The Cold War and its aftermath

With Richard Nixon winning the 1968 election, some feared that a Republican president would look to quickly minimize the nation’s commitment to development. Far from the case: Nixon defended foreign assistance as “essential to express and achieve our national goals in the international community — a world order of peace and justice.”

Nixon also commissioned a major review of the aid program, the Peterson Commission Report, and tried to push forward a major reorganization of U.S. assistance efforts, proposing to split the U.S. Agency for International Development into three parts: the U.S. International Development Corp. to deal with economic growth in low-income countries, the U.S. International Development Institute to serve as a lab for development innovation, and a security assistance program. The overhaul foundered as a result of growing Congressional dissatisfaction with the deteriorating situation in Vietnam. Nixon, however, was successful in creating the Overseas Private Investment Corp.

Before being appointed to the helm of USAID by Nixon, John Hannah (1969-1973) had been president of Michigan State University for 27 years. Hannah enjoyed a close relationship with President Nixon and brought an interesting mix of experience. He served as assistant secretary at the Pentagon during the Eisenhower administration, then as chairman of the U.S. Civil Rights Commission, and was a member of the president’s Council of Equal Opportunity.

But Hannah also brought relevant development experience: Michigan State had been at the cutting edge of efforts to bring academic research to bear on development problems, and had been the first major academic institution to collaborate with the agency on the ground in South Vietnam before expanding its work to Nigeria, the Philippines and elsewhere.

Although working for Nixon, Hannah had a decidedly progressive view of development, arguing that programs were far more effective when they were not weighted down with security or diplomatic concerns that tended to lead away from genuine economic and institutional reform. Unsurprisingly, coming from a land grant institution with a focus on agriculture just as the Green Revolution was making a huge impact, Hannah focused much of his efforts on agricultural production, education and efforts to bring universities more fully into the cause of development — and establishing the Technical Assistance Bureau toward that end. For a Republican appointee, he paid relatively less attention to macroeconomic reforms and big infrastructure projects.

Hannah, who was very well liked by staff, was largely able to get along with Congress at a time when Vietnam and other Cold War frustrations were causing growing discontent with the direction of the aid program. Hannah explained the importance of assistance in humanistic terms, as related by one of his former employees, “I think he was right in his emphasis upon people, that aid was not an exercise in economic theory, or in debating the variables involved in sustainable growth, or primarily about the U.S. national interest, and the like. It was important to recognize that we were in this to help those less fortunate — that was the real measurement of performance, not GNP or other statistical factors.”

Hannah was also quietly instrumental as one of the engineers of the Foreign Assistance Act of 1973 and its emphasis on reaching out to the poorest of the poor. Hannah shared this vision for development programs with key Democratic legislators without the White House’s knowledge. Hannah was the third highly effective USAID administrator in a row, and the period from the beginning of David Bell’s term to the end of Hannah’s was in many ways a golden era for the agency despite the obvious challenges of Vietnam.

Nixon’s second USAID administrator, Daniel Parker (1973-1977), was the most blatantly “political” choice to head the agency to that date. An active Republican, Parker was the CEO of the Parker Pen Co., founded by his grandfather in 1888. A successful businessman and a former marine lieutenant, there was nothing in his resume to suggest that he had ever given much thought to international affairs or development policy. Although a competent manager, Parker’s appointment marked the beginning of a downward slide for the agency, and a higher and higher percentage of staff positions began to be directed toward political appointees during the Nixon presidency. Parker was perhaps the least visible of all the USAID administrators both inside headquarters and out, with some describing his behavior as almost reclusive.

Coming from a manufacturing background, Parker largely approached the position of USAID administrator as a matter of management technique. He pushed the agency to use computers, and satellite photography, and was consistently focused on how innovation and new technologies could speed private sector investment. Unfortunately, many of his staff saw this as little more than a focus on gadgetry without grounding in development. As one staffer described, “He was almost in every sense of the word a new boy on the street in that he had little or no exposure to the principal problems that he was being asked to deal with, i.e., to administer foreign aid, to allocate foreign assistance, to recommend to the President and the OMB what way we should go.”

Parker’s tenure was particularly unfortunate in several respects. First, it sent the message that USAID was an acceptable place to park important but unqualified political appointees. Second, Parker’s lack of development expertise, coming just as Congress had passed new development legislation, encouraged Congress to further meddle and micromanage in U.S. assistance programs. New Congressional directives, earmarks, requirements and restrictions related to the aid program and USAID grew like kudzu, making assistance less effective, not more.

And not much changed under the next president, Jimmy Carter. Often noted for his emphasis on human rights in his approach to foreign policy, the historical record suggests nonetheless that under Carter, there was no major shift in the patterns of how the U.S. distributed assistance. Carter was never able to make a compelling case to Congress or his own bureaucracy that defense of human rights by partner governments should be the gauge by which aid was distributed.

John Gilligan (1977-1979), President Carter’s first USAID administrator, was easily the most accomplished politician of all the USAID administrators in his own right. As a congressman and then governor from Ohio, he was most notable for enacting a state income tax and substantially increasing investments in basic social services, particularly education. The state income tax was controversial, however, and Gilligan did himself no favors when he announced at a state fair farm show, “I shear taxpayers, not sheep.” He lost his 1974 reelection bid. In many ways, Gilligan’s career at USAID mirrored that of his gubernatorial term.

Gilligan rightly recognized that USAID had become increasingly headquarters-heavy over the years, and by 1976, twice as many people worked in D.C. as abroad at a time when the agency was being inundated with new Congressional rules and requirements even as they cut aid budgets. Gilligan sensibly thought that the agency needed to be decentralized and reduce red tape. Unfortunately, Gilligan’s description of his own USAID staff to a reporter — “Over age, over rank, overpaid and over here” — was all too quotable and badly alienated the staff that he was charged with leading.

Not content to quit while digging his own hole, Gilligan went on, “I thought I knew a little about the operation of a civil-service bureaucracy, but I’ve never seen anything like this.” Gilligan never recovered from the gaffe; however, he deserves credit for shifting personnel patterns at USAID back toward the field. He also wisely tried to shift the emphasis of programs so that they actually made a difference in the lives of the poor; he complained that USAID was constructing luxury hotels in the Caribbean, saying that he did not have any idea what building expensive resorts with saunas and bowling alleys had to “do with elevating the status of the rural poor.”

Gilligan was also probably the only USAID administrator to be critical of the large amount of security assistance directed toward Israel and Egypt. Many have thought it, but few have been so impolitic to say it out loud.

During his tenure, President Carter moved to consolidate management of all U.S. assistance programs at USAID; the State, Treasury and Agriculture departments; and other agencies under the broad umbrella of an International Development Cooperation Agency. The idea may have had merit, but it was very poorly implemented, and IDCA was left to wither on the vine without much in the way of staff or support. If Gilligan had been a savvy Washington player and more expert in development, the effort to bring all the strands of development together under a single set of strategic guidance might have succeeded.

In a sign of how poorly Gilligan was regarded within the administration, his first major meeting with the secretary of state came after two years on the job, when Gilligan was asked to come in on a Saturday so the secretary could break the news to him that he was being fired. Gilligan is also notable in one other regard. His daughter, Kathleen Sebelius, is the former secretary of health and human services, and Gilligan and Sebelius are the first father and daughter in the United States to both be elected governors.

Before joining USAID, Douglas Bennet (1979-1981) had been a staffer to Ed Muskie in the U.S. Senate, and when Muskie moved over to be Carter’s secretary of state, he brought Bennet along with him to serve as assistant secretary of state for congressional relations. In the 1960s, Bennet had served as an assistant to Ambassador to India Chester Bowles.

Notably, for someone who seemed to genuinely care about international development, both of Carter’s appointees as USAID administrator had no expertise in the area. Bennet continued Gilligan’s emphasis on decentralizing staff and encouraged greater collaboration with the Peace Corps in the field. Not surprisingly, he looked to repair Congressional relations despite working in an administration notorious for not getting along well with either the House or Senate.

Bennet was one of the most intellectual of USAID administrators, and he began the agency’s serious efforts to evaluate what worked and did not work in the field. As one former staffer said, “I wish he could have stayed longer.”

The seizure of American diplomats by Iranian students in November 1979 and the Soviet invasion of Afghanistan in December 1979 only further convinced many policymakers that Carter’s emphasis on a human rights approach to development and diplomacy was misplaced. Indeed, the Soviet invasion of Afghanistan led Congress to lift sanctions imposed on Pakistan due to its secret nuclear program paving the way for a massive influx of security driven aid in the years that followed as the Afghanistan-Pakistan border became the front line of the Cold War.

Bennet kept the agency out of the headlines and avoided any major scandals, but did not have sufficient time to really bring his own imprint to USAID. After USAID, Bennett went on to serve as the president of National Public Radio and then the president of Wesleyan University. When his staff at NPR bemoaned the difficulties of dealing with Congress and raising money, Bennet told them, “If you think this has a limited constituency, you should see AID's.”

President Ronald Reagan, like Nixon before, saw U.S. foreign assistance as an essential element of projecting America’s interests abroad. He both significantly expanded aid budgets and shifted their priorities more toward security aims. He reduced U.S. commitment to multilateral organizations, and put a higher percentage of funding into a smaller cluster of strategically important countries, such as Pakistan, Egypt and Turkey.

Reagan also appointed the longest serving USAID chief, and one who is also widely considered to be its best, Peter McPherson (1981-1987). McPherson gained his exposure to development early as a Peace Corps volunteer in Peru in the mid-1960s, where he worked with school feeding and credit union programs. After a stint at the IRS working on international tax issues, McPherson rose quickly within Republican ranks, serving as a special assistant to President Gerald Ford and general counsel to the Reagan transition team.

The stars aligned well for McPherson as USAID administrator: Reagan was committed to expanding the foreign assistance budget substantially, even if it was with more of a security orientation. Democrats in Congress were highly supportive of efforts to combat extreme poverty, and most USAID staff realized and appreciated McPherson’s knowledge and ability to represent their interests well.

McPherson’s four pillars strategy toward development was sensible and stressed policy reform, institutional development, innovation and private sector growth. But what seems to have truly elevated McPherson were his interpersonal skills and ability to manage the diverse constituencies with a stake in the assistance program. He was one of the rare administrators able to balance his approach between economic reforms traditionally favored by Republicans and the basic human needs strategy favored by Democrats. McPherson was also willing to buck conservative groups when he pushed through emergency famine relief for both Mozambique and Ethiopia despite their Marxist orientation.

McPherson’s relations with Capitol Hill were good, staff morale was high, he was seen as sympathetic to the needs of field staff and he was an effective manager. As one staffer said, McPherson was “an indefatigable traveler, he was interested in programs, he was interested in staff and he always stayed engaged.” In a sign of his high regard within the administration, he was subsequently appointed deputy treasury secretary under Jim Baker.

Following the tenure of McPherson was never going to be easy, but Alan Woods (1987-1989) appeared undaunted by the task. One of his first acts was to issue a major report, “Development and the National Interest: U.S. Economic Assistance Into the 21st Century,” quickly dubbed “The Woods Report,” which urged a major rewrite of the 1961 Foreign Assistance Act. The report dropped a hand grenade into the foreign aid debate and some observers read its harsh analysis of aid shortcomings as “anti-development.” Woods was fond of noting that the Washington Post ran a four-column story on the study titled, “Foreign Aid Largely a Failure, U.S. Report Says.”

For Woods, who had previously served as the deputy U.S. trade representative, the path to successful development ran almost exclusively through macroeconomic reform and openness to trade. Before Woods could make much progress in implementing his vision, however, he was diagnosed with cancer. While he remained on the job and many at the agency were unaware of his sickness, management began to drift, marking a period when USAID’s regional bureaus began to accumulate more and more power. One USAID employee thought Woods’ approach was excessively ideological and that he “was too much of a bomb thrower” to succeed over the long haul.

On June 29, 1989, while still at the helm of USAID, Woods succumbed to cancer at the young age of 42.

If there is broad agreement that McPherson sits at the apex of USAID administrators, there is equal consensus that Ronald Roskens (1990-1992) rests at the nadir. President George H.W. Bush and Secretary of State Jim Baker had impeccable internationalist credentials, and Roskens was a bafflingly unqualified choice. Well-connected in Nebraska Republican political circles, Roskens had just been fired as president of the University of Nebraska, the reasons for which were somewhat controversially never made public. Notoriously arrogant in his personal style, Roskens had no discernible development experience. It is daunting to properly catalogue his missteps while leading the agency. The comments of a former USAID staffer describing Roskens are typical, “to call him a fool would be kind.”

One of his first acts on the job was to demand a more luxurious car to transport him to the office, the costs of which angry congressional appropriators subtracted from the agency’s operating budget. Roskens trumpeted the importance of economic reforms, but slashed his economic analysis office. Roskens soon got caught up in a lengthy series of inspector general investigations around charges he had abused agency travel funds.

The first Bush administration gets very high marks for managing the complex diplomacy around the fall of the Berlin Wall in November 1989, but Roskens’ general incompetence meant USAID was badly behind the curve in designing programs to meet the rapidly evolving transition needs across the former Soviet sphere.

Under Roskens’ watch, USAID paid for ads aired in the United States encouraging U.S. companies to move to Central America to take advantage of the cheap wages. “Rosa Martinez produces apparel for U.S. markets on her sewing machine in El Salvador,” the text of one ad in in a trade journal read, “You can hire her for 33 cents an hour.”

Needless to say, the aggressive effort to export U.S. jobs as a means to promote development did not sit well with lawmakers or the public. Agency morale plunged. An inspector general report from 1991 reflected on Roskens’ most dubious achievement: more high-ranking USAID employees convicted of federal crimes during 12 months than any other agency or department of the federal government. As a former USAID employee recalled, Roskens was, “a perfect example of how a well-connected political hack could wreak enormous damage on a small agency.”

The end of the Cold War brought enormous change to the world, and USAID would soon find itself in a maelstrom as it tried to adjust to its new role.

The end of Roskens’ term ushered in a more hostile environment for USAID and its next administrator. Find out how this power struggle played out in the third installation of our five-part series.

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