**Rethinking Development Assistance and\
the Role of AID in U.S. Foreign Policy**

##### Jane Holl Lute

#### November 24, 2000

**Introduction**

What should be the role of development assistance in U.S. foreign
policy? In a time when major political, economic, and social
transformation has altered so much of the international landscape, how
are important U.S. interests served through the distribution of
development aid? More fundamentally, what needs (that is, what needs of
the United States) does a program of development assistance meet? What
should be the goals of this program? What strategies should guide aid
distribution to help best meet those goals?

In other words, how should aid policy be shaped so as to yield in ten or
twenty years' time a judgment that the goals were worthy, the policies
effective, the results a success? And finally, at this moment of
significant political transition in Washington, how can the Agency for
International Development (AID) as the lead organization within the U.S.
government for development assistance improve prospects that U.S.
development policies will succeed?

This paper offers preliminary answers to these questions. It begins with
an argument that at this moment in U.S. history, core needs, rather than
national interests (however "vital") should ground U.S. foreign
policymaking. These core needs, elaborated below, are: a) a safe and
secure homeland; b) a dynamic economic engine capable of generating new
wealth; c) strong friends and allies; and d) predictable relations with
others. Meeting these needs requires at a minimum that the United States
devise self-regarding strategies to manage its growth, promote
prosperity, protect against dangers, and help strengthen others to act
constructively on their own behalf and cooperatively in collective
efforts.

In this regard, development assistance -- even in its current, hobbled,
earmarked state -- plays an essential role in U.S. foreign policy. It is
the only major U.S. policy that takes the longer view of circumstances
abroad and of the longer term strategies likely to improve those
circumstances by helping to create markets, reduce threats, encourage
self-reliance, and promote rule-based regimes. In so doing, development
assistance directly and uniquely serves each of the core U.S. needs
noted above. Moreover, this distinctive focus on the longer term allows
development aid to play a pivotal role in U.S. foreign policy more
generally by reconciling two, perhaps overarching, strategic U.S.
objectives:

-   Maintaining U.S. preeminence and economic dynamism in

-   A world changing for the better.

These objectives often find themselves in tension with one another.
However, this paper takes the view that these objectives can be
reconciled. Policies to improve the circumstances of the United States
and maintain its political, economic, and military edge can coexist with
-- indeed, probably even depend on -- policies that improve the
circumstances of others. To be sure, managing this coexistence will
require tradeoffs and compromise in the pursuit of each of these
strategic objectives. The present argument, however, rejects the
"either/or" view, and instead maintains that the United States is not
likely to achieve best results for either strategic goal if the other is
not pursued with vigor. And development assistance lies squarely at the
policy crossroad.

This paper concludes with an argument that to achieve maximum value for
the dollars spent, development assistance should help prevent the
emergence of mass violence via strategies of structural engagement. That
is, the goal of development assistance should be to help create capable
states.

Capable states are characterized by several factors: representative
governance based on the rule of law, market economic activity, and a
thriving civil society. In these states, essential security, well-being,
and justice are available to all citizens. The societies of such states
are not only better off they tend not to resort to violence to broker
differences. Moreover, these states tend not only manage their own
affairs in relative peace they also manage their relationships with
neighbors and others in relative peace as well.

But often, states need help in becoming 'capable.' Certainly this was
the plight of European and other states in the aftermath of World War II
when the United States undertook the Marshall Plan. In this case,
outside help was indispensable to the successful reemergence of Europe
from shattering warfare, as it may be today for those countries
struggling to break free of chronic conditions that inhibit growth.

Yet innumerable political, and perhaps moral, difficulties await those
who would help. Some of these difficulties are anticipated in the
following discussion. In view of these challenges, two principles should
help guide structural prevention efforts: first, enduring freedom from
fear and want is best achieved through democratic self-governance; and
second, outside help, such as that brought to bear by development
assistance, can only provide the margin of victory (however, it is
important to note that the location of the margin will vary according to
the circumstance). The following section on development assistance and
preventing deadly conflict discusses both of these principles in greater
detail.

In sum, development assistance is an essential, distinctive, component
of U.S. foreign policy that serves core U.S. needs. And it does so in
ways that reconcile the twin U.S. goals of strengthening its own
position in the world while improving the lot of others with whom it
interacts and on whom it depends for so much of its own success. By
pursuing strategies that help create capable states, development aid
will more constructively work to strengthen emerging nations and in the
process help create markets, reduce threats, promote self-reliance,
adherence to rule-based regimes, and prevent the emergence of mass
violence.

**Needs vs. Interests**

Why is it more important to take a needs-based approach to U.S. foreign
policy as against any other approach, such as a capabilities, threat, or
especially interest-based approach? Why is a needs-based approach
particularly relevant for the formulation of development policies? To
answer these questions, it may be helpful to project ten or twenty years
into the future and try to identify where the United States would like
to find itself -- an exercise that reveals how core national needs serve
more constructively to devise strategies to achieve those future goals
than do other departure points.

Most analysts would agree that in the year 2020, the United States would
like to find that it continues to enjoy a position of global
preeminence. More specifically, it would be desirable for the United
States to enjoy a high degree of political autonomy and influence, have
global interests and reach, be economically prosperous (notwithstanding
a significant projected rate of growth in its poorest quintile), lead
the world in science and technology, and remain the dominant, if not
predominant military power.

But what about the rest of the world? Most observers would probably also
agree on the desirability of a world in 2020 as a place with a greater
number of participatory democracies and market economies. Such a world
would also have an inclusive and functional interlocking network of
legal regimes, an improved global capacity to handle the world's
problems, and be in the position where catastrophic nuclear war had
become unthinkable.

Neither future is grandiose. It is possible to project these goals for
the United States and for the world at large with a straight face. It
will be impossible, however, to achieve this twin set of goals in
anything approaching equal measure, however, unless the United States
makes a deliberate choice to do so.

In other words, if, in twenty years time, we aspire to a nation and
world as described above, then the United States must devise strategies
to achieve these aims. And these strategies can only derive from an
understanding of America's present core needs, inasmuch as needs, as
discussed below, are a more reliable guide to grand strategy than are
capabilities, threats, or even interests.

What are the core needs of the United States at present? As noted
earlier, they are four: a safe and secure homeland, a dynamic economic
engine capable of generating new wealth, strong friends and allies, and
predictable relations with others. Moreover, for a country like the
United States at this moment in its history, these needs share equal
importance. It is impossible, for example to imagine a truly safe and
secure U.S. homeland without strong friends and allies, and vice versa.
Similarly, it is impossible to imagine that the United States could
sustain dynamic economic growth without the kinds of rule-based regimes
that bring order and predictability to so much of the world's economic
and political life.

Contrast these needs with the commonly held view of vital U.S. interests
that identifies, for example, access to foreign oil sources, unimpeded
access to and the use of space, and preventing nuclear proliferation as
vital to the United States. Such interests are of course important,
perhaps even vital, to significant U.S. goals. But interests are
transient and mutable, tied to the present and especially tied to
present capabilities and present threats. As such, they do not provide a
durable basis from which to plan the future. For example, if tomorrow,
all of the world's nuclear weapons were safely vaporized, or
technological advances led to the creation of energy sources that met
life and production requirements without relying on fossil fuels,
interests in containing potential proliferators, or in assuring access
to the world's oil reserves would greatly diminish in importance.

In contrast, needs persist despite changes in even important conditions.
Needs are not merely repackaged vital interests, or even supremely vital
interests. Needs differ distinctively from interests in quality and
form.

-   Needs endure; interests change. The United States has always had a
    need for a safe and secure homeland, economic dynamism, strong
    friends and allies, and a certain predictability to its
    international relations. It has not always had an interest in
    containing Communism, including China in the global trading regime,
    or in rendering humanitarian assistance to countries half a world
    away.

-   Needs exist irrespective of constraints; interests are, in part, a
    function of constraints. In other words, needs exist regardless of
    one's capabilities, opportunities, limitations, or threat
    environment. Interests are formed or dissolved, heightened or
    diminished by these factors.

-   Needs drive strategies; interests reflect strategy. The drive to
    meet core needs gives rise to strategies that are themselves a
    product of some mix of capabilities, opportunities, and threats or
    other limitations. Strategies, in turn, create interests that now
    must be acted upon for the strategy to succeed. A simple example
    makes the point. One has a need to eat. One's significant other owns
    a nearby restaurant. One devises strategies to maximize favorable
    exposure to the significant other, including using that restaurant
    as frequently as possible. New significant other? New strategies;
    new interests. But the fundamental need to eat remains.

Why is this discussion of needs important? Because it suggests a better
way to understand the importance of development assistance and its
unique potential to contribute to American goals over the long term.
When one combines this understanding of basic needs with a clear vision
of where the United States would like to be in twenty years and an
equally clear view of the kind of world in which it would like to find
itself, one can make sense of the barriers that exist to achieving that
future and of the kinds of strategies and policies necessary to overcome
those barriers.

Those barriers, such as burgeoning populations in chronic poverty,
struggling states with arrested economic development, weak, corrupt, or
repressive regimes, wide ranging criminal networks that traffic in
illicit guns and drugs, pose threats to core U.S. needs and impede
efforts to achieve a brighter future.

These challenges are daunting, yet the world has learned much over the
past fifty years about how to deal with them. Much is now known about
the conditions of chronic poverty and ways to alleviate those
conditions. Much too, is known, about ways to jump start economic
growth, pressure difficult regimes, track and constrain criminal
activity. To be sure, no fabulous, overnight cures exist, but the
international community has learned much about ways to reverse negative
trends and generate clear, if slow, improvement.

But the debilitating conditions noted above are not static. If they
were, they might be more tractable and responsive to remediation. The
real dangers, and the real impediments to progress, stem from the fact
that these conditions often lead to the outbreak and spread of mass
violence. And it is this violence, its intensity and often chronic
state, that causes setbacks in efforts to improve the world's
conditions.

Thus, development aid should be aimed primarily to achieve the second
strategic U.S. objective, namely, helping the world change for the
better. And in this regard, it should work to prevent deadly conflict by
helping to create capable states.

**Development Assistance to Prevent Deadly Conflict**

Over the past decades, development assistance has been refocused in
various directions, with a mixed record of success. So it is with some
trepidation that this paper suggests yet another approach to
development, one that aims to prevent the emergence of mass violence --
one that pursues deliberate strategies of structural conflict
prevention.

Structural prevention emphasizes strategies to address the root causes
of conflict that often lead to widespread violence. Here, prevention is
not simply the avoidance of undesirable circumstances. Nor does it seek
simply to repress potentially destabilizing change. Rather, structural
prevention is an approach that actively works to prevent the emergence
of massive violence through deliberate strategies that help create
capable societies, or, more appropriate to bilateral U.S. efforts,
capable states.

Again, capable states are those characterized by representative
governance, market economic activity, and the rule of law. In these
states, conditions of security, well-being, and justice prevail for all
citizens making them better off and less likely to resort to violence on
a massive scale. Significant research and world experience validates
this simple truth.

Importantly, it is the intersection of these three conditions that holds
the key to prevention. Security without well-being or justice is
repression; well-being, without security or justice is precarious.
Justice without security or well-being is not possible.

-   Security is about safety, to be sure -- safety from fear or threat
    of attack. But security is also about mutual accommodation --
    because persons who themselves feel safe but threaten others are
    dangerous.

-   Well-being is about health -- a healthy life in healthy conditions.
    But well-being is also about opportunity. Opportunity for education,
    training, and constructive employment -- because healthy persons --
    especially young men -- with nothing to do and few prospects can
    also be dangerous.

-   Justice is about voice -- the right of each person to have a say in
    how one is governed, and the right of each person to exercise that
    voice free from fear of reprisals or repression. But justice is also
    about accountability -- because those who use their power to repress
    the rights of others are perhaps the most dangerous of all.

To repeat, conditions of fundamental security, well-being, and justice
-- and importantly, their interrelatedness (none by itself can produce
stable, thriving populations) -- not only make people better off, but
also inhibit the tendency to resort to violence to manage differences
and cope with change. Again, the key here is not to suppress change or
simply preserve the status quo, but rather to encourage the indigenous
development of institutions and processes to help societies manage
change in relatively peaceful ways. Many societies are able to manage
their own development to achieve these objectives. Many others, however,
are not.

The task for outsiders then, is to offer the kind of help that promotes
these conditions while recognizing that the lion's share of the
responsibility, effort, and credit for success ultimately resides with
the insiders -- those who are helped. But the kind of help needed is not
always available, or if available, not always wanted. Finding ways to
strike the right balance poses a continual political challenge.

Thus, the two principles identified earlier might prove useful to help
guide the efforts of outsiders. First, enduring freedom from fear and
want is best achieved through democratic governance. In other words,
self-governing processes with the legitimacy to endure must be
encouraged to take hold. In this regard, outsiders can help create the
political and, if necessary, physical space for indigenous institutions
and processes to operate. With such legitimate systems of
self-governance, related processes to ensure widespread economic
opportunity and enfranchising systems of justice can be put in place,
but help here also will be also often be necessary.

This "front-end" relationship between democratic, or representative
governance, is an important feature of effective preventive strategies
because ultimately, economic and other social systems that operate
within states result from political decisions. The stability of these
systems depends on the reliability of legitimate political processes
that are transparent and accountable. Outside awareness of this
relationship between democratic governance and effective economic
development is essential to the legitimacy of the help outsiders bring
to bear. Yet frequently, outsiders are criticized for their efforts --
accused of malintentioned interference, or worse, in the internal
affairs of other, often weaker, states.

Moral dilemmas arise when trying to reconcile the aim of outsiders to
help create capable states through the infusion of assistance with the
needs of insiders to manage their own affairs. Success may require that
outsiders limit their help to urging the broad direction of change
(i.e., toward democracy and economic reform), while leaving insiders
arrange the details and set the pace.

Thus, the second principle cautions outsiders to understand the limits
of their responsibilities and potential effectiveness. Here, one should
remember that outside help can only provide the margin of victory. But
where is that margin? Is it only at the point necessary to put a
developing state "over the top?" \-- to edge it finally into full
capacity for stable self-governance and normal relations with others?
When the Marshall Plan concluded (early, it is worth noting), the states
of Europe were by no means the economic giants of today, much less at
full pre-war capacities. Yet they had achieved a stable level of
self-governance and were able to move confidently into their future
relations with others.

But the margin here, should be thought of as various points along the
wide continuum of development where outside help can mean the difference
between progress or stagnation. Such help, for example, may be important
to put initial systems in place, overcome unforeseen or otherwise
insurmountable obstacles, or ease external financial or security
pressures to open up room for internal processes to mature. The
development margin, in other words, floats, depending on the
circumstances of the country in need. Outside help, then, is likely most
effective when used at the margins, and not when it is substituted for
internal efforts.

This view of development assistance reveals how it works to respond to
core needs and actively contribute to achieving desired futures by
working to prevent the emergence of violent conflict through strategies
that help create capable states. Its efforts orient on the longer term,
with emphasis on promoting processes of democratization and economic
reform. Its success can be seen most clearly not in what outsiders do,
but in what insiders do on their own behalf.

Here, a word might be in order about operational prevention, that is,
the use of exceptional measures to preempt fatal decisions and avert
crisis. Development assistance as understood above, is not ideally
suited for crisis response, even in the period following a conflict,
when intensified efforts of post-conflict peacebuilding preoccupy
outsiders and insiders alike. It lies beyond the scope of this paper to
delineate the ways in which these circumstances present their own
special demands to ensure that conflict does not resume and preventive
efforts succeed.

However, while distinct from longer term development efforts,
postconflict peacebuilding and emergency measures must take cognizance
of the knowledge and experience base of such efforts to ensure that the
emergency steps taken to help a society emerge from crisis succeed
without putting in place conditions that could lead to a renewal of
violence.

Development assistance has a clear role to play in advancing the
interests of this country as it contemplates its path to the future.
That role is not enhanced if development is recloaked as humanitarian
aid in a burgeoning crisis. Effective U.S. foreign policy contemplates a
role for emergency assistance (indeed, there is a near steady state need
for such assistance in the world today), but diluting the development
agenda with the requirement that it meet emergency relief needs will
likely result only in policy confusion and ineffective engagements. In
other words, humanitarian operations and development assistance do have
clear points of articulation, but they remain distinct functions and do
not easily or usefully substitute for each other.

What role, then, for AID? At this moment of significant political
transformation in the United States, AID's internal examination of its
strategic direction and policy niche is timely and essential. Against
the foregoing discussion of the importance of development aid not only
to meet the core needs of the United States, but also to help secure the
future it seeks, AID should assume the mantle of interagency lead in
structural prevention. Its competence lies here, by virtue of its field
knowledge, technical expertise, and operational experience. Indeed, AID
stands alone among all U.S. foreign policy agencies with a long term
orientation to the world's problems and to the capacity of the United
States to join with others to work to solve those problems.

A determined strategy to prevent the emergence of violent conflict
through policies that help create capable states -- future capable
partners for the United States -- conveys unmistakable benefit to
others. This much is certain. Certain too, are the unmistakable benefits
that accrue to the United States as one often called upon to intervene
when a conflict has gotten out of control. But surely it is better
prevent a conflict to begin with rather than deal with its consequences.
Prevention saves more lives than heroism, including our own. And the job
begins with the AID.