Foreign Aid, Heal Thyself: Rx for a New Approach on Development

Last Tuesday, President Obama named Dr. Rajiv Shah to head the embattled U.S. Agency for International Development. He is the type of leader who can reassert our enduring values of compassion around the world.
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You cannot turn on the news or open a browser without drowning in stories about health care legislation. Make no mistake, this is a singularly important moment for all Americans: progress on health care could be among the most important legislative achievements of our time. But there are other stories, too, that need coverage.

In fact, health care could be seen as a metaphor for another pressing issue, one that demands our full attention. To that end, the White House announced a new Presidential appointment last week. Its a decision whose implications could be life-changing in terms of US foreign policy.

Late Tuesday, President Obama named Dr. Rajiv Shah to head the embattled US Agency for International Development (USAID). USAID long has been a backwater agency, helmed by hacks and captured by consultants who monetize AID budgets like farmers milking their cows. But Dr. Shah is a different kind of leader, someone with origins far from the Beltway and whose point of view promises a very new approach to development, one evocative of the campaign rhetoric of 2008.

Credit should be given to Secretary of State Clinton for bringing three priorities to Foggy Bottom: defense, diplomacy and development. Yet development has not been a focus of the first year of the Administration. Instead, our foreign policy has been preoccupied with shoring up global capital markets, extricating ourselves from Iraq and troop deployments to Afghanistan. These crises will not dissipate anytime soon, but a smart, strategic USAID has the potential to emerge as a platform for a new model of statecraft.

Already, the US foreign aid budget has dipped to historic lows. This is incredibly unfortunate because global assistance can serve as preventive medicine to manage international challenges. Thus, cutting back on consulates that spread democratic values through cultural programming is like opting to skip morning exercise. Drawing down the budgets to build libraries and schools overseas could be compared to eliminating supplements and vitamins from your diet because they are too expensive. But just as an at-risk patient eventually will pay the price for these decisions, so has the U.S. suffered from such cutbacks.

They are many examples. The rising influence of Iran in the Islamic world; the looming specter of Venezuela in South America; the burgeoning hegemony of China in Asia and beyond. These countries are investing ideas and treasure in emerging markets around the world, long-term bets designed to yield downstream success.

But these new alliances seem transactional at best. They are based on short-term economic gain but not long-term political (re)alignment. It’s timely to recall that the Berlin Wall did not crumble overnight: U.S. soft power chipped away at its foundations for decades. We pulled down the Iron Curtain with a mix of tactics – books and blue jeans as well as bombs. In the same regard, we have an opportunity today to reapply the vaccine of foreign aid to the developing world. Indeed, Dr. Shah is the type of leader who can reassert our enduring and interlinked values of compassion and democracy around the world.

It wont be easy. Many consider USAID to be a battered agency. It has withstood a series of near-mortal blows for the past decade. First, the loss of status as an independent agency within the executive branch. Then, budgetary bloodletting by appropriators on Capitol Hill. More recently, President Bush pushed forward new models like the Millennium Challenge Corporationthat pushed USAID to the margins in favor a different, goal-oriented but practically unscalable model of foreign assistance.

Nonetheless, there are signs of hope. Dr. Shah himself is an inspired choice for USAID. A medical doctor by training, he previously served as a member of the leadership team at the Bill and Melinda Gates Foundation. He led their groundbreaking work to support sustainable agriculture in some of the neediest spots in the world.

Under his leadership, the Gates Foundation has made a series of imaginative investments in a wide range of areas. For example, they have supported research to improve rice yields, efforts to enhance small farmer productivity, or investments to catalyze new microfinance products such as livestock insurance. The common denominator in all this work is a commitment to addressing the root cause of problems, not treating symptoms, an approach that is long overdue at USAID.

Fortunately, Dr. Shah is not alone. He joins an all-star team, leading thinkers and longtime practitioners of development who bring innovation and insight to the Administration. The roster includes stars such as Maria Otero at State, a microfinance expert who brings new thinking on investment to government; Gayle Smith at the NSC with her unique understanding of the nexus between development and dignity; and Sonal Shah, he economist formerly of who brings a global perspective to the newly created White House Office of Social Innovation.

At the same time, while our government has been delinquent in preventive policies, the US has benefited from the handiwork of a small group of social entrepreneurs who are caring for the world through action. Dr. Shah should find allies in remarkable Americans like John Wood ofRoom to Read; Bruce McNamer of Technoserve; and Gary White of (FULL DISCLOSURE: the author serves on the board of These are the new leaders, true revolutionaries who are modeling change with powerful models of social enterprise that blossom, not from the top-down, but bottom-up, across what Paul Collier calls “Africa-+”.

USAID needs to learn from their examples. In his first days in office, Dr. Shah would be well served to avoid the sweet and sticky junk food offered by the Beltway Bandits and listen to the models of healthier living pioneered by people like Wood, McNamer and White. Tearing down the Foreign Aid-Industrial complex in favor of smaller, more nimble models of bottom-up, locally-led approaches could be the equivalent of opting not to shop at Walmart but instead, browsing the local produce at the neighborhood farmers market.

Let’s recognize that it’s time for an approach to development policy that resembles effective health care: think preventive medicine supported by regular checkups and a responsible lifestyle. Based on his background and his vision, Dr. Shah is uniquely qualified to issue such a prescription for USAID. Fortunately, we don’t need a complex vaccine or high-cost routine. Instead, if he can apply the adage of “physician, heal thyself’ to our foreign aid, Dr. Shah might be able to take smalls steps and use US foreign assistance to slow the spread of global viruses of conflict and poverty.

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