Introduction

Let me join Chairman Kolbe in commending Jerry for writing the paper under discussion this afternoon and for organizing this timely session. I first read a draft of Jerry's paper six months ago - I believed then, and now, that the paper gives voice to the concerns of many development professionals who have watched USAID's authorities and capabilities erode over a period of many years. In this regard, I hoped that the paper would be read by my colleagues within USAID and the broader USG as a guide to understanding the historical nature of the challenge that we are being called upon to address. Rereading the final version of the paper last night, I now view Jerry as a modern day equivalent of the ancient Biblical prophet, who accurately dissects the ills of his society, or in this case the flaws of a particular USG agency, but is blinded to the reforms that are taking place before his very eyes and that address in a consequential manner the specific problems that he has identified.

Obama Administration Development Policy

There is much that I could comment on in Jerry's paper, but I am going to focus on USAID Forward, which is how we have branded USAID's multi-dimensional reform agenda. But before I discuss the specifics of USAID Forward, I want to emphasize that our reform efforts at USAID are taking place in the broader context of the 2010 National Security Strategy, which sets forth this Administration's perspective on the relationship between the three D's, Defense, Diplomacy and Development, the Presidential Policy Directive on Global Development, which represents a historic commitment by a US president to promoting a strategically oriented development agenda, and the much anticipated QDDR, which will be formally released in mid-December, but for which there is now a power-point available for all to review and comment upon. The broad theme of these documents is not only the elevation of development to represent, together with defense and diplomacy, a core element of our national security strategy, but also an appreciation that to make this elevation a reality we must rebuild USAID into a premier development agency for the 21st century and to understand that this requires more than just rhetorical commitment.

Jerry's Vision for USAID

Jerry's paper serves as a basis for evaluating the reform agenda that we are implementing at USAID. Jerry romanticizes USAID's glory days as comprising an Agency with the following characteristics: a robust and interactive strategy process; autonomous policy and budget formulation capabilities; profound commitments to research and evaluation; efficient mechanisms for implementing programs and a staff with the requisite development expertise. And as Jerry rightly notes, these capabilities have disappeared from USAID during the past decade - there was the dissolution of PPC and the movement of budget responsibility to the State F process, the establishment of a formulaic framework for allocating development assistance resources and the centralization of decision-making in Washington. At the same time, existing learning capabilities of USAID were eviscerated and the Agency failed to replenish the staff needed to plan and implement development programs in increasingly complex environments.

USAID Reforms

For the past several months, taking Jerry's critique almost too literally, USAID Administrator Raj Shah has asked us to focus on the precise issues raised in Jerry's critique. And, we have already made considerable progress. In July, we reestablished a Policy Bureau, now called the Bureau of Policy, Planning and Learning. This new Bureau represents more than just an organizational shuffling of names and personnel, but a profound commitment to revive the type of policy and strategy oriented approaches that made USAID a development leader. As we meet, Agency teams are developing new policies to guide critical sectoral programs and to establish more regular and rigorous evaluation approaches. Our Policy Bureau is also directing the reintroduction of country-level strategy development processes through a process of evidence-based analysis and iterative field-Washington dialogue. We expect to have approved strategies for 20 missions by June 2011 and they are being purposely timed to inform the next budget cycle.

Administrator Shah also has established a new Office of Budget and Resource Management, whose role is to advise the USAID Administrator, and to ensure he has a voice, on issues relating to budget formulation and budget execution. And contrary to the speculation in Jerry's paper, the new Policy Bureau and Budget office have been broadly supported by Secretary Clinton and her colleagues at the Department of State, as can be seen in the QDDR power point. One of the lines I like best in Jerry's paper is near the end when he asks, which "USAID Administrator wants to leave office saying not that I created a new program to alleviate health, advance education, or reduce poverty, but rather 'I fixed HR.'" Well, Administrator Shah has dedicated considerable personal and institutional time to fixing both HR and our procurement systems. We continue to recruit new Foreign Service Officers at a rapid pace and we are now concentrating on filling the missing middle by increasing our mid-level hires. We are also emphasizing the important role that our foreign service nationals play in our ability to deliver quality assistance programs and directing our attention to developing personnel policies that reflect their contribution.

Our procurement reforms go well beyond what has been attempted before. They explicitly incorporate key principles of aid effectiveness, such as reliance on host country systems, building local capacity and harmonization with other donors, under the broad rubric of changing how we provide assistance in the different settings where we operate. And, we have established specific benchmarks to measure our performance in implementing these and the other reforms mentioned.

Overall, these reforms are designed to change the culture of USAID from the slow, cumbersome agency that Jerry describes, into an organization of development entrepreneurs, who are constantly seeking creative innovations for long-standing development problems and who are willing to take calculated risks to achieve transformative changes.

Will we succeed?

It is here that the skeptics argue that USAID's capabilities have eroded so deeply, and the bureaucratic pendulum swung so far, that we can no longer reverse the trend. But, our Administrator and those who he has recruited, together with the vast majority of USAID staff, do not believe that this is the case. Organizational change is possible, even in a large agency like USAID, particularly when the stakes are so high, but it will take time. Thus, even as we focus on improving the mechanics of how our Agency functions, we must also keep our eye on the bigger picture of ensuring that the President's vision of a true development renaissance is achieved.

But now, the skeptics argue, we face another challenge - a Congress that is fixated on cutting the budget and will not provide the resources required to implement the robust development vision, and the complementary reforms, as described. On the politics of this matter, I will defer to Congressman Kolbe. But I will offer this one anecdote in closing - a couple of weeks ago, I was in Sudan and a dinner was arranged with a senior official from DFID, the British foreign assistance agency, who was visiting at the same time. I asked how DFID was faring in the context of the steep budget cuts proposed by the new Conservative-Liberal government that we have been reading about in the newspapers. He replied that, much to his surprised, the new government has excluded DFID from the budget cuts and reaffirmed the government's commitment to raise the percentage of development assistance as a proportion of GNP. Clearly, even a right-of-center British government understands that, in today's world, you cannot short-shrift development in addressing global concerns. The question is whether a similar argument will resonate in this country or whether the very impressive reform efforts now underway will stall in the face of a pre-occupation with cutting the budget.