Diplomatic Disorder

July 1996

Diplomatic Disorder

The urge to merge America's international agencies is forcing them to look for ways to work together like never before.

Here is the dilemma facing America's foreign affairs agencies: On one side is Sen. Jesse Helms, chairman of the Senate Foreign Relations Committee, who has been on a quest since the 1994 Republican takeover of Congress to downsize, consolidate and reorganize the foreign affairs apparatus. On the other side is the Clinton Administration, whose Secretary of State, Warren Christopher, has floated a consolidation plan of his own. Though the President resisted Christopher's plan, Clinton nevertheless has bragged that his effort to reinvent international operations "has allowed us to reduce funding significantly, eliminate positions and close embassies, consulates and other posts overseas."

Even before the Republicans convened the 104th Congress after the 1994 elections, rumblings stirred in the White House, at the State Department and on Capitol Hill about major changes in the four foreign affairs agencies-State, the Agency for International Development (AID), the Arms Control and Disarmament Agency (ACDA), and the United States Information Agency (USIA). Administration officials pushed their reinvention effort into a new phase that promised not only better government, but less of it. Rumors quickly circulated about plans to abolish whole Cabinet departments. Inside State, senior officials began to plan for merging the foreign affairs agencies.

In late 1994, Christopher proposed merging the other foreign affairs agencies into the State Department. The idea sparked a heated debate within the Administration. In January 1995, Vice President Gore announced steps to streamline foreign affairs operations and eliminate "unnecessary and duplicative practices," but he rejected the idea of a major consolidation.

Helms could barely conceal his glee at the division within the Administration. In a February 1995 op-ed piece in The Washington Post, Helms wrote, "It is my intent to support Secretary Christopher against the bureaucrats who feel threatened by this long-overdue reorganization of Foggy Bottom." On the House side, Speaker Newt Gingrich also supported consolidation, and two bills-HR 1561 and S 908-were drafted to spark action.

Helms shut down his committee for almost four months to force the Senate to take action on the idea of reorganizing the foreign affairs agencies. He stalled numerous AID assistance projects to gain leverage over the Administration. Then Helms and his counterpart in the House, Rep. Benjamin Gilman, R-NY, crafted an almost Machiavellian plan. Earlier this year, they inserted language in the State Department authorization bill requiring Clinton to eliminate at least one of the agencies, but forcing him to choose which one. If he failed to do so, all four agencies would be combined. The bill also cut the total foreign affairs budget by some $1.7 billion.

The bill finally reached the President's desk in April. Clinton promptly vetoed it, saying it would "seriously impede the President's authority to organize and administer foreign affairs agencies to best serve the nation's interests and the Administration's foreign policy priorities."

The fight to reorganize the foreign affairs apparatus, however, is far from over. And Clinton and Helms agree on one thing: America's international operations are in need of a serious overhaul. At the very least, the foreign affairs agencies need to learn to work together like never before.

Creaky Apparatus

The State Department dates back to the beginning of the republic, and its Secretary is the most senior Cabinet official, standing fourth in line of succession to the presidency. The department is officially charged with maintaining diplomatic relations with about 180 countries and numerous international organizations. State maintains more than 250 diplomatic and counselor posts around the world, and ambassadors reporting to the Secretary of State head "country teams" composed of numerous employees from other federal agencies. The department's own personnel are well-educated generalists whose work falls in four broad categories: political, economic, consular and administrative.

Over the years, foreign affairs activities deemed too specialized for State, such as foreign aid and arms control, have been spun off or turned over to new agencies. USIA for example, was created by President Eisenhower in 1953 to streamline overseas information programs and make them more effective. AID was established by President Kennedy in 1961 to administer economic aid programs that had evolved from the Marshall Plan and other development assistance initiatives following World War II. The Arms Control and Disarmament Agency was established that same year to deal with the spread of nuclear weapons.

Other parts of State have been transferred to other agencies. The Foreign Commercial Service, for example, was moved to the Commerce Department in the 1970s.

In addition, more than 50 other agencies outside the State Department are actively involved overseas. Four other departments-Agriculture, Commerce, Defense and Justice-have extensive operations abroad, and the intelligence agencies exercise enormous influence around the world. Still other, smaller agencies, such as the Peace Corps, the Export-Import Bank, the Overseas Private Investment Corp. and the Institute for Peace, play specialized roles. Some of these latter agencies also have come under attack by the Republican majority in Congress.

Despite the end of the Cold War, the onset of the information revolution, the emergence of a global economy, and the downsizing of government, the foreign affairs apparatus has remained basically unchanged for the last three decades. A recent report by the Cato Institute, a Washington think tank, concluded that "although the United States is gradually reducing the size of its foreign policy establishment in response to congressional budget pressures, the changes are mostly quantitative . . . . There is little evidence that the nature or value of the activities [the] establishment is engaged in has received serious examination."

Cultural Issues

It is precisely the nature of international activities that has opponents of consolidating or merging the foreign affairs agencies so concerned.

Harold Seidman, a guest scholar at Johns Hopkins University who was at the Bureau of the Budget in the late 1940s, remembers that when the first foreign aid programs were established under the Marshall Plan, an independent commission recommended administering them under an autonomous business-like organization. The commission wanted the new organization to be separate from the State Department, Seidman says, because of State's reputation as "a bunch of tea-drinking cookie-pushers in striped pants." In his trips overseas to monitor the Marshall Plan, Seidman found that State officers only wanted to talk to their counterparts in the foreign ministry, and didn't want to deal with the commerce ministry-a necessity for the plan to be effective in fostering economic recovery.

Seidman also says that while State's foreign service officers strove to "be someone," officials from other foreign affairs agencies wanted to "do something." Seidman noted that the foreign service is an "up or out" system which creates competition among officers. "You don't get teamwork," he says.

AID Administrator Brian Atwood agrees. "State Department people are good observers, reporters, diplomats, and conceptual policy people," he says. "But they're not good at managing resources or programs. This is what AID does. All of our reforms are aimed at making AID good at what it does, and moving AID into State would not contribute to that goal."

Undersecretary of State for Management Richard Moose says such characterizations of the department are unfair. A State Department review found customers and stakeholders viewed the department as having broad country and area knowledge and being adept at country-level integration of programs. Moose admits that State needs to better link program priorities to resources, but he argues that a new strategic review and planning process will help.

Alan Mendelowitz, executive vice president of the Export-Import Bank, says there are two kinds of foreign policy: "high policy," which involves diplomacy and reporting, and "low policy," which includes promoting exports and selling U.S. goods. After World War II, State got out of the low policy business by spinning off the Foreign Agricultural Service and the Foreign Export Service. But then, Mendelowitz notes, two factors combined to dampen some of the luster of high policy. First, with the end of the Cold War, U.S. priorities shifted from diplomacy to economics-specifically, the opening of foreign markets. Second, modern telecommunications brought an end to traditional foreign policy. Officials in other countries no longer were dependent on U.S. ambassadors and their staffs; they could send a fax or e-mail to anyone in the United States with comparable equipment.

So State now wants back into the low policy business. In congressional testimony on proposals to merge the foreign affairs agencies last year, Moose described how the department planned to take the lead in coordinating the work of those agencies. "From top-level policy coordination with the heads of AID, USIA and ACDA," he said, "to the desk officer who relies on inter-bureau and inter-agency country teams to manage relations, teamwork will sharpen our policy development and reduce bureaucratic red tape."

Cuts and Closures

Such teamwork must occur on two levels: in Washington and at overseas posts. Atwood says that cross-agency coordination works well overseas, where strategies in individual countries are fairly coherent. "The problem," he says, "is in Washington, where turf is more important because of resource considerations."

But it is precisely those resource considerations that are now forcing the heads of the foreign affairs agencies to work more closely together. At the same time Vice President Gore advised Congress that he would not be recommending consolidating the four foreign affairs agencies, he instructed the heads of those agencies to "establish common administrative services, eliminate unnecessary and duplicative practices, and use the private sector and competition to cut costs."

Gore announced that AID would close six additional missions beyond the 21 it had already slated for closure, would cut its internal regulations by 50 percent, and would reengineer its management systems. AID assistant administrator Larry Byrne says the agency has now cut its staff by 18 percent (from over 11,000 to less than 9,000) and eliminated 25 percent of top management posts.

At the State Department, Christopher announced a "strategic management initiative" in 1994 to accelerate reinvention efforts. Gore announced that in addition to the already announced closure of 17 overseas posts, 15 more would close. He also said State would eliminate at least one of its bureaus and downsize its public affairs, congressional relations, political-military affairs and policy planning components.

On Capitol Hill, the Appropriations Committees joined the parade. A Senate Appropriations subcommittee cut ACDA's fiscal 1996 budget by 70 percent below the Administration's request and 58 percent below its 1995 spending level. Overall, the congressional budget resolution passed last year provided $18.1 billion for foreign affairs operations, down from $20.1 billion the previous year. By the year 2000, foreign affairs spending under the resolution would be down to less than $15 billion a year.

The Policy-Budget Link

The budget process itself may provide a way to better coordinate the activities of the foreign affairs agencies.

State 2000, a 1992 report prepared by a task force of career State Department officers, recommended a stronger link between policy and budget in foreign affairs. "For the foreseeable future, resources will be constrained," the report concluded. "The President should make clear that all available resources in the federal budget which are designated for major foreign affairs programs will henceforth be integrated into an overall national strategy. We can no longer afford a budget process that results in duplication or programs that work at cross purposes."

As a result of the State 2000 report, President Clinton issued an executive order requiring the Secretary of State to coordinate the foreign affairs budget accounts. The order also established an Office of Resource Plans and Policy in the State Department. In addition, the Clinton team drafted the "Peace, Prosperity and Democracy Act" to update and overhaul the 1961 Foreign Assistance Act and foster sustainable development. Rather than linking foreign assistance funds to specific countries and programs, the bill would have linked resources to four policy objectives: encouraging broad-based economic growth; protecting the environment; supporting democratic participation; and stabilizing world population growth. Congress never enacted the bill, and any hope for it died with the Republican takeover of Congress.

While the link between goals and resources is weaker than prescribed by the State 2000 task force and the administration's draft legislation, State is getting better at tying funding to specific objectives. For example, the Office of Resource Plans and Policy has coordinated the allocation of resources for specific activities such as in Bosnia, by helping to determine how much funding from supplemental appropriations goes to specific agencies such as AID.

Foreign affairs agencies could better coordinate their activities by improving their use of information technology. Each agency now has its own stand-alone information system. For example, all of AID's employees around the world can now communicate with each other via e-mail, but the system is not linked to the State Department.

Security concerns have made it difficult to link the agencies together electronically. AID and USIA operate largely in an unclassified environment, so they can take advantage of the Internet and other unclassified networks. However, much of State's communications are classified, so its employees need secure networks similar to those used by the Defense Department and the intelligence agencies. In fact, State wants to take advantage of the technology used to create the Defense Messaging System, a secure network under construction at DoD.

But such a system won't be in place at State until at least 2010, according to Harry Geisel, the department's acting head of information technology-and that's only if State gets $60 million to $100 million per year in modernization funding. For fiscal 1996, the department requested $30 million and received $16 million.

Moose says he hopes that the Office of Management and Budget, the General Services Administration and the National Performance Review will push the other foreign affairs agencies to follow DMS standards. But with all the foreign affairs agencies being squeezed by budget constraints, it seems unlikely there will be a seamless web of communications among foreign affairs agencies in the foreseeable future.

Moose says State's basic mission is to collect, process and deliver information. In the 1970s, the department led the government with its automated worldwide information system. But it largely missed out on the personal computer revolution. And now the instantaneous flows of information over the Internet and via television networks are challenging traditional methods of gathering and reporting information. As one senior AID official says, "CNN is a better reporter than most State Department personnel. State needs to change the way it looks at information-what it gets and what it sends back."

Part of the problem may be an aversion on the part of foreign affairs employees-especially at the senior levels-to keep up with the latest technological trends. The Foreign Affairs Institute has tried to compensate by offering courses on technology.

Administrative Services

Even if the employees of the foreign affairs agencies won't be exchanging e-mail any time soon, they may be able to work together to procure administrative services at overseas posts. Such services cost about $600 million annually.

The State Department has for years provided a range of services-personnel, accounting, and security, for example-to all federal agencies operating overseas. State absorbed some of the costs and charged others to the agencies.

The problem with this system was that it was complex and didn't let the users know the actual cost of services. As a result, agencies perceived inequities in how costs and funds were distributed and whose priorities were being met. AID's Byrne says his agency's career employees "think State takes the money and runs; the ambassador's swimming pool gets priority over an AID employee's plumbing problem." State officials, on the other hand, were irked that they were being asked to absorb more costs, due to the growth in the number of non-State personnel overseas, at a time when State's budget was staying flat or declining.

To deal with these problems, a multi-agency working group led by USIA developed the International Cooperative Administrative Support System (ICASS), based on the Cooperative Administrative Support Unit program in place domestically. ICASS pilot tests are now under way in Rome, Riga, Warsaw, and San Salvador. State is planning worldwide implementation late this year.

Agencies will be charged full cost for common services supervised by multi-agency ICASS boards. Agencies other than State will need to provide an additional $120 million annually to fund the system. They will have the option of selecting services from ICASS or contracting for services from local providers.

The Politics of Consolidation

Over the last 50 years, there have been numerous efforts to fundamentally reorganize government systems like the foreign affairs apparatus. The vast majority have been unsuccessful. Moving the boxes on an organizational chart is now routinely denigrated as a waste of time and a diversion from important policy issues. Most recent presidents, including the current incumbent, have assiduously avoided such reorganizations.

As to the merits of consolidation, most people interviewed for this article were open to at least some restructuring and many believed it was all but inevitable. Helms is quick to note that five former secretaries of state (all Republicans) support reorganization. Their support, though, goes beyond mere partisan cheerleading for cutting back government.

Former secretary of State Lawrence Eagleburger and former national security advisor Brent Scowcroft presented a rationale for consolidation in congressional testimony last year. No one can deny, they argued, that there has been a proliferation of foreign affairs agencies and functions over the years. One result has been growing inefficiencies and increasingly wasteful duplication. But even more important, much of the growth occurred in response to security-related concerns which have since diminished or disappeared. So we are now encumbered by a plethora of programs which no longer are tied to, or clearly serve, U.S. national interests.

Even AID's Atwood, a staunch defender of his agency's independence, says the government "could not stand pat" on the issue of consolidating agencies and programs. An independent commission to look at the future of foreign affairs, operating after this fall's elections, may be necessary, he says.

Such a commission could provide a needed forum for broad debate on future goals and strategies for American foreign policy. When the late Sen. William Fulbright, D-Ark., headed it, the Senate Foreign Relations Committee performed that function, notes Mendelowitz. "Now there is no place on Capitol Hill where such debates can occur," he says. How, he asks, can the organization of foreign affairs agencies be devised without at least a modest national consensus on the missions and functions of foreign policy?

The final chapter of this story has yet to be written. Even after the President's veto of the authorization bill that would have forced consolidation, Helms was determined to press on.

"Those on the federal payroll at AID, ACDA and USIA might wisely defer popping the champagne corks," he said. "Their agencies have been given only a stay of execution. It is only a matter of time before these fiefdoms are eliminated."

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