Littlefield spoke of OPIC’s role within the broader U.S. development apparatus:

I have seen how skillfully-deployed foreign investments provide not only jobs, but also hope and stability in poor countries. And I have seen the crucial role that well-administered government assistance from developed countries can play in making both of these things happen. Today OPIC’s work is the nexus of just this kind of U.S. development assistance.

If confirmed, I hope to be able to enhance the agency’s role as an instrument of foreign policy, creating synergies and boosting effectiveness in energetic partnerships with the State Department, USAID and other development agencies. OPIC complements the work of others in being able to respond rapidly, catalyze private investment, and do so while supporting U.S. jobs.

She told the committee that private sector investment “is crucial if poorer nations are to build the kind of infrastructure and markets that will allow their people to prosper and contribute to the prosperity and security of other nations.”

Carolyn Radelet, wife of former CGD senior fellow Steve Radelet and member of a four-generation Peace Corps family, testified alongside Littlefield as part of her own confirmation process to become deputy director of the Peace Corps.  If confirmed, Littlefield and Radelet can help ensure that private sector investment and innovation and the spirit of volunteerism are reflected as key parts of our development apparatus.

Shah’s testimony before the House Foreign Affairs Committee and the House Appropriations Subcommittee on Foreign Operations was clearly on message. It followed the same outline as Secretary Clinton’s testimony highlighting three priorities: frontline states (Iraq, Afghanistan and Pakistan); meeting urgent global challenges (global health, food security, climate change, humanitarian assistance); and the right people, tools, and focus on results. Perhaps more interesting is how closely the principles Shah outlined in his testimony mirrored five of the six principles Secretary Clinton set out in her development speech at CGD.

While Clinton and Shah may have had the same messages, members of the two House committees asked Shah far more targeted and specific development questions. They praised his handling of the Haiti earthquake – save for Rep. Mark Kirk who took issue with a sole-source contract – and asked him about basic education programs, maternal and child health, country ownership, trade capacity building, contracting, staffing, and the timing and results of the Presidential Study Directive on U.S. Global Development Policy and the Quadrennial Diplomacy and Development Review.  They see Shah as the go-to guy on U.S. development programs and from the tone of Kirk and others, it is also clear that he is the one on the hook for development decisions and results. The question is really whether Shah, after only two months on the job, has the capacities and authorities yet to go along with these responsibilities.

When Shah was confirmed, CGD President Nancy Birdsall said “The question should be:  what does Raj need to succeed?  And what he needs is the administration to bolster his capacity and authorities to successfully elevate and empower a distinct development perspective and voice.” Former CGDer Sheila Herrling and I suggested the USAID administrator needed the following:

1. The right people.
2. A strong policy capacity to participate in the Presidential Study Directive on U.S. Global Development Policy (PSD), the Quadrennial Diplomacy and Development Review (QDDR), and efforts to rewrite the Foreign Assistance Act.
3. Congressional support to allow him to use notwithstanding and waiver authorities attached to the too-many earmarks put on his budget.
4. Authority over the agency’s budget—from its request, based on input from the field; to its justification, including argumentation directly to the Secretary of State and OMB as it relates to the rest of the overall State Department request; to its final allocation across sectors, programs and countries; to accounting publicly for its results.

So how’s it going so far?

• Full webcast
• Shah’s testimony
• Berman’s opening remarks and press release
• Ros-Lehtinen’s opening remarks

House Appropriations Subcommittee on State, Foreign Operations, and Related Programs:

• Shah’s testimony
• Rep. Lowey’s opening remarks

1. People: Shah has filled a number of key positions in the front office but the twelve remaining Senate-confirmed positions on his leadership team should be at the top of the to-do list. I suspect Senate Foreign Relations Committee staff would welcome nominations and, I hope, help see to quick scheduling of confirmation hearings.
2. Policy capacity: It seems Shah has the green light to build a robust policy capacity at USAID. He reported to Rep. Berman that he is building policy planning and gave a shout-out to former CGD Vice President Ruth Levine as a “world-class innovative evaluation” expert that has joined his team. But again, filling the twelve remaining Senate-confirmed leadership positions is essential for actively and effectively engaging in the PSD and QDDR.
3. Congressional support: The marks are generally high for Shah so far, but could be even higher if he regains the confidence, spark and enthusiasm he exuded in his confirmation hearing. I suspect the slightly dampened demeanor in the budget hearings may have something to do with post-Haiti fatigue and for having to defend a budget into which he likely had little input based on the timing of his confirmation. Nevertheless, he clearly has congressional supporters for development and for reform; whether this will extend to use of waiver authorities is harder to foresee and will require continued contact and engagement with key congressional offices.
4. Budget authority: Again, it’s unlikely that Shah had much input into the FY2011 budget process given that he only began his job in January. When pressed about USAID budget authority in the hearings, he told members we “will get to the place where we have the opportunity to develop a budget.”

As Birdsall said, Shah brings “tremendous talents – smarts, passion for development and strategic thinking — to the helm of USAID.” Things are moving in the right direction, but hard tasks lie ahead. Those of us in the development community should be thinking about how we can help the administration and Shah fill his leadership team, build the agency’s policy capacity, cultivate congressional support, and gain budget authority so that next time he is before these committees, he can speak with the full authority he should have, given the enormous responsibilities in front of him.

Ahead of the March 11^th hearing, the MCC’s recently published FY2011 Congressional Budget Justification offers a blueprint for how the MCC intends to use its scarce resources.  (Kudos to the MCC public affairs team for hosting a small roundtable session – as we suggested – to walk us through the CBJ!)  Because concept papers have not yet been received from most of these partner countries, the following is an estimate of the level of FY2011 funds and compact projects:

• Zambia has $350 million budgeted for possible projects in sanitation and water supply infrastructure, education and capacity-building, and eco-tourism expansion.
• Indonesia has $521 million budgeted for investments in four potential areas: education, infrastructure, environmental sustainability, and governance (with a particular emphasis on continuing anti-corruption activities begun in Indonesia’s Threshold program).
• Cape Verde has $100 million budgeted for its second Compact, though detailed discussions with the national government have not yet begun.
• Malawi is being jointly funded with FY2010 carryover and roughly $100 million from FY2011 resources.  In Malawi, the MCC will focus on the energy sector as it looks to increase access to reliable supplies of electricity and address policy reforms required to attract future investments in the power sector.

Linked with the FY2011 budget request and CBJ are two proposals that require legislative language to:

1. Give the MCC concurrent, subsequent, and longer compact authority.
2. Allow a candidate country graduating out of an income category to retain its candidacy at the lower income category for the year of its transition and for one subsequent fiscal year.

Senators Kerry and Lugar’s Foreign Relations Authorization Act for Fiscal Years 2010 and 2011 addresses both of these issues.  It allows a compact to possibly extend to seven – as opposed to five – years with congressional approval.  The act further spells out guidelines for how concurrent compacts might work, specifically that no more than three may be in effect at a given time.

This legislation is critical as the FY2011 CBJ explicitly assumes concurrent compact authority for Indonesia in its budgeting.  Concurrent compact authority means that projects which are investment-ready can begin in FY2011 while those projects that may need further analysis can be funded at a later date without delaying the entire compact process.  Concurrent compact authority ensures the highest levels of oversight while offering greater predictability and added incentives for ongoing policy reforms within partner countries. 

The FY2011 MCC CBJ highlights other important developments that could come up in Mr. Yohannes’ hearing:

• For the second year in a row, the MCC has requested no funds for any new threshold programs.  This is no doubt an indication of the on-going internal debate at the MCC of what the threshold program is and how it should be used.
• The MCC has increased requests in the areas of due diligence and M&E initiatives by a total of $7 million.  As the MCC seeks to demonstrate results to Congress and the American public, these are important places to keep funding robust.
• Colombia may still be considered later this year due to the new legislative authority described above, even though Colombia is currently an upper middle income country.

To fulfill its mission, the MCC will need to ensure that it receives the full $1.28 billion in the FY2011 president’s request and gets its requested legislative fixes.   Next week’s budget hearing will be a chance for Mr. Yohannes to demonstrate the inherent linkages in these two requests and advocate for their full implementation.

With so many important issues at stake, what would you like to ask Mr. Yohannes at his upcoming hearing?

Full Hearing Webcast Coverage:

• Senate Appropriations Subcommittee on Foreign Operations (webcast)
• Senate Foreign Relations Committee Hearing (CSPAN)
• House Appropriations Subcommittee on Foreign Operations (webcast)
• House Foreign Affairs Committee (webcast)

Secretary Clinton’s opening remarks and video:

• Senate Appropriations Subcommittee on Foreign Operations
• Senate Foreign Relations Committee
• House Foreign Affairs Committee
• House Appropriations Subcommittee on Foreign Operation 

Written opening remarks: 

• Senate Appropriations Subcommittee on Foreign Operations (not yet available, see webcast)
• Senate Foreign Relations Committee (Kerry, Lugar)
• House Foreign Affairs Committee (Berman, Ros-Lehtinen not yet available)
• House Appropriations Subcommittee on Foreign Operations (Lowey, Granger not yet available)

Secretary of State Hillary Clinton testified last week before four separate congressional committees on the FY11 president’s budget request for the State Department and U.S. Agency for International Development.  While the hearings covered a vast array of issues, Secretary Clinton and Democrats and Republicans on the committees signaled the importance of U.S. development and diplomacy as they tried to strike a delicate balance between support for U.S. international affairs programs — still a small portion of the federal budget — and the growing need to justify any spending increases during a time of domestic economic stress.

Secretary Clinton’s testimony before the Senate Appropriations Subcommittee on Foreign Operations, the Senate Foreign Relations Committee, House Appropriations Subcommittee on Foreign Operations and the House Foreign Affairs Committee emphasized the administration’s continued efforts to elevate diplomacy and development as core pillars of U.S. foreign policy. Clinton told the committees:

I know that this is a time of great economic strain for our fellow Americans. And as a former member of Congress, I know what this means for the people you each represent. For every dollar we spend, we have to show results. That’s why this budget must support programs vital to our national security, our national interests and out leadership in the world, while guarding against waste, duplication,  and irrelevancy. And I believe it achieves those objectives.

Clinton highlighted three areas where the budget request makes significant new investments:

1. Frontline states. Afghanistan, Iraq and Pakistan receive the bulk of the FY11 budget increases.
2. Investing in development. The budget makes targeted investments in fragile societies, which Clinton argued “bear heavily on our own security and prosperity.” The administration also requests increases for the Global health Initiative, food security, climate change, investments in women and girls, and humanitarian assistance.
3. Recruit, train and empower the right people for the job. The budget allows for expanding the Foreign Service, staffing the standby element of the Civilian Reserve Corps, ending reliance on contractors, and expanding oversight.

All of these investments, Clinton said, are “designed to enhance American security, help people in need and give the American people a strong return on their investments.” She said, “one thing should be very clear from this budget: The State Department and USAID are taking a lead in carrying out the United States’ foreign policy and national security agenda.” She added that the Quadrennial Diplomacy and Development Review, set to come out this summer, will help match resources to priorities and ensure the programs are effective and accountable.

Members of Congress asked Secretary Clinton about a panoply of issues from geopolitics to gefilte fish (literally) and everything in between:  Iran, Pakistan, Afghanistan, Iraq, Cuba, Israel, Somalia, Sudan, Liberia, Armenia, Tonga, Samoa, Guantanamo, terrorism, abortion, drug policies, export controls, and free trade agreements, just to name a few. (It was about midway through this list that my colleague suggested we send Secretary Clinton a sweatband and some Gatorade to help her get through the two days of testimony.) Despite the broad array of topics and countries that are increasingly important to U.S. national interests, security and prosperity, there were a handful of common themes:

1.       Development and diplomacy are in our national security interest. Senator Kerry said the resources in the international affairs budget are “vitally needed for our national security” and citing Defense Secretary Robert Gates, argued that failing to invest in places like Afghanistan means the U.S. will likely “pay a higher price in the end.”  Rep. Berman argued that “over the long run, these civilian efforts are much more cost-effective than putting our brave soldiers in harm’s way.” Senator Lugar made the case that our international affairs budget must deal with immediate problems and address negative trends that could ultimately “undermine domestic recovery and solvency.” He argued that global economic stress is closely linked to international political, economic and security instability and can undercut our own economy’s ability to recover, putting further pressure on the national budget.

Because the international affairs budget is considered part of the national security budget, it is not subject to the domestic discretionary spending freeze. Most members of Congress embraced the international affairs portfolio as part of U.S. national security spending; Congresswoman Ros-Lehtinen was one of the few who suggested that “in light of our fiscal situation, the international affairs budget should also be subject to selective freezes of slower rates of spending.”

2.       Foreign affairs spending comprises a tiny portion of the budget. Though many members of Congress hit the same message that the international affairs budget is just a “fraction of a fraction” and  “just 1.4 percent of the overall budget,” Senator Leahy summed it up best: “For the remainder of the world, the increase is about the rate of inflation. And as the president has pointed out, the total request for foreign operations is about 1 percent of the entire federal budget. If we cut all these programs, it wouldn’t make a dent in our deficit, but it would cause many other problems around the world, especially as it affects America’s leadership position. These funds are all we have besides U.S. military to protect the security and other interests of the American people in an increasingly dangerous and divisive world.”

3.       Tough economic times call for transparency and accountability to the American people. Again, several members echoed the need for increased transparency and accountability and to show the American people what they are getting for their U.S. development investments. Rep. Granger said we must “ensure that our tax dollars are used efficiently and in a transparent method,” and Rep. Lowey said “if we are to increase our assistance in this time of economic insecurity at home, we must ensure that every dollar is well spent.” Senator Lugar said strong implementation, monitoring and review mechanisms must be in place and that the Foreign Assistance Revitalization and Accountability Act (S.1524) “has garnered wide support because it strengthens USAID and emphasizes greater evaluation and transparency of our foreign assistance programs to ensure we maximize the dollars that are available.”

4.       There is bipartisan support for U.S. foreign affairs engagement and programs.  Senator Leahy said “As we listen to the complaints about broken government or paralysis in Washington, this is a bill that over the past number of years has had overwhelming bipartisan support.” Senator Lugar also spoke of the bipartisan support for the Foreign Assistance Revitalization and Accountability Act (S.1524), now supported by 24 Democrats and Republicans, 11 of whom are members of the Senate Foreign Relations Committee. Senator Lugar said “this level of backing for a bill related to foreign assistance is extremely rare…I’m hopeful the executive branch will recognize that a bill cosponsored by a majority of the Senate Foreign Relations Committee and nearly a quarter of the full Senate should be given substantial weight.”

5.       There is interest and concern for the broader reviews of U.S. development and diplomacy policies, including around the MCC, trade and technology.  Senator Menendez asked Secretary Clinton about the process, timeline and expected outcomes of the Quadrennial Diplomacy and Development Review (QDDR) to which he was told the QDDR would be completed this summer and that they will coordinate with Congress on the reforms they believe should be undertaken. Senator Lugar also said he was eager to review the QDDR and the Presidential Study Directive on U.S. Global Development Policy.

Senator Bennett asked whether the administration, as part of the review processes, might take steps to curb the independence of the Millennium Challenge Corporation (MCC). Bennett said he was impressed with his meeting with new MCC CEO Daniel Yohannes and that one of the MCC’s values has been that it is an independent agency with strong guidance from a board of directors. He also noted, with concern, that the MCC budget request was the lowest since it began. Secretary Clinton reassured Senator Bennett  that “there have been no conversations that I have been part of or that I’m aware of about curbing the independence of the MCC.” She mentioned some of the small, legislative fixes the MCC is seeking and made clear that she does “want it to be seen as part of our overall efforts.” Secretary Clinton also stated that they are increasing the MCC budget over 2010. In this case, Senator Bennett and Secretary Clinton are both right: the FY11 request for the MCC is $1.28 billion which is 16 percent more than the FY10 enacted levels  of $1.105 billion (point for Clinton), but is in fact lower than the FY10 request level which as my colleague Casey Dunning points out was $1.425 in FY10 and is also the lowest request level to date as the first MCC request in 2004 was $1.3 billion (two points for Senator Bennett).

Reps. Ros-Lehtinen and Mack both raised questions around U.S. free trade agreements, specifically with Colombia and Panama. Rep. Mack said he was “excited to hear in the State of the Union that this is something we can work on in a bipartisan fashion” and that he will be introducing legislation to push Congress to move on free trade issues. And Senator Gregg raised the question about whether we have “the best technology and best capability so that the support is there  for the people…in the field.” It’s great that both of these issues were raised and they deserve more attention as the Congress and executive branch work together on U.S. development policy.

All in all, the hearings were the first steps in the long budgetary process and development policy reform efforts underway. They serve as a first opportunity for Congress and others to get more detail on the numbers and the policies and priorities behind them. I’m glad that in the mish-mash of topics, we still heard resounding support for investments in international affairs and many of the steps we all know we need to take—from more impact evaluation to better coordination across the U.S. government—to make sure we are getting the biggest bang for our buck. Let’s hope the hearings last week are the start of longer conversations and a joint process between the executive branch and Congress to reach the “grand bargain” many are hoping for on the mission, mandate and management of U.S. development, and foreign assistance, policy.

Next up: Raj Shah, USAID administrator, will testify before the House Foreign Affairs Committee on Wednesday morning, March 3 and before the House Appropriations Subcommittee on Foreign Operations on Thursday, March 4. What would you ask him if you were a member of Congress? And stay tuned, because MCC CEO Daniel Yohannes and U.S. Global AIDS Coordinator Eric Goosby will head to the Hill later this month to defend their agency budget requests.

This post first appeared as a news item in CGD’s Evaluation Gap newsletter. Sign up for the Evaluation Gap and other CGD newsletters here.

With a full compact pipeline at the ready, the MCC’s FY2011 resources are lined up for compacts in Indonesia, Malawi, Zambia, and the first-ever second compact in Cape Verde.  Malawi was named compact-eligible in December 2007 while both Indonesia and Zambia were selected as compact-eligible in December 2008.  Cape Verde was re-selected as eligible for a second compact in December 2009.  These compacts will follow FY2010 compacts in the Philippines and Jordan.

Given that the FY2011 MCC request is $145 million lower than the FY2010 request, it will be important to secure strong congressional support from Democrats and Republicans to maintain something close to the president’s request level, which is reasonable for the MCC’s expected operations in FY2011. Senators Kerry and Lugar have taken a strong first step in that direction with their recent letter of support and guidance for the MCC.  Hopefully they and other members of Congress will ensure that the MCC is able to keep innovating and delivering results on its unique model of development assistance.

On a side note, my colleague tells me that the Treasury Department hosted a conference call today with members of the development community to walk through and answer questions on their portion of the budget request. This is a fantastic idea and it would be great if the MCC were to do the same in the coming days.

On Friday, MCC CEO Daniel Yohannes announced my appointment as the Corporation’s Vice President of Policy and International Relations.  I am both honored and excited to assume that position on Monday and work with the CEO and the immensely capable staff of the MCC on an exciting set of issues aimed at enhancing the organization’s effectiveness.  It is, of course, a bittersweet moment for me.  I have also been hugely honored to be a part of CGD and given the space and support to think, write and build a program that I hope has helped people better navigate U.S. foreign aid  issues and helped foreign aid agencies stay true to their missions.

I want to especially thank you all for your thoughtful comments, both online and off-line.  They have both informed my analysis and inspired me personally.  It is much of what has made this job so much fun.  The Rethinking U.S. Foreign Assistance Program and blog will continue, with posts and analysis from CGD senior staff.  And before you know it, there will be a new Director you will know and love and soon be saying, “Sheila who?” 

Thanks again to all of you for your attention and support through the years.  I trust our paths will cross again and that I will benefit, on “the other side,”  from your continued monitoring of the MCC!

–Sheila

You can read the letter in full but the key messages to CEO Yohannes from the senators are:

1.      Stick to the original mandate. In short (and more diplomatically put in the letter): don’t lose your focus — the MCC mandate is promoting growth and fighting poverty in a select group of well-performing countries.  A substantial part of the letter is dedicated to advising against MCC funds to middle income countries like Colombia and Albania (who arguably have greater access to private finance and other U.S. government foreign aid accounts, as well as fewer poor people). 

2.      Be distinct from but coordinate with others.  Kerry and Lugar argue the success, innovation and results of the MCC are partially due to MCC’s relative independence from the rest of the aid apparatus and its ability to create its own systems, concepts and policies. (Not mentioned, but hugely important to its effectiveness is that its funds are not subject to congressional earmarks.) That said, U.S. foreign assistance would benefit from better coordination between agencies and the MCC should complement U.S. foreign policy, but Kerry and Lugar “are not in favor of merger or consolidation” and believe strongly that the MCC should maintain its focus as an indicator-based development agency. 

3.      Rethink the threshold program. Muddled mandates, diffuse results and an unclear threshold country selection processes cause Kerry and Lugar to call for an overhaul of the program. Among the big questions are whether it should focus on countries at the “tipping point” of eligibility, or should be a longer-term program to improve policy performance over time.  They give the MCC wide berth to consider major changes to this program.

4.     We will support a request for concurrent and longer-term compacts. Kerry and Lugar express their support for the MCC’s requests to undertake concurrent compacts and to extend, where warranted, the length of existing compacts beyond the strict 5-year limit. (Indeed, I understand that their draft State Department Authorization Bill contains such language.)  They are not as positive on requests for regional compacts, something asked for by the prior administration, but do allow some running room to for the MCC to explore regional approaches within individual compacts.

5.    Keep on innovating, but build on comparative advantage. Kerry and Lugar want to see more emphasis on using civil society and the private sector to generate project ideas and undertake implementation.  And they encourage the MCC to consider “bold and creative project ideas.”  (Unfortunatley, more precision on what that means is not included in the letter.)  At the same time the senators give the MCC some running room to keep on innovating, they caution against abandoning the MCC’s “comparative advantage in U.S. foreign assistance” in implementing economic growth programs and large-scale infrastructure related projects.

Most of this will be seen as welcome support and insight into the challenges that Mr. Yohannes and his management team will be navigating in the coming months. MCC staff have been grappling with many of these issues internally for some time now, and it’s good to see leadership in Congress maintaining strong support for the MCC model, while acknowledging and pushing the MCC to take on key reform issues to deliver on the model’s promise.  Above all, the senators are reaching out a hand of support to the new team.  The new MCC management team should grab that hand of support and, in partnership with Congress, tackle reforms specific to the MCC and related to other U.S. foreign aid programs.  Such an approach will also help the MCC team more fully understand the boundaries of each of the five points above and perhaps discover, together, additional ways to help the MCC overcome the constraints of the current model.

I suspect one of the big challenges not mentioned in the letter will be ensuring congressional support for the MCA during a tough appropriations cycle. We hear that national security budget items, including the 150 account and MCC funding, will be exempt from the federal spending freeze. While this is a strong signal from the administration of the critical importance of U.S.development investments on both domestic and global security and prosperity even in difficult financial times—it also runs the risk of putting a bulls-eye on accounts like the MCC when the extremely difficult work of meeting appropriations needs across the entire budget begins.

The MCC will need to redouble its efforts to not only stick to its mandate and maintain the model, but also focus on increased selectivity, continue to demonstrate results and execute a strong communications strategy with the Hill—with both supporters and skeptics—and the major development reviews underway.   

What challenges do you think the MCC will face in the coming months?

The good: Exempting national security spending, including the foreign affairs budget request–the 150 account–from the freeze signals strong support from the administration for the critical importance of our diplomatic and development efforts for security and prosperity at home and abroad.

The outpouring of support in response to the Haiti earthquake shows yet again the empathy and compassion of Americans for their fellow man, whether or not they live within our borders. This kind of surge in support for an emergency response is often hard to sustain and takes leadership from the White House and beyond. So it is great to see that the Obama administration is taking clear steps in the budget and in policy reviews to maintain and strengthen long-term development programs in its own best interests.  

The bad: Exempting these accounts from the rest of the freeze means they remain a pot of discretionary spending that can be redirected as Congress struggles to fund a variety of other priorities. In many ways the exemption–while still causing sighs of relief right now in the development community–puts a big bull’s eye on this particular pot as ripe for pilfering.

Avoiding the ugly: The unenviable task ahead for Congress to make ends meet with a heavily constrained budget means the domestic politics around the international affairs budget could be hell. For several years we’ve seen growing bipartisan support for U.S. international affairs programs as increasingly vital to U.S. national security and American well-being, as well as reflecting American generosity and a belief in opportunity.  The fear is that the current political climate, an election year, and a really tight budget could see a return of ugly partisan politics over these issues.

Either way, there is a real risk that the good intentions of protecting the international affairs account could backfire. It’s worth remembering—as budget guru Larry Nowels  pointed out to me—that the last time the U.S. took a meat-ax to the 150 budget in the 1990s, it fell 25 percent in real terms over five years and it took a decade and 9/11 to recover.

The trick is going to be navigating the political waters carefully and with continued leadership on the development issues. I hope tonight we’ll hear more than talk of what’s in and out of the spending freeze and that President Obama will make the case (as Secretary Clinton did in her CGD speech earlier this month) that engagement with the rest of the world matters for Americans, even in these difficult times. And that the relatively small 150 account, compared to the rest of the U.S. national security budget, is one of the more cost-effective national security tools in our arsenal.

President Obama and his team will need to keep singing this tune in the coming months, and be backed up by a congressional chorus with leaders from both sides of the political aisle to help avoid the ugly, so our policies—and purse—reflect American smart power in an increasingly interconnected world.

Indeed, Moldova’s Compact is a testament to careful planning and an impressive level of project integration.  Investments in Moldova will focus on irrigation infrastructure, high-value agricultural production, and road rehabilitation.  These projects will all work together to increase local rural incomes and promote economic growth.  Rural producers will now be able to successfully produce profitable fruits and vegetables, appropriately market them, and reliably transport them to market.

Added to this is an additional layer of improved access to credit and technical assistance.  While prior compacts in Madagascar, Benin, and Morocco included financial access projects, Moldova’s innovative financing facility appears to be a step-up in terms of integrated value-added to the program.  It will support related investments by farmers and entrepreneurs in the shift to higher value agriculture production, post-harvest processing, storage, and marketing.  This package is co-financed by USAID.  We look forward to keeping an eye on this as a model for future compacts.

Moldova’s previous $24.7 million Threshold program focused on anti-corruption by strengthening the capacity of the judiciary, increasing the monitoring capacity of civil society and the media, and curbing corruption in the tax, customs and police services.  It succeeded in reducing the number of bribes connected with getting favorable judicial decisions and improved public reporting of corruption cases by the Moldovan media.