The US Diplomacy Deficit

By David Rohde, The Atlantic

06 May 13

 

The world, and particularly the Middle East, are changing. But Washington is not.

fter helping coordinate the American civilian aid efforts in Afghanistan, Pakistan and Libya, Mark Ward arrived in Turkey last year to oversee the Obama administration's effort to provide non-lethal assistance to Syria's rebels. Unwilling to provide arms, Washington hoped to strengthen the Syrian OppositionCoalition. Led by moderates, the group was seen as a potential counterweight to jihadists.

Ward, a 57-year-old senior official in the U.S. Agency for International Development, had seen the successes and failures of similar post- September 11programs. He was determined to get it right in Syria

On one level, Ward and his colleagues have succeeded. Over the last year, more than $500 million in American assistance helped feed Syrian families,provide acute medical care and get civilians through a harrowing winter. More than 600 Syrian activists, from different religious and ethnic groups,underwent training and received generators, computers and communications equipment.

Washington's fear of any American aid inadvertently ending up in the hands of extremists, though, limited the effort. Every Syrian who received aid had toproduce their Syrian national identity card, answer detailed questions about their background and have their names run through a U.S. terrorism database.And in the hope of preventing aid recipients from experiencing retaliation by the Assad regime, little of the U.S. assistance was labeled.

Inside Syria, meanwhile, the al Qaeda-affiliate al Nusra Front openly distributed vast amounts of weapons, cash and other assistance. Today, the jihadistsare far more visible than the Western-backed coalition.

"Our competition in liberated areas -- mainly the al Nusra front -- don't abide by the same principals," Ward said, referring to American efforts tocarefully distribute aid. "It's hard to compete with them in the short term, but longer term our assistance will endure and the Syrian people will notice."

The United States' track record in similar efforts in Afghanistan, Iraq and Pakistan, though, is grim. From Kabul in 2001 to Tunis today, Washington hasstruggled to identify, work with and strengthen local moderates. In some countries, these moderates simply did not exist. In others, they had no power. Inmany cases, the American government - particularly its civilian agencies -- did a poor job of implementing its policies and promises.

Vast amounts of blame for the folly of the last decade lie with corrupt local leaders like Afghanistan President Hamid Karzai. But there is need for areckoning in Washington as well.

Ryan Crocker, who served as the U.S. ambassador to Afghanistan, Iraq and Pakistan, said the United States rushed into countries, relied primarily onmilitary force and expected immediate change.

"Let's punch out their lights and realign their society," is how Crocker explained it. "And then when we find out the latter is more difficult than weexpect, we say 'OK, let's go somewhere else.' That's what our enemies count on -- and our allies fear."

U.S. officials should "listen a bit more than we speak," Crocker said, focus on economics, and ask local moderates how best to marginalize extremists.

Crocker's view echoed that of dozens of U.S. officials -- Republicans and Democrats, civilians and soldiers -- I interviewed while covering Afghanistan,Pakistan and Iraq for eight years.

Over and over, people from divergent backgrounds had reached the same conclusion: The best way to counter militancy was working through local allies andcreating economic growth. Deadly force was necessary at times, but the civilian effort was as important as the military.

Since 2001, though, Washington has mounted an overwhelmingly military effort. Of the roughly $1.3 trillion spent in Iraq and Afghanistan, 95 percent wentto military costs. When civilian initiatives were mounted, Republican and Democratic administrations alike threw money at the problems. Sweeping changethat would take years at best to achieve was expected in months.

The United States spent more than $67 billion in Afghanistan and Iraq on civilian aid programs. By almost any measure, the results were meager. Washingtonsquandered billions on private contractors, largely failed to strengthen local moderates and struggled to use its most potent non-lethal tools: U.S.private investment, technology and education.

In Afghanistan, Pakistan and Iraq, I met well-intentioned American civilianstrapped in a broken system. U.S. aid programs seemed designed more to produce metrics to appease Congress -- schools built, students enrolled, politicians"trained" -- than have a long-term impact on the ground. Speed, visibility and American political dynamics ruled. Patience, complexity and deference tolocals were shunned.

In hindsight, Washington's tepid post-2001 civilian effort exposed the dangerously weak state of our own civilian institutions. In the decades since theend of the Cold War, the ability of the White House, State Department and USAID to devise and carry out sophisticated political and development effortsoverseas has withered. And while the complexity of global challenges has increased, Washington's partisanship and the 24-hour news cycle have fueleddemands for safe, quick results that are illusory.

In June 2009, Steven R. Koltai, a 55-year-old former Warner Brothers executive, was elated when President Barack Obama called for a "new beginning" between the United States and the Islamic world in an historic address in Cairo. What thrilled Koltai mostwas the president's call for a new economic approach.

"I will host a Summit on Entrepreneurship this year," Obama said, "to identify how we can deepen ties between business leaders, foundations and socialentrepreneurs."

Koltai had long believed that promoting entrepreneurship could play a role in sparking economic growth at home and abroad.

"The United States," he said, "has not put what I consider the central strand of our DNA into the service of our foreign policy."

Koltai accepted an unpaid State Department fellowship, designed to bring business leaders into public service. His time in Washington changed his opinionof government forever

Starting in August 2009, Koltai worked as the lead organizer of Obama's promised summit on entrepreneurship.

His mentor, and boss, was Lorraine Hariton, the State Department's special representative for commercial and business affairs. A successful Silicon Valleyexecutive, Hariton was one of a handful of "special representatives" whom Secretary of State Hillary Clinton appointed to address the country's mostpressing foreign policy issues -- Afghanistan-Pakistan, Israel-Palestine and dismally low American exports, among others.

Hariton and Koltai believed that promoting entrepreneurship could ignite economic development, foster political stability, create jobs and strengthen civilsociety in predominantly Muslim countries.

The April 2010 summit brought 220 entrepreneurs from 55 Muslim communities to Washington. In a speech, Obama unveiled a Global Entrepreneurship Program, apublic-private partnership that included Cisco and Google from the private sector; MIT and the American University in Cairo from academia, and Endeavor andTechnoServ from the nonprofit world.

The program opened offices in Egypt, Indonesia and Turkey, where "lead entrepreneurs" gave local start-ups mentoring and contact with American angelinvestors. Koltai and others led "entrepreneurship delegations" that brought successful investors and business school professors to the region. In a halfdozen countries, they held competitions where local entrepreneurs pitched ideas for high-tech start-ups.

Yet Koltai was incensed by Washington's lack of financial support. He managed to cobble together $1.5 million from various initiatives, but never securedpermanent funding or staffers.

American members of the "entrepreneurship delegations" were surprised when they learned that the State Department was providing no prize to the local entrepreneur with the best start-up idea. Pooling resources, some delegations created prizes of their own. In Tunisia, the winning entrepreneur received a three-monthinternship at the TechTown incubator in Detroit, Michigan.

The lack of resources appalled Koltai. Members of Congress, he concluded, were happy to fund the Defense Department but skeptical about increasing the sizeof the State Department in any way. Meanwhile, some State Department officials were far more interested in traditional diplomacy.

Koltai found government workers underpaid, cautious and cynical. They "yawned" at the announcement of new presidential initiatives, he said, dismissingthem as political theatrics.

Some State Department staffers, according to Koltai, did just enough to not endanger their jobs. Others, he found, were committed to public service but hadbeen beaten down by a system resistant to change.

With staff fearful of criticism and budget cuts, risk aversion was endemic, according to Koltai and other former government officials with private-sectorexperience. In business, taking risks and failing was expected. In government, members of Congress and the news media assailed the smallest mistake.

One mid-level official, a venture capitalist before joining the Obama administration, said government was paralyzed. As many as 18 out of 20 venturecapital investments lose money, he said, but the goal is to learn from one's mistakes. In Washington, one failure can doom a career.

"It's very hard to innovate and to learn," said the official, who asked not to be named. "If you fail once, you get screwed."

The result was an extraordinarily cautious and territorial system that infuriated Koltai.

What angered him most, however, was the government's reliance on contractors. Under privatization reforms enacted by President Ronald Reagan and continued by Presidents Bill Clinton and George W. Bush, civilian government agencies doled out aid money to private contractors -- who then hired a cascading series of subcontractors to do the work.

In theory, competition between contractors saved taxpayers money; slowed the growth of the federal workforce, and provided better services. Contractorscould also be hired quickly, avoiding glacial federal hiring procedures. And they could be let go as soon as a project ended.

But after the September 11 attacks, the State Department and USAID were not given nearly enough staff to manage a torrent of spending in Iraq andAfghanistan. Between 2001 and 2010, Congress doubled USAID's budget yet staffing remained largely unchanged.

In Afghanistan and Iraq, many local people viewed private contractors as war profiteers. They cited studies showing that 40 percent of foreign aid eventually returned to donor countries in the form of contractor profits.

Koltai estimated that State Department contractors regularly made a 30 percent profit -- while performing poorly and facing little competition. He watchedoverworked government contracting officers choose the same companies each year because doing so allowed them to avoid congressional scrutiny.

After the fall of President Hosni Mubarak in Egypt, for example, Koltai tried to convince USAID to revamp a $34-million program designed to "improve thebusiness environment" in Egypt. He hoped to divert money to train young Egyptian technology entrepreneurs and bring in U.S. executives and investors.

But the contractor, Chemonics International, refused to change its program, according to Koltai. When the USAID procurement officer challenged the firm, hefound himself outmanned. Citing language in its contract, Chemonics' lawyers threatened to sue. The system astounded Koltai.

"Chemonics has a whole legal department whose existence is based on memorizing the fine print," he said. "The person overseeing the public money isoutgunned. We, the American taxpayer, did not have the right to say 'stop the presses, there's been a revolution.' "

The USAID procurement officer impressed Koltai. He declined to identify him but said he was a "smart, dedicated" civil servant, with relatively low pay,scant support and tough working conditions.

"He was paid $85,000, while managing hundreds of thousands of dollars," Koltai said. "You'd never find that in the private sector."

In an interview last fall, a spokesperson for Chemonics defended the firm's work and said it does adapt to changing circumstances.

After three years, Koltai left the State Department in frustration. Former colleagues said that Koltai's grating personality hurt his efforts. Koltai,however, blamed Washington's polarization and risk aversion.

Implementing new initiatives in the government proved extraordinarily difficult, he said. The byzantine federal procurement process minimized risk -- theopposite of the venture capital system -- and blocked change.

"The No. 1 problem in connecting the dots is the procurement process," he explained. "In my view, the key to changing that is on the Hill."

No matter which party wins the White House, he said, implementing policies will be difficult if Congress does not enact procurement reform.

"The axle of the car is broken," Koltai said, referring to Washington. "Whether Mario Andretti or you gets behind the wheel, you're not going to be able todrive it."

A handful of firms now dominate civilian contracting. DynCorp International, a former Texas-based aviation maintenance company that morphed into a massivetemp agency for the State Department, is one of them.

Government workers refer to DynCorp as a "body shop." Whenever the government needed personnel to do anything -- from training local police to performinghousekeeping on a base -- DynCorp and other firms hired experts in the field and then offered them to the government for a fee.

Between 2002 and 2012, DynCorp provided translators to American troops in Iraq and Afghanistan; maintained helicopters the Defense Department provided toPakistan; trained policein Afghanistan and Iraq for theState Department, and won multibillion-dollar Pentagon contracts to build, supply and maintain U.S. military bases worldwide.

Between 2001 and 2011, the firm received $7.4 billion in contracts from the State Department and Pentagon in Afghanistan and Iraq. It was the third-largestAmerican contractor in the two wars, behind only the massive oil and defense conglomerate Halliburton and Agility, which provided food to U.S. troops inIraq.

Despite questions about its performance , DynCorp won contract after contract. Congressional investigators later found that firmswon vast contracts with little competition because so few companies were willing to work in Iraq and Afghanistan.

DynCorp and other contractors have defended their performance. They said, for example, the State Department was responsible for the design, administrationand monitoring of police-training programs.

"We are not judged on the success or failure of the program as they established it," Richard Cashon, a DynCorp executive, said in a 2006 interview. "We are judged on our abilityto provide qualified personnel."

The massive contracts eventually caught the eye of traditional defense contractors and Wall Street. In 2003, Computer SciencesCorporation, a longtime defense contractor known by its acronym, CSC, bought DynCorp for $914 million. Less than two years later, CSC split the company andsold its security and aviation divisions to Veritas Capital, a Wall Street venture capital firm, for $850 million.

Two years later, Veritas took DynCorp public. Then, in 2010, Veritas sold DynCorp to a Wall Street private equity firm, Cerberus Capital Management, for $1billion. This $20-billion firm is headed by longtime Republican donor Stephen Feinberg.

The chairman of Veritas Capital, Robert B. McKeon, may well be the American who made the single largest profit from the wars in Iraq and Afghanistan: $350 million from the purchase and sale ofDynCorp.

On Sept. 10, 2012, McKeon committed suicide in his home in Darien, Connecticut, according to local police. A Veritasofficial who asked not to be named said the cause was not work-related.

Government contracts continue to flow to DynCorp. In 2012, it was the 10th-largest government contractor in the country, with $3.8 billion infederal contracts.

Mark Ward, the USAID official coordinating aid to the Syrian opposition, had served as the agency's head of procurement from 2006 to 2008. He said theagency's major problem was a lack of staff.

"Given that the number of Foreign Service officers has fallen so precipitously since the Vietnam War -- we have one-10th of the number we had," he said, "wehave no choice but to turn to contractors."

During the peak of the wars in Iraq and Afghanistan, Ward and a staff of 60 to 70 USAID procurement officers were responsible for monitoring all aidprograms worldwide. Under pressure to approve the dispersal of billions of dollars in assistance, Ward and his staff created enormous contracts.

"The way to move the money quickly," he said, "is to award megacontracts to megacontractors."

He said there is a more effective way. "The better approach," he said, "is bite-sized contracts and grants that are close to the action, that are moreflexible, that can respond to changed approaches. That's the thing we need."

The solution is simple. "You need to hire more contracting officers," he said.

I do not begrudge Veritas, DynCorp or Chemonics their profits. The private sector is doing what it does best: finding innovative ways to make money. Theproblem is that the United States now has a private sector and military brimming with capital, capacity and talent. But our civilian public-sectorinstitutions are sclerotic, ossified and weak.

The goal should not be to hurl tens of billions of U.S. taxpayer dollars at the Middle East. Nor should it be to simply increase the size of the StateDepartment and USAID.

Instead, American policy makers should change their antiquated concept of national power. Military might remains vital, but in a globalized economy tradewith the United States, American technology and the threat of economic isolation are now national security tools as well. Washington's options in theMiddle East go beyond mounting massive ground invasions or doing nothing.

The United States should work with viable allies where they exist and admit where they do not. In the end, it is economic growth and local moderates, notAmerican soldiers, that will marginalize militants.

The world is changing but Washington is not.