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This is an archived USAID document retained on this web site as a matter of public record.
Interview with Andrew S. Natsios
Administrator, USAID
John McLaughlin's "One on One"
December 14, 2002
MR. McLAUGHLIN: Christmas giving all year: one-third of a billion dollars for Afghanistan since January 2002; $900 million for Angola since 1989; Ethiopia, Somalia, Eritrea, Balkans reconstruction, Haiti, North Korea. The list of U.S. aid recipients spans the planet. Is the U.S. Agency for International Development, AID, in the business of helping undeveloped nations develop? Or is its mission disaster relief and more relief, and will Iraq be next? We'll ask the United States AID Administrator Andrew Natsios.
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you may download a free version hereMr. Natsios, welcome. Everyone gives at Christmastime, but you give all year. How much does the USAID agency have in its budget?
MR. NATSIOS: The full budget for foreign aid for the U.S. Government is about $10 billion. We administer between $8 and $9 billion, depending on the year.
MR. McLAUGHLIN: How is it broken down?
MR. NATSIOS: Well, about a billion dollars of it is food aid that we use in famine relief and development assistance. Another $300 million is for disaster relief operations, in hurricanes, in wars, and that sort of thing. We spend about $2 billion a year on health, fighting HIV/AIDS, fighting malaria, fighting tuberculosis, and child survival programs to reduce the mortality rate among young children who are very vulnerable. We run agricultural programs. We run education programs. We printed a million--ten million textbooks for Afghanistan for the back to school program last spring, so the textbooks that are being used in Afghan schools are all printed by USAID in conjunction with the Ministry of Education in Afghanistan.
MR. McLAUGHLIN: How many countries do you have field missions in?
MR. NATSIOS: Seventy-nine.
MR. McLAUGHLIN: How many countries do you give aid to?
MR. NATSIOS: Well, we have 79 missions, but there are some countries we work with NGOs, nongovernmental organizations--
MR. McLAUGHLIN: Right.
MR. NATSIOS: --charities, where there's no AID mission but there are programs. About 105 countries actually have some form of AID--
MR. McLAUGHLIN: And you work with the NGOs above the 70 that you have missions in.
MR. NATSIOS: Oh, yes.
MR. McLAUGHLIN: And you work with the NGOs even in those countries, too.
MR. NATSIOS: Yes.
MR. McLAUGHLIN: How old--how old is USAID?
MR. NATSIOS: Well, actually, we go back to World War II when the aid program started in Latin America during the war, but the real roots of it are in the Marshall Plan. And then in 1961, President Kennedy formally created us by executive order with the current name we have. But we have employees--one of them just retired at 81 years old. She worked on the Marshall Plan in the original founding of AID.
MR. McLAUGHLIN: So the agency's about four decades old.
MR. NATSIOS: Exactly.
MR. McLAUGHLIN: How many employees?
MR. NATSIOS: We have about 2,000 direct hires, a thousand civil servants, a thousand foreign service officers. But we use a lot of contract employees who work for shorter periods of time. We have about 6,000 of those. But two-thirds of our staff are in the missions in the field. We have large networks all over the world. To make sure the money's spent properly, our doctors, economists, agricultural specialists, education specialists, they work in the villages and in remote areas around the world.
MR. McLAUGHLIN: Your budget is $8 billion?
MR. NATSIOS: About $8 billion.
MR. McLAUGHLIN: Did it go up from last year?
MR. NATSIOS: It did, actually. President Bush has been better to us than in the 1990s during the Clinton years.
MR. McLAUGHLIN: Has he been good to you?
MR. NATSIOS: Personally, I served the President's father in the first Bush administration at a lower level, and I am serving him now, and I'm proud to say that.
MR. McLAUGHLIN: Have you heard of the Millennium Fund? I'm sure you have.
MR. NATSIOS: Millennium Challenge Account, we've been working on the details of how that will be run.
MR. McLAUGHLIN: All right. That's Millennium--
MR. NATSIOS: Challenge--
MR. McLAUGHLIN: --Challenge Account. What is it?
MR. NATSIOS: It is an account, a 50 percent increase in foreign assistance, but it's a radical departure from the past. In the past, aid has either been given irrespective of the performance of the country with their aid program because there are strategic reasons, foreign policy reasons, why we provide aid to some countries, like Egypt, for example. Some countries we provide aid to purely on the basis of humanitarian need. If there's a famine, we do not discriminate. We give it to people regardless of their political persuasion.
But much of the aid we give is designed to make poor countries more prosperous so they become independent, and a number of countries have graduated from being aid countries to being wealthy middle-class or upper-income countries.
MR. McLAUGHLIN: The budget for the Millennium Challenge Fund is $10 billion?
MR. NATSIOS: $5 billion.
MR. McLAUGHLIN: $5 billion?
MR. NATSIOS: A 50 percent increase in foreign assistance. But the President has said we're going to base it on performance purely. You have to be a functioning democracy that protects human rights, that has political parties, that has a free press. You have to have investment policies that encourage private sector development, and you have to have evidence that you are supporting the education and health of your people.
MR. McLAUGHLIN: I'll tell you what's puzzling: that he created a new corporation that's headed by Colin Powell. It has a board of directors consisting of Cabinet-level officials. It has a CEO. Who's the CEO?
MR. NATSIOS: Well, none of this has been decided by Congress. This is what the President's going to propose. And Colin Powell will be the chairman of the board, not the CEO, and the President has not decided, since the legislation hasn't passed yet, who will be the CEO.
MR. McLAUGHLIN: He's going to populate this new corporation on the manpower level with 100 transfers from other parts of the government.
MR. NATSIOS: That's right.
MR. McLAUGHLIN: So we have yet another corporation coming into existence besides--
MR. NATSIOS: Well, I should--
MR. McLAUGHLIN: --besides the Homeland Security Department, which is a hundred--what is that? A hundred eighty thousand?
MR. NATSIOS: That's a huge department.
MR. McLAUGHLIN: Transferring from other parts of the government. Then the Congress apparently likes the idea of yet another corporation or entity, organization--
MR. NATSIOS: You should understand--
MR. McLAUGHLIN: --to manage intelligence. What gives with George Bush?
MR. NATSIOS: Well, I think what's happening here, which we didn't do at the end of the Cold War, is the President is restructuring the entire national security apparatus of the U.S. Government to deal with the new threat to the United States. We did not do that at the end of the Cold War. The institutions we're dealing with now internationally were all designed in the 1940s for the Cold War. They were not designed for the war against terror. And what the President is now saying is we need to look at the threat--which is very different than it was before. It's not nation states that are threatening us. It's these terrorist networks, these syndicates of criminals and gangsters around the world.
MR. McLAUGHLIN: Is the corporation going to be integrated in any way or connected, or are you going to be used, let us say--
MR. NATSIOS: Yes, we are going to be--
MR. McLAUGHLIN: --by U.S.--by the Millennium Challenge Fund?
MR. NATSIOS: You couldn't spend $5 billion with a hundred people without having bad things happen. You have to have a large staff to make sure the money is spent properly and isn't stolen and it's used to help poor people and help development. So this is basically a coordinating function.
MR. McLAUGHLIN: Isn't a natural repository for this whole entity right underneath AID, and why didn't it happen that way?
MR. NATSIOS: Well, we're going to use the expertise of the State Department, of AID, and of the Treasury Department and of the U.S. Trade Representative's office--
MR. McLAUGHLIN: This is the Millennium Fund.
MR. NATSIOS: --in the Millennium Fund.
MR. McLAUGHLIN: Right. But why didn't they just turn it over to you?
MR. NATSIOS: I think part of it will be administered by AID in the field, but we wanted to do something in Washington that would draw in the expertise of other federal agencies. It's the President's concept and I support it.
MR. McLAUGHLIN: You could have done that, too.
MR. NATSIOS: No. I think the best way to do it is the way the President's proposed.
MR. McLAUGHLIN: This is what he said. This is President Bush. "The new MCA will reward nations that root out corruption, respect human rights, and adhere to the rule of law, invest in better health care, better schools, and broader immunization, and have more than markets and sustainable budget policies"--"and have more open markets and sustainable budget policies."
Now, the condition for the grants are those, and then that's further--that's further refined after a couple of years.
MR. NATSIOS: What this tells you is the old paradigm we used for the last 20 years, which is you make these reforms and we'll give you money in the future--
MR. McLAUGHLIN: That's what it sounds like.
MR. NATSIOS: No, no. It's very different. The current system is based on future expectation and performance, and half the times they don't do--the countries don't do what we ask them to do, but they get the money. But the President said we want to see what you did on your own. Did you democratize your society? Are you encouraging the investment of private capital and private markets and private investment in your country? Are you investing in your own people? If you do those things on your own, with your own decisions at the local level, we will reward you for doing that. That is not the current way--
MR. McLAUGHLIN: So you're not disappointed that he's moving this into an independent, separate entity and not directly under you?
MR. NATSIOS: I am not disappointed. We helped design--
MR. McLAUGHLIN: Are your troops disappointed?
MR. NATSIOS: Well, I think the ones who don't understand. But the ones who were involved in this actually proposed this corporation idea to the White House. Our staff proposed--
MR. McLAUGHLIN: What is the editorial opinion in U.S. newspapers with regard to the creation of this new entity?
MR. NATSIOS: Well, my--I think the greatest tragedy is most newspapers don't even know it exists. We have not--we have not publicized it well.
MR. McLAUGHLIN: Well, anybody who is doing compilations of new entities that this so-called conservative President is bringing into existence, you know, notwithstanding Occam's Razor, Entia non sunt multiplicanda praeter necessitatem, "Don't multiply entities without necessity," which used to be a bedrock principle of conservatives--I mean, he's multiplying entities all over the place.
MR. NATSIOS: We have a threat to the United States now. These entities are not domestic entities. They're in response to the terror war and the threat that the United States faces.
MR. McLAUGHLIN: Ahh, that's a facile response. You know that.
MR. NATSIOS: No, no, it's not. It's not. We saw what happened on September 11th.
MR. McLAUGHLIN: That's--
MR. NATSIOS: The reorganizing of the federal agencies that protect us from what happens abroad, it was very important.
Secondly, the foreign assistance program, a hundred people is not going to administer the program. The hundred people are going to coordinate the response of various federal agencies through this Millennium Challenge--
MR. McLAUGHLIN: You've got--you've got men and women in the field. You have an extraordinary hands-on experience in the world, and these people don't come and go. They're careers, as you say, which was a point made by one of your retirees recently, Counselor Janet Ballentyne. She made it beautifully.
MR. NATSIOS: Yes.
MR. McLAUGHLIN: And, you know, I don't see why he--why wouldn't you want to avail yourself of that? Maybe I'm putting too fine a point on that.
MR. NATSIOS: I think you are, because the--most of our staff are in the field, one. Two, the President said we don't want a separate bureaucracy in the field. We don't want a separate organization.
MR. McLAUGHLIN: What percentage of the employees of USAID are in the field?
MR. NATSIOS: Sixty-five percent.
MR. McLAUGHLIN: So you've got an abundance of people here who relate to them. It's a perfect network.
MR. NATSIOS: The people--
MR. McLAUGHLIN: You're going to bring a hundred new people in to do what?
MR. NATSIOS: The people who are here at the accounting system, the computer system, the procurement system, the financial management system. That's half of our staff in Washington. And those systems we expect will be used to spend some of this money.
MR. McLAUGHLIN: We'll be right back.
[Commercial break.]
MR. McLAUGHLIN: North Korea announced this week that it is restarting its nuclear reactor program because the U.S. has cut off humanitarian oil. North Koreans need nuclear electricity to keep warm and to cook. Is foreign assistance only a tool of diplomacy? And if so, is that humane? We'll put this question to our guest, but first here is his distinguished profile:
Born in Philadelphia, 52 years of age, wife Elizabeth, three children, Greek Orthodox, Republican, Georgetown University, B.A. History, Harvard University, M.A. Public Administration. U.S. Army Reserves, retiring as lieutenant colonel, 23 years. Commonwealth of Massachusetts, House of Representatives, 12 years. World Vision U.S., a Christian humanitarian organization, Vice President five years. Commonwealth of Massachusetts, Secretary for Administration and Finance, one year. Turnpike Authority, managing the "Big Dig," a seven-mile, largely underground, wonder of the world superhighway, costing over $2 billion per mile, paid for by state and national taxpayers. Chairman and CEO, one year.
United States Agency for International Development, AID, Office of Foreign Disaster Assistance Director, two years. Bureau for Food and Humanitarian Assistance Assistant Administrator, two years. Administrator of the entire agency, one and a half years and currently.
Hobbies: reading, writing, fishing. Andrew Steven Natsios.
Administrator Natsios, can we regard your experience with the Big Dig as budget training for what you do at the Agency for International Development?
MR. NATSIOS: Well, the real budget training was Secretary of Administration and Finance, which is the combination of Paul O'Neill's, or the Secretary of the Treasury job, with Mitch Daniels. That's what I did in Boston. That was one of the best jobs I ever had. I serve Paul Celucci, one of my best friends, who was the Governor, who is now Ambassador to Canada, and Andy Card, one of my other best friends, the chief of staff, we served in the House together 25 years--
MR. McLAUGHLIN: Oh, you did?
MR. NATSIOS: We did, yes.
MR. McLAUGHLIN: What was your experience like at the Big Dig, if we can digress for a moment?
MR. NATSIOS: Well, I had to fire the entire senior staff the first day because there were massive cost overruns that had been hidden, and the Governor made me take over the organization with 24 hours' notice. It was not my favorite job, but I did what I had to do.
I voted against the Big Dig myself and when I was in the legislature thought it was a bad idea.
MR. McLAUGHLIN: Who named you to it, to run it?
MR. NATSIOS: The Governor did, after--
MR. McLAUGHLIN: Celucci?
MR. NATSIOS: --the scandals. After the scandals took place, he said, Go in and clean it up, so I did.
MR. McLAUGHLIN: It took a year?
MR. NATSIOS: Yes, it did.
MR. McLAUGHLIN: Do you think you cleaned it up?
MR. NATSIOS: We cleaned it up.
MR. McLAUGHLIN: You see the overruns.
MR. NATSIOS: The overruns were before I too over, not while I was there.
MR. McLAUGHLIN: Why did you vote against it?
MR. NATSIOS: Because they told us it was going to cost $2 billion. It's costing $14.5 billion. I didn't believe any of the estimates.
MR. McLAUGHLIN: That's only $2 billion a mile.
Talk to me about Afghanistan. About 400--how much money do we spend in Afghanistan, $410 million?
MR. NATSIOS: In the last 12 months, we've spent $690 million, $200 million on food aid because there was almost a famine last winter--we prevented it--$140 million of that has been spent to resettle two million, three million refugees from neighboring countries. That was spent by my friend Gene Dewey in the State Department through the United Nations. The rest of it has been spent on building roads, we've built hospitals, clinics. We're about to begin to rebuild 500 of the thousand clinics that are the primary health care system of the country. We've printed ten million textbooks. We just opened a girls' high school for 5,000 girls in Mazar-i-Sharif in the north. We are starting a huge agricultural program because 70 percent of the people live in rural areas and they're farmers or herders; and unless the agricultural system gets revived, people will not eat, and people will continue to grow poppy. We want people to get off of growing drugs to growing legitimate crops.
MR. McLAUGHLIN: Thirty percent of the people are involved in drug production. What are you going to do with those 30 percent of the people if you take poppy away from them?
MR. NATSIOS: Go back to wheat and cotton. In fact, there's been a 400 percent increase in cotton production from a program we ran in the Helmand Valley, which is a poppy-growing area, because we're getting people to stop growing poppy to go back to growing cotton, which is a very good export--
MR. McLAUGHLIN: You've got four species of an economy operating there: you've got the war economy, which is the movement of arms and warlords.
MR. NATSIOS: Exactly.
MR. McLAUGHLIN: You've got drug production. What else do you have?
MR. NATSIOS: You have an aid economy that's based on all the aid agencies and UN agencies there, which is a legitimate thing but it's only short term. You can't build an economy based on that. And the only legitimate economy is the agricultural economy and the transportation economy, because, of course, it's the crossroads of Central Asia and people, to get back and forth, have to go through Afghanistan. So the trucking routes are very important there.
MR. McLAUGHLIN: The Ambassador from Afghanistan to the United States had lived in the United States, was a U.S. citizen and a very successful--
MR. NATSIOS: Very successful business--
MR. McLAUGHLIN: --solar engineer, who did extremely well. He gave up his citizenship, what, about two years ago?
MR. NATSIOS: Oh, no, no. Eight months ago.
MR. McLAUGHLIN: Eight months ago. And he went back to Afghanistan to be the Afghan Ambassador to the United States. His name is Ishaq Shahryar, and he's done this program.
MR. NATSIOS: Yes.
MR. McLAUGHLIN: Now, he's now working with an NGO that has come into existence called Private Sector Development Task Force, which includes names like Richard Shriver, John Russell Dean, and John H. Costello, with the Ambassador. Those are very prestigious names. In the world of development--
MR. NATSIOS: Yes.
MR. McLAUGHLIN: --these people have devoted their lives--
MR. NATSIOS: They have.
MR. McLAUGHLIN: --to development.
MR. NATSIOS: They have.
MR. McLAUGHLIN: Are you working with this group?
MR. NATSIOS: We just met with them. We meet with a lot of groups. I am very private sector-oriented, as is the President and Secretary Powell. Unless the private market economy gets revived, our programs are not going to work. And so there's a heavy emphasis, as there was with this group--I was worried we were going to have an argument over what needed to be done, and they came in and said, "You need to focus on agriculture." I said, "That is exactly what our strategy is."
MR. McLAUGHLIN: Well, the strategy is for $5 billion in aid for Afghanistan.
MR. NATSIOS: From all countries.
MR. McLAUGHLIN: From all countries. Correct?
MR. NATSIOS: Right.
MR. McLAUGHLIN: Now, do you think that you can squeeze out the war economy and the drug economy, leaving a legitimate economy?
MR. NATSIOS: The man who's running our aid mission there, Craig Buck, did the reconstruction of Kosovo for AID and the reconstruction before that of Bosnia. He's an expert at this. He's done a very good job in both countries, and I said, "You want to do one more reconstruction? Go to Kabul for us."
MR. McLAUGHLIN: Well, the reconstruction job in Afghanistan far--
MR. NATSIOS: Is much--
MR. McLAUGHLIN: --is far more complex--
MR. NATSIOS: Absolutely.
MR. McLAUGHLIN: --and is far more refractory, resistant to control than either Bosnia or Kosovo. Correct?
MR. NATSIOS: Correct.
MR. McLAUGHLIN: So his work is cut out for him.
MR. NATSIOS: It certainly is. But he's very good at this.
MR. McLAUGHLIN: One of the arguments put forth by this particular NGO, which is under the Ambassador's leadership, in part at least, is that what is needed is mechanisms for attracting large amounts of foreign direct investment and--
MR. NATSIOS: Private investment.
MR. McLAUGHLIN: Private investment, correct. And the paper goes on to say the only means of economic growth is through donor assistance and the attraction of FDI because of the resistance in Afghanistan to getting anything like a solid enterprise economy going. Such things as flawed or non-transparent tenders, uncertainty with regard to tax levels, customs duties, and tax duty concessions, excessive bureaucracy in licensing agencies, and other commercial barriers, together with rumors of official corruption, all serve to produce an environment for business which is generally opaque and unfriendly. This sounds like the conditions in--earlier conditions in Ukraine about the 1930s or '40s.
How are you going to possibly root a true legitimate economy in that country?
MR. NATSIOS: Well, the first requirement is local leadership. We'll never do this unless they support us. President Karzai, Ashraf Ghani, the Finance Minister, the Economy Minister, are all free-market people. There are 300 state enterprises. They've asked us to help them sell them off, which we're engaged in now.
MR. McLAUGHLIN: Right.
MR. NATSIOS: We helped them design a new currency. AID was the principal advisor and supporter of the central bank to create this new currency, which is very important you have a stable currency to investment.
MR. McLAUGHLIN: Well, on this conceptual level, they're perfect. On the practical level, they're powerless, because the warlords throughout Afghanistan are resisting this kind of an approach. You know that.
MR. NATSIOS: But that's happened in every reconstruction AID has done in the last ten years. This is not our first reconstruction effort. We did reconstruction in Ethiopia after the civil war, in Mozambique after the civil war, in Liberia after the civil war, in Nigeria after the Sandinistas--
MR. McLAUGHLIN: Well, in all of those countries--
MR. NATSIOS: Yes.
MR. McLAUGHLIN: --you had a far less problem facing you than--
MR. NATSIOS: We did.
MR. McLAUGHLIN: Isn't that true?
MR. NATSIOS: This is going to be a big challenge, there's no question about it. But the ways in which you do these private sector things that are necessary to create investment are things we've done many places very successfully.
MR. McLAUGHLIN: Well, if you welcome this challenge, as you appear to do, are you also going to welcome the challenge of the aftermath of Iraq?
MR. NATSIOS: Iraq is a subject for the President and the Secretary of State. I do not talk about Iraq.
MR. McLAUGHLIN: You mean the Millennium Challenge Fund is not going to do much to relieve Iraq?
MR. NATSIOS: Iraq and--
MR. McLAUGHLIN: And the aftermath.
MR. NATSIOS: --the Millennium Challenge Account have nothing to do with each other.
MR. McLAUGHLIN: Has anyone in your shop estimated the cost of containing Iraq? Any idea?
MR. NATSIOS: That's for other people to deal with. We're not involved in discussions about that.
MR. McLAUGHLIN: Well, Larry Lindsey said it could climb to $200 billion.
MR. NATSIOS: You have to talk to Larry Lindsey about that.
MR. McLAUGHLIN: We'll be right back.
[Commercial break.]
MR. McLAUGHLIN: --wrote a book, by the way, called "The Great North Korean Famine" in the year 2001. My question to you is: Besides the oil now cut off, which has caused the resurrection of this reactor, we've also cut off food from North Korea. Do you approve of this?
MR. NATSIOS: Well, first, we didn't cut it off. We announced that from now on we're going to use the traditional international standards we use everywhere else in the world for the distribution of food--
MR. McLAUGHLIN: Which is what?
MR. NATSIOS: Which is you have monitors in the villages with no advance notice; you have your own translators.
MR. McLAUGHLIN: Suppose--
MR. NATSIOS: For the last five years, secret police translators have been translating for us. How do we know what people are saying?
MR. McLAUGHLIN: Okay. Suppose they don't go along. Are you going to continue to let those people starve? How many will starve?
MR. NATSIOS: Because--
MR. McLAUGHLIN: Is it something like 13 million?
MR. NATSIOS: No, no, no. The famine in North Korea ended in 1998. Two and a half million people died in that famine. The U.S. Government provided assistance. I was a big advocate of it. The famine has been over for three years. They have refused to change their agricultural economy, which is a Marxist-Stalinist system of agriculture, which--
MR. McLAUGHLIN: So you're going to cut off the food to affect the ordinary North Korean?
MR. NATSIOS: No, because we don't know that the food is going to the ordinary citizens because they will not allow us to use the standards to guarantee it's going there--
MR. McLAUGHLIN: You don't think this is an excessively harsh and ultimately not quite moral doctrine?
MR. NATSIOS: The United--well, no, it is a moral doctrine. The doctrine is that you have to prove, using international standards for food distribution, that poor people are getting--
MR. McLAUGHLIN: Otherwise--
MR. NATSIOS: --it, not the military.
MR. McLAUGHLIN: Otherwise, let them starve.
MR. NATSIOS: No, no, no. When I was interviewing refugees along the Chinese border from North Korea, they were telling us stories of how the military was taking some of the food. I have to say I was very upset with these stories.
MR. McLAUGHLIN: Ambassador Natsios, it's a pleasure having you with me. Good luck.
MR. NATSIOS: Thank you very much.
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Last Updated on: January 02, 2009 |
