How is this ‘reimagined’ proposal for USAID hitting the sector?

A blueprint for “reimagined” foreign assistance has made its way across Washington, D.C. — one that centers on three adjectives that have become synonymous with the second Trump administration’s approach to aid: safer, stronger, and more prosperous. In some ways, the proposal — which Politico reported was authored by aides of U.S. President Donald Trump — reflects previously discussed reforms and proposals. “The memo was very well thought out and well rationed. And it seems to me that whoever was the author has a pretty thorough understanding of both the legislative side of this as well as the practical side,” said Richard Crespin, a senior associate at the Center for Strategic and International Studies, a think tank based in Washington, D.C. The administration wants to “better and more thoroughly align” U.S. foreign policy goals with international development and assistance programs, similar to what other large donor countries have done, which is a strong “underlying thesis and philosophy,” Crespin said, adding that having a unified approach, particularly for economic development programs, is a great idea. But for others, the document is more a cause for concern. Does the U.S. State Department really have the capacity to deliver humanitarian aid? Would the U.S. Congress actually revoke foreign aid statutes that have been around for decades? And since the vast majority of USAID’s programs have already been eliminated — leaving just 1,000 for State Department integration — what would realistically continue on in this new design? “One thing we still don’t know is, what level of aid does the administration anticipate moving ahead? And how do they plan to implement it?” said George Ingram, a senior fellow at the Brookings Institution. “When you get rid of 90% of USAID staffing, that sort of limits the amount of aid and the way you provide it.” With the exact origins of the document in question, it’s not clear exactly where the proposal came from — and whether it has the buy-in from anyone who really matters. “To me it seems like wishful thinking,” said a source with knowledge of ongoing discussions about aid who requested anonymity to speak freely. “This is probably not a blessed document” by those in charge of USAID or the State Department. Even so, the 13-page document does shed light on how the Trump administration could be rethinking foreign aid, and what the future of U.S. assistance might look like in the months to come. The proposals The first pillar — safer — is where the newly coined U.S. Agency for International Humanitarian Assistance, or IHA, would fall. The refashioned USAID would focus solely on food security, global health, disaster response, and humanitarian assistance, making the agency razor-focused on responding to disasters, instability, famine, and disease. The so-called IHA would have a mandate of saving lives, the memo read, and its success would be measured by “concrete metrics” like disease containment, famine aversion, and lives saved. “This memo removes a lot of the congressional oversight on foreign aid. In some ways, I think that if this proposal were to move ahead, it would force Congress to start getting involved in paying attention.” --— George Ingram, a senior fellow at the Brookings Institution “This narrow mandate would empower IHA to engage in areas where the President and the Secretary of State determine engagement is in America’s national security of strategic interests,” stated the document, which was obtained by Devex on Wednesday. “The new structure would eliminate current redundancies and overlap with other agencies by bringing all life-saving efforts under a single roof and under the leadership of the Secretary of State.” The second pillar — stronger — would shift some former USAID programs to the State Department, consolidating all “politically oriented” initiatives under one roof. That includes those that promote democracy, civil society, religious freedom, and women’s empowerment, along with efforts to prevent and stabilize conflict. Its mandate, the memo stated, is to “advance geo-strategic interests,” in part by supporting work similar to USAID’s Office of Transition Initiatives — a team that’s worked to provide flexible, short-term assistance to countries experiencing complex political crises. The final pillar — more prosperous — involves the Millennium Challenge Corporation, the U.S. Trade and Development Agency, and the U.S. International Development Finance Corporation, bringing MCC and USTDA under the roof of DFC. The combined entity, the memo said, will be mandated to create a return-on-investment model — while also providing a “powerful counterweight” to China’s Belt and Road initiative, the infrastructure investment project that has been the hallmark of Chinese aid for over a decade. “U.S. investments in global leadership should not be philanthropic in nature but must advance our direct national security, strategic, and commercial interests,” the document stated. Rethinking the past If this blueprint were approved, the renamed USAID as part of the State Department would shift its focus to humanitarian response. But some development work would continue at the State Department or under DFC. The document proposed that some of USAID’s programs would be shifted to the relevant offices at the State Department, including its work promoting democracy, empowering women, and safeguarding religious freedom. Those programs would be carried out through a trio of what the memo called “new approaches” including development compacts, performance-based contracts, and new partnerships. The compacts would be transactional, time-bound agreements that are negotiated with a program’s host country, an idea that is far from new for the aid sector. MCC has been implementing compacts — or large grant agreements — with countries that meet its eligibility criteria for more than two decades. Recently, the advocacy group Unlock Aid went on a two-year “global listening tour” to ask what a reimagined USAID could look like. What they heard reflected not just a push toward the compact model, but a desire for development that’s focused on sustainable economic growth, investment, and partnership. “There is an opportunity here to just rethink entirely old systems,” Walter Kerr, co-executive director of Unlock Aid, told Devex. While some in the development community are trying to rebrand the work they’ve done in “America First lingo,” the “way forward is actually just to propose entirely new ways of showing up and partnering around the world,” he added. A recent paper from the Center for Strategic and International Studies also discussed a compact-like model, which would make aid contingent on host-country governments living up to promises to make financial contributions or policy changes, including those that would support U.S. foreign policy goals and provide the president with “diplomatic leverage.” The compact model is far better than providing governments with direct budget support because it allows for better accountability and gives the U.S. more say over how funding is delivered, said Crespin, who co-wrote the CSIS paper. While MCC could continue using its methodology — which requires governments to meet specific anti-corruption and governance metrics — in MCC-eligible countries, the State Department could delegate authority to carry out similar agreements with different criteria in other countries. Performance, or results-based, financing is also not a new concept. It’s a system in which funding is released in tranches as specific outcomes or objectives are met. “Instead of reimbursing people for time and administration, we should be tying payments to measurable things that align with the compact’s goals,” Crespin said, adding that while it's mentioned in the memo, it needs to be explored in more detail. The proposal to bring MCC and USTDA into one agency under DFC is likewise not a new proposal. In fact, it was floated in the first Trump administration when DFC was created, a former Trump administration official told Devex. While it didn’t happen then, DFC’s board was structured in a way that mirrored MCC’s to allow them to work closely or some day merge, the former official said. DFC and MCC do respond to different demands: DFC meets private sector financial needs and MCC has answered to country governments, but those are complementary and a merger would have the benefit of lowering administrative costs, the official said. One concern, however, is that MCC’s compacts take a long time to develop, and it’s also unclear how new funding, which would be transferred to DFC, would be administered. “It would get a little messy, but isn’t insurmountable with things being built from the ground up,” the former official said. What programs? Yet others remain wary. In the two months that Trump has been in office, thousands of USAID programs and staffers have been severed from the agency, and just 17% of the agency’s initiatives are said to remain. Virtually all of USAID’s democracy, governance, and human rights programs, for example, have been eliminated — making it unclear exactly which programs would be carried over to the State Department. There is also no mention of basic education programs, agriculture programs, and other development-focused work in the proposal, dissolving thousands of initiatives across the world. “It’s really misguided, because it’s not like humanitarian activities don’t bleed over into development activities,” said Larry Nowels, the co-chair of the Modernizing Foreign Assistance Network. “In a natural disaster or post-conflict, you come in with humanitarian support. But the goal is to eventually transition to a more traditional development program, and then eventually transition to a more sustainable outcome.” There’s also the matter of staffing, both Nowels and Ingram said, and whether retained programs will truly be able to function with just a fraction of the workforce they once had. Today, the vast majority of USAID staff have been terminated or placed on administrative leave, and while the proposal doesn’t mention staff size for any of the foreign aid entities, the latest number thrown out by the Trump administration was just over 600 — a 95% smaller workforce than USAID had just two months ago. “What's the capacity within embassies around the world to manage these programs?” asked Nowels. “Who’s going to be in the embassy to oversee these humanitarian emergencies? This isn’t something that the State Department’s foreign service officers are trained for.” The remaining workforce is unlikely to be sufficient to run the proposed agency for humanitarian assistance, let alone other programs, especially if the goal is to effectively oversee work with more local and faith-based organizations and not the contracting giants that have historically managed many aid projects, a USAID employee on administrative leave, who asked for anonymity for fear of retribution, told Devex. “I do think there are a lot of good kernels in there. My primary concern though is whether this is going to be properly resourced,” the USAID employee said, adding that doesn’t mean money, but people. “The proposal did not talk about staffing. That’s where this is going to break down.” Those concerns about staff also extend to the newly proposed economic development agency that combines DFC, MCC, and USTDA, the USAID employee said, especially if they are to manage billions more in funding that had previously been allocated to USAID or the State Department. A force-function for Congress The proposal represents a fundamental restructuring of U.S. foreign assistance — something that many say cannot legally be done without input and action from Congress. The document recognized that, and laid out everything Capitol Hill would need to do to make the proposed changes. That includes amending long-standing statutes, pulling years-old provisions, and changing funding lines across the U.S. foreign assistance ecosystem. The memo’s contemplation of congressional input is a good thing, the former Trump administration official said — but it also makes them wonder if this proposal is an outside document, rather than reflective of the administration’s intent. The administration “hasn’t necessarily signaled” an interest in or consideration of longer-term national security outcomes of aid, they added. The document also suggested that the administration would ask Congress to claw back previously approved funding in line with the changes. It also said that the secretary of state would use a special “notwithstanding authority” to ignore certain rules from Congress on how that money should be spent. “This memo removes a lot of the congressional oversight on foreign aid,” said Ingram. “In some ways, I think that if this proposal were to move ahead, it would force Congress to start getting involved in paying attention, and be forced to decide whether or not it wants to exercise its authority and constitutional role.” While U.S. Rep. Brian Mast, the Republican chair of the House Foreign Affairs Committee, seems plugged into discussions about the reorganization of foreign aid, other lawmakers — Democrats and Republicans alike — seem to still be in the dark about the administration’s actions to date or plans ahead, the source with knowledge of ongoing discussions about aid told Devex. Even some lawmakers who want to engage on foreign policy or aid-related issues important to them are not sure how best to do so, the source said, adding that they need to act now if they want to influence the discussions. “To do a lot of this legally requires various consultations, notifications. They are not doing any of that. At some point Congress steps up or Congress is on an island being useless,” the source said.