Chair: Richard Gardner, Columbia University
Frank Carlucci, Chairman, Carlyle Group
Lewis Kaden, Davis Polk & Wardell
Yolonda Richardson, Africare
Craig Johnstone, US Chamber of Commerce
Rapporteur: Michael Gfoeller, ISD Associate

The third panel focused on the link between additional resources and reform of the foreign affairs institutions. Dr. Gardner began the session by asking three fundamental questions:

• In the next administration, what overarching strategy for national security should the nation pursue?
• Within the context of this strategy, what improvements should be made in the "machinery" that conducts the nation's foreign affairs?
• How much in the way of additional resources will be required to manage the foreign affairs portfolio adequately?

Dr. Gardner offered some statistical data for the audience's consideration. Noting that the national GDP has now reached approximately $10 trillion, he observed that the total federal budget is now about $2.3 trillion, or 23 percent of national income. Of this sum, about 16 percent, amounting to more than $300 billion, is allocated to the Defense Department. On the other hand, the entire budget for foreign affairs, including foreign aid, is only approximately $22 billion, or about one percent of the federal budget. As a percent of both GDP and the federal budget, this level of spending on foreign affairs marks a record low point, he observed.

Though some decry the excessive largess of the U.S. government in distributing foreign assistance, in fact ours is a record of relative penury, Dr. Gardner suggested. Americans spend only $29 per person on official foreign assistance whereas the average for most developed nations which are members of the Organization for Economic Cooperation and Development (OECD) is $70 per person.

Addressing some of the concrete consequences of a low foreign affairs budget, Dr. Gardner noted that the recommendations of several blue ribbon commissions regarding improving security measures at our embassies have gone unfunded. Sorely needed new embassies have not been built, while crucial training and travel needs for key personnel in the foreign affairs agencies have not been met. Public diplomacy programs which reach out to the publics and private sectors of countries around the world have been sharply curtailed as well. Finally, just as we are asking the U.N. to do more than ever before in the peacekeeping area, we are continuing to deny the organization adequate financing.

In response, Mr. Carlucci asserted that adequate funding for the foreign affairs agencies must go hand-in-hand with serious institutional reform. The U.S. overseas presence has developed in an uncontrolled fashion, he noted, with literally dozens of agencies now represented at our embassies. As long ago as the 1960's, he said, there were over 20 agencies represented at our Embassy in Brazil, where he then served. Even then, the embassy staff numbered 900. The foreign affairs apparatus and our embassies require a more dynamic structure better suited to current challenges, he said.

Mr. Carlucci suggested that the next president give the National Security Council (NSC) responsibility for coordinating the activities of the State Department and the other foreign affairs agencies. The NSC is often tempted to involve itself in the practical implementation of policy, he said, but such micro-management is not its proper role. Citing other areas in need of reform, he mentioned the foreign affairs budget, the State Department's relationship with Congress, and the Department's recruitment and personnel system. The Department's communications facilities are in need of a massive upgrade as well, he said. He also recommended additional consolidation of the Foreign Service, to build on the merging of ACDA and USIA with State. Enhanced funding of the foreign affairs agencies will only make sense in the context of such reforms, he concluded.

Mr. Kaden largely concurred with Mr. Carlucci. In order to secure needed additional funding for the foreign affairs budget, he stressed, it will first be necessary to show that current funding is being used well. Only then can the necessary political support for increased funding be assured in Congress, he said. Regarding the State Department's recruitment, training, and personnel practices, Mr. Kaden called them woefully behind both other areas of the government and the private sector. He termed the Department's communications technology "simply a disgrace," noting that his own firm enjoys better communications and computer facilities. Major American corporations take up-to-date communications and facilities for granted.

As had Mr. Carlucci, Mr. Kaden said the Department and its sister agencies need to "right-size" their overseas presence at U.S. embassies, matching staff to real needs and priorities. In addition, he called for dramatic change in the way the U.S. government manages its foreign real estate assets. "The government gets a failing grade" in this area, he said. In particular, he called for the State Department's Foreign Buildings Office (FBO) to be abolished and its functions transferred to a government-controlled corporation. He expressed the hope that a bill along these lines would be introduced early in the next Congress.

Ms. Richardson made a strong case for increased funding for foreign assistance. Inattention and low aid levels will only entrench poverty and encourage political instability in the world's poorest countries, she said. As a world leader, the U.S. cannot afford to stand idly by as crises like those in Bosnia and Rwanda occur, she said. She recommended a dual development strategy based on the alleviation of poverty and the stimulation of private capital investment in poor countries. She described domestic political support for foreign aid as broad but soft. Both PVO's and the government need to do a better job of "marketing" the case for foreign aid, she noted. In this context, she observed that certain development issues have national security implications. For example, the threat of societal destabilization in many African countries posed by the massive spread of HIV/AIDS is so great as to rise to the level of a national security issue, she asserted. Ms. Richardson described the PVO community as "U.S. citizens working abroad to make a contribution to peace." PVO's are ready to work with both government agencies and private corporations to provide the leadership needed to create greater political support for foreign assistance, she noted. She called for a trilateral effort on the part of government, PVOs, and corporate leaders to achieve this aim.

Amb. Johnstone agreed with the other participants' view that enhanced funding for the State Department and the overall foreign affairs budget must go hand-in-hand with institutional reform. He observed that government funding deficiencies "are crippling American foreign policy, disgracing us in international organizations, forcing us to engage militarily in crises that might have been averted, and preventing us from addressing the critical global issues of our time." Enhanced funding alone, however, will fail to solve the problem, he asserted, "if we do not get our arms around the severe management shortcomings of the Department of State."

Amb. Johnstone asserted that the State Department as an institution "is badly broken." Indeed, he said, the Department "is among the dead." Morale in the Department "is not just bad, it is catastrophically bad," he said. Regarding financing for the Department, he said, "Before anyone gives it any more money, they must demand that it is on the road to being fixed." Reviving the Department and its mission will require building a new State Department with a structure and organizational culture attuned to post-Cold War realities and challenges, he declared. A new structure will require a new foreign service, produced by a new system of recruitment and training. Amb. Johnstone also called for much greater senior-level attention to management issues. If the Secretary of State cannot perform this function, he said, then it should be handled by a Deputy Secretary.

The question and answer portion of the session elicited remarks calling for simplification and reduction of bureaucracy in the embassies and the Department. Mr. Tex Harris, former president of the American Foreign Service Association, commented that there have been enough blue ribbon panels studying the Department and the other agencies. What is needed now are vision and leadership from the Secretary, he said. The last to provide such leadership was Secretary of State George Schultz, he added.

Other members of the audience echoed the panelists' views regarding the need to build greater political support for the foreign affairs budget. Mr. Carlucci responded to a question in this regard by commenting that State had much to learn about Congressional relations from the Defense Department.