Rajiv Shah's USAID legacy

On Jan. 12, 2010, a 7.0-magnitude earthquake with its epicenter less than 20 miles from Port-au-Prince flattened the Haitian capital. In the months to follow, more than 300,000 people would die from illness and injury caused by the cataclysmic event.

When the earthquake struck, Rajiv Shah had been administrator of the U.S. Agency for International Development for less than a week. At 36 years old, he was the youngest head of the world’s largest bilateral aid agency ever, and concerns about how much clout he would have alongside Hillary Clinton, perhaps the highest-profile secretary of state ever, accompanied him to Pennsylvania Avenue.

Round-the-clock command of USAID’s Response Management Center derailed any early illusions that Shah might ease into his role, gather perspectives and deliberate over goals. Instead, Shah found himself advising President Barack Obama in the White House Situation Room and surveying suffering on the ground in Haiti.

An appointee who had been told to fix a broken agency found himself charged with stabilizing a shattered nation.

By some accounts, the outreach Shah intended to conduct during the early days of his tenure was not only delayed by the existential crisis in Haiti that heralded his arrival, but would never really materialize at all. The young and ambitious aid chief was thrust into the spotlight immediately and never seemed to look back.

Juggling on a tightrope

From the outset of his time in office, Shah faced an uphill battle to restore USAID’s credibility, or else lose the support of some of the agency’s most steadfast champions.

Sen. Patrick Leahy from Vermont put the challenge to Shah in no uncertain terms.

In his April 2010 opening remarks to the appropriations subcommittee he chaired, Leahy warned that unless Shah succeeded in the “formidable” task of fixing USAID, there would be questions about whether the agency should continue to exist or perhaps be folded into other departments.

Leahy went on to decry USAID’s “culture of arrogance” and the “disturbing detachment” of some U.S. officials overseas who spend their time in “comfortable offices” and behind “imposing security barriers.”

The senator described an agency that had become an “ivory tower, distant from the trenches,” and lashed out at USAID’s practice of “writing big checks for big contractors and high-priced consultants,” while “churning out self-serving reports filled with sometimes incomprehensible bureaucratic jargon.”

All this from one of USAID’s most steadfast supporters in Congress.

Leahy’s gauntlet — fix USAID or lose my support — elevated to the breaking point a set of concerns about the U.S. government’s aid apparatus that had been simmering for years. In particular, global development supporters watched in the 1980s and 1990s when, at the end of the Cold War, USAID’s budget was gutted, staff numbers plummeted by 40 percent and many questioned whether the agency would be absorbed by the Department of State.

Leahy’s challenge “forced Raj into a very tough box,” a former senior USAID official, who wished to remain anonymous in order to discuss internal matters, told Devex.

Shah had only just come into the agency, and already he had been forced to choose the lesser of two evils: alienating the agency’s staff by acknowledging their failure or alienating a critical supporter on Capitol Hill.

During his five years in office, Shah has faced, as the former senior official put it, “a public perception and an internal reality that is inconsistent.” George Ingram, senior fellow at the Brookings Institution, described the administrator’s role as analogous to “a juggler who’s on a tightrope” and concluded the demands of the job are “simply untenable.”

“Most of us have one, maybe three bosses,” Ingram told Devex. Shah’s “bosses” and stakeholders include the president of the United States, the secretary of state, the USAID bureaucracy, 535 members of Congress, “all who think they know foreign policy and development better than he does,” nearly 100 partner countries and USAID’s various implementing organizations.

Shah found himself also, at least initially, caught up in the residual turf battles between Obama supporters and Clinton loyalists, both of which filled administration posts as political appointees.

The “department of development?”

The agency Shah inherited was torn by its multiple allegiances — and by a damaging lack of clarity about USAID’s role in formulating and implementing U.S. foreign policy. Shah’s own appointment had been something of a compromise between Obama’s White House and the Clinton-led State Department; many felt the dynamic but relatively inexperienced health economist, who had previously held leadership posts with the Bill & Melinda Gates Foundation and Department of Agriculture, had been appointed to execute Clinton’s vision, in which development was a key pillar but one that she would ultimately own as the nation’s top diplomat.

State Department’s Office of Foreign Assistance Resources, or “F Bureau,” already held sway over “the strategic and effective allocation, management and use of foreign assistance resources,” or, in the words of one former USAID official, gave bureaucrats in Foggy Bottom  “poaching rights to change everything” in USAID’s budget.

When Shah assumed office, the agency had no policy planning office. USAID had no authority over food security programs, nor was it even clear who was in charge of humanitarian assistance in disaster situations. Entirely separate foreign aid instruments — the President’s Emergency Plan for AIDS Relief and Millennium Challenge Corp., most notably — had been created outside of USAID just a few years prior under the assumption that the agency no longer represented the state of the art in development cooperation.

Shah has worked hard to restore some of USAID’s stature and independence. He set up a policy, planning and learning bureau to help reinternalize some of the policymaking. He created an office of budget and resource management and developed “direct relationships” with the White House’s Office of Management and Budget in order to “be able to defend his budget,” according to a former senior official.

Many credit Shah with safeguarding USAID’s budget in today’s tough fiscal environment. Things were not always so smooth.

The “Republican side of Raj”

In March 2011, Shah went to Capitol Hill to tell Republican lawmakers their proposed budget would kill 70,000 children.

“We estimate, and I believe these are very conservative estimates, that [House Resolution] 1 would lead to 70,000 kids dying,” Shah told the House Appropriations subcommittee on state and foreign operations, referring to the House of Representatives’ budget bill.

Some 30,000 would lose their lives because of scaled-back malaria-control programs, 24,000 would die from a lack of support for immunizations and another 16,000 from a “lack of skilled attendants at birth,” Shah suggested.

A former House Republican staffer recalled learning ahead of time that Shah’s testimony would equate the Republican budget with child deaths. The staffer’s impression was that the Obama administration’s highest-ranking Indian-American was displaying a shocking degree of tone-deafness, and that his message to lawmakers would “not play well with my boss.”

Since then, something has changed in the narrative of Shah’s political savvy.

Now, at the end of his tenure, Shah garners praise from both sides of the political aisle. He is regarded by many as a leader who restored bipartisan support for U.S. humanitarian and development aid, a rare success story in a political era rife with intransigence and infighting.

When Shah accepted the U.S. Global Leadership Coalition’s annual tribute in December, Sen. Lindsey Graham, a Republican from South Carolina, said in his honorary remarks: “That Republican side of Raj is coming out more and more.”

The senator’s remark, while in jest, speaks to a common view about Shah’s approach to Congress — that it got better over time.

“Raj, at the beginning of his term … underestimated the need to spend time with members of Congress and go up to the Hill and talk with them,” said Carolyn Miles, Save the Children’s president and chief executive. “I think he remedied that toward the end and made a lot of friends.”

Miles added: “He probably got whipped around a little bit.”

Part of the transformation — from alleged tone-deafness and inattention to bipartisan support — could be attributed to Shah’s ability to negotiate the work of an administration many feel showed little interest in extending its hand for congressional support, even when lawmakers were ready to endorse the administration’s policies.

“The first two years in office, they wouldn’t deal with the Congress,” Ingram said of U.S. aid leaders.

“Congress was ready to enact Feed the Future,” the former USAID deputy assistant administrator added. “Five years later, [the administration has] come back to the Congress to say, ‘Oh yeah, we’d like to have that.’ They had Republicans and Democrats in the Senate with a drafted bill, ready to pass it. They wouldn’t engage with them.”

During those first few years, Shah managed to maintain funding levels for aid — and was even able to hire hundreds of new staff using congressional authorization — but he made little headway in securing legislative approval of his new ventures, an effort that appeared to get underway only toward the end of his tenure.

The roadblocks Shah has faced in turning ideas into actions were not always self-made. The White House, for instance, botched an effort to reform U.S. food aid, failing to generate congressional buy-in and leaving Shah scrambling to pick up the pieces, according to Ingram.

The idea was to allow the U.S. government to send cash instead of food commodities to countries in need of assistance. Doing so can help aid reach emergencies faster and more efficiently and mitigate some of the distorting effects huge shipments of food can have on local markets, according to a number of studies.

The White House “never consulted beforehand with the Congress on this change, so they didn’t build up their supporters,” Ingram remembered.

Instead, the Department of Agriculture leaked a draft of the new policy in advance of congressional outreach, allowing “anti-reform elements” to “gin up their supporters” and leaving Shah “holding the ball and trying to move” reform legislation, Ingram explained.

Food aid reform has since proceeded in a patchwork of incremental changes and flexibility adjustments embedded deep in budget proposals, not as a broadly supported and well-communicated plan to deliver more food to more people in emergency and food-insecure settings.

The costs of going local

Reform is never easy — especially if the goal is a paradigm change. USAID’s ongoing efforts to change the way it delivers support serve as a prime example.

Shah has sought to upend the notion that USAID had surrendered the “business of development” to its mostly U.S.-based contractors with a massive reform agenda called USAID Forward. He described his vision in a speech at the Center for Global Development in early 2011.

Under his leadership, he charged, USAID would act “aggressively” to usher in a “new era.”

“This agency is no longer satisfied with writing big checks to big contractors and calling it development,” Shah said, echoing comments made previously by Clinton.

USAID would increasingly fund NGOs and entrepreneurs in the developing world to create “real local institutions and lasting, durable growth,” the Detroit native said. The effort was part of the “most aggressive procurement and contracting reform our agency has ever seen.”

Shah’s fiery rhetoric echoed like a declaration of war in the corridors of many longtime partners — contractors and NGOs who feared their main donor had just announced plans to cut business.

The speech prompted a flurry of lobbying, in particular against Shah’s plan to direct 30 percent of agency funds toward host-country governments and institutions. Many of USAID’s international partners declared they were being demonized simply for providing the services they had been asked — and paid — to provide.

As chairman of the House Oversight Committee, Darrell Issa turned a sympathetic ear to the contractors’ concerns, in particular when they raised alarm bells about the possibility Shah’s localization plan might end up with money in the pockets of corrupt officials. In a letter to Shah, Issa demanded more information about USAID’s intentions and raised concerns that “funneling grants to unaccountable and often corrupt foreign governments without the necessary safeguards” would harm USAID’s programs and “waste taxpayer dollars.”

USAID officials have since cooled their rhetoric, at least in public, while reducing the average size of its largest contracts and advancing pilot projects to test ways to better engage local communities. USAID now champions a “new model of development” which invites actors of all stripes to help end extreme poverty. Shah has pivoted from demonizing “big contractors” toward encouraging all stakeholders to rethink their roles in global development.

Bilateral donors no longer command the same clout over capital flows to developing countries as they did in the last century. Today, the vast majority of overseas spending — even to low-income regions — comes from the private sector and remittances. Under Shah’s leadership, USAID has taken steps to leverage those private funds toward development outcomes and use its authority and creditworthiness to convene a wide range of partners around investment opportunities that benefit the underserved.

One former senior USAID official attributes the initial backlash against Shah’s reform plans less to his purported plans to undermine government contracting but to his success in pointing out how the development community needs to change if it is to stay relevant in an industry no longer dominated by a small group of specialized development institutions but open to an increasingly diverse and growing set of actors.

“Each institution is trying to figure out its role in this new world,” the former senior official told Devex. “I dare say people are jealous of the success that Raj has had in defining USAID’s role as a partner to these groups, as a facilitator of initiatives, as a thought leader and as an institution willing to apply strict measures of accountability to itself.”

A marathon, or a sprint?

Shah is an energetic, inspirational leader who embraces the importance of innovative partnerships to drive development outcomes. But he can also be a challenging, at times maddening boss, according to some of his peers.

In particular, the young administrator seemed to recognize little difference between his own ability to generate ideas and his agency’s ability to absorb and implement them.

“Raj has treated his five years at [USAID] as a sprint with an amazing reservoir of energy and enthusiasm,” a former senior official told Devex. “But an agency like [USAID] is more suited for a marathon.”

Current and past USAID employees describe a common condition under Shah’s leadership: “initiative fatigue,” a state of frustration with the never-ending list of new priorities and new requirements pressed upon the agency’s staff. Some charge that Shah’s leadership style can be “management by initiative,” suggesting the USAID chief has relied too much on one-off priorities that may not proceed beyond the pilot phase or the current administration, and thus may not have the “transformational” development impact he advertises.

The push to “localize” aid turned heads not just with implementing partners but also the agency’s own oversees staff. Some of them raised alarm bells about the rapidity of change Shah seemed to advocate for with his target of 30 percent.

When the push toward it began, several USAID employees cautioned that they “legitimately did not want to go to jail when that money disappeared,” one current USAID official told Devex.

The official noted that those concerns, in part, gave rise to a new public financial management system designed to safeguard against instances of waste or fraud — a positive, though perhaps unintended, consequence of a push some felt had not been properly vetted.

Even senior officials who broadly supported his ideas warned Shah that the pace of change he sought was “straining the agency, hurting morale and undercutting the need for change to be fully institutionalized,” according to the former senior official.

As an example, some critics point to the fact that Shah presided over a period in which USAID’s democracy and governance budgets were “decimated” while a perception grew that available funds would flow into the administrator’s pet projects and Washington-based initiatives like the new U.S. Global Development Lab, an office that steers the agency’s efforts in the areas of science, technology, innovation and partnership.

The current official who spoke anonymously with Devex described a period when staffing the lab seemed to take precedent over any plans other bureaus might have had to fill their own rosters. At one point, USAID’s senior managers were told to “sweep and pause,” that is, to scour their bureaus for open positions, pause hiring and allow upper management to redirect funds.

“The sixth floor seemed to be taking a lot of its own discretionary power to use those positions to help build the lab,” the current official suggested.

Shah moved quickly, in big ways and always forward, whether the bureaucracy he led turned with him or not.

One such “transformational” opportunity seemed to present itself in an unlikely place: a series of whitewater rapids in the lush heart of the Congo River, where plans to create a massive hydroelectric dam that could power half of sub-Saharan Africa seemed ripe for USAID’s support — at least in Shah’s mind.

The Inga 3 Basse Chute, a critical component of the long-imagined Grand Inga Dam, captured Shah’s imagination — so much so that the administrator not only visited the site of the proposed project but, by some accounts, flew to China unannounced to discuss investing in the controversial project with Chinese business leaders. Shah’s enthusiasm sparked backlash in Congress, particularly from Leahy, who feared the project would fail to deliver and instead destroy the local ecosystem and displace residents.

While the agency has since avoided a clear stance on Inga 3, Shah has added new causes to champion, often from his perch on the sixth floor of the U.S. capital’s Ronald Reagan Building.

“There is always a pendulum of tension between centralization and decentralization — how much say the missions have [versus] how much say the headquarters have,” a current USAID official told Devex. “Under Raj, there was an attempt to swing it as far toward centralization as possible.”

Decision-making power periodically migrates back and forth between USAID’s 89 missions and the agency’s headquarters. At times, USAID missions have a great deal of latitude to determine where and how to spend their time and money. At other times, agencywide initiatives and policies earmark those resources for centrally determined purposes and attach new requirements to them which missions are required to fulfill. Under Shah, there was a significant shift toward the latter.

Donald Steinberg, former deputy administrator at the organization, described the “major challenge” of getting an institution as large and “set in its ways” as USAID to “buy into sweeping reforms.”

“On occasion, there has been push-back, especially from missions abroad who feel that Washington doesn’t understand the implications and unintended consequences of mandated procurement reform, focus on local systems and other initiatives,” he said.

Shah recaptured portions of the agency’s agenda and management from the State Department in part by establishing USAID’s leadership and coordination of presidential initiatives like Power Africa, Feed the Future and the lab. Money earmarked for centrally driven programs carries requirements and obligations that — in some colleagues’ minds — are blind to conditions abroad.

What has really changed?

Despite Shah’s emphasis on congressional relations in the later years of his tenure, many of the initiatives USAID has begun in the past half-decade were never enshrined into law to ensure life beyond the current administration. Barring passage of such legislation, the next U.S. president, secretary of state and USAID administrator could unwind them. Elements of USAID Forward — the push for local solutions, for example — while currently in vogue, have questionable legislative backing.

Shah’s legacy, therefore, is pinned to USAID’s leadership of presidential initiatives and laying the groundwork for reforms that could backslide without continued support. Many of Shah’s ideas and directives have given rise to adversaries within and outside the agency; Congress wants a stronger hand in foreign policy: It’s not too hard to imagine opponents biding their time until the ambitious aid chief steps aside.

Five years after his boss pressed Shah on the unenviable task to reform a broken aid agency, Devex asked Leahy’s foreign policy aide whether the 41-year-old had done enough to institutionalize change at USAID.

“No,” Tim Rieser responded simply.

The changes Leahy wants to see are “more transformational than any single USAID administrator could achieve,” Rieser noted, allowing that Shah brought “new energy and vision” to the agency.

“Key impediments to the reforms the senator is looking for remain intact,” Rieser added, citing “entrenched interests both inside and outside government.”

Inside the agency, feelings remain mixed. Shah’s time in office saw him swing back and forth between grandiose depictions of a wholly transformed agency and a track record some observers described, more or less, as business as usual. The agency still pays NGOs and contractors to implement the vast majority of its programs, though USAID has taken greater charge of program design. And wasn’t the agency already doing many of the things Shah seems to have taken credit for — building up local systems and partnering with the private sector, for instance, though perhaps to a lesser degree?

“One of the cloying things about the claims of doing development in a new way is that there’s nothing new overall in what’s being done,” a current official argued.

Shah took credit for what was already underway and ramped it up, the official suggested.

Steinberg does not mince words in his assessment of the young leader’s impact at USAID.

“The last five years under Raj Shah has seen a modernization of how [USAID] does its business and what its business is that is as fundamental as anything that has occurred in the history of the agency,” he told Devex.

While a Republican-led Congress could well usher in a new era of aid skepticism and reignite questions about U.S. aid reform, the outgoing administrator has, by most accounts, elevated USAID’s standing in the public eye at a critical moment in its history.

Like global development, it’s a long process.

What’s your take on Rajiv Shah’s legacy as USAID chief? Join the conversation by leaving a comment below and tweeting @devex.

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