-Caveat Lector- -------- Original Message -------- Subject: NYTimes: U.S. Aid Abroad Is Business Back Home Date: Sun, 28 Jan 2001 21:57:50 -0600 (CST) From: Joyo News <[EMAIL PROTECTED]> Organization: ? To: undisclosed-recipients:; Washington Post Friday, January 26, 2001 -front page- Aid Abroad Is Business Back Home By Michael Dobbs Washington Post Foreign Service Last of three articles In September 1997, a development consulting firm headquartered in elegant offices on 20th Street NW celebrated winning a $26 million contract from the U.S. Agency for International Development. Chemonics International Inc. had the go-ahead to lead a three-year effort to promote democracy in local government in Poland. The project became one of the most ambitious U.S. foreign aid initiatives in the former Soviet Bloc. To hear USAID officials talk, it was a model worthy of emulation around the world. Assessments by Polish recipients range widely, from modestly positive to scathingly critical. What is not in doubt is the financial boost that such programs have given to the development business back in the United States. An analysis of the Polish project shows that the bulk of the $26 million was spent on aid consultants, many of them Americans, for such things as salaries, airfare, rent, office equipment, cost-of-living allowances, cars and a support staff back in Washington. In an era of declining aid budgets, USAID's official Web site proclaims that "the principal beneficiary of America's foreign assistance program has always been the United States." The site notes that nearly 80 percent of USAID contracts and grants go "directly to American firms." It adds that USAID programs, which cost about $7.5 billion last year, have helped create new markets for American goods and "hundreds of thousands of jobs" for U.S. citizens. USAID officials contend the system benefits both sides. Americans get jobs and foreigners get hard-to-acquire knowledge that will enable them to build thriving economies and stable, democratic governments. Critics argue that the principal beneficiaries are a handful of big consulting outfits, for-profit and nonprofit, with an inside track on the complex and highly bureaucratic art of winning government contracts. Nowhere is aid a bigger business than in the Washington area, home to dozens of development groups that feed off USAID and compete for contracts. Many of these companies are staffed by retired USAID employees skilled in writing proposals to appeal to their erstwhile government colleagues. Some employ spouses of current USAID officials. One of the largest and most successful of these companies is Chemonics, which runs a host of foreign aid programs -- its work includes improving air quality in Cairo and helping persuade Colombian farmers to stop growing illicit coca and opium poppy crops. In Poland, the work has entailed such things as helping local governments reform their budgets, computerize housing databases and improve their public relations techniques. Fifty-two percent of Chemonics' shares are owned by a former assistant administrator of USAID from the last Bush administration, Scott M. Spangler; the rest are held by staff members and a minority investor. Run day-to-day by a former U.S. Foreign Service officer named Thurston Teele, Chemonics reported a record $85 million in revenue for the last nine months of 1999 and net income of $1.7 million. The company's return on equity was 34 percent, it reports. According to Teele, Chemonics relies on USAID for 90 percent of its business, which has been growing at about 20 percent a year. Chemonics -- like its leading competitors, Development Alternatives Inc. of Bethesda and Academy for Educational Development on Connecticut Avenue -- devotes much of its work in Washington to winning USAID contracts. This highly specialized process demands intimate knowledge of agency rules and procedures. Once a contract is won, the firms may charge various forms of administrative overhead, which in the Polish project amounted to about $5.4 million, or 21 percent of the Chemonics contract. Also keeping the money in American hands are laws that oblige both USAID and Chemonics to use American companies and American subcontractors wherever possible, even if the cost is significantly higher than using foreign ones. Chemonics personnel in Poland, as in other parts of the world, are required to fly on American airlines, drive American automobiles and type their reports on American computers. J. Brian Atwood, who stepped down as director of USAID in 1999 after six years in the job, describes the buy-American procurement laws as "the biggest headache I had to deal with" at the agency. He argues that the rigidity and complexity of the contract-bidding process -- a proposal can cost the bidder $50,000 to produce -- favors big companies like Chemonics over small nonprofit groups. "It is a very frustrating aspect of the way USAID is run." Teele describes the procurement regulations as "a necessary evil." "In order to sell these programs to Congress and keep them sold," he said, aid agencies must show that foreign assistance benefits the United States. He dismisses recent proposals to exempt the world's poorest countries from the buy-American requirements as politically unrealistic. "The U.S. won't let it happen," he said. Despite the outward signs of prosperity at Chemonics, aid contracting is not a particularly profitable business, Teele argues. He added: "The [American] aid system is as good as you will find anywhere. It is very transparent. Real corruption is virtually nonexistent." Americans in Poland On the wall of the Warsaw headquarters of the Polish local government project is a sign posted by Chemonics employees that wryly sums up the experience of the last three years. The "Six Phases of a Successful Program" are listed as: 1) Enthusiasm; 2) Disillusionment; 3) Panic; 4) Search for the guilty; 5) Punishment of the innocent; 6) Praise and honors for non-participants. Hailed by USAID as part of America's "legacy" to Poland, the local government project has been through all these phases. By most accounts, the first year was chaotic. Jerzy Fischer, a Polish consultant who worked closely with the company, recalls "dozens of Americans arriving with their wives, dogs, cats and children, causing many more problems than they were able to solve." He notes that the total cost of employing an American in Poland is around $200,000, many times more than the salary of a Pole with equivalent qualifications. USAID and Chemonics were roundly criticized by independent evaluators for hiring 23 expatriate consultants, few of whom had worked in Poland before, when a half-dozen probably would have sufficed. The project was poorly designed and over-ambitious in scope, the evaluators said. "The returns [on] cost of the first year, $7.3 million, are very difficult to show," concluded the report, written for USAID by another Washington-based contractor, Management Systems International. "Polish counterparts were able to see that the quality was low and resented, justifiably, that [the foreign] experts were being paid large salaries and were producing little." "It was shocking to me," said Cesar Marcino, a Venezuelan housing consultant hired to work on the local government project from February 1998 to March 1999. "We discovered when we got out there that a lot of the [materials] that we were supposed to disseminate were not appropriate [for Polish conditions]. It was like dressing someone up in clothes that don't fit him." USAID and Chemonics responded to the problems by installing new project management and replacing many of the Americans with Poles. This resulted in significant improvements, according to USAID officials and independent evaluators. After a year largely devoted to resolving logistical problems in Warsaw, team members began getting out in the field, working with 45 "partner" municipalities (out of about 2,500). Teele acknowledged difficulties in the first year, but said that they were rapidly corrected, in cooperation with USAID, which last year gave Chemonics an "excellent" rating for its overall performance in Poland. He added that the original USAID plan called for a large number of expatriates in the early phase. "They asked for the expatriates, so that is what we gave them," he said. As the local government project nears its end in March, USAID officials are generally upbeat about it. "In terms of results, this is one of the best projects that USAID has," said William Frej, who headed the agency's operations in Poland until last summer, when the USAID mission in Warsaw was closed. "It's bad news that they're leaving," said Rafat Jozwiak, assistant mayor of Kutno, in central Poland, which is implementing several Chemonics-run programs, including one aimed at increasing public participation in local government. "They have helped us become more professional." Yet other Poles feel that the practical results are modest, particularly in relation to the $26 million investment. While many mayors express gratitude for the assistance, others say they would not repeat the experience, and criticize the amount of money that consultants ate up. "When we agreed to cooperate with them, we thought we would get something concrete out of it," said Edmund Puzio, mayor of the lakeside resort town of Mikolajki, in northeastern Poland. "We were looking for tangible results, but all we got was a lot of papers and books. It was like attending a university." U.S. officials say such criticism misses the point. USAID, they argue, is no longer in the business of giving charity, but of transferring knowledge. Given this shift in priorities, said recently departed USAID administrator J. Brady Anderson, "it doesn't matter that a large percentage of our budget goes for the kind of thing that we buy in the U.S. I say 'so what?' " But even Poles who are well-disposed to USAID have reservations about how the know-how was delivered. It was "a colonialist approach," said Jerzy Regulski, who is widely regarded as Poland's leading expert on local government reform and served as a cabinet minister in the post-communist era. "The attitude of the foreign experts was, 'We have money, we are wise, we know what to do.' But the American experts had never lived under communism. Much of their technical information was not usable in a different political setting." Regulski and others point out that by the time the Chemonics project got underway in 1998, Poland already had nearly a decade of experience in local government reform following the collapse of communism in 1989. But instead of working through existing Polish institutions, Chemonics set up its own well-funded operation, draining talent away from local organizations with offers of higher salaries. Teele acknowledges that Chemonics was approached by many Polish local government experts, several of whom were hired at salaries "somewhat higher" than standard local rates. He added, however, that "we collaborated closely with the local groups. We had the same goals." A 'Paper Factory' In this project and similar ones around the world, extraordinary effort is devoted to satisfying the internal reporting requirements of USAID. Fischer, the Polish consultant, compares the Chemonics headquarters on Lucka Street in Warsaw to a giant "paper factory" churning out reports to Washington. Many of the reports attempt to quantify success. Filled with such terms as "NGO Sustainability Index" and "SO 2.3 results framework," the reports are designed to impress congressional appropriators but often end up vanishing into a vast bureaucratic hole. Their flavor is reflected in a one-inch-thick document issued last summer that attempts to show how Chemonics met various USAID targets. For example, in order to demonstrate "increased participation in local government decision-making," Chemonics commissioned an opinion survey in randomly selected "partner" municipalities. Among other things, the survey found that one in six citizens had attended municipal budget presentations and one in four citizens had met with their local representatives at some point during the previous year. There was no baseline to show that public participation had risen over the project's lifetime, however. And if public participation did increase, no evidence was produced to show that this was the result of the Chemonics project, as opposed to myriad other changes underway in Poland. Both USAID and Chemonics officials acknowledge problems with these efforts to quantify, part of a U.S. government-wide effort to demonstrate results, but insist they are better than nothing. "I don't think we are quite there yet in terms of turning this from an art into a science," said Donald L. Pressley, assistant USAID administrator for Europe and Eurasia. But the effort "is a correct one." For-Profit vs. Nonprofit One of the hottest debates within the foreign aid community over the last few years has concerned the proper balance of for-profit contractors like Chemonics versus nonprofit agencies that receive USAID grants. Nonprofit grantees are typically much smaller operations, have their own vision of international development and seek U.S. government support to implement it. In USAID's view, the main advantage of for-profit contractors is that they do what they are told and account well for their spending. Grantees often resent interference from Washington. "Over the past few years, we have had the sense that USAID has been favoring for-profit firms," said John Zarafonetis, director for development policy at InterAction, a Washington-based lobbying group that represents more than 165 nonprofits. USAID officials in Washington deny that and say the two types of groups get a roughly equal share of the foreign aid budget. A Senate report last summer strongly criticized the agency's "reluctance to work directly with local non-government organizations" in the Balkans, and demanded that USAID stop handing out "large grants to U.S. contractors with no relevant field experience." Other critics fault the buy-American approach. Research by Rep. Jim McDermott (D-Wash.) showed that 53 cents of every dollar spent by the United States on tackling the AIDS crisis in Africa never left the Washington, D.C., area. "Much of the aid is very ineffective," he said. "It is in the hands of various consultants who fly over to Africa for a week and then come back." Teele acknowledges that Chemonics has benefited from USAID's ever-increasing reliance on independent contractors. As the aid agency gets smaller, he notes, it is farming out contracts in ever larger chunks. But he disputes the idea that the deck is stacked against small companies. "We don't win only because we write better proposals. We win because we do a better job." Despite the complaints, many Poles feel that the consultants performed a valuable service in demonstrating international support for Poland after nearly half a century of communist isolation. "We had to learn the language of international civilization," said Jacek Szymanderski, who heads Municipal Development Agency, a USAID-funded think tank. "We needed foreign advisers here at the beginning, although maybe not as many as showed up." [This message was distributed via the east-timor news list.] ____________________________________________________________ T O P I C A -- Learn More. Surf Less. Newsletters, Tips and Discussions on Topics You Choose. http://www.topica.com/partner/tag01 <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://peach.ease.lsoft.com/archives/ctrl.html <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html">Archives of [EMAIL PROTECTED]</A> http:[EMAIL PROTECTED]/ <A HREF="http:[EMAIL PROTECTED]/">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
