USAID Should Become the Department of Nation-Building

Nation-building abroad has become a neuralgic term in American politics ever since it became associated with the lengthy and costly wars in Afghanistan and Iraq. Opposition to it is one of the few things that Barack Obama and Donald Trump can agree on. Both believe that “nation-building begins at home,” as the president so often says.

And yet, at the same time that U.S. leaders proclaim their opposition to nation-building, they acknowledge that failing states pose a serious threat to American interests. As Obama said in his 2016 State of the Union address, “Even without [the Islamic State] … instability will continue for decades in many parts of the world — in the Middle East, in Afghanistan, parts of Pakistan, in parts of Central America, in Africa, and Asia. Some of these places may become safe havens for new terrorist networks. Others will just fall victim to ethnic conflict, or famine, feeding the next wave of refugees. The world will look to us to help solve these problems.”

But the United States cannot adequately respond to global instability with military force alone. The U.S. public will not support more large-scale interventions like the ones in Iraq and Afghanistan, absent a compelling casus belli, while lesser military measures — such as drone strikes and Special Operations raids — are unlikely to prove adequate to safeguard American security. Although “kinetic” strikes can kill terrorist leaders, such as the Taliban’s Mullah Mansour or al Qaeda’s Osama bin Laden, they can seldom eliminate entrenched terrorist organizations — and they can never create indigenous institutions capable of maintaining law and order on their own.

The United States needs a civilian capacity to foster better-functioning institutions in chaotic countries — what is popularly known as nation-building. Various federal agencies, from the Department of State to the Department of Agriculture, currently have aspects of nation-building in their portfolio but none sees it as a main mission. The failure to prepare for nation-building was brutally exposed in Iraq in 2003 when the Bush administration had to assemble the ramshackle Coalition Provisional Authority at the last minute to take over from Saddam Hussein’s government — with predictably catastrophic consequences. These days, nation-building usually gets dumped into the lap of the military, along with myriad other missions. But although the armed forces are tremendously capable at improvising on the fly, they do not plan and prepare for this mission either.

The United States needs a dedicated nation-building agency — not to undertake military occupations but to avoid them by helping allied governments to secure their own territory without need for large numbers of American troops. Fortunately, there’s a natural candidate for that mission: the U.S. Agency for International Development (USAID). To embrace a state-building mission, however, USAID will have to be transformed. The agency will need to do less but do it better. Instead of trying to promote development for its own sake in every poor country in the world, it should limit its efforts to enhancing core state functions in strategically important countries.

The proposed 2016 budget for USAID is $22.3 billion, of which $10.7 billion is in core accounts directly managed by USAID. Of this, only $2.4 billion is to be spent on what might be considered state-building. The rest is dedicated to poverty alleviation, global health, biodiversity, women’s empowerment, education, sanitation, and economic and agriculture development. These are admirable goals, but USAID has demonstrated no particular advantage in any of these fields compared to international organizations (such as the United Nations and the World Bank) and nongovernmental organizations (such as Oxfam and Africare). Accordingly, USAID should leave these areas either to multinational or private-sector organizations, cutting back its own support to NGOs working in these areas.

USAID and its defenders will argue that everything it does contributes to nation-building, because the public goods it supports — such as health care, electricity, and environmental protections — are commonly found in successful states. The USAID website argues: “Progress is only sustainable when supported by capable governments and institutions that can ensure the health, safety and well-being of their people.” That is true, but successful states are not successful because they provide public goods; they provide public goods because they are successful. USAID should focus less on temporarily increasing outputs in public health, education, and other sectors, and more on building durable state capacity so that host nations can manage their own affairs — even if their clinics or schools may never attain USAID’s ideals.

Even democracy can be a luxury good in the developing world. Yet the USAID program for nation-building is billed as Democracy, Human Rights, and Governance. The most important issue — governance — is put in last place, with most of USAID’s emphasis on supporting elections, political parties, and civil society organizations, rather than nuts-and-bolts governmental functions. Yet the United States can live with undemocratic states as long as they behave responsibly; indeed, states such as Jordan and Singapore are close American allies. Many become democracies in time, as did South Korea, Chile, and Indonesia. And, while perhaps distasteful to some, the United States has a long tendency to look the other way at human-rights violations committed by strategically important countries such as Egypt and Vietnam.

The United States cannot live with ungoverned spaces, however, which inevitably become a breeding ground for and exporter of terrorism, criminal networks, disease, refugees, and other problems. Nurturing representative institutions is a legitimate job for the National Endowment for Democracy. But USAID should prioritize effective governance over democratic governance.

Instead of trying to promote welcome but inessential services — from electricity to free elections — USAID should focus on the bare necessities of stable states. These include training security forces that can exercise a monopoly on the legitimate use of force, supporting courts that can dispense a semblance of justice, staffing a professional civil service that is not compromised by rampant corruption, and constructing financial mechanisms that can allow the state to raise and spend revenue with some degree of transparency. USAID does not, at the moment, have the necessary competency in any of these fields; none of these areas are adequately addressed by any existing U.S. government program. The U.S. Armed Forces, for example, assist foreign militaries, but the crucial job of assisting foreign police forces and courts falls to the Departments of State and Justice which outsource them to contractors of dubious value. USAID needs to buttress its capabilities accordingly while shedding less important functions. Put another way, USAID should leave the job of building toilets in Mozambique to the Peace Corps.

USAID currently operates in more than 100 countries, with “democracy, human rights, and governance” programs in roughly half of them. That stretches the agency way too thin. USAID cannot be effective in more than 30 or 40 countries with its current staffing and funding levels, and it should not be necessary to increase USAID’s budget in order to address the vitally important nation-building mission. USAID should limit its efforts to countries of strategic importance to the United States where it can make a difference. Given the threat of Islamist terrorism to the United States, one priority should be countries with significant Muslim populations that are located in the arc of instability stretching from West Africa to Southeast Asia. In a few of those countries, including Libya, Somalia, Syria, and Yemen, central government is non-existent; in almost all of the others, it is very weak.

Relatively wealthy nations such as Turkey and the Gulf monarchies can be excluded, along with states such as Sudan or Iran that are hostile to the United States. Some hard judgment calls will have to be made as to whether services can be effectively delivered in nominally allied states such as Pakistan and the Palestinian Authority, where the governments have been implicated in supporting terrorism. If USAID cannot be effective (defined as increasing local capacity to execute the basic functions of sovereignty), it should not commit.

Beyond the focus on stopping the spread of Islamist extremism by building local governance capacity, USAID should focus its state-building initiative on supporting a few other strategically important countries at risk of subversion: Ukraine and Georgia, which are vulnerable to Russian encroachment; Mongolia and Myanmar, which are vulnerable to Chinese encroachment; and nations in Latin America — particularly Columbia, El Salvador, Guatemala, Honduras, and Mexico — that are vulnerable to a significant narcotrafficking threat. USAID is, of course, already present in all these places but because of its amorphous development mission and its tendency to get stretched too thin, it does not devote the critical resources and attention that these high-risk countries require to enhance basic governmental capacity.

This is still a substantial undertaking, but it would exclude more than half of the countries where USAID currently operates. USAID should not be committing scarce resources in strategically irrelevant countries such as Lesotho and Madagascar, in unfriendly countries such as China, or in rapidly developing countries such as India. Money and personnel can better be focused elsewhere for maximum geopolitical return.

In order to be more effective at state-building, USAID needs to change the way it does business. It should emulate the armed forces by drawing “lessons learned” from recent state-building experiences and inviting outside experts to assess its performance instead of relying on its own contractors and officials to grade their own performance. It should be more willing to brand some projects as failures instead of claiming they were successful simply because the budgets were spent.

It should also streamline its bureaucracy: there is no need for 14 separate bureaus and 11 independent offices. Does USAID really need an Office of Human Capital and Talent Management independent of its Bureau for Management? It should give managers greater responsibility to shift resources, human and otherwise, between offices as events warrant. And it should decrease its reliance on a few major Washington contractors that can deploy legions of lobbyists, lawyers, and grant specialists to navigate the Byzantine contracting and grant-making process. After the Haitian earthquake of 2010, for example, USAID took the lead in disbursing $3.6 billion in money authorized by Congress. Of that total, the Associated Press found, only 1.6 percent went to firms in Haiti. The biggest beneficiary by far of USAID’s largesse was Chemonics International, a for-profit development company based in Washington that specializes in winning USAID grants.[1]

In order to reduce its reliance on contractors, USAID needs to transform its workforce. USAID’s staff, while talented, are often not the specialists needed for state-building. USAID employs few experienced civil engineers, urban managers, civil service development specialists, security and policing experts, or development economists. Many permanent staff are recent graduates of master’s degree programs in international relations with little direct experience managing government agencies or businesses. USAID needs to hire more mid-career professionals with substantial experience in managing large organizations and working in foreign cultures. One fertile source of recruits should be the U.S. Army, which is in the process of laying off thousands of officers and noncommissioned officers with extensive state-building experience.

Any of these changes suggested above, indeed any change at all, will be fiercely resisted by vested interests. Countries that face losing their USAID programs will complain. So will USAID employees and contractors who will lose their jobs and grants. Such a transformation can only be accomplished if the next administration makes it a priority.

Of course there is no guarantee that even a restructured USAID will succeed at nation-building in every instance or even in most instances. This is a notoriously difficult undertaking. The United States, however, has had success in contributing to state-building in such disparate countries as Colombia, East Timor, El Salvador, Germany, Italy, Japan, Kosovo, the Philippines, and South Korea, with USAID having played a role in some of those instances. Although there is no way to predict how often USAID will succeed, even a few successes are worth the relatively modest (by government standards) investment. There is simply no good alternative to nation-building if the United States wants to address the problem of failed states while avoiding endless military interventions. And if the U.S. government is to get better at nation-building, a transformed USAID needs to take the lead role.

This article is based on a new Council on Foreign Relations Policy Innovation Memorandum.

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