Statement of the Administrator
The post-September 11th world has put a premium on the effectiveness of this country's foreign assistance. Consequently, the U.S. Agency for International Development (USAID) has embarked upon a major effort to meet the demands of this new and extremely challenging environment.
We have five top priorities for the coming year: building a free and prosperous Iraq; winning the peace in Afghanistan; fighting HIV/AIDS; championing peace in Sudan; and supporting 17 Presidential or Administration initiatives. These priorities, along with the other elements of our FY 2005 programs, reflect our core mission: promoting transformational development; strengthening fragile states; and providing humanitarian relief.
Equally important, we are continuing an ambitious program of management improvements. Our highest priority in this domain is the Development Readiness Initiative (DRI). A three-year program that began in FY 2004 and was modeled after a similar State Department Diplomatic Readiness Initiative, the USAID DRI is designed to give the Agency's workforce the skills they need to meet the challenges of the future.
To meet these challenges, USAID is requesting $3.9 billion for its FY 2005 programs. We anticipate working with the Departments of State and Agriculture on joint programs valued at $4.8 billion. We will also manage a portion of the $1.45 billion requested for the Global HIV/AIDS Initiative in conjunction the State Department's Global AIDS Coordinator and of the $2.5 billion for the Millennium Challenge Corporation.
Program Priorities
Building a Free and Prosperous Iraq. When USAID initiated programs in Iraq in 2003, a vacuum of political power coupled with limited infrastructure made for a difficult operating environment. Amid challenges, USAID is working closely with the Coalition Provisional Authority in Iraq to provide humanitarian and reconstruction assistance with funds from the Iraq Relief and Reconstruction Fund to help the Iraqi people reclaim their country. Of the country's 25 million people, more than 19 million Iraqis have the new opportunity to engage in political discourse at the local level through interim bodies that USAID has supported at the community level. USAID is also restoring the power supply to health and educational facilities, water supply facilities, and infrastructure that contribute to the local economy and employment generation. Simultaneously, USAID is helping to restore basic healthcare services to vulnerable people and is strengthening the national education system.
Winning the Peace in Afghanistan. USAID is committed to the President's goal of seeing a stable and democratic Afghanistan that is free from terror and no longer harbors threats to our security. As an integral implementing agency for the 2004 supplemental funds for Afghanistan, USAID's reconstruction programs remain focused on six visible building blocks to support Afghan efforts to transform their society: infrastructure, particularly improving secondary roads; agriculture and rural development targeted at enhancing food security through agricultural productivity and market development; targeted communities to improve education; economic governance programs aimed at banking, budget and investment law reform; health care, particularly reducing maternal mortality rates; and reconstituting the basic organs of governance. In fulfillment of one of the Presidential initiatives, USAID completed the first phase of reconstruction of the Kabul-Kandahar Highway in December 2003. This initiative has revitalized entire villages along the 389 kilometer route and is enabling the movement of the people, aid resources, and agricultural and trade goods essential to Afghanistan's development. The Administration's FY 2005 funding request for Afghanistan is $397 million to support these efforts by USAID.
Fighting the HIV/AIDS Pandemic. The HIV/AIDS pandemic is more than a health emergency. It is a social and economic crisis that is threatening to erase decades of development progress. The pandemic has tended to hit hardest in the most productive age groups and in developing countries that can least respond. Sub-Saharan Africa remains the most affected region with 70 percent of the total number of people worldwide living with HIV/AIDS. USAID's programs aim to reduce HIV/AIDS transmission and improve access to care, treatment, and support for people living with HIV/AIDS and children affected by HIV/AIDS. Under the leadership of the State Department's Global AIDS Coordinator, USAID will scale up its work in expanding access to anti-retroviral treatment, reducing mother-to-child transmission, increasing the number of individuals reached by community and home-based care, providing essential services to children impacted by HIV/AIDS, and promoting education and behavior change programs that emphasize prevention of transmission. The FY 2005 request for HIV/AIDS is $600 million. In addition, $1.45 billion is requested for the Global HIV/AIDS Initiative managed by the State Department Coordinator in partnership with USAID and other U.S. Government agencies.
Championing Peace in Sudan. USAID continues to be at the forefront of sustained international engagement to end Sudan's long North-South civil war. USAID and other donors are now preparing to shift from the long humanitarian focus in southern Sudan to longer-term recovery and development programs. However, during 2003, armed opposition to the central government broke out in western Sudan, where attacks on civilians and general insecurity have displaced more than one million people. USAID is working intensely with the Department of State, other donors and the United Nations to bring a political solution to this western conflict. It is unlikely that a North-South peace agreement that will require heavy support from the international community can be implemented while another war rages in the West. USAID's three-year strategic plan for Sudan for 2004-2006 has a new objective of support to the peace process, and continues the focus on education, health, economic recovery, and governance. For FY 2005, $81 million has been designated from the Development Assistance account and the Child Survival and Health Programs Fund for assistance to Sudan, $140 million in International Disaster and Famine Assistance, and $6 million in Transition Initiatives assistance.
Supporting Other Key Presidential and Signature Initiatives. The President's core development-related initiatives achieve a broad range of outcomes, from improving agricultural productivity to strengthening democratic institutions to protecting tropical forests. USAID is implementing these initiatives in a variety of ways, including delivering services directly, providing technical assistance and training to strengthen institutions, sponsoring policy analysis, and facilitating the sharing of ideas and approaches among people facing similar problems. All of these initiatives, four of which were already mentioned above, are being implemented in whole or in part by USAID.
In addition, USAID is playing a key role in implementing a number of Administration initiatives announced at the World Summit on Sustainable Development, including the Congo Basin Forest Partnership, the Initiative to End Hunger in Africa, the Trade for African Development and Enterprise Initiative, and the Water for the Poor Initiative.
Harmonizing State-USAID Efforts: Building a Common Vision
The Department of State and USAID, in partnership, developed a Joint Strategic Plan (JSP) for fiscal years 2004-2009. The JSP synchronizes diplomatic, security and development efforts around a set of common goals drawn from the President's National Security Strategy of 2002.
In conjunction with the JSP, USAID is exploring new directions for development assistance, particularly as they relate to:
- Promoting transformational development;
- Strengthening fragile states;
- Providing humanitarian relief;
- Supporting U.S. geostrategic interests; and
- Mitigating global and transnational ills.
USAID is currently discussing these potential new directions with stakeholders within the Administration, in the Congress, and in the nongovernmental foreign assistance community, and will factor the results of these discussions into any changes that it may propose in the structure or approach of the agency's implementation of its programs.
Strategic Direction
The FY 2005 Congressional budget justification carefully balances USAID's commitment to these five development challenges. Several key themes that have formed the foundation of prior USAID programs cut across the broader themes of this new direction. Democratic governance, economic growth, agricultural development, environmental improvement, health and education enhancement, global market integration, conflict mitigation, disaster assistance, and public-private alliances are interdependent components of USAID's development, strategic and humanitarian programs. By working in concert with one another, these sectoral components and partnership approaches promote an agenda of improved governance, accelerated economic performance, and enhanced standard of living.
Promoting Transformational Development. "Transformational" development is development that not only raises living standards and reduces poverty, but also transforms countries through far-reaching, fundamental changes in institutional capacity, human capacity, and economic structure. The primary determinant of progress in transformational development is political will by a country's leader, demonstrated by ruling justly, promoting economic freedom, and making sound investments in people. For USAID, this would mean allocating resources among countries based on need and on commitment to good governance, as evidenced by actual policies and institutional performance. Where commitment to good governance is weak, USAID would sharply limit assistance that is intended to contribute to transformational development. Efforts toward transformational development would support fundamental changes in govern-ance and institutional capacity, human capacity, and economic structure. The largest group of countries that have yet to experience transformational development is located in sub-Saharan Africa. Mali, for example, is a low-income country that has shown the political will to reform its policies and the institutional commitment to improve its economy. USAID would collaborate with its partners to assist such countries in attracting the financing they need and, equally importantly, acquiring technologies and ideas that will invigorate their development.
Strengthening Fragile States. Fragile states are characterized by a growing inability or unwillingness to provide even basic services and security to their populations. The goal in fragile states is stabilization, reform and recovery that provide the foundation for transformational development. Programs effective in providing this foundation address the social components of instability and conflict, both microeconomic and macroeconomic aspects of the business climate, trade capacity, and oftentimes agricultural productivity. Resources for fragile states would promote stabilization and consolidation in countries where a link to U.S. national security is present, and where U.S. assistance can make a difference. This is a new, difficult, and increasingly important area for foreign assistance, where all donors still have a great deal to learn about how to achieve results. USAID is developing a strategy for fragile states that focuses on the causes of institutional weakness and violent conflict, whether in circumstances of complex disaster, post-conflict reconstruction or stagnant growth. Resources would be allocated selectively, taking into account need, commitment (particularly quality of leadership), and the feasibility of achieving results. In Liberia, improving basic institutions of governance and enabling critical public services to be delivered are elements of USAID assistance aimed at promoting stability and recovery.
Providing Humanitarian Relief. As a global superpower, the United States maintains both the responsibility and impetus to save lives and alleviate the suffering of people in distress, regardless of the character of their governments. USAID is the lead U.S. Government agency in providing international humanitarian relief through food aid and disaster assistance resources. In collaboration with other U.S. Government agencies, humanitarian assistance is often provided to countries where USAID is concerned with development progress, overcoming fragility, combating HIV/AIDS and other communicable diseases, and addressing conflict and internal displacement of people. A second part of humanitarian relief is seeking means of preventing the recurrence of health and environmental emergencies. USAID humanitarian assistance, such as famine relief in Ethiopia, when coupled with programs to strengthen macro- and micro-level economic institutions, lessens the likelihood that crisis will recur.
Supporting U.S. Geostrategic Interests. As an essential arm of U.S. foreign policy, foreign aid plays a vital role in supporting U.S. geostrategic interests. Strategic states are those countries in which the U.S. Government is pursuing a specific, high priority, foreign policy objective. For strategic states, USAID will manage resources, in close consultation and coordination with the Department of State and other U.S. Government agencies, to accurately identify and agree on the objectives and desired results in each country.
Mitigating Global and Transnational Ills. As communication and transportation improvements reduce relative distance between countries, our collective vulnerability to disease, global environmental concerns, and international criminal activity has increased. Progress in global and transnational issues depends on collective efforts and cooperation among countries. Attacking the global HIV/AIDS pandemic illustrates one transnational ill that is best served by a coalition of forces. The Global AIDS Initiative unites efforts of the Department of State, Department of Defense, Department of Health and Human Services, and USAID to enhance the effectiveness of resources in addressing the pandemic. Strategic planning to address transnational challenges must include emphasis on interagency and international cooperation, coordination and collaboration. USAID is committed to do its part by continuing to develop the Global Development Alliance (GDA). Private sources of foreign assistance provide nearly $33.6 billion per year. GDA focuses these resources to benefit from the economies of scale that are generated when all sources are working in concert to achieve common development goals.
Management Reforms
The demand to meet complex foreign policy and international development challenges requires a USAID with modern business systems, organizational discipline, and the right number of qualified, well-trained people to manage its programs. The ability to hire the right people ready to be deployed quickly to the right place plays an essential role in USAID's capacity to serve as a leader in international development. Staffing U.S. missions overseas with the appropriate number of qualified personnel to meet the demands of development and humanitarian relief ensures competent, adequate U.S. representation on the ground. This budget request includes the funds necessary to establish recruitment and hiring resources to ensure that USAID has the proper staffing to achieve program success. With current staffing levels, we have made great progress in management improvements that are in alignment with the President's Management Agenda priorities. USAID's successes include:
- Nearing completion of a Human Capital Strategy which includes the Development Readiness Initiative modeled after the Department of State's Diplomatic Readiness Initiative;
- A new organizational restructuring that has de-layered the Agency and continues to strengthen program management capacity in the field by centralizing technical leadership;
- Improved financial performance that has culminated in the first-ever unqualified, clean audit opinion awarded by the Office of the Inspector General for all five categories of year-end financial statements;
- Establishment of an Agency "best practices" model for Enterprise Architecture (EA) and making progress on developing a joint EA with the Department of State;
- Progress on joint financial management systems collaboration with the Department of State and progress on procurement systems modernization, including plans to accelerate a joint acquisition and assistance software that will be deployed to overseas missions;
- A new, operational Capital Planning and Investment Control process to manage, monitor, and evaluate the efficiency and effectiveness of major technology investments; and
- A comprehensive review of programs in Development Assistance and Child Survival and Health in the Bureau for Latin America and the Caribbean, the Office of Transition Initiatives, and in our contribution to the State Department's Europe and Eurasian Affairs program in accordance with the Office of Management and Budget's program assessment reporting tool (PART).
The Road Ahead
The FY 2005 budget for USAID builds on the progress achieved in management improvements already undertaken. USAID is prioritizing collaborative activities with the Department of State in management areas common to both agencies such as standardization of operations, implementation of a staff and workforce plan to meet the challenges of the future, and using the PART to inform strategic budgeting practice.
A hallmark of our new role under the National Security Strategy is the closer relationship USAID is developing with the Department of State as reflected in the joint strategic plan. As a result of this closer collaboration, USAID and the State Department have established the joint Policy and Management Councils. These councils provide a formal venue for timely cooperation and coordination on a range of program, budget, and management issues. This closer cooperation with the Department of State will facilitate our efforts to develop joint financial management and procurement systems as well as a joint Enterprise Architecture. This cooperation has led to a pilot program to allow cross-over assignments in which staff from each agency could bid on a selected list of positions in the other agency. We are also exploring how to better share other services and to coordinate our program and budget process.
USAID's budget priority is to ensure that improvements in the management and performance of our programs are carried out by the appropriate number of qualified people. The Development Readiness Initiative (DRI) will strengthen the Agency's ability to respond to crises and emerging priorities by closing critical staffing gaps that are currently restricting the Agency's ability to position the right people in key positions overseas and in Washington. USAID plans to hire up to 50 new foreign and civil service staff in FY 2004, and the budget requests funds for up to an additional 50 new positions in FY 2005. This budget also seeks authority to convert up to 50 currently program-funded personal services contractors to permanent direct-hire employees. These new staff, in addition to the up to 255 new non-career, limited-term, program-funded, Foreign Service employees that USAID plans to hire for overseas assignments through FY 2006, using the authority provided in the FY 2004 Consolidated Appropriations Act, will help ensure that USAID employees are well-trained and prepared to meet the challenges of a post-September 11th world.
The Foreign Operations chapter of the FY 2004 Consolidated Appropriations Act also instructs USAID to develop an administrative cost rate that it can apply to programs in the Asia and Near East region that are not covered under the FY 2004 budget. The budget requests authority for USAID, in collaboration with the State Department and the Office of Management and Budget, to develop and implement a pilot program to determine and recover the actual operating and administrative costs of two country or regional programs. The results of these pilots will inform the development of possible alternatives or revisions to the current budgeting approach for USAID operating expenses.
With respect to the Office of Management and Budget's program assessment rating tool (PART) for evaluating the budget and performance integration element of the President's Management Agenda, in FY 2004, USAID plans to assess the Child Survival and Health Fund and Development Assistance programs in the Bureau for Asia and Near East, the Development Credit Authority, the Office of the Inspector General, and the Operating Expense budget for the entire Agency. By FY 2005, USAID will have assessed 80 percent of its programs. USAID uses PART results to shape the Agency's budget request. As a result of the PART assessment of USAID's population program, for example, USAID has taken steps to allocate funds more strategically, taking account of country-level needs (measured in terms of population density, fertility, and unmet need for family planning). As a result, USAID shifted over $30 million of the FY 2004 Child Survival and Health Programs Fund population allocation to countries with higher needs.
The Budget Request
The FY 2005 budget request for USAID represents a new approach toward meeting complex challenges in a post-September 11th environment. The request sets priorities that move the President's economic growth and governance agenda forward in ways that promote aid effectiveness and real transformation. It also helps states not yet committed to transformation move toward stability, reform, and recovery. The assistance addresses global and transnational ills, supports individual foreign policy objectives in geostrategically important states, and continues USAID's premier capacity to offer humanitarian and disaster relief to those in need.
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