Re:Development: The USAID Shutdown and What’s Next

In our second episode, former USAID Administrator Andrew Natsios warns of the impact of the agency’s shutdown and outlines his vision for the next era of U.S. foreign aid.

International development is entering a new and uncertain era. This past year, the U.S. Agency for International Development (USAID) was shut down after more than 60 years. Other countries have cut their foreign aid budgets. And yet global poverty remains one of humanity’s most urgent challenges.

At this moment of crossroads, TechnoServe is exploring what the future of international development should look like—and how we get there.

Our new series, “Re:Development | Conversations for Change,” interviews leading thinkers and doers with a variety of bold perspectives on how to build a world where everyone has an equal chance to succeed.

Read part one of the series. 

Re:Development | Episode Two

In our second episode of Re:Development, TechnoServe CEO Will Warshauer speaks with former USAID Administrator Andrew Natsios.

Now executive professor at the Bush School of Government and Public Service at Texas A&M University, Prof. Natsios led USAID from 2001 to early 2006. There, he oversaw the launch of the first Global Development Alliances–partnerships between USAID and the private sector–as well as the President’s Malaria Initiative and the President’s Emergency Plan for AIDS Relief (PEPFAR) program fighting HIV/AIDS around the world. 

Prof. Natsios currently serves on the Boards of Directors of the Committee for Human Rights in North Korea, the American Academy of Diplomacy, and the International Foundation for Electoral Systems. He previously served as the Chair of the Board of Harvest Plus of the Consultative Group for International Agricultural Research (CGIAR).

How the USAID Shutdown Impacts U.S. and Global Food Security and Safety

Will Warshauer: It’s a bit of an understatement to say that U.S. foreign aid has been shaken up recently. In one of your commentaries about these shifts we’ve seen at USAID, you said of U.S. foreign assistance: “This assistance is one of the most powerful tools Washington has to push back against Chinese and Russian influence and to prevent transnational threats such as disease and terrorism from reaching U.S. soil.”

I wonder if you can say a little more about that and elaborate on how you think the shutdown of USAID, among other impacts, will have negative impacts on the United States.

Andrew Natsios: Well, I always start out my talks with a research enterprise today that is almost unknown. There was a disease, plant disease, attacking sorghum about 20 years ago; it was called striga. It’s a weed that attaches to the sorghum roots and kills the crop. And we’re the largest producer of sorghum in the world, eight million tons. An Ethiopian-American who got his PhD with a USAID scholarship did research with a USAID grant to find a way of breeding a sorghum variety that would be resistant to striga. And he did. And he went on to become a professor at Purdue in Indiana. And that solved the striga problem.

So when you eat Texas beef, you’re eating USAID food. Even though it was developed for the developing world, we had ranchers come in from Texas to thank USAID for developing the seed. 

Second, 60% of the wheat grown in the United States is resistant to wheat rust, which is a plant disease. And that wheat was developed by CIMMYT, which is part of the CGIAR, the Consultative Group for International Agricultural Research, which USAID helped found in the ’60s to institutionalize the Green Revolution. So when you eat a loaf of bread, or maybe part of a loaf of bread, you’re eating USAID wheat. And why is that? Because of Norman Borlaug, who won the Nobel Prize for Peace for the Green Revolution. He told me once it’s because of USAID that we, through CIMMYT, through the CGIAR, developed this wheat rust-resistant wheat that was for the developing world, but our farmers now are using it in the United States. 

I could bring up HIV AIDS, the PEPFAR program, President Bush’s malaria initiative. There’s a study that was just done by Lancet, which is the most respected European journal of public health, by a group of social scientists funded by the Spanish government. It has nothing to do with USAID or the U.S. government; they didn’t get any money from USAID to do the study. And they concluded that USAID had saved–through its food programs, its agriculture programs, and its health programs–92 million people between 2001 and 2021. And that [14] million people would die in the next six years because we have destroyed it. 

I am a big supporter of the State Department, but the State Department is not a development institution. It has a short-term time horizon. USAID needs to have a much longer time horizon. As USAID has been more and more absorbed by other agencies, State Department in particular, the time horizon for programs has collapsed, and that has reduced the success rate of programs. I fear it will get worse now that this is in State because they need quick results, and we don’t produce quick results that are sustainable over the long term. It takes a long time to do this stuff, but when we do it, it has a profound effect on the whole world.

Why U.S. Foreign Aid Must Prioritize Global Food Security

Will Warshauer: Will you say a little more about the soft power involved in this? You make a very, very convincing case about the many, many ways that Americans are better off with USAID than without it. But the soft power argument is one which is interesting as well, e.g. “hearts and minds” of people around the world.

Andrew Natsios: I wrote an article for Foreign Affairs, the journal, at their request in early February on the consequences of shutting down USAID. And I said, we do need to retool our aid program, given great power rivalry. I argued that we should be locating aid missions in countries that affect the food security system of the planet. 

Food security has a huge effect on political stability. Tunisia, Libya, Yemen, Egypt, Syria, those [uprisings] were caused by food price increases because of the collapse of the food system in those countries. People thought, you know, it’s because of political oppression that these countries were thrown into chaos. It was not. It’s because of food price increases. 

We’re going to have more of this happen now because the principal way we would deal with this is through development programs, agricultural development programs, market-based programs. And that’s been undermined by the destruction of USAID. So I think this is a disaster for the American people and for the developing world.

And we are one of the biggest agricultural producers in the world. Our crops are exported, and countries rely on it. There was a study done by a British think tank on the choke points on the high seas that affect the shipping industry, the ships for food.

The two biggest ones are the Suez Canal and the Panama Canal, but the Dardanelles that go into the Black Sea, the Straits of Hormuz–these choke points affect the ability to move food around the world. If a couple of them are paralyzed at the same time, we could collapse the world food system. One way of stabilizing the countries where these choke points exist is to have robust aid programs.

I think we should never have shut down the aid mission in Panama. The Panamanians didn’t want to shut down the aid mission. Guess who moved in after we moved out of Panama? The Chinese did…The Chinese don’t leave, they come here and stay. I mean, we have such a short memory in the United States, we’re putting ourselves at risk. The whole Pacific Rim is now [being] taken over by the Chinese.

We only recently set up an aid program for the island nations of the Pacific. We should have done that a long time ago when Xi Jinping started Chinese businesses and aid programs taking over all these small island countries. That’s all shut down now as a result of the shutdown of USAID, which is a mistake, I think. It is a mistake for the developing world, but it’s also a mistake for us.

Should Countries Graduate from USAID and U.S. Foreign Assistance?

Will Warshauer: One of your successors, Mark Green, in particular, talked a lot about self-sufficiency in graduating countries. I know from some things you’ve written that you’ve never bought into that.

Andrew Natsios: Yeah, exactly. And you know, if a country’s become [as prosperous as] South Korea–and USAID had a huge amount to do with South Korea’s success, and Taiwan’s success, Thailand–they don’t have aid programs now; I’m not suggesting that South Korea should have an aid program. But most middle-income countries have a real risk of regression. Venezuela was the richest country in Latin America. No one thinks it’s a rich country now. It’s a disaster.

Russia and Turkey had large aid programs at one point, and they are regressing because their leadership is so bad. But I’m talking about domestically, I mean, Putin’s also an aggressor for what he’s done to Ukraine. 

So my point is, I don’t think we should use a graduation as a–I think we should use U.S. interests to determine whether or not we should close an aid mission.

I do think that as a country becomes more prosperous, the nature of the program should change. If a country is upper-middle-income, the program should shift maybe to a university linkages program where we link their universities with our universities, their industry with our industry through global development alliances, public-private partnerships. So I think we can change the program. 

But if you want to ensure that American leadership continues in the world, we need to have the aid missions functional in these countries. I actually think we should be expanding the missions. We just shut them all down, which is a disaster.

Why Many Americans Misunderstand USAID and U.S. Foreign Aid

Will Warshauer: It relates to my next question, which is about the U.S. population. And you’re as familiar with all the polling data as I am, that when you ask people, do they support foreign aid, they say, “it’s a waste of money, and we’ve got problems here at home.” 

When you talk about particular programs: “Do you support a program to feed undernourished babies or give people AIDS medicines they need to stay alive?” They say, “Yeah, we support that.” And you ask them how much we spend on aid and how much we should spend, and they estimate 25% of GDP, and say we should only spend 10% and all of that. So those numbers have been pretty steady for a long time. Did you worry about that when you were administrator? Should we worry about that now? I mean, my sense is that they started with USAID because it was an agency that didn’t really have much of a domestic constituency.

Andrew Natsios: That is the biggest problem…I mean, we’re the third-largest country in the history of the world. People forget that. 340 million people. It’s not easy to educate people on what we’re doing. I do think this catastrophe with the destruction of USAID has improved the public understanding of what we do.

But the attacks that were made by Elon Musk are contemptible because they’re all lies. USAID’s had clean audits for eight years now. What’s the basis for him saying that it’s full of fraud? I mean, they destroyed the agency based on a lie? It’s outrageous. 

Actually, it’s infuriated me to listen to it. The Pentagon hasn’t had a clean audit in eight years. Did they shut the Pentagon down? I don’t think so. And I’m a retired Lieutenant Colonel in the reserve. I served in the Gulf War, my son served in Afghanistan, my uncle served in World War II. I’m pro-military.

So this whole thing is political. It was designed to appeal to the worst instincts of people who don’t pay a lot of attention to foreign affairs. But it’s affecting the American people. We are now defenseless against a lot of disease, against food insecurity in the world, plant diseases that are gonna affect the world food system. Who’s going to protect us?

Rebuilding the U.S. Foreign Aid System After the USAID Shutdown

Will Warshauer: How could USAID be reconstituted at some point in the future? It seems like a difficult problem sitting where we are today.

Andrew Natsios: I am sending into a major publishing house a book I’ve been working on since I left USAID, and they are now going to publish it. It was going to be an academic work–I’ve retooled it, I had to rewrite it in the last six months over what’s happened–on USAID and what USAID does and the bureaucratic environment in Washington for getting work done.

And I describe it in some of the reforms. One of the reforms is to create a Department of International Development, which reports to the president directly and is part of the National Security Council, in a permanent seat, where we move all of the aid programs that are left: the Millennium Challenge Corporation, the IFC, the aid program–$16 billion worth of aid programs still exist in the State Department. They should not be there, I’m sorry.

I was a diplomat for a while; I have great respect for the State Department. It is not a project management agency. Its time horizon is a year or two. Aid programs during the Cold War were 10 to 20 years. Because what aid’s about is building institutions: private institutions like markets, public institutions like health ministries and universities and colleges, public schools. 

It’s in our interest to have that in a federal department with all of these agencies in the same place so they don’t compete with each other. 

So that’s one reform. The second is–during the Cold War, we had a highly decentralized system. Development is different in each country. You don’t do development programs the same in each country. Institutions are affected by culture and geography and language and history.

And so you need to decentralize power to the field. During the Cold War, the mission directors, the head of USAID in the field, had enormous power. And some people in Washington resented that, but it worked. I mean, I go through the examples in my book of things that worked during the Cold War: the Green Revolution. People think of Dr. Borlaug, he did the breeding with support from the Rockefeller and Ford Foundation.

But the implementation of that program to bring high-yield staple crops to the developing world was implemented principally by USAID. And I asked Dr. Borlaug, who I knew when he was still alive–he taught here at Texas A&M, we still have a Borlaug Institute here named after him–he said USAID helped implement it. And 50% of the aid budget in the [1960s] was used to implement the Green Revolution. It was a huge success.

According to the National Academy of Science, an independent study that was done, it increased food production by [200%] with only a 30% increase in the land area being cultivated, because of the improved varieties, use of fertilizer, the development of rural road systems and markets. 

All of that was done by USAID. It fed the world. It feeds the world now. People don’t even understand that. So I do think that one of the reforms is to move more money into those areas, what I would call the productive areas of development, from an economic standpoint. Which is one reason I’m on this program, because that’s what TechnoServe does. You should be triple the size that you are now, because you’re doing exactly what we need to stabilize the international system.

What Local Ownership Means for Post-USAID Development Success

Will Warshauer: Way back in 2005, you talked about local ownership as a key principle of reconstruction and development in an article you did. And today, I think localization has been a point of focus in the development community. You really made the strong case for the soft power argument, but are you in favor of local ownership? And if so, how do you think about that best happening?

Andrew Natsios: Institution building is hard to count, but institution building is about what we’re all about. Localization should be focused on institution building, not necessarily just giving money to local entities. Because neither party in Congress will support transferring all our money to the bureaucracies of developing countries, because many of them are patrimonial or clientelist states. They’re overstaffed, very bureaucratic, and their bureaucracies are very corrupt, many of them. And they change depending [on] who the president is.

That’s not how you build institutions. So USAID is focused more on the private sector because there’s less of that clientelism in the private sector than there is in the public sector. So USAID has done more than almost any other aid agency–bilateral, multilateral–in developing private markets and private sector systems because they show more promise in terms of economic growth. And that’s where I think we should focus our aid programs.

Targeting Reform: How USAID Cuts Impact Democratic Progress and Market Systems

Will Warshauer: I was a Peace Corps volunteer in Sierra Leone almost 40 years ago, hard to believe. And I was, for a while, feeling very optimistic about a new generation of African leaders. I mean, you’ve talked about building institutions and you’ve talked about the problems in many of these bureaucracies. But I guess I want to turn that around and ask where you see encouraging things going on in governments and institutions around the continent of Africa, whether they’re green shoots or whether they’re more than that.

Andrew Natsios: Well, Steve Radelet, who was the chief economist at USAID under President Obama, teaches at Georgetown. Steve did two studies that were very interesting. One of them was—people say, well, we spend all this money [on] foreign aid. It’s not having an effect on growth. Only 10% of the aid budget is spent on economic growth. The great bulk of it is spent on disaster relief. 

Disaster relief is not designed to be sustainable. It’s taking care of people where the government’s collapsed or the government’s predatory. But the real impact of the research that Steve Radelet did is, he shows that in [17] African countries that are democracies, there has been an improvement in the economic growth over a 20-year period.

But it’s only now [17]. There are about [4]8 countries in sub-Saharan Africa, something like that. And there’s a whole bunch of countries that [economic growth] didn’t improve in. But Botswana is a middle-class democracy. And we don’t have an aid program in Botswana anymore. Ghana, until recently, has been doing very well. Economically, it’s in crisis right now, but for 30 years, it was growing, and the aid programs were working very well.

Along with local leadership, you know, that’s the thing. We cannot change bad leadership. If a country chooses populist leaders, who are demagogues—I mean, I am very hostile to socialism and Marxism, but people run around thinking that’s gonna solve the problems of the developing world—they’re not. Markets work when they’re allowed to work. Too often in the developing world, markets are actually clientelist, and they’re corrupted because the elites use them for their own purposes. So I think, when the full weight of the U.S. government is put on promoting the aid program, making it successful, our programs tend to have a much higher success rate. But we cannot actually change bad leadership. That’s the problem. It is what it is.

Will Warshauer: I was going to ask you how to make U.S. foreign assistance more politically durable, but you may have just answered that.

Andrew Natsios: Yeah. We have to deal with the world as it is. Too many people who go to USAID, young people particularly, very idealistic, want to solve every single problem in the developing world, through USAID. We can’t do that. We know what works and when it works. And I think if a government is hostile to economic growth and to market reforms and to democracy, you know, we can’t force them to do it. We need to maybe just focus on those shorter-term things. And then the countries that are going through reform efforts, as Botswana did and Ghana did, and these [17] countries that Steve Radelet wrote about, then we need to put more money in those countries. 

Will Warshauer: I think there’s been a huge evolution compared to, as recently as 10 years ago, where many companies that were sourcing goods in emerging markets saw it as zero sum: if I can buy that 10% cheaper, I win. And I think almost all the companies now understand that if the family that’s growing the coffee they’re buying, or whatever it is, if that family is living in poverty, that’s actually a threat to their core business because [the coffee] may not be there when they need to buy it again, or it may not be the quality they need it to be. 

And I think, you know, politicians will come and go, and the markets [remain] there. My view is that not surprisingly, perhaps, the private sector is going to play an even more important role, at least in the short- to medium-term, with the pullback of official [development assistance] from the U.S. and some other donors.

Andrew Natsios: Right.

Why Development Work Matters: A Personal Story from Andrew Natsios

Will Warshauer: Let me ask you sort of a more personal question in terms of why you’ve made a career in international development and why does it matter to you personally. You’ve cited a lot of research and a lot of data obviously, but is there a story, an experience you had somewhere that was formative or important for you that stimulated this interest?

Andrew Natsios: My grandfather was a tenant farmer in Greece during the Ottoman Empire. He immigrated to the United States. He did not own his land. There were nine kids in the family. He was an agro-pastoralist. They grew wheat in the summertime, and he tended the animal herds in the wintertime up in the mountains. And he came when he was a young guy because he wanted a better life. I asked him why he came to America. He said, I had to work and make sure my kids got college degrees and became professional people. 

My grandfather made $9 a week in the mills in Lowell. He was illiterate in Greek and English. He emigrated in 1905. And the tenement they lived in did not have hot water in it, didn’t have central heat. This is Massachusetts, now. 

And all my uncles and my aunt got college degrees and became professional people. My father was a research scientist in textiles, and he used to tell a story when my sister and I would not eat our dinner: “Eat your dinner or you’re not getting up from the table.” I said, “Why is that?” He said, Dimitri Karadimas, he was my great-uncle, and he died of starvation during the Greek famine. During the Nazi occupation of Greece in World War II, 300,000 Greeks starved to death. Nazis stripped the country of food to feed Rommel’s army in North Africa, and the Greeks died en masse. He was buried in a mass grave. And so I remember that story. Whenever there was a famine, I remember what happened to Greece. So yes, it’s very personal for me.

And I think often of my family experience when I would go to the developing world. When I went to Greece as a kid in 1963, it was a third-world country. It’s now not the richest country in Europe, but it’s an advanced industrial power and a democracy. And it’s largely because of development. USAID had a lot to do with the building of Greece in the 1960s.

Will Warshauer: I really relate very much to what you’re saying. I mean, my own personal background is a little different, but when I think about the work that TechnoServe does, I often say we’re really in the business of providing opportunities to people. I think Nick Kristof said that intelligence and industriousness is equally distributed around the planet, but opportunity is not. And if you can get opportunity in front of these people and they can see it, they will seize it and go. We’re just sort of cracking the door open for them, is how I think about what we do in a lot of places. 

Is there anything that you wanted to talk about that I should have asked you about and I didn’t?

Andrew Natsios: Well, I could go on. That’s what I teach. It’s not just my experience at USAID and at World Vision. But I do think we’ve made a terrible mistake, and I think it needs to be corrected. And so I am not retiring from this fight. It’s just begun.