Government Executive - Authors - Corine Hegland

Bailout brings massive hiring, oversight challenges

Bruce Stokes and Corine Hegland — Fri, 10 Oct 2008 00:00:00 -0400

"The New Deal wasn't written in a day," advised Tom Gallagher, senior managing director of the International Strategy and Investment Group, an institutional brokerage firm. "The policy response to burst bubbles takes years and years. First you put out the fire and then you build a fireproof house." And that requires trained, competent firefighters and fire inspectors -- lots of them.

The new legislation has created an Office of Financial Stability within the Treasury Department and charged it with implementing the Troubled Asset Relief Program. That effort will entail buying distressed mortgages and investing in failing financial institutions. It may require hiring more than 1,000 federal workers and at least that many more in the private sector, in part because this unprecedented task will demand skills and experience that current civil servants do not possess. Punishing those whose abuses triggered the financial meltdown and ensuring that the bailout process itself is not corrupted will also become high government priorities. And everyone will look to Congress for better oversight of the financial services sector.

Can Washington handle this challenge? For nearly three decades, deregulation has dominated policy debates in the executive branch, on Capitol Hill, and in much of the Washington think-tank community and the press. Federal financial-sector regulatory authority and expertise have been scattered across multiple agencies. Over the years, the civil servants responsible for such oversight have been demonized by Republicans, demoralized by their lack of political support from Democrats, and hamstrung by their shrinking numbers.

"Like all great national challenges," said Robert Dugger, a partner in a global investment company, "it will take some time to crank up the capability to deal with this." President Hoover created the Reconstruction Finance Corp. to cope with the Depression. But it wasn't until the Roosevelt administration that the agency hit its stride. Two decades ago, it took about a year for the Resolution Trust Corp. to get its hands around the savings and loan crisis.

"This is stuff that the government doesn't do great, but it's not impossible to do," said Adam Posen, deputy director of the Peterson Institute for International Economics. "Think of this as a public works project. It is no different from building the interstate highway system. You have to get the financial engineers, as opposed to the civil engineers, involved and set up specialized procurement processes."

Building a bridge to a more stable financial future is certainly a daunting task. But the die has been cast: The rescue is now the federal government's responsibility, and it is up to Washington to get it done.

An Unprecedented Challenge

The bailout's $700 billion price tag dwarfs any of the dozen U.S. government efforts to rescue troubled industries, companies, or public entities in the past four decades. Up to now, the 1989 S&L bailout was the most costly, ultimately requiring $218.7 billion in taxpayer money (in 2008 dollars). The 1980 rescue of Chrysler involved $4 billion. The 1975 federal aid deal for New York City cost $9.4 billion. In the end, taxpayers made money on the Chrysler deal, and New York City repaid its loan. The Bush administration hopes that the current bailout will turn a profit.

The newly created Office of Financial Stability has broad authority. This flexibility is intentional, to give Treasury the discretion needed to find creative solutions to a financial problem that everyone suspects will get worse before it gets better.

But Washington veterans question whether the framework designed to oversee the rescue will be up to the task. "This bill does not provide the institutional infrastructure to manage $700 billion in distressed assets," Dugger complained.

The Office of Financial Stability will be headed by an assistant Treasury secretary, a relatively low post in the bureaucratic pecking order. On Monday, Treasury named Neel Kashkari, 35, a former Goldman Sachs vice president in San Francisco and now the assistant Treasury secretary for international economics and development, to head the office until Jan. 20.

The Federal Emergency Management Agency, by comparison, is run by the equivalent of an undersecretary. Yet the potential damage of the financial hurricane dwarfs that of natural disasters such as Katrina. "There are no agencies with a budget of $700 billion run at the assistant secretary level," noted Paul Light, a New York University professor and the former director of the governmental studies program at the Brookings Institution.

Light argues that the Office of Financial Stability's chief will be buried under layers of political appointees, hardly a situation that encourages speed and accountability. Moreover, other federal financial regulators -- the Federal Reserve Board of Governors; the Federal Deposit Insurance Corp.; the Comptroller of the Currency; the director of the Office of Thrift Supervision; and the Housing and Urban Development secretary -- will constitute a Financial Stability Oversight Board charged by Congress to monitor the bailout.

"By dint of their position in the hierarchy," Light observed, "they aren't going to spend time talking to an assistant secretary. They are going to talk to the secretary." He warns, "The more you push the office down into the bureaucracy, the more power rebounds to the Treasury secretary. I can see the assistant secretary being pushed around to favor investors that the Treasury secretary or the head of the Federal Reserve favor."

Light says that Congress should convert the Office of Financial Stability into an independent agency as soon as possible. "Treasury does not have the institutional memory to manage and oversee this kind of high-transaction operation," he said. Moreover, the S&L experience teaches that every government purchase of distressed assets and their eventual sale brings intense political pressure on the office from winners and losers. The Resolution Trust Corp.'s independent governance and operations helped to insulate it somewhat from such political meddling.

Help Wanted: Financial Managers

The federal workforce available to oversee this effort and the almost inevitable reregulation of the financial sector in the years ahead is a shadow of its former self. In 1992, the federal government had more than 20,000 financial regulatory employees, from accountants to bank examiners. In 2006, the last year for which there are comprehensive estimates, that regulatory oversight team had shrunk to fewer than 14,000, despite an exponential growth in the volume of financial assets being regulated.

Some of this workforce reduction is attributable to the declining number of banks in the United States after years of consolidation. But it also reflects the triumph of those who have long argued that the financial sector is far too large, too globalized, and too innovative to be efficiently or effectively regulated by Washington.

Just how many people will be needed to conduct the bailout is a disputed topic. Treasury officials have created the impression in some news interviews that a couple of dozen government employees can oversee the rescue, with most of the work subcontracted to Wall Street. Many experts with experience in these kinds of efforts say that Treasury woefully underestimates what will be required and that it would be unwise to scrimp on personnel. "You don't want to do this with too few troops," Posen said.

At the height of the S&L crisis, the RTC had about 10,000 people on the federal payroll. That huge workforce was needed because the government took over the management of houses, office buildings, and retail outlets financed by the thrifts. Someone had to make sure that the rent was collected and the lawns mowed until the properties could be sold. This time around, said Robert Litan, a vice president of the Kauffman Foundation and a former associate director of the Office of Management and Budget, "you will need fewer people and much smarter people."

To be sure, it will take only a handful of experts to design the process for acquiring distressed assets. But someone has to decide which assets to buy first and, in each case, what price the government is willing to pay. Many of the financial products involved are one-of-a-kind securities, each intentionally complex because its originator was often trying to hide its vulnerabilities. There can be no template for buying and selling these assets. Each will require unpacking -- a labor-intensive analytical and legal dissection.

Once the government owns these distressed securities, they can't just be stuffed in a lockbox for five or 10 years, to be sold when the market has recovered. Although Washington won't be managing buildings directly this time, someone has to be responsible for hedging against interest-rate changes on the mortgages and other economic developments that could hurt the value of the underlying assets.

The bailout legislation also directs the government to rewrite mortgages wherever possible to make them more affordable for the homeowners facing foreclosure. "You will need legal manpower to get down to that level of granularity," Posen said. And, Litan noted, "the post-crisis litigation is going to be incredible," requiring even more lawyers.

In addition, the rescue legislation permits Treasury to take over failing firms, rather than merely buying their distressed securities. Many observers think that such action will end up being a much larger part of the bailout than the Bush administration has suggested. Determining whether to buy assets, or a firm itself, will be time-consuming. "Once you invest in the company, you have to oversee that investment," Dugger noted. "That has not been done on this scale by the U.S. government since the Depression."

"And somebody is going to have to keep track of all these things," Light said. "Even if you charge [civil servants] only with housekeeping, there still has to be enough of them to handle it. One thousand people would be a reasonable total number, but it could run to 1,500. And that would just be the civil servants."

The FDIC could help; it is one of the few federal institutions to earn virtually unqualified praise during the crisis. Established in 1933, the FDIC insures deposits at commercial banks. Its examiners keep a close watch on a bank's bottom line and will take it over if necessary to avert a collapse. Under Chairman Sheila Bair, experts say, the FDIC has adroitly handled 13 bank failures this year, and it is carefully monitoring more than 100 other banks that could run into problems.

The bailout legislation gives the FDIC an unlimited credit line from Treasury to cover bank failures, and it directs Treasury to consider hiring the agency to manage some of the loans and securities that the department purchases. The FDIC, however, has its hands full and would need more people to expand its role. "The FDIC is far and away the most competent agency in D.C. at dealing with bank assets and exposures," a longtime banker who covers the industry writes on the Naked Capitalism blog. "If you have to have a stopgap, use the FDIC, and upscale it as quickly as you can."

Undoubtedly, people from other government regulatory agencies will be brought in to share the burden. But, said Steve Wallman, a former commissioner at the Securities and Exchange Commission, "you can't redeploy people without compromising other missions. Instead, you can have a few people tasked with overseeing it, and then you hire the folks from the outside who have the expertise, who do this for a living, who have the contacts, and who know whom to call."

Michael Bopp, chairman of the financial services crisis team at the Washington law firm of Gibson, Dunn & Crutcher, said, "The secretary has robust authority to hire people quickly to manage the assets, which is exactly what Treasury did with Bear Stearns; [it] hired an outside entity to manage the assets."

Treasury Secretary Henry Paulson Jr. has previously come under criticism for such outsourcing. But he moved quickly this week in that direction. On Oct. 6, Treasury solicited companies interested in managing bailout work. Bidders had to respond by 5 p.m. on Oct. 8, and the department said it would pick its lead firm by Oct. 10. Treasury wants a lead company with at least $500 billion in domestic assets. Industry sources say that half a dozen or more Wall Street firms may be brought on to buy troubled assets for the government, manage them -- probably for several years -- and eventually handle their sale. Press reports suggest that the firms interested in taking on the work included Pimco, Legg Mason, BlackRock, and MKP Capital Management.

Wall Street experts worry about the operational challenges involved in this effort. In the S&L crisis, the government took over properties without having to first determine their fair-market value, because the financial institutions that owned the assets were broke. Now Washington, or more accurately its agents in the private sector, will be buying distressed mortgages from troubled banks. The seller will try to maximize the price to benefit its shareholders. The government will want to minimize the price to safeguard taxpayers. How this will be done, through a reverse auction or some other means of determining value, remains to be seen. One thing is clear: It won't be easy.

How many people in how many firms will be involved in this outsourcing operation also isn't known. One indicator of the magnitude of such an operation: Pimco requires more than 1,000 people to manage its portfolio of $829.5 billion.

So, although it is impossible at this early date to know precisely how many people Treasury will need inside and outside the government to run the bailout, a couple of thousand seems a safe estimate.

The Civil Service Challenge

Beefing up the federal workforce side of this equation involves particular challenges in finding people with the necessary skills, paying them what they are worth, and policing their conduct. "There is not a lot of capacity lying around," Light lamented. "And that is a result of the lack of investment in the career workforce."

Allan Mendelowitz, a member of the board of directors of the Federal Housing Finance Board, said, "The area that needs to be strengthened the most is not the bank examiners. The real push has to be on the quantitative side, to strengthen the analysis."

Getting skilled personnel in a hurry won't be easy. The Office of Personnel Management recently announced that it hoped to shorten the hiring process for all federal workers to 80 days. The bailout legislation allows the Treasury secretary to waive some hiring rules to accelerate the effort. But bringing people up to speed is a separate issue. By some estimates, it takes five years to become a qualified bank examiner. Oversight of the bailout cannot wait that long, so the Office of Financial Stability will need to hire people from the private sector ready to take on huge responsibilities from day one.

With the shuttering of major financial institutions and the downsizing on Wall Street, many highly qualified people are looking for jobs, or soon will be. Some of those people may now work in London or Dubai, however. "As a taxpayer," a former senior Treasury official said, "I want to get the best people on the planet. But what if the best asset managers in the world are foreign nationals? That would be white-hot politically."

Federal pay constraints pose another obstacle. The maximum salary for an FDIC bank examiner was $160,910, according to a 2007 analysis by the Government Accountability Office. The highest pay for an SEC lawyer was $126,987. The pay cap for those in the senior executive service is $191,300. None of these salaries can compete with the remuneration available to the best and brightest on Wall Street.

Nonetheless, federal service does have appeal: patriotism and job security among them. The government should be able to find the people it needs, despite the salary constraints. "I used to compete very well hiring people," Mendelowitz said, referring to his tenure as a vice president of the Export-Import Bank and as the managing director of the GAO's international trade, finance and, economic competitiveness division. "If you have a high tolerance for idiosyncratic people, you can get very good ones."

But to attract the best, Light contends, "the agency needs the authority to create a pay system that rewards employees for measurable performance."

Subcontracting much of the bailout to the private sector will dramatically speed up the rescue and skirt many of these skill and pay constraints. The concern is that it may solve a short-term management problem by creating a long-term political one.

The private-sector firms that Treasury is likely to hire will need their own specialists. "They have to have quants," said Litan, referring to Ph.D. economists and mathematicians whose quantitative skills are high and who know how to use complex algorithms to develop financial derivatives. "Or they will get creamed. They will have to pay market rates for these guys, more than government salaries. I hope that congressional staff will understand that" when news stories start appearing about the "outrageous" earnings of those managing the rescue effort.

The Ethical Dilemma

Major ethical challenges also loom, both in staffing the Office of Financial Stability and in outsourcing the Troubled Asset Relief Program.

The wizards of Wall Street may be the only people with the skills needed to buy and eventually sell bundles of distressed mortgages. And it may take the engineers of today's complicated financial products to figure out how to regulate them.

The public, however, may balk at hiring the arsonists to put out the fire. The people intimately involved in some of the worst subprime mortgage and derivatives abuses must be off-limits to both Treasury and the Wall Street firms handling the bailout. The government will also have to carefully screen those who eventually buy distressed assets. The buyers can't be business associates or relatives of those doing the selling.

The next order of business, Wallman, the former SEC commissioner, said, is for "Paulson to call these people into his office, stare them in the face, and say, 'You say you want to do this to help the country and the world, and we believe you. You are working for the U.S. government now and not yourself or your friends. If you're willing to do that, stay. If not, go.' "

Yet, once specialists are hired, ethics conflicts are almost inevitable. Wall Street people are creatures of a different culture. The kinds of personal contacts and the casual trading of insider information that are commonplace in Lower Manhattan will be out of bounds along the Potomac. "Congress may want to prohibit all outside lobbying and gifts," Light offered, "while requiring full financial disclosure from every person in the organization as well as every analyst under contract."

Anticipating such problems, the bailout legislation, at the insistence of Congress, includes a robust framework for monitoring and enforcing ethical standards. Treasury has already issued guidelines to manage conflicts of interest in the program's administration. The department must publish details of purchases, sales, and other dispositions of troubled assets within two business days of their occurrence. There also is a requirement for an additional public accounting each time another $50 billion in assets have been purchased.

The comptroller general will exercise oversight, issuing reports at least every 60 days. Annual audits are required. Treasury must make monthly reports to Congress, and the department's actions will be subject to judicial review. An inspector general will be appointed to supervise Treasury's asset purchase program and a congressional oversight panel will be established.

Enforcement and Accountability

Accountability will be key to rebuilding public trust in the financial system and in Washington's ability to cope with such crises. Nothing may resonate as loudly with taxpayers as throwing a few wrongdoers in prison.

In 1990, in reviewing the S&L crisis, what was then the General Accounting Office reported that the RTC suspected that fraud or criminal activity on the part of directors, officers, or senior managers contributed to the failure of 40 percent of the thrifts it had investigated.

So it is little wonder today that many taxpayers suspect that fraud and corruption triggered or worsened much of the subprime mortgage mess and many of the economy's other financial problems. Moreover, in a late-September Pew Research Center poll, 72 percent of Americans said they were very concerned that "those who are responsible for causing the crisis will be let off the hook." Such public anger with the bailout will be appeased only by holding someone accountable.

This is not so much a legal problem as a political one. If only a few Wall Street small fry end up being punished because of the meltdown, the public may conclude that politicians are covering for their well-heeled campaign donors. Voters' faith in their elected officials would be further eroded, possibly making it even harder to obtain needed public support for any future government aid to the financial sector, with potentially catastrophic economic consequences.

"There has to be some very aggressive enforcement activity," said Kenneth Donohue, HUD's inspector general, who was the assistant director of the RTC's office of investigations. "You have to be very proactive."

The FBI has about two dozen corporate fraud investigations under way in the financial services sector and about 1,400 other investigations into smaller companies and individuals suspected of mortgage fraud. Much of this is being done by local task forces, but some in Congress have pushed for a major effort on the national level. To counter the public's cynicism, the next administration may have to create a high-level enforcement arm headed by a respected, scrupulously independent prosecutor with unlimited resources.

Moreover, the Office of Financial Stability will have to be vigilant in policing its own activities. With $700 billion in taxpayers' money on the table, Dugger, the investment firm partner, said, "this poses every potential problem that Iraq has: corruption, conflicts of interest, theft, and waste of government resources. It's Blackwater, Halliburton, and KBR, but right here at home."

History suggests that some fraud may be inevitable. In the S&L bailout, the RTC faced allegations of favoritism in the hiring of outside counsel, document shredding to conceal criminal evidence, and the use of front men to mask the identity of those buying real estate from the government.

"Protecting against fraud will be a huge part of the operation," said William Seidman, a former chairman of both the FDIC and the RTC. "You will be sitting there with a large bundle of money to give out, and it is unbelievable how many bad people are attracted by that."

Wallman's advice to Treasury is to be explicit in warning its private-sector hires about the penalties they will face for mismanaging taxpayers' money: "Here's how we are dealing out the cash and how we would like you to [handle the buying and selling of distressed mortgages]. And, by the way, we will send in an inspection team from Treasury, GAO, [and] FDIC, and ensure that we do the necessary things in auditing to make sure that you did the right thing. If there is any fraud, any corruption, we will deal with it. And you understand that it will be criminal. Therefore, please don't do it; we know where to find you."

At the same time, oversight must not become second-guessing, Wallman warned. "You don't want somebody two years from now saying, 'You bought it for 10 cents on the dollar for the government, and the economy is now better and we believe it was only worth 4 cents on the dollar when you bought it.' And then you have to stand up and say, 'We were trying to save the global economy, and that is what you told us to do,' " he observed. "People involved in buying and selling these securities for the government will need a strict indemnification so that, except for mischievous conduct, they have no liability."

Given the politically poisonous atmosphere that is likely to continue to surround this massive expenditure of taxpayers' money, such protection may prove easier to promise than to deliver.

The Political Transition

All of this effort to set up an organization in the midst of a financial calamity could not come at a worse time in Washington, where the impending transition to the next administration, with its inevitable bureaucratic reshuffling, threatens to further complicate the bailout.

Dozens of political appointees in the financial regulatory agencies will lose their jobs in January and are understandably distracted. "They have only a few more paychecks before they are working somewhere else," one banking lobbyist noted. "Who among them is not spending time updating their résumés?"

In the next few weeks, Treasury Secretary Paulson will be reaching out to those he wants to staff the Office of Financial Stability. The first question that prospective hires are likely to ask him is whether their appointments are for the duration of the Bush administration, or longer.

With the pressing need to rapidly buy up distressed assets, continuity of action between administrations is of paramount importance. "Maybe Paulson will want to reach out to both campaign teams and privately vet people" in advance, Litan suggested. "You would not want to bring on a guy no one could live with."

But there may be limits to what the next administration will commit to. Barack Obama and John McCain each knows full well that as president, he will ultimately be held accountable for the success or failure of the bailout. The new president may not want to be saddled with structural and programmatic decisions that he had no role in crafting. He is also likely to want his own people in key roles.

Whatever happens in the transition, Congress can help by putting all appointees to the Office of Financial Stability on the same fast-track confirmation process accorded to senior national security nominees.

The bureaucratic challenge facing Washington as it gears up to manage the bailout is, in the financial world, comparable to the complexity and difficulty it faced in creating the Homeland Security Department after the attacks of September 11, 2001. In its own way, the bailout is no less important. Washington fumbled the formation of Homeland Security. It cannot afford to get it wrong again.

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After Gonzales, Justice seeks to regain trust of employees

Shane Harris, Peter H. Stone, Corine Hegland, and Edward T. Pound — Fri, 31 Aug 2007 00:00:00 -0400

Quiet and unassuming, Gonzales was a perfect fit for an administration that operates close to the vest and puts a premium on loyalty. After 9/11, he helped craft some of the White House's most controversial policies -- everything from harsh interrogation guidelines to expanded domestic surveillance to rules for military tribunals. This year, after the Democrats took control of Capitol Hill, Congress finally began looking for answers, and Gonzales often appeared as the man who had none or was confused about events. He specialized in "I have no recollection" and "I have no memory," when questioned by senators trying to learn whether several U.S. attorneys were fired for political reasons.

Those firings, along with contradictory testimony from other Justice Department officials on the issue, ultimately led to Gonzales's undoing. Internal department investigators now are reviewing events surrounding the dismissals and, separately, allegations of inappropriate political interference in department decisions.

Whatever the verdict on Gonzales, this much is clear: The next attorney general has a huge mess to clean up. Uppermost will be restoring credibility to a department dogged by allegations that partisan politics have subverted policies and hiring actions. Key senior leadership positions also remain unfilled, and career lawyers have been fuming over the turmoil.

"When you bring the Justice Department into low repute," says Philip Heymann, a Harvard law professor who served as head of Justice's Criminal Division in the Carter administration, "you sacrifice morale."

Mending fences on the Hill is another critical issue that needs close attention. But that won't be easy, as Democratic-led committees are conducting vigorous investigations.

The House Judiciary Committee voted in July to issue contempt citations for two of Bush's closest associates in the confrontation over the prosecutors' firings. That panel is also investigating whether the department, under Gonzales, engaged in selective prosecutions that were politically motivated. Last but not least are national security issues, including the domestic surveillance program and the knotty problem of what to do with prisoners captured in the war on terrorism.

The president has yet to nominate a replacement for Gonzales. Michael Chertoff, secretary of the Homeland Security Department, seemed initially to be the leading candidate, but his appointment is unlikely, officials say. Among others being mentioned are George Terwilliger, who served as deputy attorney general in the administration of George H.W. Bush; Theodore Olson, a former solicitor general in the Justice Department; and Laurence Silberman, a senior judge on the U.S. Court of Appeals for the District of Columbia. When Gonzales leaves on September 17, Solicitor General Paul Clement will serve as the acting attorney general.

The administration, says one senior government official, wants to move quickly. However, the official says, it must find a candidate who not only can fix the damage but also be "somebody the president is comfortable with."

When Gonzales's successor does finally sit down at the attorney general's desk, at the top of the To Do list will be these seven challenges.

Repair A Battered Department

No sooner had Gonzales announced his resignation than some career lawyers in the department breathed a collective sigh of relief. "He was a huge embarrassment," says one midlevel department attorney, complaining that Gonzales had misled Congress in testimony about the firings of the federal prosecutors. "He was too close to the president. You need somebody with independence."

The successor's job, current and former department officials say, is to restore relations with the U.S. attorneys' offices around the country and to improve morale within department headquarters. For that to happen, the president must nominate an attorney general who has immediate credibility inside the 110,000-person department and in Washington.

"Every attorney general has to have a bit of Thomas Becket in him," says Mark Corallo, who was the chief spokesman for Attorney General John Ashcroft, the immediate predecessor to Gonzales. "Your duty is not to the king. It is to the rule of law."

There's an additional problem: Other senior department officials have jumped ship recently, including the deputy attorney general and the associate attorney general, the department's No. 2 and No. 3 positions. Joseph diGenova, a prominent Republican and former U.S. attorney in Washington during the Reagan administration, thinks it will be difficult to fill some of the top jobs. "There's not that much time left" in Bush's second term, he says. "It is going to be pretty rough to get people to take jobs where they need to be confirmed, go through all of that, put their holdings in blind trusts and so forth." Moreover, nearly one-fourth, or 22, of the department's 94 district offices around the country are headed by acting or interim U.S. attorneys.

Dennis Boyd, the executive director of the National Association of Assistant United States Attorneys, which represents about one-third of the nation's 5,200 assistant attorneys, says that morale among department attorneys has eroded. One reason, he says, was that prosecutors worried their cases were being perceived, incorrectly, as politically motivated. Now that Gonzales is stepping down, Boyd says, his organization would like to see Congress shift its focus to law enforcement issues, such as better court security for prosecutors.

"We are hopeful now that Congress can get to the business it is supposed to be dealing with -- law enforcement legislation," Boyd says.

Reduce Political Interference

Arguably the biggest stain from the Gonzales era is the perception that conservative credentials and loyalty to the White House were key factors driving the department's policy and personnel decisions. Former department officials say that Gonzales's misguided and inept efforts to employ ideological litmus tests caused much of the damage.

Heymann says that the first move must be "straightening out the system for hiring and promoting career employees." The Justice Department "lost widespread support in the legal and judicial communities," he adds, because career positions were filled by people who held political views in lockstep with the White House. The next attorney general, Heymann says, should make a public announcement that the White House "will not be consulted or provide advice on decisions involving individual prosecutions."

Similarly, Joe Rich, who spent 36 years at Justice and was in charge of voting rights in the Civil Rights Division before he left in 2005, says that in "all the years prior to Bush the hiring of career lawyers had been very nonpolitical." Rich has testified that the situation deteriorated so badly that 20 of the division's 35 lawyers either quit or transferred to other jobs at Justice over the past two years because of the politicization.

More broadly, James Cole, a top prosecutor in the public integrity section from 1980 to 1992, stresses that Gonzales's successor should "bring in a cadre of people who have been, or had been, in the Department of Justice for a long time and know how the place works." Cole says that Justice has a long tradition of being a "pretty independent agency," and that the attorney general must make clear to department employees "their client is the American people and not the president."

Establish Credibility With The Public

When Gonzales testified before the Senate Judiciary Committee in July on the U.S. attorney firings, a clearly frustrated and angry Arlen Specter, R-Pa., the panel's ranking member, issued this blunt appraisal to the attorney general: "I do not find your testimony credible, candidly."

Confidence in the department among the American public is also at its nadir. Olson, the former solicitor general, would not talk about Gonzales's performance, but he stressed in an interview that "the American people have to have confidence that the department is being run fairly and evenhandedly."

Michael Bromwich, who was inspector general at Justice during the Clinton administration, says that restoring credibility is "a very tall order." Bringing in a "strong lawyer or policy maker, and preferably both," he says, would be a good start. The next attorney general should also be acceptable to both sides of the aisle in Congress and someone who can speak "knowledgeably" in public about the key challenges facing Justice, including law enforcement and combating terrorism.

Others suggest that clearing up the clouds hanging over the department would go a long way toward lifting Justice's standing with the public. Former department officials point out that it would be helpful for the department to finish its internal probe of the U.S. attorney firings as quickly as possible. That investigation, conducted jointly by the inspector general's office and the Office of Professional Responsibility, initially focused on how the department handled the firings. It has since broadened to look at questions related to political influence in hiring decisions and the veracity of Justice officials' congressional testimony. Heymann says that Justice's credibility would climb if the "processes, opinions, and standards" of the department were "made more transparent."

Patch Up Relations With Congress

This, too, will be a huge challenge for the next attorney general. Democrats have long memories (remember the Republican investigative assault on the Clinton administration), but some GOP lawmakers believe that accommodations can still be made. For starters, consulting with Congress and naming a new attorney general acceptable to both ends of Pennsylvania Avenue would be a major step forward, the thinking goes.

Sen. Charles Grassley, R-Iowa, a member of the Judiciary Committee, said in a statement: "While credibility with the Senate and even within the department won't just happen overnight, the prompt confirmation of a well-respected individual to be attorney general can certainly begin to restore that trust."

Separately, Judiciary Committee Chairman Patrick Leahy, D-Vt., has said it is crucial for President Bush to consult with Democratic and Republican leaders before he nominates a candidate. The White House appears to understand this. After Gonzales announced his resignation, White House Counsel Fred Fielding made courtesy calls to Sen. Charles Schumer, D-N.Y., and other members of the Judiciary panel, according to officials.

Democrats also say they want an attorney general who will answer their questions. House Judiciary Committee Chairman John Conyers, D-Mich., a strong critic of Gonzales, says that the new attorney general needs to be candid and cooperative. If that happens, Conyers said, "it wouldn't take more than four or five sentences for us to establish a relationship."

But given the history of conflict and the political benefits that might be realized by continuing investigations, it's likely that relations won't improve greatly, if at all, no matter who is named to fill the post. Democrats, now in the driver's seat, have launched a series of investigations into the Bush administration, and there is no indication that they plan to slow down any time soon.

Conyers, for one, made it quite clear that he isn't going to take his foot off the pedal. His says his panel will continue probing the White House role in the prosecutor firings, as well as other matters. In late July, Conyers's committee voted along party lines to issue contempt citations to Joshua Bolten, the White House chief of staff, and Harriet Miers, the former White House counsel. Both had refused to comply with subpoenas issued after President Bush declared that their testimony was covered by executive privilege.

The Senate Judiciary Committee, meanwhile, is also investigating the U.S. attorney dismissals and is expected to hold hearings on other controversial issues, including the government's surveillance activities in the wake of 9/11.

Fix Warrantless Eavesdropping

Before its August recess, Congress passed an amendment to the Foreign Intelligence Surveillance Act that allows the attorney general and the director of national intelligence to authorize clandestine monitoring of people "reasonably believed" to be located outside the United States. The law broadens the government's intelligence-gathering powers, and it effectively makes the attorney general the co-director of the National Security Agency's effort to track terrorists through the global telecommunications network without first obtaining warrants.

The law, known as the Protect America Act, comes up for renewal in February. It is essentially a compromise measure: Democrats were unwilling to give Gonzales the sole authority to approve warrantless wiretapping, and they insisted that the intelligence director be added to the mix. Director of National Intelligence Mike McConnell expended tremendous personal political capital to get the law passed. He told lawmakers that it was needed to comply with a court ruling that intelligence agencies couldn't intercept certain foreign-based communications without warrants. Democrats reluctantly agreed, earning the condemnation of liberal activists and opponents of the administration's surveillance efforts.

It will be up to McConnell and the new attorney general to keep the modified law in place or to develop a new regime that gives intelligence agencies the powers they say they need to quickly track suspect communications. The two officials also must assess the government's compliance with the law and make periodic reports to the House and Senate Intelligence committees.

For the new attorney general, the most significant issue will be this: He or she must demonstrate to the court that normally issues intelligence surveillance warrants how the government determines that a "target" is actually located outside the United States and thus is out of reach of the warrant process. In effect, the attorney general must not only keep the law alive but also personally guarantee that the government isn't violating it.

Before the summer recess, Democrats said they would quickly renew discussions over the FISA legislation. The prospect of confirmation hearings now adds an undeniable wrinkle to this complicated debate. The nominee's position on warrantless surveillance could be a litmus test for some senators, and key lawmakers have already made clear they want a nominee devoid of any whiff of Bush cronyism.

"The first loyalty of the next attorney general must be to the law, not the president," said Sen. Russell Feingold, D-Wis., a member of the Judiciary Committee and one of the staunchest opponents of the NSA's surveillance program.

Strengthen FBI Counter-Terrorism Operations

The White House has consistently emphasized the terrorist threat to the United States posed by the group Al Qaeda in Iraq, but it is the intelligence community's consensus that a resurgent Al Qaeda, based in Pakistan, is perhaps the most formidable enemy. The terrorist group "has protected or regenerated key elements of its homeland attack capability," to include a "safe haven" in Pakistan's federally administered tribal areas, according to a National Intelligence Estimate released in July. "Although we have discovered only a handful of individuals in the United States with ties to Qaeda senior leadership since 9/11, we judge that Al Qaeda will intensify its efforts to put operatives here," the estimate states.

The Justice Department and the FBI have been operating under that assumption for years and are ramping up their efforts to track suspected terrorists who are already in the United States. The new attorney general, in concert with the FBI director, will have to secure the necessary resources and fend off charges that the agencies are mounting domestic spying campaigns.

Specifically, the bureau wants more money and positions for domestic terrorist-tracking programs, including developing a center that would use advanced technology and so-called data-mining tools. The National Security Branch Analysis Center would conduct "bulk data analysis, pattern analysis, and trend analysis" in support of the FBI's intelligence and counter-terrorism efforts, according to the bureau's fiscal 2008 budget request.

The new center, as well as other domestic counter-terrorism initiatives at the FBI and Justice, will further stir lawmakers who are hostile to the administration's forays into domestic intelligence. The attorney general will have to be a credible and forceful proponent for increased efforts to hunt and capture terrorists, activities that, by their very nature, could undermine Americans' civil liberties and privacy.

As one of the chief legal architects of the administration's warrantless surveillance program, Gonzales served as a reminder to many that the White House had disregarded some of the basic checks and balances meant to keep the line between intelligence-gathering and law enforcement functions from blurring. The new attorney general will have to convince lawmakers that expanded domestic surveillance powers are not only necessary to prevent acts of terrorism but also will not turn law enforcement agencies into national secret police forces.

Modify Detainee Policy

Gonzales was a key architect of the legal house of cards holding prisoners in the war on terrorism. With both the Supreme Court and Congress preparing to once again attack its foundation, his successor will have a tough task in either riding out the coming tremors or putting detention on more stable ground.

In late June, the Supreme Court reversed itself and agreed to hear the case of Guantanamo detainees who are asking the Court for habeas corpus -- the right to stand before a judge and question their detention -- and for judicial answers about who can be held as an enemy combatant. The unprecedented change-of-mind left Court-watchers anticipating another setback for the Bush administration.

Clement, soon to be acting attorney general, may be able to mitigate the expected damage while waiting for a permanent successor. As solicitor general, it is Clement who argues the government's cases before the Supreme Court. "He recognizes the serious prospect of another rebuke coming from the Supreme Court," says Thomas Goldstein, head of Akin Gump Strauss Hauer & Feld's Supreme Court practice. As a caretaker attorney general, Clement won't be making radical changes. But he will be in a position to argue internally that if the administration and Congress could agree on a legislative framework granting detainees more rights, the administration would have a stronger hand in court.

In Congress, the debate over detainee rights will return to the floor in September when the Senate takes up the Defense authorization bill. The measure would give more rights to detainees, and proposed amendments would restore habeas corpus to them or close Guantanamo altogether. In addition, some members would like to revisit the CIA's interrogation practices for detainees. In July, Bush issued an executive order outlining how far CIA interrogation techniques can go; the administration says it complies with Geneva Conventions on prisoners. But the military's top uniformed lawyers have expressed concerns with the legal interpretations of the order. Two proposed bills would instead make the CIA comply with the military's guidelines on interrogation techniques.

Gonzales was a staunch opponent of reformers, including the secretaries of State and Defense, who want to close Guantanamo and find a new, diplomatically palatable solution for prisoners in the war on terrorism. His successor will have to decide whether to follow in his footsteps or find a new path.

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Pentagon, State struggle to define nation-building roles

Corine Hegland — Mon, 30 Apr 2007 00:00:00 -0400

If countries such as Haiti, Liberia, or Sierra Leone, with about 5 million people and per capita incomes of approximately $500, were on your To Do list, The Beginner's Guide to Nation-Building estimates that you would need 65,000 international troops, at an annual cost of $13 billion.

In addition, you should plan for 8,000 international police officers ($1.25 billion) and lots of advisers to help establish the rule of law, provide humanitarian services, assist in governance, stabilize the economy, teach democratization, and support development and infrastructure work, for a total cost of some $15.6 billion a year.

The chief author of the recently released book, former U.S. Ambassador James Dobbins, director of the International Security and Defense Policy Center at the Rand think tank, said he wrote it, in part, so that "nobody could ever again go up to Congress and say we could do this on the cheap."

"This," of course, is nation building, which candidate George W. Bush in 2000 said that U.S. troops should not do. They should only, he said, fight and win the nation's wars. But as president, Bush launched two of the biggest reconstruction and stabilization missions that the United States has undertaken since World War II.

As a sign of the shifting political winds, former House Speaker Newt Gingrich, who was once as eager as any conservative to lob grenades at the striped pants in Foggy Bottom and at President Clinton's nation-building efforts in the Balkans, now says that America cannot avoid the job. Indeed, he is stumping for a bigger, better State Department to be ready for the nation building ahead.

Bush, meanwhile, in this year's State of the Union address, called on Congress to build a Civilian Reserve Corps within State, similar to the Pentagon's military Reserve, to "ease the burden on the armed forces by allowing us to hire civilians with critical skills."

Nation building is back. And it's bigger than ever.

The formulas in The Beginner's Guide, by the way, are based upon a country's population and gross domestic product, and on the costs of past nation-building exercises, many of them headed by Dobbins himself. He was the Clinton administration's special envoy to Somalia (year of intervention: 1992), Haiti (1994), Bosnia (1995), and Kosovo (1999), and he was the Bush administration's first special envoy to Afghanistan.

If there is a maestro of nation building, he is it. And the maestro is, frankly, worried.

Not about Iraq, although Dobbins doesn't think that's going so well. He's worried about what will happen the next time. The United States isn't going to repeat an Iraq-style invasion anytime soon. And yet, Afghanistan is shaky. Sudan is deteriorating. Lebanon could explode again. U.S. soldiers and aid workers remain in Haiti. Somalia is looking bad. Nigeria, our fifth-largest oil supplier, could rapidly unravel this year. Kosovo is still unstable. Fidel Castro will die someday, potentially sparking chaos in Cuba.

Some of these nations are allies. Some might become terrorist havens. Some could simply cause endless trouble for American interests. The alternative to stabilizing a country is letting it fail; that's how Osama bin Laden took advantage of a weakened Afghanistan to set up shop and plan the September 11 attacks.

What worries Dobbins is that the situation in Iraq has become so foul, the American people may oppose anything that comes close to nation building. "The Pentagon and the administration have reflected on their experience in Iraq and concluded that we need to do better next time, while most of the public and Congress have reflected and concluded that we need to not do this the next time," he said. "The question is, which reflection will hold sway."

"As the Iraqis Stand Up ... "

Every time that Dobbins, a former assistant secretary of State for Europe, traveled abroad to fix a troubled country, one thing was clear: He was in charge. Although his authority was sometimes complicated by a lack of staff and money, he muddled through.

Every time, that is, until Afghanistan. In early 2002, the U.S. military, following President Bush's minimalist definition of peacekeeping and nation building, rejected requests to expand the international peacekeeping force beyond Kabul. With peace limited to the capital, civilians working on reconstruction were confined to that city and its environs.

American troops fanning out across the country, however, found that guns and bombs couldn't win the hearts and minds of villagers. The locals wanted water and agriculture and clinics, and so it fell to the soldiers to provide them. That equation carried over into the planning and invasion of Iraq, in which the civilian experts were entirely left out. The U.S. military, a force of competency unparalleled in modern times despite its occasional miscues and mistakes, was in charge.

The results, by any measure, have been disastrous.

Here's one example of how nation rebuilding in Iraq broke down: Nearly two years after Bush summarized his plan -- "As the Iraqis stand up, we will stand down" -- Iraq's army is only fractionally closer to taking over security. That failure has many causes, but rampant absenteeism is a chief one.

Newly trained Iraqi soldiers do not always appear when and where they should. Sometimes it's because they're moonlighting with militias; sometimes it's because they're scared, or not committed; but often, according to the Government Accountability Office, it's because they don't have any way to deposit their paychecks. Iraq lacks a most basic civilian institution: banks.

The Defense Department failed to anticipate the need for a functioning banking system in Iraq. The State and Treasury departments, which could have foreseen the need, were not in charge. And so every pay period, Iraqi soldiers temporarily abandon their units to carry cash home to their villages. Rep. Geoff Davis, R-Ky., a member of the House Armed Services Committee and a former Army Ranger who looked into the issue, said that banking, quite simply, "got lost along the wayside."

The question now is what to do about it. Who will be in charge next time? Will the military, having learned its lessons in Iraq, plan for banks the next time around? Or will the State Department, and other U.S. civilian agencies, push for and get the authority, money, and people to do it?

Who Will Be America's Face Abroad?

Last December, the Organization for Economic Cooperation and Development, a European think tank, published a review of U.S. foreign aid. Between 2002 and 2005, according to the report, the proportion of American official development assistance channeled through the Pentagon jumped from 6 percent to nearly 22 percent.

Read that again. By 2005, more than one-fifth of U.S. development dollars were being run through the military.

According to Stewart Patrick, director of the Center for Global Development's commission on weak states and U.S. national security, the Pentagon is spending 85 percent of its development dollars (about $6 billion) in Iraq and Afghanistan. Most of the rest went to tsunami relief in South Asia, various drug interdiction and humanitarian assistance efforts, and nuclear threat reduction in the former Soviet Union.

The OECD figures don't even capture the full picture. The Pentagon also spends money that isn't tracked -- to dig wells, treat impoverished medical patients, and refurbish clinics, among other things. In some countries, U.S. "security assistance" from both Defense and State has outpaced traditional economic aid.

"There are a lot of bigger diplomatic inequalities involved here," said Patrick, who worked for State's policy planning office earlier in the Bush administration. "They're being created because you have a fundamental mismatch. Congress doesn't see State as national security. It doesn't give [the foreign-assistance account] what it needs, while the [Defense] account is, for a number of reasons, going to be well funded. But aren't there reasons why the secretary of State controls foreign assistance?"

Traditionally, the military does the fighting; civilians do diplomacy and aid. But as the Pentagon's understanding of security expands to include stability -- terrorists, a Defense official said, hide among local populations, so troops have to address the people's needs -- it risks undermining the core missions of both State and Defense.

"As we charge Defense more and more with foreign- and security-assistance responsibilities, we begin to disempower the capability of the State Department and the [U.S. Agency for International Development] to oversee policy and to supervise and to implement such programs," said Gordon Adams, a fellow at the Woodrow Wilson International Center for Scholars who was an associate director for national security and international affairs at the Office of Management and Budget under Clinton. "And the consequences for the Defense Department are, we increasingly are putting our men and women in uniform in the job of security-assistance and foreign-assistance providers, which diverts them from their core military mission."

On the one hand, nobody wants civilians to take charge more than the military does. Although former Defense Secretary Donald Rumsfeld and his senior coterie of civilians didn't have much fondness for the State Department, the uniformed officers in the Pentagon's upper and middle ranks have been among the State Department's staunchest supporters, both politically and financially.

"Our civilian agencies are under-resourced to meet the requirements of the 21st century," Marine Gen. Peter Pace, chairman of the Joint Chiefs of Staff, told the House and Senate Armed Services committees in his budget testimony in February.

On the other hand, the military can get that money quickly when the president says it is needed to support the troops.

"The conundrum for the Defense Department is, the more capability it builds, the incentive decreases for anyone else to build up those capabilities," said Kathleen Hicks, a senior fellow at the Center for Strategic and International Studies and, until last year, director of policy planning at the Pentagon. "What you see is the Defense Department trying to straddle this. The capability doesn't exist elsewhere, and the culture of the military is to say, 'We're just going to do this now, because nobody else is going to.' But long term, you get into this paradox: 'If we show we're too good, then nobody else can.' And Congress isn't going to create duplicate capability, so to the extent the Defense Department builds it, no one else will build it."

Lessons Learned

Dobbins's Beginner's Guide, his third book in a series on nation building, is part of a burgeoning cottage industry. Nearly every think tank in town, including CSIS, Rand, the U.S. Institute of Peace, and the Brookings Institution, has a prominent program or two looking at some aspect of the foreign-assistance conundrum.

The Defense Department's war colleges are adding stabilization operations to their curricula. The State Department's new Office of Reconstruction and Stabilization just made an alliance with State's foreign-aid coordinator. USAID now has a military liaison office. The National Security Council signed off earlier this year on models for interagency cooperation for the next country collapse and on an idea to create a National Security Education Consortium to provide joint education and training for civilians and the military.

To understand what everyone is trying to correct, consider the experience of Deborah Alexander. In spring 2002, USAID sent Alexander to Afghanistan to build relations with the U.S. military and pave the way for forthcoming agency experts to help in the country's reconstruction.

It was a tough job. Alexander would land at a clandestine airfield and then hitch a ride with a passing United Nations convoy to get to a base. Once there, she would find the civil-affairs unit: "Hi, I'm from the government and I'm here to help." Civil-affairs soldiers were always happy to see her, even if they didn't know she was coming, and they would quickly brief her on the local water, agricultural, and health challenges. She made friends and learned about the needs to be filled by the USAID experts -- who arrived 18 months later.

"It takes a while to get them recruited, trained, and out there," Alexander said. Unlike the military, neither USAID nor State has a standing reserve of civilian experts ready to deploy. They can send a few people quickly, but for such substantial operations as those in Afghanistan or Iraq, both have to recruit staff, write and sign contracts, and conduct training -- a time-consuming process for which the situation on the ground can't wait. As a result, in the short term, the burden falls on the military.

The Defense Department took steps to address that burden in November 2005, when Rumsfeld made stability operations -- building local security forces, correctional facilities, judicial systems, governing councils, and the like -- a core U.S. military mission, equivalent to combat. "U.S. military forces shall be prepared to perform all tasks necessary to establish or maintain order when civilians cannot do so," read his directive, now commonly referred to in the bureaucracy by its number, 3000.05.

What the directive means in practice, explained Janine Davidson, director of stability operations capabilities at the Pentagon, is that when a lieutenant colonel finds himself in charge of a couple of cities, he needs to know what to do.

"In an ideal world, the military would be a supporting partner to a broader civilian-led operation. But that's challenged by the very real fact that the civilian agencies are under-resourced," she said. "Even if they started building capacity today, it would still take a long time. So we're faced with our job to prepare the next set of troops to do whatever they're called upon to do by the president."

The Pentagon is incorporating stability operations into training, the planning of the regional combatant commanders, and the war colleges' curricula.

The military has a PowerPoint presentation for everything, and there's probably more than one PowerPoint for 3000.05. But one that Davidson likes to cite has a box on the right, representing the military, and a box on the left, representing civilians. Arrows, representing capacity, arch out of both boxes toward the center. The message, she says, is simple: "We're going to build until they meet us. We hope it happens sooner rather than later."

Instability at State

A couple of years ago, somebody tried to put together a directory of all the people in the U.S. government who worked on lessons learned. The Pentagon's side of the directory was, predictably, voluminous: The U.S. military has an enormously sophisticated program to debrief soldiers after action and to pass on what they've learned to others. Observations from the field can appear in training scenarios within days.

The civilian side of the directory had one name. It belonged to a presidential management intern at the State Department.

About a year and a half before Rumsfeld signed 3000.05, then-Secretary of State Colin Powell created an Office of the Coordinator for Reconstruction and Stabilization. The first coordinator, Carlos Pascual, wanted $350 million to build a Civilian Reserve Corps. Congress gave him $7 million. The Pentagon came to his rescue. After learning of Pascual's money woes, Gen. Pace offered him $100 million out of Defense's 2006 budget.

Unfortunately, that's not the end of the story. Pascual departed for Brookings, and a bitter fight broke out between the coordinator's office and USAID over which should get the Pentagon money. The coordinator's office won, but not until nearly the end of the fiscal year, by which time both the funds and the time to spend them were limited. "That fight never should have happened," Pascual said succinctly. (The Pentagon offered money again this year. The funds are, so far, flowing smoothly to the coordinator's office.)

In the two and a half years since Powell established it, the coordinator's office has, as a former Defense official diplomatically put it, "not progressed as we imagined." Under Pascual, the office took over planning for the response to the Sudan crisis. Pascual needed six months to corral everybody into an agreement, and then higher-ups promptly shelved the plan.

The office has not yet run a single operation yet, although it did recently take the planning lead for Kosovo should that Balkan province gain its independence from Serbia and need help getting on its feet. It has also created an active response corps of in-house State Department employees for rapid deployment throughout the world, but building the ranks has been slow. By the end of the year, it hopes to have 30 people trained and ready to go.

"It's not manned, it's not funded, and until that happens, it's not going to do its job," said Joseph Collins, a National Defense University professor who served as the deputy assistant secretary of Defense for stability operations from 2001 to 2004. In December 2005, Bush signed a presidential directive anointing the coordinator's office as the lead unit for organizing interagency operations on reconstruction and stability missions, but the office doesn't control any money.

If everybody comes to the table, Collins said, and "the Defense Department brings billions, USAID brings hundreds of millions, and these people bring a piece of paper with the president's name on it, that's not going to work."

The coordinator's office has had a hard time getting the resources it needs. When it wanted $25 million this year to create the Civilian Reserve Corps, OMB shot it down. State asked for it again in its budget pushback; OMB again declined. Bush mentioned the corps in his State of the Union speech, but his fiscal 2008 budget request to Congress the following month included no money for it.

Over the past two months, however, prospects have started to look up. Under its current director, Ambassador John Herbst, the stabilization coordinator's office slid across State's organizational chart in February to fall under the foreign-aid coordinator, who also runs USAID, giving the office a powerful ally.

The National Security Council signed off on a new interagency planning process for stabilization and reconstruction to be directed by three co-chairs: the stabilization coordinator, an NSC director, and the relevant regional bureau head from the State Department. (Granted, a working group co-chaired by three people sounds like a plan for some very long meetings, but a senior administration official said that "more specific understandings" will be worked out.)

Most important, though, the conference committee version of the Iraq supplemental budget bill, at the request of Secretary of State Condoleezza Rice, allows State to spend $50 million of its own funds to create the Civilian Reserve Corps. The Senate Foreign Relations Committee passed a bill authorizing the corps.

Experts who are watching this process say that the corps is the key, and that its creation comes close to a make-or-break deal for a partnership between the civilian and military wings of the government. It would represent the first real investment in desperately needed civilian capacity. If the concept fails again, then Defense might start looking at building its own civilian corps.

"If I were at the Pentagon, I'd be looking at my authorizations to see if I could create the civilian component myself," Pascual said. "I think that's the wrong answer, but that's what I'd be doing."

The Dark Side of Defense

Last year, the Pentagon took a piece of the work it was doing in Iraq and Afghanistan -- training and equipping the national armies -- and expanded it around the globe. The program is known by its legislative handle, Section 1206 of the National Defense Authorization Act. Last year Defense spent $200 million on the task; this year it is spending $300 million; next year the Pentagon wants $750 million.

Normally, U.S. funding for other countries' armed forces comes from the State Department. Defense spends most of that money, but, for decades, the power to write the check has rested with State, which can be slow to move. The State Department's military funding programs, for example, run on three-year budget cycles.

The Pentagon had previously tried to get Section 1206 authority, but then-Secretary Powell had rejected the request as an incursion into State's territory. ("Over my dead body," was how Patrick, who was then at State, summarized Powell's stance.) Rice, however, assented: There was a need, and Defense was the department that could get the money from Congress.

But the Pentagon's advance into the State Department's territory worried Sen. Richard Lugar, R-Ind., then the chairman of the Senate Foreign Relations Committee. He sent six staffers around the world to take a look at Section 1206 operations. As a result of inadequate funding for civilian programs, they wrote in their December report, military units are increasingly being granted authority and funding to fill perceived gaps: "Such bleeding of civilian responsibilities overseas from civilian to military agencies risks weakening the Secretary of State's primacy in setting the agenda for U.S. relations with foreign countries and the Secretary of Defense's focus on war fighting."

According to the report, one-quarter to one-half of the American aid going to some countries was security assistance; one country got military aid only. Nearly all of the ambassadors whom the Senate aides interviewed reported inadequate civilian staffing and an increase in military staffing at their embassies. One worried that uniforms might outnumber suits within a year.

Money talks. The report cites an ambassador who "lamented that his effectiveness in representing the United States to foreign officials was beginning to wane, as more resources are directed to [military] special operations forces and intelligence. Foreign officials are 'following the money' in terms of determining which relationships to emphasize."

The military is trying to coordinate with the diplomats, the ambassadors said, but the Pentagon often ends up setting the agenda. In Chad, a Central African nation that would likely become a haven for terrorists if the government collapsed, Defense saw a "model country for security assistance," Lugar's staff reported.

The American Embassy there saw the situation differently. Chad's government is repressive and has an abysmal human-rights record. The rapidly growing U.S. military presence, and U.S.-labeled equipment carried by Chadian soldiers undergoing U.S. training, raised the possibility of complications with the civilian population, the embassy staff said. "It would be a major setback if the United States were to be implicated in support of operations shoring up the repressive regime, regardless of the stated intent of such training."

What Mission?

The Defense and State departments have worked out some of the kinks from the first year of Section 1206 funding, when, according to a February GAO report, only five of the Pentagon's 14 proposals were coordinated with the relevant embassies before being reviewed in Washington; in another five countries, the Pentagon didn't tell the embassies what was going on until it had notified Congress of the projects, well after they had been approved in Washington. This year, with better guidance from the top, people from State and Defense are talking to each other, officials say.

But coordination alone can't settle the basic question: Who is in charge? Are America's relations with foreign countries set by commanders or by diplomats? The lines between the two have been blurring for years. In 2003, journalist Dana Priest of The Washington Post wrote The Mission: Waging War and Keeping Peace With America's Military, describing the Pentagon's ascendance in foreign policy.

But Defense's takeover in Iraq -- from the outset, L. Paul Bremer, the head of the Coalition Provisional Authority, reported to Rumsfeld, not Powell -- and its ability to incorporate and apply the lessons it has learned there faster than the civilians, may have accelerated a rupture between the two departments.

The Office of the Secretary of Defense has developed a new and comprehensive proposal, the Building Global Partnerships Act, that would authorize the military to do nearly everything it has done in Iraq and Afghanistan anywhere in the world, without subscribing to the human-rights and other restrictions that govern State Department dollars.

Under this legislative proposal, the Pentagon wants to permanently expand its Section 1206 authority to train not just military partners but also foreign police forces. It wants to give commanders around the globe access to the funds in the Commander's Emergency Response Program, which U.S. officers in Iraq and Afghanistan draw on to quickly build clinics or dig wells, for example. It wants to expand its humanitarian-assistance dollars to cover stabilization activities -- more clinics and wells.

The proposed legislation is still under discussion between the Pentagon and the State Department, which objects to several provisions. National Journal obtained a copy of the draft bill and asked the Wilson Center's Adams to review it. Pointing to the expansion of the Pentagon's humanitarian programs to cover such things as wells and clinics, he said, "Hello? That's USAID!"

Adams's fundamental question, however, was, "Who's in charge?" In Chad, for example, security and human rights are both important U.S. objectives. If they are incompatible, which should drive the relationship?

"Which agency should be initiating our security relationships with other countries? Should it be the military or State?" he asked.

A Defense official, who did not want to be identified because the proposal is still in interagency discussions, pointed out that most of the provisions in the bill would require the concurrence of the secretary of State, but Adams said that concurrence wouldn't be enough to balance the power of the checkbook: "The downstream threat is that the State Department becomes the supporting institution for Defense Department initiatives."

The proposal, according to Adams, reaches well past the Pentagon's traditional bailiwick, which for decades has been military-to-military training-assistance programs and weapons sales. The legislation would allow Defense "to engage itself in virtually the entire architecture of another country's internal security," Adams said.

That is exactly what the military needs to do, the Defense official said, because in some countries the key forces aren't the national army. In Pakistan, for instance, the Frontier Corps works in the tribal areas where Taliban sympathizers live. But it is not part of the country's military force; it's more of a police unit.

Restrictions on the Pentagon's ability to work with domestic police forces, which are generally attached to a country's interior minister rather than to a defense minister, could prevent American military leaders from easily providing training and equipment to those forces, the official said.

As for the Pentagon's expansion into clinics, wells, and the like, the official said, "We're not trying to crowd out USAID, but in the circumstances where USAID is not available, we can't simply wait for the civilians to show up and address some of these issues, because our forces are at risk today."

A senior Republican aide on the Senate Foreign Relations Committee who had seen a draft of the Building Global Partnerships legislation said that the Pentagon is basically trying to get out from under State and congressional restrictions and run its own program.

The staffer predicted that the measure would face skepticism on the Hill, pointing out that in March, the Senate Budget Committee prompted a small revolt when it tried to trim the State Department's funding. The panel had cut State's foreign-affairs budget by $2.5 billion. That amount would be one-half of 1 percent of the Defense Department's regular $480 billion budget request, but it was 7 percent of State's $36 billion total request.

Sen. Gordon Smith, R-Ore., introduced a floor amendment to restore full funding; he rapidly picked up 23 co-sponsors, and the amendment passed. "There's a general realization that getting this out of kilter is unhealthy on a whole bunch of different levels," the staffer said.

The Juggernaut

In the short term, winning the "long war," as Defense now informally calls the global war on terrorism, requires countries that are stable and secure: no failed states, no ungoverned areas in which terrorists can take root. But in the long term, combating terrorism requires countries with such foundations of civil society as human-rights protections and participatory government, which the United States and other democratic nations built only after suffering through long periods of instability.

No matter the outcome of Defense's current troop surge in Iraq, it won't work unless the Iraqi government can find a way to channel the swirling political currents to build rather than destroy the nation. No matter how many Chadian government soldiers Defense trains, it won't work unless the Chadian people find a voice in their government. Digging a well might help a village mayor, but that mayor might be running a corrupt police force.

Defense excels at the short term: It can stabilize; it can secure. But when those objectives conflict with the longer-range goals of U.S. foreign policy, should Defense be the dominant player?

That's not a question that anybody wants to answer. The military, however, is still clearly uncomfortable doing jobs that it would rather leave to civilians. That's why Gen. Pace offered $100 million a year to State and warned Congress that the civilian agencies were underfunded. That's why Defense wants to incorporate civilians into its education system, building a National Security Education Consortium that will allow more cross-pollination between soldiers and civilians. That's why Defense so staunchly supports an interagency process.

And, irony of ironies, that's why civilians who work on nation building have a new and barely surfaced sense of optimism. Even as the Pentagon moves to fill the short-term gaps left by the absence of civilian agencies, it is firmly pushing for the civilians to get the dollars and authorizations they need to fulfill their part of the mission.

"The military wasn't with us 10 years ago," said Beth Cole, a senior program officer at the Institute of Peace and a co-author of The Beginner's Guide to Nation-Building. She's been involved in nation building since the Balkans and has had a front-row seat to all of its strange iterations since. "They're with us now."

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Facing the Big Guns

Corine Hegland — Mon, 15 May 2006 00:00:00 -0400

The Pentagon's new point man on detainee policy steps into the crossfire over inhumane treatment.

"Cully" Stimson doesn't seem the type to cut class. A wiry judge advocate general in the Naval Reserve and, until recently, an assistant U.S. attorney for the District of Columbia, he has a litigator's fondness for precision and an officer's penchant for rigor: He brings a law journal article to an interview for an exact reference, and gently asks a reporter to ensure that his name is spelled correctly.

Nevertheless, in early December 2005, Charles D. Stimson, 42, cut his final day of class at the Naval Justice School detachment in Norfolk, Va., teaching effective courtroom communications. He had a good excuse: a job interview with Defense Secretary Donald Rumsfeld. He got the post, and on Jan. 23 became the Pentagon's point man on detainee policy as the deputy assistant secretary for detainee affairs.

It's an odd position, established in 2004 in the wake of the Abu Ghraib scandal, and it is subject to tugs from every direction. The Army is nominally in charge of the military's prisoners in the war on terrorism, but the mammoth operation, which has involved more than 90,000 detainees since Sept. 11, reverberates throughout the Pentagon and beyond-even at the Justice and State departments and the White House.

The Kenyon College graduate, who grew up in rural Maryland and earned his law degree from George Mason University, is accustomed to tug-of-war. He's a prosecutor with a passion for domestic violence cases. Aside from teaching at the Naval Justice School, Stimson is an adjunct law professor at George Mason and he serves on the executive committee of a Seattle family business. On top of all that, he has a wife and two children. "Family first," he says of trying to balance it all.

But balance might be harder to reach than he'd like. Two major policy documents on detainees are immersed in high-level interagency debates. They're scheduled for release this spring, and advocates-and Congress-are impatient.

Stimson's predecessor, Matthew Waxman, decamped to the State Department in December amid battles over Directive 2310, one of the documents that govern the Pentagon's overall care and custody of detainees. Waxman fought to insert language drawn from the Geneva Conventions barring cruel, humiliating and degrading treatment. He ran into overwhelming opposition from the Pentagon's general counsel, the undersecretary for intelligence and the White House, according to a February article in The New Yorker. After Waxman's departure, though, President Bush reluctantly signed the McCain amendment into law in December 2005, with similar language that forbade U.S. personnel from inflicting "cruel, inhuman or degrading treatment or punishment."

The second policy document, the Army field manual, spells out the tactics that military interrogators can and cannot use. It's been revised to incorporate lessons learned in the past few years and the requirements of the McCain amendment, but nobody outside government knows yet exactly what the revision will allow and forbid.

The two documents are important, says Elisa Massimino, the Washington director for Human Rights First, because together they provide the new baseline for detainee treatment. None of the dozen-odd military investigations found that Pentagon policy condones abuse. But they didn't exactly find that the policy that prevents it, either. Instead, they reported widespread confusion over the rules.

The problem is that for most of the past century, detainees simply were prisoners of war, and policy was, by and large, the Geneva Conventions, which undergirded the Pentagon's labyrinthine system of directives, training and manuals. Article 3 of the Third Geneva Convention-which explicitly bars cruel treatment, torture and "outrages upon personal dignity," including "humiliating and degrading treatment"-was virtually all the guidance needed.

But when President Bush issued a February 2002 order declaring that prisoners from the Afghanistan conflict were not entitled to the Geneva Conventions, he replaced the well-established baseline with a vague and qualified one. It said the United States would treat detainees "humanely and, to the extent appropriate and consistent with military necessity, in a manner consistent with the principles of Geneva." Later, prisoners in Iraq were entitled to Geneva protections, but communications about what that meant exactly weren't clear. Tactics devised under the "humane" standard used for detainees at Guantanamo migrated to Iraq, where there was less oversight. The resulting photographs of treatment at Abu Ghraib angered the world in April 2004.

Stimson declined to comment on the pending documents. He did, however, say he perceived an enormous gap between the diligence with which the Pentagon has sought to improve its detainee operations and the public's impression that "we're not really giving it a lot of thought." Stimson handles the department's communications with the International Committee of the Red Cross-the only group allowed frequent and unfettered contact with detainees and he c0-chairs a department-wide committee that meets quarterly to review the implementation of more than 400 recommendations that have come up in the investigation.

"When we say umpteen investigations and umpteen recommendations, I don't think people grasp the millions of personnel hours that have gone into investigating, recommending, holding accountable, correcting and moving forward to make the appropriate changes where necessary," he says.

But outside observers say piecemeal fixes alone can't do it, and they're waiting for a more coherent policy to prevent abuses. In late February, Human Rights First released a damning report documenting the deaths of 98 detainees while in U.S. custody, including 34 officially suspected or confirmed homicides and eight to 12 men who were tortured to death. "One such incident would be an isolated transgression; two would be a serious problem; a dozen of them is policy," retired Rear Adm. John D. Hutson, the Navy's former top lawyer and currently dean of Franklin Pierce Law Center in New Hampshire, wrote in the report's introduction.

"I wish Cully every good wish and hope that he's effective and gets it straightened out," Hutson says, but "I'm not wildly enthusiastic about the job that's being done." The fundamental problem, according to Hutson, is a failure of congressional oversight. In 2004, Senate Armed Services Committee Chairman John Warner, R-Va., said Defense was leaving no stone unturned in its investigations. But, "There are lots of stones, and they're still sunny-side up," Hutson says. "They're afraid of what's going to crawl out if they turn them over."

Stimson has some leverage that Waxman lacked. He's a military JAG, and the combination of the McCain amendment and the ongoing Abu Ghraib trials, in which the former commander of military intelligence recently admitted that he should have established "some definitive rules and put out clear guidance," gives the newcomer a stronger platform. "If he's inclined to see this as an opportunity to get the Pentagon's interrogation policies back on track, he has the tools," says Massimino of Human Rights First.

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The Decision Makers: Intelligence Agencies

Corine Hegland, Siobhan Gorman, and Terrence Henry — Tue, 23 Aug 2005 00:00:00 -0400

John Negroponte
Director of National Intelligence
202-395-7957

When Negroponte left his job as U.S. ambassador to Iraq to become the first director of national intelligence, he barely reduced his exposure to cross fire. But he has quickly, quietly begun reshaping the intelligence community. He has assumed the role of Bush's chief adviser on intelligence and delivers the President's Daily Brief. He has instructed CIA chiefs of station that they will be his eyes and ears in the field. And he's filling top positions in his office with respected veterans of the intelligence community. What will happen when Negroponte goes toe-to-toe with the Pentagon on budget and policy issues is unknown, although he seems to have successfully protested an effort by one of its top congressional allies to curb his authority over intelligence personnel.

Negroponte's challenge, according to 9/11 commission member John Lehman, is to avoid "being dragged into old wars and grudges and internecine turf disputes, rather than doing the dramatic and even revolutionary work that needs to be done in changing our intelligence establishment." He added, "The DNI's principal responsibility ... was to change this culture to [one] that attracts and holds bright, innovative, creative, and risk-taking people."

Negroponte, 65, grew up in New York City and went to Yale. He speaks five languages and served as ambassador to Mexico, the Philippines, and Honduras in the Reagan and Bush I administrations. Negroponte was sworn in to his current post in April. During his confirmation hearing, critics accused him of failing to report the gravity of the human-rights abuses by Honduran military groups when he was ambassador. He denied the charge.

Gen. Michael V. Hayden
Principal Deputy Director of National Intelligence
202-395-7957

Hayden walks into the newly created Office of the Director of National Intelligence with his insider credentials well burnished: Between a six-year stint as director of the National Security Agency and a posting as commander of the Air Intelligence Agency, Hayden, 60, has seen how the nation's 15 intelligence agencies function -- or veer into dysfunction. The Pittsburgh native joined the Air Force after college at Duquesne University. He delayed active duty while going for a master's degree at Duquesne. He jumped into the world of intelligence as an analyst and a briefer at Headquarters Strategic Air Command. In 1999, he took over the troubled NSA and cracked open the secretive agency just enough to give Congress and the public a glimpse of their tax dollars at work.

Hayden anticipates that he will focus most of his time at his new job on furthering the "smooth functioning" of the intelligence community.

Porter Goss
Director, CIA
703-482-1100

After the tumult that greeted his decision to fire several top spooks, Goss is settling into his newly redefined role as CIA director, where his focus is on rebuilding the agency in a post-9/11 world. Goss, who took the helm in September 2004, is seeking to remake the agency into a "field-first organization" focused on ensuring that agents have sufficient language skills and cultural understanding, says spokeswoman Jennifer Millerwise. A 10-year veteran of the CIA's clandestine service, Goss served for 16 years in Congress, where he chaired the House Permanent Select Committee on Intelligence. He also founded a newspaper in Sanibel, Fla., and later served as mayor there. Goss, 66, grew up in Waterbury, Conn., and graduated from Yale. Once thought of as a shoo-in for the new post of director of national intelligence, he angered the White House by allowing his personnel decisions to make headlines.

John A. Kringen
Deputy Director for Intelligence, CIA
703-482-1100

In February, Kringen took over the Directorate of Intelligence, the division where he got his start nearly 30 years ago as an analyst. He has spent most of his career at the CIA, most recently serving as director of the Crime and Narcotics Center. The intelligence directorate is responsible for providing analysis to senior policy makers, including the president. Given the high-profile intelligence failures of recent years, Kringen will have his hands full pushing for more-accurate and tough-minded analyses. He "agreed to become DDI at a critical point for intelligence analysis," says CIA Director Porter Goss, who appointed him. "He has the substantive experience, including time in the field, and leadership skills to foster the rigorous, competitive analysis our customers need." Kringen, 57, is from Garden Grove, Calif. He earned a bacheler's degree at the University of Southern California and a Ph.D. in political science from the University of Minnesota.

Donald M. Kerr
Deputy Director for Science and Technology, CIA
703-482-1100

Since August 2001, Kerr has headed the CIA's science and technology division, which is responsible for collecting open-source intelligence, supervising satellite technology, and making gadgets for intelligence-gathering. Kerr is the only high-level holdover from George Tenet's reign. Kerr "brings a breadth of experience and knowledge to this post," says CIA Director Goss. Previously, Kerr was an assistant director of the FBI, overseeing its crime lab; an assistant secretary of Energy, working on nuclear weapons development and testing; and the director of the Los Alamos National Laboratory. Kerr spent time in the private sector, where he held high-level positions at EG&G, SAIC, and Information Systems Laboratories. Now 65, Kerr is originally from Philadelphia. He received a bachelor's degree, a master's degree, and a Ph.D. in plasma physics and microwave electronics from Cornell University.

Jennifer Millerwise
Director of Public Affairs, CIA
703-482-1100

Millerwise has a strong work pedigree for the Bush administration and its loyalists: She has been deputy communications director for the Bush-Cheney 2004 re-election campaign; Vice President Cheney's press secretary; assistant press secretary in the Bush White House; and a regional press coordinator for the Republican National Committee's "Victory 2000" campaign. Millerwise has also worked for Ari Fleischer (at the House Ways and Means Committee); for Spencer Abraham (while he was a senator for Michigan); and for her current boss, CIA Director Goss, when he was a member of Congress. Millerwise, who was Rep. Goss's press secretary, became the CIA's director of public affairs in January. "She is loyal, patriotic, and dedicated to our mission," Goss says. "Her experience and relationships with the media bring a unique asset to the CIA." Millerwise, 29, is from Pinconning, Mich. She has a degree in business administration and political science from Western Michigan University.

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Agriculture's homeland security role still in seedling stage, observers say

Corine Hegland — Fri, 09 Jan 2004 00:00:00 -0500

A lot, according to Peter Chalk, the author of a forthcoming Rand report, "Hitting America's Soft Underbelly: The Potential Threat of Deliberate Biological Attacks Against the U.S. Agricultural and Food Industry." Chalk said, "The American farming community and food sector remain highly open...al Qaeda has said that it considers America's economic interests to be its Achilles's heel, and [Osama] bin Laden has said that biological agents should be used in whatever capacity against Western interests."

Agriculture is a $1 trillion-per-year industry, responsible for about one-sixth of the American gross national product. But despite its economic heft, the industry is a latecomer to the homeland-security game. It wasn't included among the country's high-priority infrastructure systems until after Sept. 11, and basic security preparations such as emergency plans, drills, maps, and clear lines of communication still vary enormously from state to state.

Mad-cow isn't contagious, but plenty of other diseases are. If terrorists were to unleash foot-and-mouth disease on the country's livestock, for example, which they could easily do, they could inflict $30 billion in damages. In the United Kingdom, the accidental outbreak of the disease in 2001 cost more than $10 billion, and the livestock sector there still hasn't recovered.

"From the standpoint of homeland security, we haven't got a strategy," Chalk said. "There are ad hoc initiatives, but they're not integrated, and they're more stopgaps than concerted efforts."

Washington state, where a stumbling cow was belatedly discovered to have carried bovine spongiform encephalopathy, or mad-cow disease, is a case in point. In the state's agriculture department, James Wood said the department's full-time emergency staff consists of "me." "There are times when I feel stretched," he said, adding that the department has requested funding for two additional people to work on homeland security and food safety.

At the other extreme is North Carolina's agriculture department, which has more than 25 people dedicated to emergency programs. The impetus for the Tarheel State's extensive program wasn't terrorism, but hurricanes. With a $49 billion agricultural sector and vulnerable oceanfront position, North Carolina is home to more supercostly weather disasters than any other state in the country. As a result, by the mid-1990s, it had mapped out the location of every farm inside its borders, something that other states are just starting to do. In 1999, after Hurricane Floyd devastated the state, North Carolina transferred Tom McGinn, its chief veterinarian, into a newly created post: director of emergency programs.

McGinn immediately began working with the state's emergency management, law enforcement, public health, and forest service officials on developing a coordinated response to agricultural emergencies. Cooperation, he said, came easily, thanks to a bit of creativity on his part: He showed the other departments a video clip of an animal disease outbreak in another country. "I told them this was a $10 billion disaster, and that the biggest thing we'd seen in our state, at that time, was a $6 billion hurricane," he said, and the light "immediately came on."

The state, under McGinn's leadership, undertook an ambitious program of creating county-level animal response teams, which counties and states across the country have since copied. The teams include animal-control officers, universities, the sheriff's office, veterinarians, forestry officers, animal producers, and private citizens, all of whom can be mobilized in an emergency. "We got the whole idea from the volunteer fire department," McGinn said. "The community can't afford a full-time emergency team, so we have a volunteer one instead."

But how would all of the state's preparations hold up under a terrorist attack? That, McGinn said, depends on the preparations of other states. American livestock is tremendously mobile: North Carolina alone moves a million animals a week, which easily allows a contagious disease to spread quickly. A breakdown at any point in the livestock/food distribution/first-responder network would mean huge problems. If one producer doesn't quickly call a vet, if one vet doesn't recognize slobbering as a sign of foot-and-mouth disease, if one county fails to lock down the area around contaminated farms, or if one state fails to guard its borders, then a virus could quickly spiral out of control.

In cooperation with the National Defense University, McGinn ran a simulation on the impact of having terrorists deliberately introduce foot-and-mouth disease into five states around the country. The disease was not detected until the fifth day, at which point it was already in 23 states. By day 30, the disease had spread through 40 states and would have required some 700,000 personnel to contain.

Preparing for a terrorist attack, McGinn said, is akin to preparing for a computer virus. "Hardening one computer, or farm, won't do it," he said. "There's an entire system that has to be hardened, and there have got to be resources from the states and at the national level addressed to that hardening." The Department of Homeland Security has asked each state to identify its top 10 agricultural targets, McGinn added, but "the biggest target is the network itself."

USDA has taken some recent steps to help strengthen the agricultural and food emergency-response network at the national level. The department is spending millions on agricultural security, including $43 million to help states rapidly detect, diagnose, and respond to outbreaks. Together with the Homeland Security Department, USDA will be delivering a joint strategy on foreign animal diseases to Congress this month. And some of the steps taken in the wake of the mad-cow discovery--such as a formal commitment to implementing a system of animal tracking--are crucial to containing an outbreak of any animal-borne disease.

If the news is mixed on the animal front, it's even more so for vegetables and fruits. Most food-borne illnesses are also carried by produce, which falls under the jurisdiction of the Food and Drug Administration. Last fall's 1,000 cases of hepatitis A illuminated some stark vulnerabilities there.

The first three outbreaks occurred in late September and early October, but almost a month passed before the green onions were identified as the problem. Furthermore, the first public advisory wasn't issued until November 16, during the fourth, and largest, outbreak.

The FDA says it didn't know that it was in the middle of an ongoing crisis until people in Pennsylvania started to get sick. "By the time we implicated the onions, there were no more in the marketplace, so we didn't think we had a continuing" public health hazard, according to an FDA spokesman.

But the biggest contrast between USDA and the FDA is in the time it took each agency to trace the culprits. USDA took a couple of days to figure out that the mad-cow came from Canada; after fingering the onions, though, the FDA needed another month to trace them back to their Mexican roots.

"I'm not a big supporter of USDA, but they have a much tougher law and much greater resources to apply to addressing a problem," said Carol Tucker Foreman, director of the food policy institute at the Consumer Federation of America. The "FDA doesn't have the resources and, in the case of imported foods, doesn't have the legal authority to do the job."

While USDA inspects all the butchered meat in the country, the FDA, which oversees some 75 percent of America's food, inspects less than 2 percent of all food imports--and even that's an improvement from a year ago, when it inspected less than 1 percent.

Furthermore, according to some experts, the inspections on incoming shipments are so cursory that their effectiveness is questionable. "They're just looking for gross contamination, like opening a container that says green onions and making sure there are no dead raccoons," said Rocco Casagrande, director of homeland security for Abt Associates, a research and consulting group based in Massachusetts.

What could terrorists learn from the contaminated green onions? They could see that the majority of healthy adults would survive most food-borne attacks. That's the good news for Americans. The bad news is that the terrorists would realize that vegetables are a pretty good method of making a lot of people sick -- and killing a few -- with anything from salmonella or E. coli poisoning to botulism. "You're not cooking it. You sometimes don't even wash it very well," Casagrande said of imported produce. So all a terrorist has to do is "ensure that [the germ] will survive in dirty, watery food."

Under the Bioterrorism Act of 2002, the FDA got some new abilities to track and respond faster to contamination. For the first time, most of the food industry has to register with the FDA, and food importers have to give inspectors advance notice of incoming shipments. More importantly, as of December 2003, the industry became responsible for keeping records of where food comes from and where it is going. These are the type of records that could have helped trace the contaminated onions much faster.

Despite the recent advances, though, Chalk said that the country's agriculture and food sectors are still far too vulnerable. "I started researching this area back in 1999, and in terms of concrete developments, virtually nothing has changed, 9/11 or the U.K. foot-and-mouth outbreak notwithstanding," he said. Even without a terrorist attack, he speculated, it's only a matter of time before a new imported disease breaks out in the U.S., and then "we'll be scrambling to catch up."

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USDA works to simplify food stamp program

Corine Hegland — Mon, 05 Jan 2004 00:00:00 -0500

For two mothers who arrive on a Wednesday morning to pick up their sacks of free food, however, the bags hold most of what their families will eat over the next few days.

Both women receive food stamps. If they lived in the suburbs, where it's easy to find Shoppers Food Warehouse and other discount grocers, the stamps might be enough. But living in the city without a car means shopping at expensive grocery stores, and then hitting a couple of pantries each month once their stamps run out. "I'm blessed to have this assistance," one woman said, "but we all know that food stamps just don't last for the month."

The $23.7 billion-a-year food stamp program is supposed to be the first line of defense against hunger in America. But with only 62 percent of those who are eligible for food stamps now participating, millions of families are getting no government help and are turning to community food pantries.

Even so, the food stamp rolls are growing fast. From September 2001 to September 2003, the number of Americans receiving food stamps jumped by 27 percent, from 17.9 million to 22.7 million. And despite the nascent turnaround in the economy, everyone involved in helping to get food to the poor--from the Agriculture Department to local food banks--expects the caseloads to climb even higher.

Kate Coler, deputy undersecretary for food, nutrition, and consumer services at Agriculture, said, "Food stamps is a nutrition program; it is not a welfare program." But historically, food stamps have been a lot easier to get for a family that is already on welfare. Applying for stamps is complicated. It requires a lot of paperwork to report income, assets, expenses, and household size. Moreover, because some working-poor parents experience big fluctuations in their monthly paychecks, they were required until recently to keep their caseworker apprised--often in person--of any income changes so that their stamp allotment could be recalculated. For working parents, enrolling and staying in the program means taking precious time off work.

Partly because of the difficulties for people with jobs, the food stamp rolls plummeted after the enactment of the 1996 welfare reform law, which pushed millions of families from welfare checks to paychecks. In 1996, 26 million adults and children were getting stamps. By 2000, that number had dropped to about 17 million.

But the families who fell off the list still struggled to put food on the table. Studies by the government and advocacy groups showed that these families relied on private food banks instead of the government-funded stamps.

"We went through unparalleled economic growth and very low unemployment, yet the number of people we were serving grew twice as fast as the population," said Doug O'Brien, vice president for public policy at America's Second Harvest, the country's largest food-bank system. Officials at the Chicago-based nonprofit realized that despite the decrease in unemployment, the number of people in poverty hadn't changed all that much. After welfare reform, more poor Americans had jobs instead of welfare checks, but because of the difficulty of getting food stamps, the working poor turned to food banks. "Nearly half of the people we serve come from households in which an adult is working," O'Brien said.

And despite the recent increase in the food stamp rolls, the food pantries, in the words of one operator, are still "getting slammed" by overwhelming demand. A December 2003 study by the U.S. Conference of Mayors found that emergency requests for food shot up by 17 percent last year. Furthermore, in about half of the cities surveyed, lack of resources forced agencies and food banks to turn people away.

Historically, "the needy person was the guy with a 5 o'clock shadow, who was a recovering alcoholic at the mission down the alley," said Catherine D'Amato, president of the Greater Boston Food Bank. Now the needy are more likely to be families with homes and, in many cases, jobs. "It used to be that you went once a year for an emergency, and now [food banks] are a way of life: You go every month," D'Amato said.

Unlike the decline in overall welfare caseloads after 1996, the drop-off in the food stamp rolls was not viewed as a cause for celebration. Instead, to advocates and administrators, and to Democrats and Republicans alike, the decline illuminated a major problem in the country's food policies. Changes were needed.

At the administrative level, both the Clinton and Bush administrations tried to make the food stamp program more accessible to poor working families. The states were encouraged to loosen their asset requirements and ease the application process. A Second Harvest study in 2000 documenting the complexities involved in food stamp applications and recertifications showed that some states demanded that applicants report income even from garage sales, birthday gifts, and the sale of blood plasma. As a result, USDA hired a contractor to help the states simplify their paperwork and encouraged caseworkers to waive in-person interviews, when possible.

The 2002 farm bill built on these changes. Legal immigrants who had been kicked off the rolls entirely in 1996 were allowed back on. Complex income eligibility rules, which were different for food stamps, welfare, and Medicaid, were simplified; states were permitted to use one definition for every program. The federal government also allowed states to ask recipients to report their income twice a year, instead of every month. And most important, the quality control system, which had encouraged states to make stringent demands on food stamp recipients, was relaxed. Now, only administrators with persistent problems run the risk of penalties.

Advocates credit Agriculture Undersecretary Eric Bost with aggressively ensuring that the changes made in Washington took effect throughout the country. O'Brien says that Bost's message is clear: "If you're eligible for nutrition programs, especially for food stamps, we want you in." And that message, coupled with greater flexibility, means that the states are now focusing on getting more people into the program.

"Suddenly, the purpose of the program is central again. It's meant to provide food assistance to Americans who lack the resources to provide enough food," O'Brien said. "And now that is driving [the program], not just the quality control system."

Arizona is now putting food stamp posters and applications in grocery stores. Massachusetts cut its application from 12 pages to four. Community groups and food banks in Texas are reaching out to eligible immigrants. Delaware created a tool that food banks can use to show people how much they could be receiving in food stamps. And similarly, USDA has a new online resource for local food banks and community groups that people can use to determine if they're eligible and, if so, for how much.

It's too early to say how well the new measures are working. Most experts agree that the economic downturn, which increased the pool of eligible participants, is the reason for the jump in participation in the past few years. Moreover, some states have been slow to embrace the new streamlining options because of the up-front costs involved; the states have to shoulder half of the administrative costs of the federal program.

"Everyone wants to get rid of red tape and unnecessary bureaucratic hurdles, but they can't get the resources to do the training and to reprogram the computers," said Stacy Dean, director of food stamp policy at the Center on Budget and Policy Priorities.

In California, for example, Gov. Arnold Schwarzenegger has proposed reversing his predecessor's decision to loosen the vehicle asset rules and provide transitional benefits for people leaving welfare for work. By doing so, he'd shave $100,000 off his state's massive budget deficit--but also lose more than $200 million in new federal funds, says a group called the California Budget Project.

"The image of food stamps may have become more positive, but that doesn't mean that it's first in the hearts of the leadership of a lot of states," said James Weill, president of the Food Research and Action Center. "It still takes a bit of money to bring in a lot of money."

While trying to make the program in the states friendlier to working families, advocates in Washington are now focused on next year's scheduled reauthorization of the Child Nutrition Act. Kids are still going hungry; the 2000 census showed that almost one-third of the households headed by single mothers were "food insecure," which means that the moms weren't sure where all of their meals were going to come from that year. Surveys by America's Second Harvest reported that in 1997 one of five people in soup kitchen lines was a child, but by 2001, that proportion had risen to one in four.

"We know that these programs work, and that they have a substantial benefit not just to the child, but to society as a whole," said O'Brien, whose organization is pushing for $550 million a year in new funding for the Child Nutrition Act programs. "Ultimately, it's a political decision: Will we extend these benefits or not?"

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Reinventing Iraq will require bureaucratic overhaul

Sydney J. Freedberg Jr. and Corine Hegland — Thu, 27 Mar 2003 00:00:00 -0500

Bureaucrats in Mesopotamia, as the land between the Tigris and Euphrates Rivers was known, began keeping written records in 3400 B.C. And despite three decades of political repression, economic mismanagement, and military disaster under Saddam Hussein's Baath Party, Iraq today-unlike Afghanistan in 2001, Yugoslavia in 1995, and Germany in 1945-is not a "failed state." From food-distribution systems to local police forces, essential institutions and infrastructures have survived Saddam, albeit barely, and they will survive a war that successfully ousts him.

So the good news is that Iraq will not have to start over from scratch. Unfortunately, the bad news is also that Iraq will not be able to start over from scratch.

"This is not Afghanistan; this is a country that's functioning," said Phebe Marr, author of The Modern History of Iraq. "They can get the oil up, they can run the irrigation system, they can run the government," Marr said. "But that's very different from [running] a political system. The liberal strand you need ... tolerance, compromise ... it's just not there."

Force and fear have long held Iraq's disparate parts together: the clannish, pastoral, and agricultural Kurdish north; urban, urbane, multiethnic Baghdad; and the marshy, impoverished Shiite (also called Shia) south. The modern era is bloodily bracketed by the Iraqi army's 1933 massacre of Assyrians, a tiny ethnic group of mostly Christians-just 11 months after Iraq gained independence-and by the slaughter of Kurds and Shiite Muslims in the uprisings against Saddam after the Persian Gulf War in 1991. The history of Iraq can be told as an intermittent war waged by the Sunni Arabs, who have dominated the government and the center of Iraq, against their ethnic rivals-the Sunni Kurds to the north and Shiite Arabs to the south. No wonder many international experts and officials, scarred by the peacekeeping failures of the 1990s, see Iraq as a new Yugoslavia waiting to explode.

But many of those who know Iraq best-exiles and, more objectively, historians-see more nuance, and more hope. The violence has been real, but it never was simply about ethnicity. Shiite mobs lynched Shiite collaborators in 1991, and were shot down by units that included Shiite conscripts. Kurdish paramilitaries aided Saddam's genocide of other Kurds in the 1980s. And yet, in 1991, Kurdish rebels showed remarkable restraint, even toward Saddam's non-Kurdish soldiers they had taken prisoner.

"We were quite afraid that the Kurdish people would take revenge," said Antonella Notari of the International Committee of the Red Cross, who was in northern Iraq in 1991. Instead, "Iraqi prisoners were treated with great respect by the Kurdish combatants, [who realized that the soldiers] didn't fight against the Kurds by choice."

Such an understanding represents Iraq's best hope. Unlike Yugoslavia with its ethnic paramilitaries, or Afghanistan with its tribal warlords, or even democratic India with its Hindu-versus-Muslim riots, Iraq has seldom seen the violence of people who willingly took arms against their neighbors. In 1991, mobs burned government buildings, not ethnic neighborhoods, and with good reason. Precisely because the flat, fertile floodplain of Iraq has been so civilized for so long-unlike the barely governable highlands of Afghanistan or the Balkans-the state has traditionally been the worst killer. And there is a difference between entire communities that commit violence and a government that commits violence: Governments can be overthrown.

But with so much blood on official hands, the robustness of Iraqi governmental institutions is a mixed blessing. "How do you reconcile a woman who has been raped, as a matter of state policy, by a civil servant?" asked Feisal Istrabadi, an Iraqi expatriate who has advised the State Department's "Future of Iraq" study.

The wounds inflicted by Saddam run deep. So does complicity. Istrabadi estimates that the regime's hard-core supporters number 100,000. And nearly 2 million people-one Iraqi in 12-belong to the Baath party, less out of conviction than convenience; they need party membership to get promoted, to stay safe, even to get into college. "I understand why they joined," Istrabadi said. "I might have joined myself." So while many leaders in exile want the Baathists out of the bureaucracy, the tainted rank-and-file functionaries may be so numerous that it's impossible to govern Iraq without them.

The dilemma then, for any U.S. occupation force, is that immediate and future goals often conflict. Flooding Iraq with aid eases short-term suffering but deepens long-term dependency. (Indeed, U.N.-supervised Oil-for-Food rations are now killing off Iraqi agriculture.) Keeping Baathists in official positions reduces the risk of anarchy today but increases the danger to democracy tomorrow.

"What you do from day one sets the terms," said Ray Jennings, a veteran of Balkan reconstruction who is now at the U.S. Institute of Peace. "The traditional idea that you go in, provide relief, stabilize, and then you worry about rehabilitation and development ... has gotten us into trouble several times," he said. Most notably that was true, Jennings noted, in Bosnia and Kosovo, where gangster-politicians had time to entrench after NATO troops stopped the fighting and before U.N. civilian personnel could restore the rule of law.

The need to keep both short-term and long-term goals simultaneously in sight has gained real traction in the U.S. government. Contracts to rebuild everything from oil fields to schools are being put up for bid, even as emergency rations are being stockpiled. Agency for International Development chief Andrew Natsios pledges that long-term reconstruction projects will follow humanitarian relief efforts within days.

But many outside experts fear that the plan to win the peace is far less advanced than the plan to win the war. "The administration has given very little attention to this, the Congress has given essentially no attention to it, and the media has spent very little time on it," said Sen. Chuck Hagel, R-Neb., a Foreign Relations subcommittee chairman fuming over administration officials' refusal to even guess at the costs of rebuilding Iraq. And until the president forces Congress and the public to confront those costs, said Hagel, the American people will not commit for the long haul.

And rebuilding may require a huge commitment: Unofficial estimates suggest tens of billions of dollars, and tens of thousands of troops, for years. The stakes are high, and time is short.

Security

Dictators don't fall softly. The 1991 Gulf War drove Saddam Hussein's troops from Kuwait but only shook his hold on power. Yet the failed uprisings afterward still took an estimated 60,000 lives-20 times as many Iraq civilians as were killed by the U.S.-led coalition. Some experts blame Saddam's security forces for most of the post-Desert Storm bloodshed, and they fear that tens of thousands of Baathist thugs could again lash out in despair if Saddam seems doomed. Other experts, attributing the 1991 carnage to vengeful mobs, worry that tens of thousands of ethnic militiamen will again settle old scores as soon as they are free to do so. Yet others simply fear the natural escalation of fear and violence in a country without a trusted, neutral arbiter.

Who's right? Whether it's the old oppressors or the newly liberated who might run amuck is almost moot. The way to head off either kind of chaos is with several hundred thousand troops, as Army Chief of Staff Gen. Eric Shinseki has let slip. The administration quickly renounced his estimate, but it still plans to have 380,000 troops either in the Gulf or on call as potential reinforcements. Such numbers would be needed less to defeat the 400,000 demoralized and ill-equipped soldiers of the Iraqi army than to impose order on 23 million Iraqi civilians. And the Bush administration has explicitly given its regional commander, Gen. Tommy Franks, the task of administering what he liberates.

But once again the short-term and the long-term concerns are at war. U.S. troops can keep most Iraqis from killing each other, but some Iraqis will soon try to kill them. At the end of World War I, the British liberated the Ottoman provinces of Baghdad, Basra, and Mosul from the Turks and united them in one entity called Iraq; in 1920, Iraq rose in revolt when it became clear that the British weren't going to leave. In 1996, the mere presence of U.S. troops in Saudi Arabia inspired a truck bombing in Dhahran that killed 19 Americans, and they were just sitting in barracks. The last time the United States tried to impose peace on an Arab city was in Beirut in 1983-and the response was one bomb that killed 241 Marines. Just imagine the reaction if a U.S. patrol in Baghdad were swarmed by rioters and had to open fire.

"Some dirty work needs to be done," said Mustafa Malik, a journalist, scholar, and former Pakistani official. "Somebody has to do some shooting initially [to keep order]. If the shooting has to be done by the American military, I cannot imagine, after that, that we can have control."

So although U.S. forces must be the final guarantor of order, on a day-to-day basis it will be best to have Iraqis policing-and if need be, killing-other Iraqis. And what happened in the Kurdish north in 1991 offers some hope. Kurdish rebel leaders forswore mass trials and mob violence against supporters of Saddam's regime; some were killed anyway, some fled, but most of the rank-and-file functionaries stayed-and most of the local cops kept walking their beats.

Municipal police in Saddam's Iraq today are ill-trained, underpaid, and steeped in petty graft. But their very weakness has saved them from the worst corruption of all: The elite security forces shunted them aside to keep for themselves the work of repressing the regime's foes and the ample rewards from Saddam. Meticulous records captured by the Kurds on the torture and murder of dissidents show that the regular police were uninvolved.

So if the invasion is not too disruptive, the United States could copy the Kurdish model, pay civil-service salaries-as the Bush administration has already pledged to do for a time-and leave the local cops in place. Heavily armed U.S. patrols can provide backup and a visible reminder of who is in charge, but U.S. forces could steadily draw down, as they have in Bosnia and Kosovo. In most towns, most of the time, the only armed foreigners might be a few discreet observers from Army civil affairs, military police, or Special Forces, and, later on, civilian police from Brooklyn or Berlin to retrain the locals. Some villages might never see an American soldier at all.

Eventually, however, villagers will have to see an Iraqi one. Sharing the region with Al Qaeda and Iran, the new Iraq will need an army-which is one reason U.S. war planners don't want to blow up too much of Iraq's existing army. But once again, short- and long-term goals are in conflict. The Iraqi army staged its first coup in 1936, four years after independence, and then alternately dominated and ousted civilian governments for decades. After 1968, the Baathists weakened the army and built up new security forces loyal only to their party-but those thug elites will go out with the Baath, leaving the army once again the strongest player in Iraqi politics.

How can the Iraqi military be taught the rules of a more democratic game? The U.S. has reformed authoritarian armies before, notably in the Eastern European nations now welcomed into NATO. But it took years of aid and constant pressure. Even if current commanders are retained and their units are kept intact, it will take months to sort through personnel records (assuming files are not destroyed) to find the worst actors. And many experts doubt that such half-measures will purge the dictatorial taint fouling the army.

Kanan Makiya is considered the dean of Baghdad dissidents and is affiliated with the Iraqi National Congress. In an interview with National Journal, he said that U.S. occupiers should "completely restructure the army ... demobilize it and build it up again under new leadership, with new training." But in Afghanistan, it has taken foreign advisers more than a year to train just 3,000 troops for that war-torn country's new army. Protecting Iraq's borders and provinces might require a new army of 150,000 troops. And however retrained, those troops will have to be paid adequately to keep them anywhere near loyal, while demobilized soldiers will need jobs that keep them off the streets. All of that requires money. In the long run, Iraq itself must pay for sustainable reform-and that means using its oil.

Economic Reconstruction

America fought its most recent war in Afghanistan, a country already leveled by 20 years of fighting. Iraq starts off in far better shape and has never fallen as far. This makes the long-term task much easier-there is a base in Iraq on which to build. Iraq contains the apparatus of industrial society-water systems, electrical grids, food distribution. Now, the United States will wield the most precise weapons in history and follow a "humanitarian map" of what not to hit with its bombs. But human error, technical glitches, city fighting, and last-ditch malice by Saddam will take some toll on Iraq's infrastructure. And the fighting will inevitably result in fleeing refugees.

How many refugees? In 1991, 2 million, mostly Kurds and Shiites, fled Iraq. Now, some leaked U.N. scenarios estimate that fighting will force up to 2.5 million Iraqis to leave their homes. But if the war is short, they can return home fast, as Kosovar refugees did in 1991, said Jan de Wilde of the U.N.-affiliated International Organization for Migration. And de Wilde doubts a U.S.-led war will displace as many people as the 1991 anti-Saddam uprisings did.

The critical variable in these calculations is water. People without food take weeks to starve; people without water die in days. And all of Iraq is hot. Much of it is desert. But more dangerous to more people are the great rivers that gave Mesopotamia its wealth in ancient times, but that are now badly contaminated with sewage.

The oil boom of the 1970s bought Iraq a sophisticated water and sanitation system to serve its burgeoning cities. In 20 years of war and sanctions, the infrastructure has decayed while the population grew. Despite real improvement since Oil-for-Food funds started buying repair parts in 1996, aid groups estimate that 5 million Iraqis still lack safe water, many of them right in Baghdad, and that half the sewage treatment plants aren't working. The plants and pumps that do work draw power from an electrical grid whose output is still 30 percent below 1990 levels and which is highly vulnerable to stray bombs.

By contrast, the food supply in Iraq looks almost robust. Since Oil for Food began in 1996, the average Iraqi's caloric intake has doubled, though it is still below 1980 levels and the U.N.-recommended minimum. Malnutrition remains widespread, especially among children under 5, whose death rate is among the highest in the world-not from outright starvation so much as from weakened resistance to the bacteria in the water. Under Saddam's rule, 60 percent of Iraqis-some 14 million people-depend on a government rationing system that outside experts consider highly efficient, and which the United States has promised to get running again soon after the war. To bridge any gap, many families have stockpiled a six-week supply of food, thanks to extra rations Saddam has been issuing since July. And for those in need, aid agencies can deliver food far more easily than water; the U.N.-affiliated World Food Program alone has enough rations warehoused in the region to feed a million people for a month.

But foreigners cannot provide basic services such as food and water, or police, to all of Iraq indefinitely. That is why even the emergency supplies U.S. and international agencies are now stockpiling include not only rations but also electrical generators, water-purification systems, and other equipment to get Iraq's infrastructure back in service. In the midterm, the reconstruction of Iraq will depend on getting both halves of Oil for Food running again-not just imports of food, medicine, and spare parts, but also exports of oil to pay for it all.

The long-term paradox is that the Oil-for-Food program reinforces central planning, pervasive subsidies, and the kind of dependence on a single export-oil-that has doomed developing economies in the past. Said one U.S. government official, "Sooner or later, you'd want to wean people off of that."

But global capitalism may come calling before the new Iraq is ready. The immediate potential danger to Iraqi oil fields is that Saddam may set them afire out of spite. He has, however, already done a subtler kind of damage to his nation's economy-piling up debt. Even today, a quarter of Oil-for-Food revenues go not to Iraq, but to Kuwait and others as reparations for the 1991 Gulf War, amounting to nearly $16 billion in payments over the past six years, with another $172 billion in claims awaiting adjudication. And the commercial loans Saddam took out before 1991, on which Iraq has a decade of unpaid interest, are estimated to total between $60 billion and $140 billion-up to twice Iraq's entire annual gross domestic product.

No plausible aid program could outpace the annual interest payments. "All of our generosity will not match that number," said Rick Barton of the Center for Strategic and International Studies in Washington. The only solution, Barton said, is an international conference to renegotiate this crushing debt, and soon.

If their creditors do not suck them dry, the Iraqis may prosper, because they have plenty of experience running a profitable, technically efficient oil industry on a daily basis. But strategically, Iraqi oil has been mismanaged for decades. The Baathists have spurned foreign investment, left oil fields unexplored, and squandered revenue. In areas Saddam controls, the gross domestic product is one-fifth of what it was before the Iran-Iraq war of the 1980s, literacy has dropped by a third since the mid-1980s, and the shriveled economy is less diversified and more dependent on oil than ever before. Since 1979 when Saddam became president, Iraq "hasn't been developing-it's been de-developing," said Paul Sullivan, a professor of economics at the National Defense University.

Before 1979, peace and high oil prices made the 1970s a boom time for Iraq, fondly remembered even today. But even then, the golden age was hollow, and the country suffered from what could be called "the oil disease." Easy money propped up inefficiency and repression, and it fed economic dysfunction without building lasting gains. Although Iraq shows this syndrome at its warmongering worst, the oil disease has undermined democracy and development in countries around the globe, from Saudi Arabia to Nigeria to Venezuela. If Saddam's replacements are even half as corrupt, Iraqi oil will go to waste again, and with it, American hopes.

Political repression is not completely incompatible with economic growth; look at the histories of South Korea and Taiwan. But openness gives young economies the chance to see and correct rising corruption before it chokes them. Even from a narrowly pragmatic point of view, the new Iraq will need some measure of democracy, if only to get it on its feet and off our back.

Prospects for Democracy

Who will rule Iraq after Saddam? The bitter debate usually focuses on who is to be on top-will it be a U.S. military administrator, a civilian, or an international figure linked to the United Nations? After years of feuding among themselves, the splinters of the Iraqi opposition came together in early March to name a six-member provisional council-and to denounce Washington's plans for an interim U.S. administration.

But whether a transitional government has an American governor with an Iraqi advisory council, or an Iraqi council dominated by an American adviser, the final arbiter will be U.S. troops-and the day-to-day administrators will be Iraqi functionaries. Parliaments are important; however, for most Iraqis, most of the time, their local bureaucrats and courts already matter more, and will continue to matter more. How can Iraq reform its economy, let alone its politics, if citizens cannot even take the government to court?

The Iraqi court system, of course, has also been corrupted by Saddam. Before the Baathists, "you could sue the state for breach of contract; you simply can't do that now," said the expatriate Istrabadi, a lawyer. Bribes and personal connections outweigh evidence, even in ordinary civil cases. And for dissidents, there is an entire body of secret laws known only to the security police, and a parallel system of secret courts-in which regular judges are often forced to serve, knowing in advance that the defendant has been tortured and that the verdict will be "guilty." Such forced complicity is as demoralizing as it is corrupting.

The pervasive dishonesty of Saddam's police state taints even schoolteachers, who are so underpaid that many give good grades in return for a bribe. With 50 percent of Iraq's population unemployed, 60 percent living off government rations (some of which get sold for spare cash), and many families selling off furniture and books to make ends meet, any idea of normal economic life is lost in Iraq. "This is a society in shambles," said Sullivan. "Behavior that would have been completely unacceptable in the 1970s is now the norm."

Some decency and honor do remain, however. "The corruption and all of those things are there; but it's much better than any [other] developing country in the world," said Rehan Mullick, a former staffer with the U.N. Oil-for-Food program who found Iraqi bureaucrats "definitely" superior to those in his native Pakistan. "Even my colleagues from Africa and other places really admired Iraqis for maintaining their integrity."

While never up to Western standards, Iraq has traditions and institutions many countries would envy. Before 1958, during the rule of the British-installed Hashemite monarchy, Iraq had not only functioning courts but also a parliament, political parties, a free press, and elections. The elections were frequently rigged, the press was often censored, and "the politicians tended to be large landlords," said Juan Cole, a historian at the University of Michigan. With all its flaws, said Cole, Hashemite Iraq was "kind of like 18th-century Britain."

Since 1958, when a military coup ended the monarchy, Iraq's proto-democratic institutions have been destroyed, and the landlord class that ran them has been exiled, killed, or simply dispossessed. Saddam has spent three decades eradicating any alternative leadership. But there are candidates, each with strengths and flaws.

The exiles are the best-known and most derided. The Bush administration has rejected proposals to form a government-in-exile, and outsiders doubt the dissident Iraqi National Congress's claim to strong underground support inside Iraq. Some leading dissidents left the country decades ago. But that very isolation-besides keeping them alive-has kept the expatriates free of the pervasive corruption of the Baathist regime. And for all the bickering among expatriate politicians, the huge number of Iraqis living abroad-an estimated 4 million-includes the country's best-educated professionals, many of whom have years of experience living in Western democracies. Said Abbas Mehdi, a professor at St. Cloud State University in Minnesota and no fan of the INC, "If 20 percent of these people go back and act as an agent for change, Iraq will change."

Inside Iraq itself, however, the Kurds have long provided the strongest leadership. The two main Kurdish parties date back decades and are led by men with famous family names. "People like me knew who Talabani and Barzani were before the uprising" of 1991, said Tara Aziz, now with the Washington Kurdish Institute. Such recognized leaders could both direct and restrain the revolt. Former U.S. Ambassador Peter Galbraith recalled being at a town hall meeting with Jalal Talabani at the height of 1991's postwar uprisings: "They were talking about independence; Talabani was explaining-again-why it couldn't happen."

The two Kurdish groups fought bitterly in 1996, one even allying briefly with Saddam. But despite that internal divide, the 4 million Kurds under the groups' rule in northern Iraq have three times as many schools as in 1991; their income and nutrition levels are well above those in Saddam's part of Iraq; and they enjoy a fledgling civil society. And common fear of Turkish intervention, if nothing else, has forced the Kurdish factions to work together-and they function so much better than the rest of the opposition, said Galbraith, that "the Kurds basically ran the show" at a recent Iraqi opposition conference, where they got the other groups to agree in principle to a more decentralized Iraq.

The Kurds' key partner at that meeting, Galbraith said, was the leading Shiite group, the ominously named Supreme Council for Islamic Revolution in Iraq. SCIRI has strong ties to Iran, where a half-million Iraqi Shiite refugees from the 1991 war still live, and from where an estimated 10,000 "Badr Brigade" guerrillas are infiltrating into Iraq. But "they have their own tensions with Iran," said Yitzhak Nakash of Brandeis University, the author of The Shi'is of Iraq. Historically, Iraqi Shiites fought loyally alongside the Sunni against the non-Arab (Persian) Shiites of Iran; Iraqi and Iranian clerics have been rivals for influence in the Shiite world as often as allies; and, anyway, most Iraqi Shiites pay far less heed to their clerics than do Iranians. The real problem in Iraq, Nakash argued, is not the strength of Shiite leaders but their weakness: "After 83 years of Sunni minority rule, the power of the Shiite religious establishment in Iraq has largely been broken."

This power vacuum will slow recovery throughout the part of Iraq now under Saddam's control. "It will take a long time for that interior to be able to express itself politically," said Makiya, the Iraqi dissident. "The inside will take years to create leadership."

The INC's short-term solution is governance by exiles like themselves. But in the long term, civil society must be grown, and must be grown from the grassroots up. "Most of the national-level talent has either been co-opted [by Saddam], or they've been killed or chased out of the country," Barton said. That means, Barton continued, that leadership will have to be built from the ground up in Iraq. "You want to work at the municipal level," he said. Reconstruction veterans advise that the moment a town is liberated, foreign troops and aid workers need to consult the community, not dictate to it, in order to give new leaders the chance to step forward, test themselves in manageable projects, and learn to work with their traditional rivals on obvious common interests such as irrigation.

The downside of such a bottom-up approach is that it cedes control. In the short term, it is always easier to impose compliance from the center. From peace with Israel to war on Iraq, said University of Maryland professor Shibley Telhami, the United States asks "governments in the region to be allies of policies that are not popular; and they can only be allies of policies that are not popular by being less responsive to the public, which means more repressive." A genuinely democratic government would sometimes voice its people's wish that the Yankees go to hell-as the Turkish parliament did in early March when it voted against allowing U.S. ground troops to use Turkish bases to attack Iraq.

The majority in the Ankara parliament belong to an Islamic party. Religious fervor has risen for a generation in the Middle East, even in famously secular Iraq. So removing Saddam may take the lid off some vehement Islamic-and anti-American-sentiments. But trying to clamp the lid back down has proved to be worse. When an Islamic party won the 1991 elections in Algeria, the government annulled them-and sparked a civil war that by some estimates has so far killed 150,000 civilians. In Turkey, when the military finally let Islamic politicians take power, the realities of running a country moderated the views of the Islamists. Indeed, it was the Turkish Islamic party's own leaders who pressed a pro-U.S. vote this year. So when Islamic politicians speak out in the new Iraq, the interim regime might do better to co-opt them, rather than to crack down on them. The best way to guarantee that Iraq will remain America's enemy is to try to force it to be America's friend.

In the long run, if everything goes right-if security, prosperity, and democracy all take root in Iraq despite the odds-the result may still be a country that the U.S. does not particularly like, and that does not like us. Americans died to free France in World War II, and spent years afterward rebuilding Germany. Today, both countries oppose U.S. policy toward Iraq. In the end, the true measure of success will not be the creation of a compliant, repressive puppet, but the fostering of a defiant democracy: an Iraq that can say no.

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INS registration spurs Muslim activism

Corine Hegland — Tue, 18 Feb 2003 00:00:00 -0500

As owner of a restaurant chain called James Coney Island and president of a large civic group in Texas, Ghulam Bombaywala could hardly be more American. "I've been involved in mainstream politics for the last 20 years," said Bombaywala, who leads the Pakistani-American Association of Greater Houston, "and I always told all the Pakistanis, `You need to get involved in the mainstream.' Nobody was taking it seriously. Now, they're taking it very seriously."

"Now," in this case, means since December 18, when Pakistani students, workers, visitors, and other temporary-visa holders-all men over age 16-were added to the growing list of Muslims in the United States who are required to register with the Immigration and Naturalization Service.

More than 1,000 people from the Houston area showed up for a town hall meeting sponsored by the association, with the help of Rep. Sheila Jackson-Lee, D-Texas, to distribute information about the program that immigrant groups refer to as "special registration."

Before special registration, Bombaywala's group focused on providing services for seniors and charities in the Pakistani community. Now, the association devotes all its resources to helping people prepare for registration. The group is holding meetings, educating small groups, and providing space for registrants to meet with volunteer lawyers on Saturdays to learn about the program. "The whole community has revived and gotten more united than it's been in the last 30 years," said Bombaywala, who repeatedly credits the regional INS director, Hipolito Acosta, for his help in getting information out to Pakistani residents. "Acosta has been very good to the community," he said.

Indeed, special registration has now become the singular driving issue-and sometimes organizing principle-for disparate Arab-American, Muslim American, and South Asian-American groups across the country. Those who have to register are men on non-immigrant visas from countries considered to be state sponsors of terrorism, or from those in which Al Qaeda is believed to be operating. That's 25 countries in total, and all but one, North Korea, are predominantly Muslim. As a result, many Muslims in the United States, and overseas, feel as if the Muslim immigrant community is being targeted.

It's not so much the registration program itself as the way it is being implemented that has proved most controversial. "Every government in the world has the right to register immigrants, but the way they are doing it resonates very badly for the American government, because the perception is that it's only targeted on Muslims," says Zahid Bukhari, director of a project at Georgetown University called Muslims in American Public Square.

A December debacle in Los Angeles didn't help that perception. More than 700 men, most of whom were Iranian, overwhelmed the INS office there on the last day of registration. The office responded by handcuffing 553 of the men and detaining them.

The Muslim Public Affairs Council, which had worked with the INS before the December deadline to educate Muslims and encourage them to cooperate, responded to the arrests by protesting and launching a human-rights monitoring project for subsequent registration deadlines.

Although the special registration program has nabbed 36 felons, many activists argue that most of the people spending their days finding registration forms and traveling to government offices to be photographed, fingerprinted, and interviewed are properly documented students and cab drivers, not terrorists. "It's a waste of resources, requiring the law-abiding to go to the INS and tell them what they're doing," says Michael Maggio, an immigration lawyer in Washington. "The agents doing that work are the very same agents who are supposed to be out looking for Al Qaeda and foreign nationals who've absconded."

Furthermore, Maggio says, confusion at the INS has resulted in a patchwork of outcomes. "If you go to Baltimore, your case is treated entirely differently from the Washington district office," in Arlington, Va., he said. Despite promises from INS headquarters, some offices haven't allowed attorneys to accompany the men during registration. Some offices arrested men whose visas had expired, even if their applications for legal status were pending within the INS's own yearlong processing backlog, and then set bonds for their release at more than $10,000. Other offices set bonds in the hundreds of dollars, and some made no such arrests at all. Some men are asked about where and how often they pray; some aren't. "It's poor in conception, and terrible in execution," Maggio said.

The resulting chaos has led local ethnic organizations in the affected communities to focus solely on helping members with the special registration process. And a lot of people who arrived in the last quarter-century and thought they could keep their heads down and work hard to become Americans have discovered another part of the American dream: politics.

"After Justice began targeting Muslims, they began organizing very fast," Bukhari said. "As with other ethno-religious groups that had problems and turmoil, like the German, Irish, Japanese, and Jewish Americans, they realized they have only the American way, which is to organize an alliance and fight back."

In Chicago, an unusual organizer for the large Muslim immigrant community there exemplifies just how far and fast the changes have come. Ifti Naseem is a flamboyant, openly gay poet who has been in the country since 1974. Thanks to the fear and confusion surrounding special registration, Naseem's political experience as co-founder of a local organization for gays and lesbians is more important to his fellow immigrants than his love life. "A Muslim would never stand next to a gay person," he says, "but now I'm a leader, which I didn't want to be!" Now Naseem's radio show is fielding calls from worried families, and he's preparing to co-anchor a rally on February 15 that is sponsored by more than 90 local groups.

In Washington, an almost-defunct coalition of Arab, Muslim, and South Asian groups has resumed its Wednesday strategy meetings at the Arab American Institute. Special registration "brought together a range of ethnic and racial groups who never had this kind of challenge before," said AAI President James Zogby. "And it's largely John Ashcroft who helped spur this effort together." Zogby doesn't exactly consider this a point in Ashcroft's favor, though. "It's a disaster. This is not how to protect and defend our Constitution."

The Council on American-Islamic Relations says that its caseload has been swamped by special registration. "Civil-rights issues have become a major common denominator among Muslim and Arab-American organizations," said Executive Director Nihad Awad. He interrupts the interview to field a call from Arizona, where a CAIR representative is trying to help a woman find her husband, a student who was detained on January 10 for violating his visa by not taking enough credits at school. Returning to the phone, Awad said, "These kinds of policies are spreading fear among many innocent people, and giving a signal to the community that you are all considered suspects."

Pakistanis are the biggest immigrant community affected by special registration, and they have developed the most robust response. After trying, unsuccessfully, to have Pakistan removed from the special registration requirements, Pakistanis turned, with help from their Embassy in Washington, to preparing for registration-through extensive meetings, mailings, community organizing, hotlines, support centers for detainees and their families, and a legal defense fund. Before the registration program, the national umbrella consortium of the Pakistani-American National Alliance had only five member groups; now it has more than 20.

Agha Saeed, president of the Pakistani Democratic Forum and a PANA organizer, says that registration has reverberated through Pakistani-American politics on three levels. First, local community groups have seized the initiative from Pakistan's diplomats. "Secondly, leadership has shifted from elite and professional Pakistani-Americans, like the physicians, to grassroots organizations. And third, people have realized the importance of working through the mainstream American organizations."

In Chicago, Ifti Naseem thinks that the INS program could prove to be a blessing in disguise for Muslim immigrants. "They thought they were very American, and the rug was pulled out from under their feet," he said. "Now they feel like it's their home, and so now they have to fight for their rights."

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HUD budget woes force local housing authorities to tighten belts

Corine Hegland — Fri, 17 Jan 2003 00:00:00 -0500

Nothing is easy about public housing: Not living in it, not running it, and not, as Michael Liu is discovering, paying for it.

As assistant secretary for public and Indian housing at the Department of Housing and Urban Development, he is working in an organization saddled with such a history of corruption and mismanagement that it made it this year onto the HBO hit show about the Mafia, The Sopranos. But his efforts to straighten out the books are causing something between heartburn and heart attacks for public housing authorities across the country.

On January 6, Liu's agency sent a notice to the nation's 3,400 locally run housing authorities cautioning them to be modest in planning how much money to spend this year. Liu said until HUD had a final 2003 appropriations bill from Congress, and could work out a way to correct a multiyear accounting problem on the HUD books-that is, until sometime in late spring or early summer-the local authorities would receive federal operating subsidies at a level 70 percent of the prior year's. Seventy percent, he later explained to National Journal, was a prudent opening move, designed to ensure that he would have enough money to meet the authorities' basic needs after he received their final budget proposals in May and a final HUD budget from Congress.

Prudent or not, the local housing authorities went ballistic. Some called their newspapers: The Boston Globe, The Philadelphia Inquirer, The Tampa Tribune, and other regional papers ran stories in the past week screaming about what was, in effect, a 30 percent budget cut. Some called their congressional delegations, some called their lawyers, and almost all started huddling with their accountants and boards of directors, trying to figure out which already-delayed maintenance projects could be put off even longer, and which security services could be trimmed or stopped entirely. Legally barred from raising rents to above 30 percent of their tenants' incomes, the housing authorities don't have many options for bringing in replacement revenues.

A week and a half later, Liu sent out an e-mail clarifying the department's funding intentions and addressing what he called "rumors" and "misinformation." Assuming, his letter said, that Congress passed HUD's requested budget, the department intended to fund the local housing authorities at 90 percent of their prior subsidy budgets. "We're trying to be sensitive to those who feel like they need this comfort level," Liu told National Journal. Authorities sighed enormous gusts of relief, and then settled back down with their books and boards to attack new budgets that were only 10 percent thinner.

This all came about because last summer, Liu's staff told him that they had been carrying a quarter-billion-dollar shortfall, running back to 2001. Stunned, he asked about his options for making up the funds. He says he was told that he could just take the money from the 2003 budget.

"Time out!" he said, aghast. "Can we do that?"

The money in question is money HUD annually gives to local housing authorities to meet some of their expenses. Internal problems with HUD's system for estimating local expenses had led to the shortfall, but Liu saw an even bigger problem in the recommended solution. "We had an environment that allowed the persons working on this to think that shortfalls were not important," he told National Journal. "They had a practice around here where they would just take money out of the subsequent fiscal year to solve the past fiscal year's problem. If you have that kind of program, without being questioned by policy, then there's no urgency" to fix it.

Slopping funds across fiscal years, Liu believed, was legal, but the habit made it hard to sell his historically messy account books to the White House Office of Management and Budget. "From a management, appropriations, and an OMB view, this was clearly not a practice that was condoned, nor something they were necessarily aware of," Liu says.

"They're in full support of what we're trying to do now, as uncomfortable as it may be, which is to straighten things out and put the program back onto a sound financial basis."

Normally, the department funds public housing agencies at between 95 and 99 percent of their requested budgets, based on the total pot size and a convoluted formula estimating the total needs nationwide. Two years ago, the department changed the funding formula, but it didn't update its accounting systems to match the funding change. As a result, estimates of local expenses for the past two years were about $250 million off.

Liu went to OMB and Congress to get permission to pull the needed money from the 2003 budget. But, he says, it's the last time. Furthermore, he's not going to seek a supplemental appropriation to replace the 2003 funds. "We are not in a position to seek additional funds at this time," he says.

Although the local housing authorities are happy they didn't suffer a 30 percent cut, and are resignedly facing only a 10 percent cut, their anger and confusion over HUD's conflicting signals won't fade away as quickly as the cut did. "It sounds like HUD in turmoil," says Sunia Zaterman, executive director of the Council of Large Public Housing Authorities. "It does start to undermine credibility."

Housing authorities say they first heard about a major shortfall in early November. (Liu disputes that timeline, indicating that he was in communication with housing groups long before then.) On January 6, they received notice to cut their budgets to 70 percent, which was followed-after all the bad press-by the January 15 "clarification" saying that 90 percent of their funds would be available, after all.

"It's the credibility of the entire system which is at risk here," says Kevin Marchman, executive director of the National Organization of African-Americans in Housing and a former assistant secretary for public and Indian housing. "I think everyone thinks this is an episode that we could have done without, and the last three or four weeks of energy should have been spent on other things."

Tim Kaiser, executive director of the Public Housing Authorities Directors Association, says that the budgetary confusion has taken a toll on HUD's already-low credibility. "They have created such chaos and confusion in the housing world-and this is just another example of miscommunication, mismanagement, and an incredibly poor way to do business."

Nobody is delighted by the 10 percent reduction, either. Many thought that they would actually see an increase in their money this year, to replace the funding they lost when the $300 million Public Housing Drug Elimination Program was dropped in 2001, at the request of HUD Secretary Mel Martinez. But, Liu points out, the new levels are commensurate with HUD's historic funding commitments.

Bob Rosenberg, who runs the Federal Receivership for the long-troubled Chester Housing Authority in Pennsylvania, was considering a week ago whether to sue HUD. Now he's looking over his books and trying to figure out how to strike $300,000-or half of his total security costs-out of his budget. He's not entirely surprised by HUD's pullback. "A lot of [local housing authorities] expected that they would eventually try to look like heroes by saying, `Oh, we've found some money, it's not 70 percent, it's 85 or 90, and everyone should be happy,' " he says.

In Minnesota, Tom Streitz, deputy executive director of the Minneapolis housing authority, estimates that he's going to lose about $1.5 million this year because of the cuts, on top of the lost $1.4 million that he used to get for security out of the Public Housing Drug Elimination Program. With those two hits on a $30 million budget, he says, he's not sure where the economies are going to come from. "Everything will be on the table" for cuts, he says, running through a folder containing his budget numbers for property management, utilities, administration, security, and maintenance.

Zaterman says she agrees with the need to put public housing on solid financial footing. But she's concerned that the residents will have to pay for HUD's administrative blunders. "I think the emerging policy from HUD is `Housing authority residents, you take the cut if we make a mistake,' " she says. She would like to see HUD seek a supplemental appropriation from Congress to cover the shortfall caused by its own accounting and estimating systems. "There doesn't seem to be, in all this mess, a clear direction from HUD on how they're going to deal with this," she says.

Some critics charge that housing authorities should be patient and let Liu sort through the budgetary morass he has inherited from the Clinton administration. "There's a little bit of crying wolf," said a Senate Republican staffer. "Every year, [the local housing authorities] complain there's not enough money for something."

But other critics say that HUD's actions of the past few weeks show a preoccupation with accounting instead of housing. If the lack of a budget was the problem, says a House Democratic staffer, HUD could have spoken to Congress. "They could have come and said, `We have a big problem because your bill was late, and we're going to do this terrible thing. Are there any assurances you can give us?' " he said.

Liu says that the accounting problems came as a surprise to many in the housing world, including himself, and he acknowledges that remedying them is going to be painful. "We've had extensive discussions with the [housing] industry, and I can understand they're unhappy," says Liu. "I can assure them that it is as difficult for me as it is for them currently."

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Broad reorganization powers require Congress' approval

Corine Hegland — Tue, 18 Jun 2002 00:00:00 -0400

While the idea of shoving disparate agencies together into a new organizational chart now has credibility on Capitol Hill, nobody is sure how the bills creating a Homeland Security Department would be written to make all the pieces work together effectively. Will old boxes merely coexist on a new set of department stationery? Or would any Homeland Security Department have a free hand to consolidate or cancel redundant functions?

"That's one of the things we're trying to find out right now," said one Senate GOP source. "Making this a strong and effective department [means] giving it the authority it needs to make sure it is coherent."

It is challenging enough to move an agency with a comfortable perch in one department to someplace new in the government. It is especially daunting to rip up the legal authorities for many agencies and budgets and then sew them back together into a single body. The White House's proposal favors the ripping-up approach: "The secretary," it says, "should have broad reorganizational authority in order to enhance operational effectiveness, as needed."

That authority doesn't exist today. Under the Reorganization Act, most presidents from Harry Truman to Ronald Reagan could submit reorganization plans to Congress for approval. If neither house vetoed the plan, the plan was enacted. But the act expired in 1984 after the Supreme Court threw out the congressional veto process.

As a result, for the past 18 years, executive branch reorganizations have had to get a thorough vetting from Congress. Not surprisingly, few proposals survive intact. Norman Ornstein, resident scholar at the American Enterprise Institute, thinks the Bush administration wants "to allow the secretary, once he's got a new department, to rearrange the boxes and move authority and even move budget around without, in each instance, having to go back and get congressional approval. My guess is if this is what we're talking about, then Congress may look at it with a skeptical eye."

Giving the administration the power to reorganize could be crucial in creating a Homeland Security Department that will be organized by functions instead of by fiefdoms. Consider an example from the White House's proposal on the new department. Today, a ship coming into the United States falls under the jurisdiction of the Customs Service, the Immigration and Naturalization Service, the Coast Guard, and the Agriculture Department. Even if these groups are all moved into one department, a menacing ship could still face scrutiny from agents wearing four different uniforms.

Some government-watchers are doubtful about giving an executive department the sweeping power that would be needed to effectively combine the agencies. Gary Bass, the executive director of OMB Watch, says that such a move would undermine the Constitution's balance of powers. "If there was language that allowed the executive branch to fundamentally alter the functions or responsibilities of individual departments without consultation to Congress," he says, "then that shifts the balance in favor of the executive branch."

Alan Dean, a fellow with the National Academy of Public Administration, argues that open-ended authority to reorganize isn't necessary. The secretary of Homeland Security would have all the power he or she needs to get the job done, Dean says, if the legislation creating the new department gets the organizational structure right and strips subagency heads of independent authority. "The real question is, do we want somebody to run this department or not?" Dean says. "If you want the secretary to run the department, you give him all the statutory authority."

Civil-rights groups, meanwhile, are also awaiting details on the new department's powers and how it will carry out its work. The American Civil Liberties Union has called for an independent watchdog within Homeland Security. Laura Murphy, the head of the ACLU's Washington office, says that the operations of any new department will "bear watching."

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Three departments offer important lessons on reorganization

Sydney J. Freedberg Jr., Margaret Kriz, and Corine Hegland — Fri, 14 Jun 2002 00:00:00 -0400

Creating a Department of Homeland Security will demand the biggest reorganization of government in 50 years. But those who don't remember the past are condemned to repeat it, and in Washington, there is an awful lot of history that no one would want to repeat. The last three Cabinet departments to be cobbled together from scattered components-Defense, Transportation, and Energy-all offer important, if often painful, lessons for today.

Defense: The 40 Years' War

Hunting for a historical analogy for the creation of the sprawling Homeland Security Department? It's clear which date the Bush team wants you to pick: 1947. That year saw the origin of the Defense Department (and the National Security Council and the CIA). White House spokesman Ari Fleischer invoked 1947 three times in briefing reporters on President Bush's new plan. And Condoleezza Rice, speaking during the 2000 presidential campaign, long before she became national security adviser, actually told National Journal to expect Bush to make the biggest government reforms since 1947. But just what do administration officials mean by harking back to the 1947 model? And what awkward aspects of history would they like us to ignore?

On the surface, the National Security Act of 1947 was a "big-bang" reorganization, much like Bush's plan: A stroke of President Truman's pen put the rival Army, Navy, and Air Force under a single civilian secretary, a unified chain of command, and an interservice Joint Staff. And like the proposed Department of Homeland Security, the Department of Defense was a reaction to a devastating surprise attack: Japan's raid on Pearl Harbor in 1941, during which the separate Army and Navy headquarters failed to coordinate a defense.

But the 1947 reorganization did not fix the lack of coordination. Political scientist Amy Zegart (who studied under Rice at Stanford University) went so far as to title her history of the National Security Act and its aftermath Flawed by Design. The rival bureaucracies fought the reform so successfully, both within the administration and on the Hill, that the final structure of the department was a compromise: The military services still submitted separate budgets to Congress, the Joint Staff became a graveyard for officers' careers, and the "unified commanders" could not actually order unified action. As late as 1983, during the invasion of Grenada, the Army and Marine Corps simply split the island down the middle. Their separate, ill-coordinated campaigns against a Third World enemy that they outnumbered 10-to-1 took three days and cost 18 American lives.

Ironically, it was America's first losses to radical Islam that inspired a reform of the 1947 reform. In 1980, an interservice attempt to rescue U.S. hostages from fundamentalists in Iran ended in a deadly fireball at a place called Desert One, where a Marine helicopter collided with an Air Force plane loaded with Army commandos. Eight men died. Congress was outraged. But three years later, legislation to fix the problem had run aground. What restarted the push for reform was the deaths of 241 Marines in their Beirut barracks in 1983, in the first massive suicide bombing by Muslim extremists against Americans. Two of the wounded servicemen went into cardiac arrest while Navy and Air Force medics bickered over who would treat them. A subsequent investigation showed that the military's complex, multiservice chain of command had failed to recognize and defend against the terrorist threat. Nevertheless, it still took the Grenada disaster and three more years for Congress to pass the Goldwater-Nichols Act, the next major overhaul of the Defense Department-and it passed over the Reagan administration's objections.

Unlike the 1947 act, the 1986 reform went beyond organizational restructuring and changed some important career incentives. Explained Harvard political scientist Joseph Nye: "One of the reasons Goldwater-Nichols worked was that any officer who wanted to rise in his own service had to have a `purple' assignment, a joint assignment"-a requirement that forced the future leaders of the Army, Navy, Air Force, and Marines to learn to work together if they wanted to be promoted.

So what is the true lesson of history here? The 1947 act was not a total failure: Flawed as it was, it did lay the structural foundation of a better organization. But it took 39 years, and many deaths, to finish the job.

Transportation: A Long, Strange Trip

The Department of Transportation was born on April Fool's Day, 1967-just 13 months after President Johnson started knocking congressional heads together to get it done. With 30-odd component agencies and 95,000 employees, Transportation was the most ambitious consolidation of federal functions between the 1947 Defense Department merger and Bush's proposal for a Homeland Security Department. Thirty-five years later, Transportation still struggles to make its components cooperate, share information, and generally play nice-but it has come a long, long way.

Jack Basso lived through almost all of Transportation's evolution: He started in the Commerce Department's Bureau of Public Roads, which was shunted into the new department on day one, and he retired in 2001 as Transportation's assistant secretary for the budget. Now at the American Association of State Highway and Transportation Officials, Basso greeted the announcement of the proposed Homeland Security Department with a jaundiced eye. "I was thinking, `Man, are they in for an interesting time,'" he laughed. "With the stroke of a pen, you legally create a structure. Making it into a [real] structure takes years."

The Transportation Department's early days were roiled by power struggles between the secretary and his subordinates, to whom Congress had directly delegated some key authorities. An effort to consolidate all of the department's inspections and audits into a single office, for example, took six months, during which the secretary issued orders and the agency heads invoked their independent powers to ignore them. The bickering extended to the trivial: The headstrong Federal Aviation Administration-which had pushed for the reorganization in the first place-for years refused to fly the new departmental flag in front of its (separate) headquarters building.

Today, the flag is flying, but the battle over power drags on. Congress's decision to give the subordinate administrators their own legal structures meant that individual modes of transportation could and did prosper without bureaucratic interference from above. But it also gave the secretary few levers to make the component agencies cooperate, let alone to restructure them in the interest of efficiency. More than one Transportation secretary has left office with battle scars from trying to meld, say, highways and mass transit into one coherent office for land-based transportation, or to consolidate different safety offices into a single agency. Today, with multiple congressional committees retaining their pre-1967 ties to individual agencies, getting approval for any department-wide change is still a nightmare.

But the main lesson of Transportation, Basso said, is to plan carefully at the inception-and then get on with business: "If you're going to make changes, get them over with," he said, "and let people settle in and get back to doing their jobs."

Energy: Criticized Mass

The history of the Department of Energy reinforces the lesson that legislating a bureaucracy into existence is just the beginning of the battle. Created in 1977 after OPEC oil embargoes had racked the U.S. economy, the Energy Department faced little opposition during its legislative birth in Congress. But in the decades since, with scandals over stolen nuclear secrets and missing hard drives, Energy has taken flak, including some from its own officials, as one of the most dysfunctional bodies in government.

President Carter proposed the new department in 1977, drawing on a similar plan floated unsuccessfully by President Ford. Congress took only five months to approve Carter's blueprint. In a key contrast to today's divided government, however, one party then had control of both Congress and the White House. "Part of it was the fact that you had a Democratic Congress, and you had a new [Democratic] president who made this a high agenda item," recalled former Rep. Phillip Sharp, D-Ind., who sat on the Select Committee on Energy that was formed to consider Carter's proposal.

The core of the new Cabinet department was the Energy Research and Development Administration, itself an evolution of the Atomic Energy Commission, which focused on federal energy research. Energy also brought together the Federal Power Commission, the Federal Energy Administration, and bits and pieces of five other federal agencies.

In a model that Bush spokesman Ari Fleischer explicitly likened to the current role of Tom Ridge, Carter's special assistant on energy, James Schlesinger, devised the new department, lobbied for it on the Hill, and then was confirmed as its first secretary. In his new job, Schlesinger had authority over nuclear weapons production, the prestigious national nuclear research laboratories, and even regulation of oil and natural gas prices (a power later abolished). But if getting the legislation passed had proved easy, actually creating a new department out of such diverse parts proved to be surprisingly difficult. "The problem," Schlesinger said, "is to bring together the various rather sharply divergent cultures after-after-the creation of the department. And one has to choose ... a dominant culture and the budgetary processes, the organizational processes, for the new department. And the disparate units that are brought together in the department will have to adjust to that dominant culture."

In the case of Energy, that adjustment wasn't easy. "You have no idea how aggravated workers became when they were asked to move from their old offices to Energy headquarters at 1000 Independence [Ave.]," said lobbyist Andrew L. Zausner, who in 1977 was a top aide to Deputy Energy Secretary John O'Leary. "It took unbelievable negotiations over months to get people to move."

Many of the staff members who finally did move over to headquarters were employees their parent agencies were glad to see go. "Who gets passed off isn't necessarily the best and brightest," one former Republican Energy official said. "I've always felt that Energy was thin in terms of really high-quality people."

As a result, Zausner said, "for a period of time, the new Cabinet department in reality worked less well than the original parts." He added, "When you create a new agency, you take two steps back before you can take three steps forward."

Some Energy-watchers argue that it was more like two steps forward and three back-in large part because Congress never changed its committee structure to align with the new department. "With each assistant secretary reporting to a separate subcommittee on the Hill, you're going to wind up with the assistant secretaries working for subcommittee chairmen rather than for the Cabinet secretary," said nuclear expert John Pike of GlobalSecurity.org. "You've seen this for the last quarter of a century with the Energy Department ... which has always had difficulty achieving institutional coherence."

But one crucial difference between 1977 and today gives cause for optimism, said former Rep. Sharp: As bad as the oil embargoes were, today's national security crisis is far more compelling. "This is significantly different than when Energy was created," Sharp said. "Today there is a deeper recognition that there are serious problems that have to be solved."

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