State Department and Pentagon creating joint office for funding emergency response

Former Defense Secretary Robert Gates championed a rebalancing of foreign policy funding away from the military, arguing that the United States should pool soldiers’ and diplomats’ shared resources to better manage projects in warzones. Now, after his departure, the first true test of that idea is going into effect.

Gates, who famously warned in 2008 of the "creeping militarization" of U.S. foreign policy, was talking about his idea for a new $2 billion pooled fund that State and Defense would share for security capacity building, stabilization, and conflict prevention in dangerous areas of the world, where both the military and the diplomatic core operate, until his departure this year.

The Obama administration acted on that idea this year by proposing a $50 million starter fund in its fiscal 2012 budget request which it called the Global Security Contingency Fund (GSCF), meant for responding to "urgent and emergent challenges." The idea is that approval to spend the money would require the approval of both secretaries, but the State Department would be more or less in charge.

"Secretary Gates called for pooled funding and this is the direct result of that and the first test of whether State and DOD can really work together on this kind of thing," a senior State Department official said in an interview with The Cable. "This is really an example of how State and DOD, rather than engage in bureaucratic gamesmanship, have decided to work together to solve these problems."

"For us, GSCF is the new model," the official said. "This is the model we think makes the most sense, particularly in budget-constrained times."

The new GSCF office will have a State Department official as a director, a Pentagon official as a deputy director, and will be located at the State Department, the official said. Nobody has been selected for the positions yet. The rough model for the office is the interagency "Pakistan cell," which manages various aspects of Pakistan funding now.

There’s only one hitch: Congress. In the fiscal 2012 budget bill passed by Congress last week and signed by President Barack Obama, the $50 million to start GCSF was omitted. But Congress did give the administration the authority to start the project using funding from other accounts, including money earmarked for the Pakistani military.

Accordingly, GSCF will be funded this year by money appropriated to Foreign Military Financing (FMF) and what’s called the Pakistani Counterinsurgency Capability Fund (PCCF), a pool of cash that is used to reimburse the Pakistani military for money it spends helping the United States fight Islamic extremists.

The PCCF program, meanwhile, is another ongoing saga in the jostling between State and DOD for control over money and power in countries where they both operate.

Originally housed at the Pentagon as the Pakistani Counterinsurgency Fund (PCF), the program was originally supposed to be transferred over to State in 2009. But at that time, State didn’t have the capacity to manage it, so the transfer was delayed. In 2010, State finally took over the program, only to lose it again in 2011 during the last-minute budget slashing that accompanied the April 2011 deal to raise the debt ceiling. Now for 2012, the program is back at State again.

State will receive $850 million for PCCF in fiscal 2012, and this year State put the funding in its Overseas Contingency Operations (OCO) account. By placing the program in the OCO account, the money is not counted as part of State’s regular budget and therefore is more protected from the budget-cutting knives on Capitol Hill. The Pentagon is still heavily involved: In order to get the money to the Pakistani military, State actually passes the funds through the Pentagon, which implements the program on the ground by doling out the cash to the Pakistani army.

Passing the PCCF funds though the Pentagon this year will subject them to new policy restrictions in the fiscal 2012 defense authorization bill that require the administration to certify that Pakistan is using the money to fight extremists, rather than to build up conventional forces opposite India.

"The administration did have concerns that [these new restrictions] would hinder the flexibility of the program, but the Congress, obviously concerned about the nature of our relationship with Pakistan, insisted on these requirements," the State Department official said.

But how do you certify the Pakistanis are spending the money as intended? "That’s going to be the issue," the official said.