The creation of a new State Department position—Director of Foreign Assistance—has sparked congressional interest regarding the management of U.S. foreign aid programs, its possible impact on funding levels, and any possible future reform of foreign aid operations and account structure. The Director of Foreign Assistance (DFA), who serves concurrently as Administrator of the U.S. Agency for International Development (USAID) is Randall Tobias, the former Global AIDS Coordinator. Charged with coordinating U.S. assistance programs, the DFA has authority over most State Department and USAID programs, and will provide "guidance" to other agencies that have foreign aid programs. Details of the restructuring have been unveiled in the form of a new Strategic Framework for Foreign Assistance. The restructuring raises a number of questions with regard to how Tobias will be able to coordinate aid programs spread throughout almost every government department. Executive officials have said that the current restructuring is a first step in a more thorough overhaul of U.S. foreign assistance. Transformational Development

Announced on January 19, 2006, the restructuring is part of Secretary Rice's "transformational development" initiative that seeks to use foreign assistance to transform recipient countries' economic development paths, with the goal of graduating countries from U.S. assistance. The centralized planning and budgeting operation is designed to provide coherence and coordination, and to reduce duplication among programs. The current proposal creates five categories of countries. Country teams would make recommendations on country-specific aid programs. Others fear that the Framework is focused on strategic objectives to the neglect of poverty alleviation, which they contend is the underlying cause for instability. They also contend that reaching short-term strategic goals will assist in long-term development. While the Director of Foreign Assistance has been granted authority over State Department and USAID aid programs, a number of other foreign aid agencies remain outside the scope of the Director's responsibility.
The creation of a new State Department position—Director of Foreign Assistance—has sparked congressional interest regarding the management, budgeting, and proposals for reform of U.S. foreign aid programs. Charged with coordinating U.S. assistance programs, the Director of Foreign Assistance (DFA) will have authority over most State Department and U.S. Agency for International Development (USAID) programs, although major foreign aid programs, such as the Millennium Challenge Account and the Office of the Global AIDS Coordinator will remain outside of his scope. The DFA is also tasked with providing "guidance" to other agencies that manage foreign aid activities. Some assistance programs are scattered throughout numerous domestic policy agencies and the Department of Defense.
The restructuring is part of Secretary Rice's "transformational development" initiative, that seeks to use foreign assistance to transform recipient countries' economic development paths, and to graduate countries from a dependence on aid. Details of the restructuring have been unveiled with the release of a new Strategic Framework for Foreign Assistance. The Framework links strategic objectives with categories of countries that have shared characteristics or development challenges. Operational plans would design country-specific aid programs to meet those challenges. The FY2008 budget request has been developed by joint State Department and USAID teams to provide better coordination and coherence.
While the current restructuring requires no legislative action, it raises a number of questions with regard to the management of foreign aid programs, funding levels, and reform options that will confront the 110th Congress. Supporters argue that it is a long overdue reform of fragmented and uncoordinated assistance programs that will focus aid on strategic objectives and make programs more accountable. Some critics contend that its piecemeal approach will not result in comprehensive reform. Others fear that it will politicize aid programs, and put the focus on short-term objectives rather than long-term development. Administration officials have said that the current effort is the first step in a more thorough overhaul of U.S. foreign assistance.
[author name scrubbed], who retired from CRS in 2006, was an original co-author of this report.
This report will be updated.