August 11, 2017

To Merge, or Not to Merge: Lessons from Overseas

By Abhik K. Pramanik

Against the backdrop of an Executive Order soliciting recommendations for reorganizing the federal government, some have suggested merging the U.S. Agency for International Development (USAID) with the State Department. Despite Deputy Secretary of State John Sullivan’s assurance to Congress that “there is no intention to fold USAID into State,” uncertainty remains about the future architecture of American diplomacy and development.

Driving these conversations has been the idea that consolidation of diplomacy and development will lead to greater efficiencies and effectiveness. Before the State Department reorganization process submits its final recommendations to OMB on September 15th, it may be useful to see how different models of consolidation have played out in Australia, Canada, and the United Kingdom.

Full Consolidation: Australia

In 2013, almost immediately after being sworn into office, Prime Minister Tony Abbott called for “amalgamating” Australia’s development agency – AusAID – into its Department of Foreign Affairs and Trade, saying “we’re going to bring aid back inside the [foreign affairs] department because we want Australia’s aid program to be fully integrated into our overall diplomatic effort.” Australia then proceeded to rapidly and totally integrate AusAID employees into the Department of Foreign Affairs and Trade.

Consolidation appears to have had a negative effect on the accountability of Australia’s foreign assistance. In 2013, prior to the amalgamation, AusAID was praised by its OECD peers for improving the transparency of its aid. As part of the Department of Foreign Affairs and Trade however, questions were raised in the Australian parliament about the purpose of aid as the Department’s development expertise and capabilities began to wither. This lack of transparency ultimately resulted in a parliamentary inquiry into Australian aid to restore loss efficiencies. Additionally, in 2016, outside groups found that DFAT was unable to produce any documentation of its foreign assistance programs in some partner countries since the merger.

Partial Merger: Canada

The Canadian International Development Agency (CIDA) was similarly combined with the Department of Foreign Affairs and International Trade in 2013. Julian Fantino, then Canadian Minister for International Cooperation, argued that the merger would “work to achieve greater results by aligning the roles of international development with trade and diplomacy” in an era of constrained finances. Unlike the Australian amalgamation, Canada’s consolidation was a much longer process—stretching over two years—and ensured that a distinct development function would be retained. Under the new agency, there are now three deputy ministers devoted to development, foreign affairs, and trade.

Since then, the consolidation has been criticized for politicizing Canadian aid. Skeptics contend that Canadian development assistance—now under the direction of the Minister of Foreign Affairs—has increasingly prioritized countries with mining potential like Mongolia or those that the Canadian government has actively pursued free-trade agreements with including Colombia and Peru. This instrumentalization of Canadian foreign aid, some have suggested, has come at the expense of aid to poorer nations.

Doubling Down on Development: The United Kingdom

Created in 1997, the UK’s Department for International Development (DFID) is a cabinet-level agency that oversees all British foreign assistance. Though created under the Labour Party, DFID’s political independence and strong funding were reinforced by the Conservative Prime Minister David Cameron again in 2011, writing “at a time when we are making spending cuts at home, our decision to protect our aid budget abroad is a controversial one. But I am convinced it is right…The answer is to do development differently: to introduce proper transparency and accountability into how aid money is spent.”

DFID has been praised for its comprehensive evaluations of British foreign assistance to ensure that UK aid is spent effectively on projects with the greatest measurable development impact. Its status as an independent agency continues even post-Brexit, with Prime Minister Theresa May recently proclaiming that UK “aid should be untied, focused on poverty reduction and spent through an independent Department for International Development.” DFID is the lead agency for all UK development assistance, in contrast with the more fragmented development architecture in the United States. DFID is also an equal partner of the UK’s newly created National Security Council, where it helps manage Britain’s approach to weak and fragile states.

Seeking: The Right Model for Consolidation

These three case studies provide contrasting models for diplomacy and development. In Australia’s case, subsuming development under diplomacy has led to concerns that Australian foreign assistance has become less accountable. In Canada, though a distinct development function remains even after consolidation, its subordination to diplomacy has led to serious concerns regarding the politicization of Canadian foreign assistance.

As the reorganization process moves forward in the United States, it may be worth reviewing Britain’s example of consolidating all development assistance (while keeping British Diplomacy separate), which has enabled DFID to be a strong and effective voice in British foreign policy and around the world.