5 “Don’ts” for U.S. Development Policy

By Will Inboden

One line in Secretary Clinton’s generally solid Asia policy speech the other week gave me a laugh. It has nothing particular to do with Asia policy but rather was  Clinton’s earnest invocation of development as a policy priority:

Now, you may have heard me describe the portfolio of the State Department as including two of national security’s three Ds: defense, diplomacy, and development. Each is essential to advancing our interests and our security. Yet too often, development is regarded as peripheral to our larger foreign policy objectives. This will not be the case in the Obama Administration.

No, there isn’t anything terribly funny about the three D’s themselves, but behind that pithy acronym is a classic Washington story. 

In 2005, when Peter Feaver and I began working at the National Security Council, Steve Hadley tasked us with staffing the production of a new National Security Strategy (NSS) for the second Bush term. In the early stages of the process we canvassed a broad array of experts, officials, and other interested parties to solicit ideas on how best to shape the new NSS. Every time we met with anyone remotely connected with development policy — from USAID officials to NGOs to industry groups — we heard the same appeal for prioritizing development: "Please at least re-state the sentence from the 2002 NSS that said national security includes the three D’s of defense, diplomacy, and development." It was further explained to us that this alleged formulation had empowered many groups in their appeals to Congress for increases in development funding. Though we didn’t remember that particular line, these requests sounded reasonable enough. Until we went back and did another careful, line-by-line re-read of the 2002 NSS — and realized the 3 D’s are not mentioned at all! To be sure, the document does affirm the importance of development and its connection to other policy priorities. But it nowhere privileges development as the third pillar of some type of new national security trinity. 

These appeals notwithstanding, President Bush had made it clear that he did want to elevate development as a policy priority, and to continue to integrate it into a broader national security framework. Pre-9/11 Afghanistan provided the most obvious empirical validation for the linkages between impoverished, fragile states and security threats, but any quick scan at the globe would reveal many other examples. So when we released the final version of the 2006 NSS, it did include this description of development’s strategic role:

Development reinforces diplomacy and defense, reducing long-term threats to our national security by helping to build stable, prosperous, and peaceful societies. Improving the way we use foreign assistance will make it more effective in strengthening responsible governments, responding to suffering, and improving people’s lives.

Meanwhile, back in our office, the puzzle persisted. How did the now-widespread myth develop that the 2002 NSS established the three D’s?  It had become an article of faith at USAID, and had taken on a life of its own in the minds of development officials in many other countries. 

The next year I found the answer. During the cocktail hour at a development strategy conference, I struck up a casual conversation with a former senior USAID official. I half-jokingly told him that my biggest historical puzzle was discovering the questionable origin of the "three D’s" and asked if he knew anything of the matter. Rather sheepishly, he admitted that he may have been the source. He had apparently attended a White House meeting at which then-National Security Advisor Condoleezza Rice had referred to the Pentagon, State, and USAID as each having important functions of (respectively) defense, diplomacy, and development. Excited, he had returned to the USAID office and told the senior staff about Rice’s comment. Somehow in the hallways of USAID and then throughout Washington, the account rapidly mutated to become the article of faith that the 2002 NSS magisterially proclaimed the three D’s.   

I share this story not just as an updated political version of the old children’s game of "telephone," but as an interesting angle from which to reflect on the proper role of development policy.

Much as I appreciate the sentiment behind the three D’s, there are a couple of problems with it as a formulation. First, reducing national security to these three D’s is incomplete. It leaves out other important pillars such as intelligence. And it implicitly reduces international economic policy to just development, while disregarding trade policy, commerce, monetary policy, and other dimensions of economic policy — which are also important drivers of economic development. At the Pentagon, the favored acronym to summarize the pillars of national security power is "DIME" (Diplomacy, Intelligence, Military, Economics). It is less pithy than the three D’s, but more complete and more accurate.

Additionally, listing "development" alongside defense and diplomacy blurs an important distinction. The latter two are primarily if not exclusively the domain of government policy. But development is as much if not more a private sector initiative than government-led one. In fact, some of the most innovative, effective, and enduring development efforts today are being driven by the private sector. And the vast majority of the 20th century’s economic development success stories (e.g. South Korea, Taiwan, China, Singapore, India, Chile, Ireland, etc.) grew on the strength of developing businesses, not foreign assistance.   

This is by no means to say that government has no role in development. In some development areas, government’s role can be helpful; in other areas, it is indispensable.  

The Obama administration’s policies and priorities on development remain unclear and are no doubt just in the early stages of being debated and formed. Here are five suggested "don’ts" to bear in mind:

1. Don’t neglect incentives and governance. Not all development aid is created equal, and aid that creates incentives for recipient countries to improve their governance has a much better chance of being invested well — and not creating dependency or fueling corruption. Good governance is virtually a sine qua non for effective development, and in turn development programs should either be directly bolstering governance or at least not be undermining it. This is a perennial theme of Paul Collier’s work, most recently in his review of Dambisa Moyo’s new book Dead Aid: "My preferred alternative is to strengthen [aid’s] potential for ‘governance conditionality’: aid agencies should insist on both transparent budgeting and free and fair elections."

It was in large part the inability or refusal of many traditional development agencies (including USAID) to prioritize governance reforms that led to the Bush administration’s creation of the Millennium Challenge Corporation (MCC). A public-private hybrid, MCC incentivizes countries to make governance reforms first before any money will follow. As mentioned previously, early signs are encouraging that the Obama Administration will keep it going.  

2. Don’t listen only to aid debates among Western experts. Some new voices in the debate are coming from scholars, journalists, and business leaders who themselves hail from developing countries. People like Andrew Mwenda of Uganda, Dambisa Moyo of Zambia, and Iqbal Quadir of Bangladesh speak not just as critics of aid, but also from their own firsthand experience in developing commercial ventures or fighting corruption in their home countries. They are pioneering new models that work, and the insights they bring should be included in Washington policy deliberations. 

3. Don’t expect aid to produce growth. After five decades and some $2.3 trillion spent by the West on foreign aid, the majority of impoverished recipient countries have experienced little if any economic growth. Continuing debates over aid effectiveness serve as catnip for economists and will no doubt continue. But the prevailing assessments seem to be that aid has at best an inconclusive effect on growth, and at worst can actually impede growth.

4. Don’t forget that aid can save lives. Though few would disagree with this statement, it can help focus otherwise sprawling development policy and resources where needs are most acute and on specific initiatives that have been shown to work. While massive aid programs have a dubious record on creating growth, some targeted and carefully crafted efforts can save lives on a significant scale. Most dramatic in this regard is the significant success of the President’s Emergency Plan for AIDS Relief (PEPFAR) launched by the Bush administration in 2003. At $15 billion over five years it was not cheap, but it saved many lives and extended many more, and helped arrest the death spiral which threatened entire African nations. The Obama administration’s professed support for this signature initiative is laudable.

5. Don’t miss this chance to fix the system. A perennial debate in Washington is how to (re)organize the U.S. government foreign assistance system. The various disputes, proposals, and task forces can be mind-boggling, but almost all boil down to the basic question of whether development should be run by a stand-alone agency completely independent of all other masters, or whether development should be more closely integrated into the broader national security community.

About the only thing that nearly all parties agree on is that the current system — a quasi-autonomous USAID partly governed by the State Department, an incoherent proliferation of Congressional earmarks mandating pet development projects, a growing but murky Pentagon involvement in foreign assistance — doesn’t work. This consensus, along with emerging political will to re-write the obsolete Foreign Assistance Act of 1961, gives the Obama administration a singular opportunity. A particular focus should be bringing more coherence to the dizzying proliferation of assistance programs, and more closely aligning development resources with foreign policy priorities.

Of course there are no easy solutions, but considering these "Five Don’ts" just might help make the "Three D’s" work.