The State Department Does Foreign Aid Better

A recent email to USAID employees with the subject line “USAID’s Final Mission” informed them of impending layoffs to cut all but the 15 statutorily required top jobs. Terminated staffers will be able to apply to be rehired by the State Department, but by September, “the agency’s operations will have been substantially transferred to State or otherwise wound down.”

I may be in the minority among former officials and foreign affairs experts in thinking it is a sensible idea to make US foreign assistance more rapidly responsive to foreign policy by bringing it into the State Department. Most donor countries, in fact, nest their aid agencies within their foreign ministries. The move might even convince more Americans that foreign aid has come under management that looks out for their direct interests.

The real challenge now is execution that gets US foreign aid back up and running promptly, because idling makes it fall into disrepair. With the process having suddenly disrupted a fragmented aid delivery system, the clock is ticking before the US government loses its ties to partners worldwide that specialize in national security issues central to the new administration’s foreign policy.

There are enduring institutional-cultural reasons why the two most successful foreign aid initiatives in American history were timely creations of the State Department, which has moved faster than USAID:

• Secretary of State George Marshall unveiled the Marshall Plan less than three months after the presidential address announcing the Truman Doctrine. President Harry Truman’s “wise men” at the State Department developed this foreign policy as a real-time response to Moscow’s exploiting economic desperation to politically dominate Eastern and Southern Europe.
• Secretary of State James Baker crafted and Congress approved—all within one week of the fall of the Berlin Wall—economic aid to Eastern bloc countries such as Poland, Hungary, and Czechoslovakia. Deputy Secretary of State Lawrence Eagleburger then administered the assistance directly from State to bypass USAID’s years-long process of building out field missions, conducting studies, developing strategies, procuring partners, and executing grants.

For aid programs launched around timely foreign policy objectives, the principal challenge is often to deliver assistance rapidly. This explains Eagleburger’s outgoing recommendation in 1992 for USAID to keep up with foreign policy priorities by delivering new aid programs more expeditiously. That advice led to the establishment of USAID’s Office of Transition Initiatives, which unfortunately remained too small and technocratic to drive historic foreign policy initiatives.

Development practitioners in other parts of USAID, such as those focused on poverty alleviation, health, education, and environment, would disagree with my argument. Their reasonable consensus may be that supporting low-income countries creates goodwill and stability that serves US values and interests, transcending the foreign policy goals of any given administration. But the international development community has long failed to convince enough Americans of this. As a result, voters elected an administration that campaigned on curtailing US development aid. This could be done by shifting more of the burden to institutions with more stakeholders, such as the World Bank, or more sustainable models, such as the Millennium Challenge Corporation, which would allow US cabinet-level departments and agencies to focus squarely on foreign policy.

One example of a targeted US foreign assistance program could be a new project that supports President Donald Trump’s critical minerals deal in Ukraine. Treasury Secretary Scott Bessent has said that the goal of such an agreement would be to assist Ukraine’s long-term reconstruction and develop its natural resources sector with high standards of transparency, accountability, and corporate governance. Implementers of US foreign assistance have been on the ground in Kyiv advancing exactly those kinds of reforms since Ukraine’s 2014 Revolution of Dignity, and they would be essential partners in building the coalition of government officials, business executives, and civil society experts needed to make the critical minerals deal attain its objective. But they would need to start now, not wait several years for agencies such as USAID to wade through protracted processes of internal bureaucracy and external procurement.

It is, therefore, logical to bring more foreign aid into the State Department to make it more responsive to foreign policy, albeit with one important caveat: Do not allow a prolonged rebuilding phase to undermine the timeliness that this approach can offer. Partners that implemented the 83% of USAID awards that were terminated are now exiting the industry or finding non-American funders. Many of these projects were surely out of step with the new administration’s foreign policy, but many were well aligned with it, for example those designed to prevent migration to the United States, combat Middle East terrorism, fight corruption in Ukraine, and insulate Taiwan from Chinese malign influence.

Moving quickly to reactivate aid that aligns with the Trump administration’s foreign policy objectives will ensure that implementing partners continue their important work and remain available for future programs built and managed by the State Department. Launching programs and resuscitating certain old ones, at least in part, should not wait until after the bureaucratic reorganization into new governmental structures is complete. If State holds off on a major reactivation of foreign aid for many months, it risks spending the remainder of the current presidential term struggling to rebuild foreign assistance partnerships. The time would be better spent deploying partners to secure foreign policy wins. Now is the moment to turn the corner from dismantling USAID to rolling out more timely and targeted foreign assistance at the State Department.