*EPF312 02/05/2003
Good Governance Must Be a Higher Aid Priority, Natsios Says
(Development one of three pillars of U.S. security, USAID head adds) (680)

By Kathryn McConnell
Washington File Staff Writer

Washington -- Promoting democratic governance must become a higher priority of U.S. foreign aid because without governance improvements successful development in poor countries is "virtually impossible," U.S. Agency of Development (USAID) Administrator Andrew Natsios says.

Outlining a recently published private analysis of development trends and challenges commissioned by his agency, Natsios said development along with defense and diplomacy are the key pillars of U.S. national security. Natsios made the remarks late February 4 to the Council of Foreign Relations in Washington.

The report, "Foreign Aid in the National Interest," says that there are now more democracies in the world than ever before but many of the new democracies are weak. Without U.S. efforts to strengthen good governance in these countries, "many democracies are likely to disappear," Natsios said.

The administrator added that when a government makes no commitment to work to improve the livelihoods of its citizens, USAID will work with a country's nongovernmental organizations (NGOs) and "committed reformers" as it is now doing in Zimbabwe.

The report urges development efforts be focused more on promoting sustainable, equitable economic growth, Natsios said. Basic to growth is investment in improving agricultural productivity, he said, adding that USAID's cutting back sharply on agriculture programs in the 1980s was "a mistake." The administrator applauded the Bush administration's request for $2 million in fiscal year 2004 (FY04) for famine prevention programs.

Natsios said USAID is following the report's recommendation to help countries adopt "transparent regulations, predictable laws and lower trade barriers" so they can attract the investment they need to further their development. Income gaps have "shrunk," he said, when countries have been better able through transparency to integrate into the global market.

More development aid should also be directed not only to improving macroeconomic policy but also to creating an "entrepreneurial class," Natsios said, noting that past development trends concentrated only on macroeconomic policy. "Wealth is created through an economy's microeconomic foundation," he said.

The administrator urged a comprehensive strategy in the U.S. government to link development and trade.

The report said emphasis also should be given to improving people's health and to education. Natsios said that the world's population generally falls into two groups: one with rising life expectancies, the other where health suffers because of poor governance that keeps resources from being directed to providing basic health care. He said the report urges more development resources be focused on reproductive and child health care and on providing secondary education.

"A primary school education is no longer enough for workers to take part in the global economy," the report states. The president's budget proposal for the year starting in October 2003 (FY04) includes an increase for education programs.

Mitigating conflict, which is "almost always" the result of bad governance, is another area needing development attention, according to the report. There is a connection between human trafficking and other human rights abuses and failed states with conflicts, Natsios said.

He said the administration's FY04 budget also includes $100 million for unexpected complex emergencies such as rebuilding a country after a period of conflict.

The administrator also pointed to the importance of leveraging aid dollars through "alliances" with foundations, universities, corporations and nongovernmental organizations and with personal remittances to families and communities in poor countries.

"We [USAID] have to learn how to connect better with diasporas that are the sources of remittances," he said.

However, the administrator said, development aid from any source "is no substitute for national and local leadership."

Speaking at the same meeting, Mary McClymont, president of Interaction, praised the report and said polling results show a greater understanding by the U.S. public of the importance of foreign assistance to U.S. and world security. Interaction is an association of U.S.-based NGOs working overseas in development.

The 149-page "Foreign Aid in the National Interest" may be found on the USAID web site at: http://www.usaid.gov/fani/.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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