to a ``trusted'' government. Our aid 
should be accountable, part of a bargain with the recipient country.


    Question. What is your assessment of the F Bureau? Is it 
functioning in such a way as to promote effectiveness and efficiency in 
our foreign assistance or does it create an unnecessary bureaucratic 
layer to the process?

    Answer. I believe that a strengthened USAID should be an 
independent agency, working with the State Department (and of course 
ultimately subordinate to it when core foreign policy issues are at 
stake). The USAID Administrator, in my view, should have cabinet rank. 
I do not believe in housing USAID in the State Department, so I'm not a 
great fan of the F Bureau approach.

                               __________

      responses to additional questions submitted for the record 
                 by senator feingold to peter mcpherson
    Question. In your testimony, you highlighted the possibility for 
greater collaboration between USAID and Public and Land Grant 
Universities, primarily with regards to recruitment of experts for 
senior staff positions. What obstacles exist to this collaboration and 
what can the administration and Congress do to better facilitate it? 
Aside from staff recruitment, in what other areas do you think Public 
and Land Grant Universities can play a greater role in a revitalized 
and reformed foreign assistance agency and agenda?

    Answer. One of the obstacles to greater collaboration between U.S. 
land-grant universities and USAID has been the general decline of 
agriculture among the Agency's priorities. Another has been the 
tendency for the Agency to award large, mega-contracts to independent 
firms, a reflection of the loss of technical personnel within USAID. 
Additionally, the strengths of universities has been problem solving, 
analysis, training, and building long-term human and institutional 
capacity, not the delivery of goods and services, which has 
increasingly preoccupied the agency in recent years. All of those 
obstacles are interrelated, but could be addressed by USAID by some of 
the efforts under consideration, such as the Lugar-Casey bill and 
proposals by the Administration. I urge the committee to act on the 
Lugar-Casey proposal.
    In addition to recruitment, the university community can help 
provide the critical scientific analysis for monitoring and evaluation, 
and help develop metrics to measure impacts necessary for 
accountability. Universities provide the research networks to develop 
the innovations and technologies for dramatic increases in sustainable 
agricultural production. Universities also build the institutional 
capacity in host countries, which is necessary for long-term problem 
solving. Finally, universities develop the human intellectual capital 
that is the core of any prosperous society. Over the past 20 years, 
USAID's long-term training (higher education degree training) has 
declined from 18,000 trainees in the United States per year to less 
than 1,000 last year. These trainees of the past have become government 
ministers, scientists, administrators and national leaders--the human 
capital that is critical for a developing country to move forward 
economically, socially and politically. These individuals have also 
formed important diplomatic and business links that facilitated 
productive interactions with the United States. Exposure to the United 
States and its social and academic environment is critical to this 
process. Such long-term degree training, coupled with the experience of 
living in the United States, has shown that these trainees carry a 
positive lifelong image of our country.


    Question. The Association of Public and Land Grant Universities has 
worked to partner U.S. and African universities in order to empower 
institutions of higher education in Africa to contribute more 
effectively to development on the continent. What progress has been 
made thus far, and what lessons learned that could help inform attempts 
to reform U.S. foreign assistance, specifically related to capacity 
building and impact evaluations of the initiatives?

    Answer. The progress to date has been very good. Twenty awards have 
been issued and ten more are pending. There is a conference in Accra, 
Ghana in August for awardees and donors, and we are looking to develop 
the next phase. One of the major lessons we learned is that the 
interest among the African countries is huge. We received 300 proposals 
for 20 awards of $50,000 each. We need to bring more resources to the 
table to respond to this great demand. Another lesson learned is that 
the program could benefit from being premised on a strategic plan for a 
nation or region. A third lesson is the need to focus more on 
development outcomes with a clearer articulation by Africans on 
specific development priorities. As we move forward we will be building 
a robust monitoring and evaluation component, and also establishing 
Centers of Excellence with universities that identify technical, policy 
and organizational solutions to pressing regional and national 
development constraints. I strongly emphasize enough the importance of 
increased U.S. investment in building higher education capacity in 
Africa. This is the key to less dependency and to sustained economic 
growth as we have found in our own country.

                               __________

      responses to additional questions submitted for the record 
                 by senator feingold to david beckmann
    Question. I have long been supportive of certain programs that 
address specific issues such as PEPFAR or the Malaria Initiative, and 
such issue-based programs often draw the widest support from the 
general public. At the same time, it is clear that if U.S. foreign 
assistance relies too heavily on issue-specific programs, new obstacles 
develop such as overlooking certain populations or deprioritizing long 
term, sustainable development programs. How could U.S. foreign 
assistance be restructured to better balance the needs of both issue-
based programs and broader programs that are strategic in nature?

    Answer. Thank you for your continued support of vital programs such 
as PEPFAR and the President's Malaria Initiative. Development 
assistance is a crucial tool of American foreign policy. It is the 
means by which our government fights poverty, supports good governance, 
and promotes human welfare in developing countries around the world. 
Though the United States gives more in Official Development Assistance 
(ODA) than any other country, it does not have an explicit strategy to 
guide the type of investments it makes across the breadth of the 
government. Without a strategy, the U.S. cannot achieve the best 
outcomes from its development programs or ensure that they support 
American foreign policy objectives in a coherent manner.
    A National Strategy for Global Development is needed to set 
priorities for the selection of development initiatives and to 
coordinate the development activities of relevant government agencies. 
Given the multitude of global challenges and the limited resources 
available for foreign assistance worldwide, it is essential that the 
U.S. Government think systematically about the most effective ways to 
reduce global poverty while advancing its national interests. It is not 
enough simply to spend money on certain sectors (such as health care or 
agriculture) and to fund the foreign assistance programs of disparate 
government agencies (from USAID to the Department of Justice) without 
articulating how those initiatives work together. To be effective on 
the ground and to maintain the support of the American people, the 
collective outcome of our disparate development programs must be 
greater than the sum of its parts. This can only happen with a clear, 
credible and authoritative plan that guides the development activities 
of the entire U.S. government. A National Strategy for Global 
Development--emanating from the White House (ideally the interagency 
National Security Council) but developed in consultation with Congress 
and non-governmental stakeholders--would ensure a holistic approach to 
how the U.S. administers foreign assistance.

                               __________

      responses to additional questions submitted for the record 
                  by senator feingold to jeffrey sachs
    Question. In your testimony, you named six categories, including 
agriculture and education, which align with the Millennium Development 
Goals. How are these categories currently being identified and 
addressed by U.S. foreign assistance, successfully or otherwise? Could 
you elaborate on how they might be used to develop a new framework for 
foreign assistance?

    Answer. USAID does not have a good balance among agriculture, 
education, health, infrastructure, climate change, and business 
development. Indeed, there is no overarching framework or measurement 
of the sector allocations. There is no conceptual approach that makes 
sense. By starting with our goals--the Millennium Development Goals--it 
would be possible to work ``backward'' to the methods to achieve the 
goals. Alas, USAID did not even try to do this during the Bush 
administration.


    Question. I have long been supportive of certain programs that 
address specific issues such as PEPFAR or the Malaria Initiative, and 
such issue-based programs often draw the widest support from the 
general public. At the same time, it is clear that if U.S. foreign 
assistance relies too heavily on issue-specific programs, new obstacles 
develop such as overlooking certain populations or deprioritizing long 
term, sustainable development programs. How could U.S. foreign 
assistance be restructured to better balance the needs of both issue-
based programs and broader programs that are strategic in nature?

    Answer. The issue-specific programs are very good. They lend 
themselves to measurement, accountability, and results-based aid. The 
key is to have enough of these targeted programs (in the six main 
categories) that the breadth of development needs is really being 
addressed. We don't need fifty categories, or even fifteen. Ten or 
fewer major categories will suffice. Each should be driven by metrics, 
operational systems, and a way to explain to the taxpayers what we are 
getting for our money--in the form of lower hunger, reduced malaria, 
more solar power, less illiteracy, lower population growth, etc.

                               __________

      responses to additional questions submitted for the record 
                  by senator demint to peter mcpherson
Foreign Assistance
    Question. President-elect Obama made commitments to ``elevate, 
empower, consolidate and streamline'' U.S. development programs. With 
foreign assistance programs scattered across more than 20 different 
federal agencies, how should the government address inefficiencies and 
incoherence within the current structure in order to help maximize the 
impact of U.S. assistance and instability that threaten prosperity and 
security globally and at home?

    Answer. USAID should be a strong separate agency with the 
Administrator reporting to the Secretary of State (but not the State 
Department). Some would like the Agency to be a Cabinet-level position 
but I do not think that is practical. In any case, agreement on 
principles on the Hill should focus on several key elements, and USAID 
reauthorizing legislation should put these changes in place and provide 
the appropriate delegations of authority for USAID. The Administrator 
should be the government's Chief International Development Officer and 
represent the United States at international development conferences, 
donor coordination meetings etc.

    The implementation of this would entail:


   Placing under the Administrator several foreign assistance programs 
        and activities related to development, e.g., PEPFAR and 
        refugees budgets and staff;

   Maintaining and implementing and advisory role for USAID for 
        related foreign assistance programs, such as ESF;

   The Administrator chairing boards of related U.S. government 
        agencies (MCC);

   The Administrator chairing the interagency foreign assistance 
        committee to coordinate policies among agencies that impact or 
        have other foreign assistance programs (Deputy NSC should co-
        chair), and produce a Quadrennial International Development 
        Review, which creates a government-wide strategy for addressing 
        international development including trade, finance, the 
        environment, and agriculture policies; and

   The Administrator having a seat by law on the National Security 
        Council and other intergovernmental entities that deliberate on 
        policies related to development and foreign assistance:


                   USAID and DOD should jointly plan strategies on an 
                ongoing basis. Such planning would include field 
                operations in countries where U.S. troops are engaged 
                in combat or peacekeeping operations that require the 
                capabilities and resources of DOD and where U.S. 
                civilian agencies have or will expand their role.

                   USAID should have a separate budget relationship 
                with OMB, not through the State Department.


    Question. What metrics should the U.S. government use to gauge the 
success of U.S. foreign assistance programs? If the metrics are not met 
would you advocate for the elimination of a program?

    Answer. Metrics should be focused on outcomes and impacts, not 
simply inputs. To be effective, assistance activities must be designed 
and managed to produce clearly identifiable and measurable results. 
What must be avoided is letting this worthy objective interfere with 
long-term mission and impact. Development takes time but it is true 
that managers need to show results ``now.'' The imperative to ``show 
results'' and the U.S.-centric, bean-counting approach can lead to 
activities that show quick outcomes and can be quantified and make nice 
photo-ops but do not contribute to sustainable development. Selective 
and critical long-term outcome can and should be put in place.
Foreign Aid Reform
    Question. Senator Clinton committed President Obama to ``enhancing 
our foreign assistance architecture to make it more nimble, innovative, 
and effective.'' What specific ideas and actions do you believe are 
necessary to achieve these goals?

    Answer. To be effective and relevant, U.S. assistance policies and 
programs must be flexible and adjust to the needs of each community and 
country and to changing dynamics. While the basic areas of development 
need to stay relatively constant-human resources, creation and 
dissemination of new technology, agriculture and enterprise 
development, etc.-the needs and requirements of each country is at 
least somewhat different and changes over time. A new law should set 
forth the key objectives and priorities for U.S. assistance policies 
and programs, but how those programs are implemented in each country 
can best be determined by those in the field responsible for 
implementation. There should, when practical, be a ``presumption'' in 
favor of a country own priorities. Note, this is a ``presumption'' of a 
bottoms up approach, not an absolute requirement.


    Question. In addition to what metrics we should use to gauge 
success, what criteria should the government use to determine 
elimination or reduction of foreign assistance programs?

    Answer. There are a number of steps that can be taken to evaluate 
the success of programs and to weed out those that have proven to be 
ineffective. An organization that does not learn from its mistakes is 
bound to become sterile and ineffective. I suggest a strong evaluation 
function be within USAID itself. It takes senior-level attention but I 
think appropriate staffing can avoid some of the institutional bias and 
engender a genuine independent and constructive analysis. The 
evaluations should focus on a few key outcomes not process and inputs.
    I also support reestablishing a lessons learned center, probably 
associated with the evaluation office. I think cross-agency evaluation 
and analysis can be undertaken through something of a ``think tank'' 
that is kept vibrant and relevant by a board from several agencies. 
This certainly is not full agency coordination, but it could contribute 
to that goal. A National Academy model could be considered, for 
example.
    We need to learn lessons though a good evaluation system and 
learning center and act on them in terminating activities and making 
new allocations.
    Also critical to improving foreign assistance management is for 
USAID to have its own budget and policy capability, preferably in the 
same USAID office. USAID needs to be able to argue a coherent overall 
budget to the State Department in order for there to be a full voice 
for development. Budget and policy drive each other and are 
inextricably linked. USAID must have a strong policy office to be a 
creditable organization. The development agency has to be able to 
provide well-reasoned analysis and recommendations for the State 
Department to consider. I support the bill's provision to reestablish a 
Bureau of Policy and Strategic Planning at USAID.


    Question. Some of the largest criticism of foreign aid regards 
distribution monitoring and management. What do you believe is the 
proper balance between rapid delivery of aid and accountability and 
oversight to ensure aid does not find its way to terrorist 
organizations? How can we build a monitoring-and-evaluation capability 
at USAID that is independent, rigorous and reliable across U.S. foreign 
assistance activities, that will contribute to restoring the United 
States as a credible partner, and that will ensure U.S. taxpayer funds 
are invested well? Is there any way to leverage low-cost technology to 
track aid distribution, such as an online, searchable database?

    Answer. In general, I believe that during the last 20 years USAID 
has moved away from long-term development and more toward transferring 
goods and services. The issue is not easy because the immediate needs 
are so great. But it is important that long-term development not be 
crowded out and that is why I am pleased by the support for 
agriculture. Sustained progress usually comes by building human 
resources; creating and distributing technology; and building 
institutions, stable governments and reasonable economic policies. 
Often infrastructure plays a key role. There clearly needs to be a 
balance between programs for addressing urgent short-term human needs 
and long-term development activities to sustain progress.
    I note that much of the progress around the world in the last 
several decades has been in countries where leadership wanted to see 
better lives for their people and where the country has taken control 
of their own future. We need to do a better job of listening to these 
countries and how they define their needs to the extent practical as we 
plan our development program. This is the real strength of the 
Millennium Challenge Corporation (MCC). But we should not limit giving 
full consideration to needs as set forth by only MCC countries. As I 
noted in response to an earlier question, there should be a 
``presumption'' that we will support a country as it sees its needs. 
Note that this is a ``presumption'' only because there may be other 
factors that are critical.
    Low-cost technologies are being used more frequently. U.S. land-
grant universities have increasingly engaged host country institutions 
through online venues, and professional journals are accessed in 
digital format. The World Bank is undertaking a multi-billion dollar 
effort to increase bandwidth and improve connectivity in many 
developing countries. We are only at the early stages in realizing the 
almost unlimited potential of ICT, and this should continue to be a 
very important component of our foreign assistance effort
    Donors and recipients must be accountable for their actions. The 
best path to accountability is transparency in budgets, decision 
making, and implementation. Implementation cannot be too complicated 
and constrained by red tape or else formal accountability and well as 
project success is likely to be defeated. Only rigorous, objective 
monitoring and evaluation will produce the information and knowledge 
necessary to know whether assistance activities are effective and to 
inform whether and how they should be continued or modified. Careful 
planning must go into what really is important to measure because too 
many measurements will be self-defeating. Development activities and 
their evaluation must be based on realistic goals and should be 
designed to be of benefit not just to donor organizations but also to 
the intended beneficiaries and indigenous institutions.

                               __________

      responses to additional questions submitted for the record 
                  by senator demint to david beckmann
Foreign Assistance
    Question. President-elect Obama made commitments to ``elevate, 
empower, consolidate and streamline'' U.S. development programs. With 
foreign assistance programs scattered across more than 20 different 
federal agencies, how should the government address inefficiencies and 
incoherence within the current structure in order to help maximize the 
impact of U.S. assistance and instability that threaten prosperity and 
security globally and at home?

    Answer. One of the consequences of having a U.S. development system 
so outdated is that it has been easier to add more and more layers than 
to address the underlying inefficiencies.. The proliferation of 
programs and agencies has been compounded by the lack of an overarching 
strategy and of any single person being truly accountable for the U.S. 
government's efforts in global development. Consolidation of U.S. 
foreign assistance programs would improve organizational capacity, 
streamline bureaucracy, and strengthen the contribution that U.S. 
global development initiatives make to our foreign policy.


    Question. What metrics should the U.S. government use to gauge the 
success of U.S. foreign assistance programs? If the metrics are not met 
would you advocate for the elimination of a program? In addition to 
what metrics we should use to gauge success, what criteria should the 
government use to determine elimination or reduction of foreign 
assistance programs?

    Answer. The focus on metrics as a way to communicate successes in a 
measurable way must be balanced with more nuanced and analytic methods 
to illuminate realities that statistics cannot easily capture or 
convey. Education policy is a good example of the adverse impacts that 
can occur when testing and metrics supplant informed judgment and 
attention to important individual/subgroup needs, when statistics 
become more important than stories. On the other hand, stories are 
certainly never the ``whole story.'' The key is to balance statistics 
and stories to produce a genuine understanding that will inform both 
policymakers and taxpayers.
    Building a monitoring and evaluation capability that is 
independent, rigorous and reliable across U.S. foreign assistance 
activities will contribute to restoring the United States as a credible 
partner and ensure that U.S. taxpayer funds are invested well. 
Monitoring and evaluation (M&E) informs program and policy decision 
makers about whether a desired result is or is not being achieved, as 
well as for whom and why. Monitoring and evaluation serves multiple 
purposes at different levels of foreign assistance decision making, 
requiring M&E systems that are both disciplined enough to ensure high-
quality work and flexible enough to cope with the requirements of a 
complex and decentralized foreign assistance structure.
    Quality monitoring and evaluation are critical components of 
effective governance-including development assistance. USAID, once a 
leader in project design, monitoring, and evaluation, has lost much of 
that capacity due to changes in priorities and lost technical 
expertise. As with any significant investment of taxpayer funds, we 
need to know that dollars devoted to global development are well spent 
and are achieving the intended objectives in both the short and long 
terms. Efforts by the United States to evaluate the impact of our 
development programs have been spotty at best. Recent trends--including 
the F process, PEPFAR implementation, and the Defense Department's 
increased involvement in development and reconstruction efforts--have 
focused significant attention on creating and reporting on short-term 
outputs for monitoring purposes (i.e., how many people are being fed/
treated/attending school), rather than evaluating the longer-term 
impact of these efforts. By disregarding longer-term impact evaluation, 
we have lost the opportunity to learn what kinds of programs are 
effective or wasteful and what programs are successful enough to be 
expanded and replicated. Financial and staff resources devoted to 
impact evaluation generates huge returns: identifying best, and worst, 
practices can leverage spending by other agencies and by developing 
countries themselves, making each dollar spent more effective at 
helping those who need it most around the world.
    An effective evaluation system generates different kinds of 
information for different purposes. Operations and process evaluation 
involves in-house experts engaged with practitioners and provides 
managers with efficiency information. Output evaluation--counting 
numbers of schools built, vaccines given, etc.--helps with managerial 
decisions and resource accountability and is best done with a 
combination of in-house staff and external review. Impact evaluations, 
which consist of broader targets -better educated students, lower child 
mortality rates, etc.--are not needed for every program but should 
focus on new interventions and popular existing approaches that have no 
evidence of effectiveness.
    Through a more comprehensive and independent monitoring-and-
evaluation system for U.S. foreign assistance programs, we can begin to 
assess their true impact and better weigh resource-allocation decisions 
based on those measures.
Foreign Aid Reform
    Question. Senator Clinton committed President Obama to ``enhancing 
our foreign assistance architecture to make it more nimble, innovative, 
and effective.'' What specific ideas and actions do you believe are 
necessary to achieve these goals?

    Answer. There is broad agreement on the need to strengthen the 
impact of U.S. foreign assistance and to improve the coherence of 
foreign assistance programs. The current bureaucratic architecture is 
based on the Foreign Assistance Act of 1961, an outdated piece of 
legislation which was drafted in response to Cold War threats and which 
does not effectively address 21st century challenges such as extreme 
poverty and climate change. Well-executed investments in development 
align closely with American values and can help create security and 
prosperity at home and abroad as well as bolster the U.S.'s image 
globally. But the way in which these programs are managed must be 
modernized if they are to achieve their full potential impact.
    Foreign assistance today is administered by over 50 governmental 
offices, through more than 20 agencies and 12 departments, and lacks a 
coherent National Strategy for Global Development (NSGD). A NSGD is 
needed to set priorities for the selection of development initiatives 
and to coordinate the development activities of relevant government 
agencies. Given the limited resources available for foreign assistance 
worldwide and the variety of problems to address, it is essential that 
the United States think systematically about the most effective ways to 
reduce global poverty while advancing its national interests. The 
following actions--both immediate and longer-term--are essential to 
making U.S. global development efforts more strategic, efficient, and 
effective. Taken together, they will:


   Elevate development as a critical component of U.S. national 
        security;

   Empower USAID to become a strong and strategic contributor to U.S. 
        foreign policy interests, with a level of independence and 
        authority necessary to serve as the development policy lead 
        promoting long-term development and poverty reduction efforts 
        coordinated with, but distinct from, shorter-term diplomacy 
        efforts; and

   Better coordinate U.S. foreign assistance activities across the 
        government.
            Elevate
    Appoint Development Leadership as Soon as Possible: To exert strong 
leadership on development policy, allocate development resources more 
effectively in pursuit of U.S. development objectives, and transform 
USAID into a 21st-century development agency, a high-profile individual 
who will be respected in the interagency and development communities 
should be appointed as quickly as possible as USAID Administrator. A 
strong leader should also be appointed to the MCC, and the trajectories 
of both the MCC and PEPFAR in the foreign assistance landscape made 
clear.

    Give Development Its Own Seat at the National Security Table: The 
USAID Administrator should be made a member of the National Security 
Council and of other high-level interagency deliberative bodies. At a 
minimum, the USAID Administrator should be invited to all NSC 
Principals Committee meetings dealing with international issues that 
have a significant development impact.

    Craft a Development Strategy: The National Security Council should 
prepare a National Strategy for Global Development, distinct from but 
consistent and coordinated with the National Security Strategy. This 
strategy is essential for clarifying goals and objectives, 
strengthening coordination of development-related activities spread 
across the government, and increasing the efficiency and effectiveness 
of key programs.

    Rewrite the Foreign Assistance Act: The FAA is unwieldy and 
outdated, and adds significantly to the costs and inefficiencies of 
many of our foreign assistance programs. While using the authorities in 
the current Act more strategically is a good first step, it is no 
substitute for reaching a new understanding on the goals, objectives, 
and modalities of foreign assistance programs.
            Empower
    Continue to Re-professionalize USAID: Rebuilding USAID into a 
strong and professional development agency with sufficient 
independence, capacity and flexibility is essential for strengthening 
our development programs and for restoring USAID as a lead development 
agency internationally. This would include: ensuring that net increases 
in personnel at field posts are significant; resolving Operating 
Expenses (OE) constraints; re-staffing the Agency with technical 
expertise, including experienced mid-level managers; and bolstering 
training.

    Bolster USAID's Capacity and Authority for Policy, Planning, and 
Program Design and Management: Creating a strong development agency 
requires restoring responsibility for overall development policy 
strategy and authority to an empowered USAID. In particular, 
development assistance strategies, sectoral strategies, and country 
strategies should be under USAID's authority. The policy function 
(formerly PPC) currently resident in the F Bureau should be transferred 
back to USAID to facilitate long-term thinking and planning on 
development policy and USAID should regain the capacity to design its 
programs in-house.

    Restore and Strengthen Budget Expertise at USAID: USAID budget 
expertise should be restored and strengthened to enable the Agency to 
provide a meaningful voice for development (and contribute field 
perspectives) during the budget preparation and interagency budget 
negotiations. USAID should have staff responsible for strategic 
budgeting.

    Strengthen USAID's Ability to Partner with NGOs and the Private 
Sector: Any reassessment of U.S. development efforts must take into 
consideration how U.S. resources can leverage the corporate and NGO 
sectors. A restored and empowered policy planning function at USAID 
should develop an approach to engaging the corporate and NGO sectors as 
true partners in achieving global development objectives.
            Coordinate
    Eliminate the Position of Director of Foreign Assistance: Given the 
appointment of Jack Lew as Deputy Secretary of State for Management and 
Resources, and the need to reestablish the USAID Administrator as the 
key development policy advisor in the U.S. Government, with direct 
reporting to the Secretary of State, the position of DFA should be 
eliminated. The F Bureau's staff and responsibilities should be split 
appropriately between the Office of the Deputy Secretary and USAID. 
Despite some achievements in the framing and reporting of foreign aid, 
the addition of the F Bureau has contributed to: the weakening of USAID 
and country-driven development; counterproductive, Washington-based 
micromanagement of field-level strategy and budgeting; declining 
morale; and the fragmentation of responsibility for development 
programs.

    Transfer Responsibilities for Overall Budget Coordination to the 
Office of the Deputy Secretary: Responsibilities for reviewing and 
coordinating budgets across all foreign affairs agencies, reviewing 
proposals for reducing inefficiencies and non-performing programs, 
consulting with Congress on the need to rationalize earmarks, and 
mobilizing financial resources should all be assumed by the Office of 
the Deputy Secretary. An empowered USAID would work closely with the 
Office of the Deputy Secretary on all development assistance-related 
issues and would have authority over its own budget, including control 
over the final allocation of development resources across countries and 
programs based on input from country teams. The Office of the Deputy 
Secretary would continue to have authority over diplomacy and State-
managed foreign assistance. The budgets for State-managed foreign 
assistance, USAID, MCC, PEPFAR and others could be presented jointly in 
order to show the full force and application of U.S. foreign 
assistance. Efforts to officially consolidate the budgets, however, 
should be avoided.

    Transfer Resource Tracking Responsibilities to the Office of the 
Deputy Secretary; Establish Top-Line Objectives for Foreign Aid with 
Performance Tracking Responsibilities Transferred to the Lead Agency: 
The Deputy Secretary should absorb the resource tracking function 
currently housed at the F Bureau, including FACTS, and expand its 
coverage to be able to report on the MCC and PEPFAR. At the performance 
level, a monitoring and evaluation system should be designed in close 
coordination with State, USAID, MCC and PEPFAR to aggregate to top-line 
objectives and standardize indicators across foreign aid agencies 
(regardless of any restructuring or consolidation plans) to both 
effectively report on the impact of foreign aid and to reduce 
unnecessary data collection and reporting requirements from the field. 
Tracking and reporting would be the responsibility of the lead 
implementing agency, and each agency would have its own monitoring and 
evaluation capacity. Data and evaluations should be made public, 
including budget process data at every stage, from request, to pass-
back, to Congressional submission, to final appropriation, to 653(a) 
allocations.
Metrics and Transparency
    Question. Some of the largest criticism of foreign aid regards 
distribution monitoring and management. What do you believe is the 
proper balance between rapid delivery of aid and accountability and 
oversight to ensure aid does not find its way to terrorist 
organizations? How can we build a monitoring-and-evaluation capability 
at USAID that is independent, rigorous and reliable across U.S. foreign 
assistance activities, that will contribute to restoring the United 
States as a credible partner, and that will ensure U.S. taxpayer funds 
are invested well? Is there any way to leverage low-cost technology to 
track aid distribution, such as an online, searchable database?

    Answer. While I support the goal of ensuring that no taxpayer funds 
(or any other funds) are diverted to suspected terrorists or terrorist 
organizations, U.S NGOs already have systems in place to ensure that no 
funds are misappropriated for any reason. Moreover, U.S. NGOs that 
implement official humanitarian and development assistance are required 
to certify that they will not knowingly provide funds or material 
support to any individual or organization that advocates or commits 
terrorism.
    Recently introduced legislation by Senators Kerry, Lugar, Menendez, 
Corker, Cardin, and Risch--the Foreign Assistance Revitalization and 
Accountability Act of 2009 (S. 1524)--goes a long towards achieving 
these goals by calling for the creation of an independent Council On 
Research and Evaluation of Foreign Assistance that would reside in the 
Executive Branch and be responsible for objectively evaluating the 
impact and results of all development and foreign aid programs 
undertaken by the U.S. Government. In addition, the bill would create 
an Office for Learning, Evaluation, and Analysis in Development in 
USAID's reestablished Bureau for Policy and Strategic Planning (as 
called for in the legislation) that would link evaluation and research 
results to strategic planning and policy options, coordinate the 
evaluation processes of USAID bureaus and missions, develop a 
clearinghouse capacity for dissemination of knowledge and lessons 
learned to the wider community, and closely consult with the Council.
    The bill also calls for the President to make publicly available 
all information on U.S. foreign assistance on a program-by-program and 
country-by-country basis. These are all very strong steps for both 
improving accountability and transparency for U.S. foreign aid 
programs. As a point of reference, the Office of the Director of 
Foreign Assistance began development of the Foreign Assistance 
Coordination and Tracking System (FACTS) in FY 2006. FACTS is a 
database that aims to combine USAID and Department of State foreign 
assistance budget and performance planning and activity reporting data 
into one central system. Though it is not a public database, it may 
serve to inform the advent of such a public searchable database.

                               __________

      responses to additional questions submitted for the record 
                   by senator demint to jeffery sachs
Foreign Assistance
    Question. President-elect Obama made commitments to ``elevate, 
empower, consolidate and streamline'' U.S. development programs. With 
foreign assistance programs scattered across more than 20 different 
federal agencies, how should the government address inefficiencies and 
incoherence within the current structure in order to help maximize the 
impact of U.S. assistance and instability that threaten prosperity and 
security globally and at home?
    What metrics should the U.S. government use to gauge the success of 
U.S. foreign assistance programs? If the metrics are not met would you 
advocate for the elimination of a program?

    Answer. It makes sense to bring the aid programs back under one 
roof, USAID. I believe that USAID should be an independent agency with 
an Administrator at cabinet rank (as is the Administrator's counterpart 
in around a dozen other donor governments). We should focus the aid 
effort on a few categories. I've mentioned six: agriculture, health, 
education, infrastructure, climate change (including environment and 
hazards), and business development. Each of these needs metrics. It 
would be wise to base these metrics on the Millennium Development Goals 
(MDGs), since these are the ambitious but sensible objectives that have 
been internationally agreed by 192 governments, including the U.S.
Foreign Aid Reform
    Question. Senator Clinton committed President Obama to ``enhancing 
our foreign assistance architecture to make it more nimble, innovative, 
and effective.'' What specific ideas and actions do you believe are 
necessary to achieve these goals?

    Answer. I believe that our aid program should be targeted, based on 
explicit and quantitative goals, and with an explicit goal of enabling 
countries to break the poverty trap and thereby end their dependence on 
aid. The targets should fall in the six categories referred to above. 
Success should be measured against the Millennium Development Goals, 
which are the world's agreed goals for reducing extreme poverty and 
breaking the poverty trap.
Metrics and Transparency
    Question. In addition to what metrics we should use to gauge 
success, what criteria should the government use to determine 
elimination or reduction of foreign assistance programs?

    Answer. There are rather obvious, professionally deployed metrics 
in each area of concern. Public health specialists, for example, talk 
about disease burdens (e.g. for AIDS and malaria), child mortality, 
maternal mortality, immunization coverage, etc. We should be working 
with recipient countries and global agencies (e.g. the Global Fund to 
Fight AIDS, TB, and Malaria) to establish quantified goals together 
with the aid programs. Our aid programs would then be evaluated 
relative to specific targets.


    Question. Some of the largest criticism of foreign aid regards 
distribution monitoring and management. What do you believe is the 
proper balance between rapid delivery of aid and accountability and 
oversight to ensure aid does not find its way to terrorist 
organizations? How can we build a monitoring-and-evaluation capability 
at USAID that is independent, rigorous and reliable across U.S. foreign 
assistance activities, that will contribute to restoring the United 
States as a credible partner, and that will ensure U.S. taxpayer funds 
are invested well? Is there any way to leverage low-cost technology to 
track aid distribution, such as an online, searchable database?

    Answer. By establishing well-targeted programs (e.g. for food 
production, AIDS control, malaria control, road construction, potable 
water, etc.) we can track the outlays and measure the implementation 
relative to goals. This is very important. It is not a good idea, in 
general, to transfer money to other governments as a blank check, or a 
matter of trust. Our aid programs should be specific, monitored, 
quantified, and subject to audit.
    It makes most sense for the U.S. to pool its money with other 
donors, as a matter of leverage and a matter of simplification of the 
monitoring, goal-setting, and evaluation processes. By pooling our 
money with other donors, U.S. leadership is leveraged two-or-three to 
one, and we maintain the ability to help shape and monitor the 
assistance programs.

                               __________

      responses to additional questions submitted for the record 
                  by senator casey to peter mcpherson
The Administration's Foreign Aid Reform Policies


    Question. In April, the Government Accountability Office (GAO) 
released a report with seven recommendations on how to improve the 
United States foreign assistance structure. A key phrase that caught my 
attention in the report was: ``once the incoming Administration has 
defined its overarching goals for foreign assistance, we recommend that 
the Secretary of State work with all U.S. government entities involved 
in the delivery of foreign assistance.'' Although many of us recognize 
the need for foreign assistance reform here in Congress, it strikes me 
that the Administration has yet to present its comprehensive foreign 
assistance strategy.
    Mr. McPherson, do you believe that Congress should wait to consider 
any foreign assistance reform legislation until a USAID Administrator 
has been confirmed and an Administration policy articulated? If so, 
why?

    Answer. Congress should not wait for the Administration. It should 
pass legislation in the nature of the bipartisan draft bill being 
considered by the Committee. In fact, moving forward with the 
Committee's bill will draw attention within the Administration to 
foreign aid reform as a priority. Clearly, the Administration's views 
will be critical and a new USAID Administrator will help advance a 
foreign assistance reform agenda. But, I believe there is a growing 
sense of urgency by some members in both the Senate and House on this 
matter and moving a bill will underline the concern. Let me 
congratulate you on your leadership on international agriculture. Your 
bill with Senator Lugar is very much needed.

                               __________

      responses to additional questions submitted for the record 
                   by senator casey to david beckmann
The Administration's Foreign Aid Reform Policies


    Question. In April, the Government Accountability Office (GAO) 
released a report with seven recommendations on how to improve the 
United States foreign assistance structure. A key phrase that caught my 
attention in the report was: ``once the incoming Administration has 
defined its overarching goals for foreign assistance, we recommend that 
the Secretary of State work with all U.S. government entities involved 
in the delivery of foreign assistance.'' Although many of us recognize 
the need for foreign assistance reform here in Congress, it strikes me 
that the Administration has yet to present its comprehensive foreign 
assistance strategy.
    Several of the GAO recommendations are based upon the assumption 
that the current Administration will continue the foreign assistance 
reform efforts as laid out in the 2006 announcement of the State/F 
organizational reforms. Mr. Beckmann, do you believe that the current 
Administration should continue to carry out the State/F reform process?

    Answer. Given the appointment of Jack Lew as Deputy Secretary of 
State for Management and Resources, and the need to reestablish the 
USAID Administrator as the key development policy advisor in the U.S. 
Government with direct reporting to the Secretary of State, the 
position of Director of Foreign Assistance should be eliminated. The F 
Bureau's staff and responsibilities should be split appropriately 
between the Office of the Deputy Secretary and USAID.
    Creating a strong development agency requires restoring 
responsibility for overall development policy strategy and authority to 
an empowered USAID. In particular, development assistance strategies, 
sectoral strategies and country strategies should be under USAID's 
authority. The policy function (formerly PPC) currently resident in the 
F Bureau should be transferred back to USAID to facilitate long-term 
thinking and planning on development policy, and USAID should regain 
the capacity to design its programs in-house. Recently introduced 
legislation--the Foreign Assistance Revitalization and Accountability 
Act of 2009 (S.1524) sponsored by Senators Kerry, Lugar, Menendez, 
Corker, Cardin, and Risch--would do just that by reestablishing the 
Bureau for Policy and Strategic Planning at USAID. I hope you will join 
them in supporting this important bill.

                               __________

      responses to additional questions submitted for the record 
                   by senator casey to jeffery sachs
Foreign Assistance & External Contributions


    Question. According to the Organization for Cooperation and 
Development, private aid accounts for approximately 65% of the total 
flow of foreign assistance from the United States to developing 
nations. Private aid includes contributions from corporations and non-
governmental organizations. This influx of resources from private U.S. 
entities, coupled with the large number of international organizations 
working in the same countries, means whatever reforms are instituted 
that the United States government should account for these other 
actors.
    Dr. Sachs, as the Senate continues to debate foreign aid reform, 
what recommendations would you give for adapting how the U.S. 
government provides foreign assistance to include the work done by 
these external entities?
    Last September, many donors who give aid to developing countries 
launched the International Aid Transparency Initiative--an effort 
through which donors commit to work together to make comprehensive and 
timely information on aid flows publicly available. Do you agree that 
clear and publicly available information on U.S. spending would be a 
useful tool--both for Congressional oversight and planning at USAID? 
Would you recommend that the U.S. join the International Aid 
Transparency Initiative?

    Answer. Official development assistance accounts from around 0.20 
percent of U.S. GNP, and according to best recent estimates, private 
development aid accounts for perhaps 0.08 percent of GNP. Of course, it 
depends what is counted. Some researchers and institutions try to count 
remittance flows as ``private aid,'' but I certainly do not regard 
remittances as ``aid.'' Remittance income is the hard-earned money of 
individual families. In-kind contributions of pharmaceutical companies 
are also counted as private aid, but probably at quite inflated levels 
(by recording the wholesale drug prices of donated medicines rather 
than their true costs of production).
    Note that official development aid address large-scale societal 
needs--such as the control of AIDS and malaria or the construction of 
roads and power systems--much more readily than private flows, which 
tend to be for much smaller and disjointed projects, for instance 
community-based projects for an individual school or clinic. There is 
definitely a need for both public and private flows. Both the public 
and private flows are far below what they should be given the need and 
size of our economy. The international target (to which the U.S. 
subscribed in the 2002 Monterrey Consensus) is 0.7 percent of GNP in 
official aid. Private aid should be on the order of 0.2 percent of GNP.
    USAID should be able to do a much better job of partnering with 
private flows to help direct the private flows to more effective uses 
(and vice versa, since private flows can sometimes help to re-channel 
official aid as well). Many of America's leading companies are eager to 
play a larger societal role in development, in partnership with the 
USG. With more effective USAID strategies and public-private 
partnerships, more private flows could be raised and could be far more 
effective in their developmental impact.
    The main ``scorekeeper'' for aid flows is the OECD's Development 
Assistance Committee (DAC). We ought to strengthen the DAC's mandate 
and capacity to produce authoritative aid data for all donor countries. 
Within a DAC-led process, the IATI can be a useful initiative.

                                  
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