In reexamining the strength and purposes of the agencies that support our overall policy, we have identified separate but complimentary missions that are best pursued by leaner, more effective, independent institutions under the overall foreign policy guidance of the Secretary of State.

The consolidation proposals to which the chairman has referred will not, in our view, produce savings as a result of administrative efficiencies. The large numbers being discussed represent potential program reductions. We should be clear about the difference between program reductions and administrative savings attributable to consolidation.

We believe that it would be a serious mistake for the Congress to assume that future demands and challenges to the United States abroad will be less or that the Department of State and the agencies are incapable of reforming themselves, and that a larger, poorer, unitary foreign affairs agency will be adequate to sustain our expanding purposes abroad.

For all those reasons, Mr. Chairman, we respectfully disagree with the conclusions which you have referred to in your opening statement. We remain ready, as always, Mr. Chairman, to work with you and the committee members to examine our reasoning and to explain further our belief in the continued necessity of vital, separate foreign affairs agencies. Thank you, Mr. Chairman.

The prepared statement of Mr. Moose appears in the appendix.] Chairman GILMAN. Thank you, Secretary Moose. Mr. Atwood. STATEMENT OF THE HONORABLE J. BRIAN ATWOOD, ADMINISTRATOR, AGENCY FOR INTERNATIONAL DEVELOPMENT

Mr. ATWOOD. Thank you very much, Mr. Chairman. Let me thank you for giving us this opportunity to discuss these complicated issues. You are asking, I believe, the right questions. These are questions that need to be explored, because we are in a different era. We are in the post-cold war period. It is clear that we need to review where we stand.

It is also clear that we need to do more with less. You have raised the question about how much less, by suggesting that our budgets are going to be cut. I think that remains to be seen, and we certainly will want to fight to defend the President's request. These are complicated questions. I would remind you that it took approximately a year and a half to do the bottom up review of the Defense Department. It took 2 years to look at the intelligence community to come to some conclusions as to how those institutions should be reorganized, and I would suggest that it would be very dangerous to rush to judgment about how the foreign affairs agencies, as well, ought to be reorganized.

I can tell you from personal experience that the administration is seized with this issue. The Vice President is personally engaged, the President is personally engaged, as is the Secretary of State. So, I do hope that we will have future opportunities to present our views on these questions.

I also recognize that when we appear today, we can be made to appear to be defending the status quo. You made the statement that we cannot simply tinker around the edges. I would suggest to you that we have not been tinkering around the edges for the last

2 years, and the others will be able to explain what has been done within their agencies, as Undersecretary Moose has explained what has been done at the State Department.

But, I feel very good about what we have been able to accomplish at USAID. We have managed to be on the cutting edge of change, so I do not feel that we have been tinkering around the edges at all. When we came into USAID in May 1993, we saw that there were excellent people, excellent programs, a very vital mission to our country, but we had what, in essence, was a bureaucratic mess. We had disorganization. We had been stretched much too thin because of the acquisition of the challenge in Eastern Europe and the former Soviet Union, and we had to do something about it, so we did.

We basically used the principle of consolidation. Consolidated eight bureaus into four. We eliminated 90 organizational units. We have reduced our work force by 1,200. We are planning to reduce by another 830. We reduced 21 missions and we have now announced that we will reduce another 6 very soon. We reengineered the way we do business. We streamlined our operation by eliminating unnecessary bureaucratic steps. We focused on strategic objectives, and we narrowed them down to five missions.

We have tried to convert the Agency into an agency that can achieve measurable results. We have reported to you in our congressional presentation in a different way, asking you to hold us accountable for results, as opposed to how much money we have spent.

We have taken 11 accounting systems and created a single accounting system, so that we can better manage our finances and our pipelines. We have created a new procurement and acquisition planning system. And, we have also made an effort to be a lot more responsive to the foreign policy needs of our country and to the President and to the Secretary of State.

We created an Office of Transition Initiatives to allow us to get into transitional situations and work on the recovery of nations, a foreign policy goal of not only this administration, but the past one as well. And, we have responded to contingencies that have arisen, by reprogramming money within our budget, without damaging the development goals, so that we could handle contingencies in South Africa and Cambodia and Haiti and the West Bank and Gaza.

We have created a new concept in that we want to relate the relief work that we do, which is vitally important and supported by a vast majority of the American people, to recovery and then to the long term development efforts. The Greater Horn of Africa Initiative, the President's initiative in the Greater Horn area, is an example of that, and we have used that initiative and that new way of thinking to change the thinking of other donor nations, as well. We have adopted a new strategic approach in each country, and we have tried to blend our private and public development efforts. We want to work with the host government so that the right framework is created to encourage free markets, entrepreneurship, private sector development, and we want to work with people as well as with the government, so that we can encourage them to become more democratic, more participatory in their own society, and

to develop the nongovernmental organizations that are so important in the development field.

We have also done a more effective job of donor coordination. Most of the time I spend on donor coordination, I am dealing with other development agencies of other governments that are led by ministers. Obviously, we have a hard enough time being last in the OECD, in terms of our contribution to development. Dead last, I might add, behind Ireland. It is hard enough to maintain American leadership.

I think it would be a lot more difficult to encourage other donors to be involved in issues that we considered to be in our national interest if we downgraded the development mission, which is the way it would be interpreted if USAID were merged into the State Department.

So, to sum up, I think we should be asking the question, what is it that can be gained from a merger of USAID into the State Department? I already feel as though I work for the Secretary of State. I recognize that under the IDCA legislation that was adopted in the late 1970's, I also report to the President. That legislation has never been fully implemented. I certainly would not go to the President around the back of the Secretary of State.

I feel that our Agency has been terribly responsive to the foreign policy needs. We have actually moved money around in a responsible way. I feel that the Secretary of State has supported our efforts to reduce our presence around the world, and I feel that there is much to be lost if we were actually to merge USAID into State. I think that the way we have attempted to manage our program would be lost as we enter into a larger organization.

I feel that subordinating the development mission and putting it on an equal plane with many other missions which are part of the State Department's fundamental missions would mean that it would not get the attention that it deserves. It would obviously downgrade the development mission at a time when I think we need it more than ever before. It would hamper our donor coordination efforts, because you would no longer have an agency head dealing with other ministers from other governments. You would have, presumably, an undersecretary under one of these plans.

You would separate the relief from the recovery from the development part of this continuum that I mentioned, and you would not be able, it seems to me, to relate as well the government mission to the people-to-people mission.

I think that we have not got an incompatible mission vis-a-vis the State Department, but the State Department's mission is different. Its focus is diplomatic relationships with other governments, and that drives people to do different things in a different manner. It is a different perspective.

With all due respect for the State Department, every institution has an institutional nature. Because of the primary mission of the State Department, its nature is different. It establishes a pattern of behavior, a certain series of biases that are reflected in the positions that they take within government.

Now, I think as a former Under Secretary of State for Management, I have proven that one can make the transition and come over to the development agency and become a strong advocate of

development. I know Dick Moose could do the same, but where he sits, he thinks differently, he has different challenges, he has a different mission.

I cannot expect, very frankly, the State Department, because of its nature, to care as much about child survival issues. I could not expect it to care as much about basic education or maternal health care or private sector development. It simply is not in the nature of the beast to be as concerned.

I am not suggesting that the current leadership of the State Department would shun these duties. I am simply suggesting that throwing those kinds of initiatives into a larger organization would mean that the development mission might get lost, if not now, then in the future. I think that is a very, very serious move for the United States to make at a time when sustainable development is an extremely important mission for our country, because it treats conditions that cause instability. It treats conditions that are causing us to spend a lot more money on peacekeeping in our military and on refugee assistance and disaster relief and the like. In addition, it seems to me, it creates opportunity for American business by creating new markets in the developing world.

So, I think it is vitally important. It is an investment in our future, it is an investment in economic growth for our own country, and I feel at this time that the mission needs to be accentuated, not downgraded.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Atwood appears in the appendix.]

Chairman GILMAN. Thank you, Mr. Atwood. Dr. Duffey.

STATEMENT OF THE HONORABLE JOSEPH D. DUFFEY,
DIRECTOR, U.S. INFORMATION AGENCY

Dr. DUFFEY. Thank you, Mr. Chairman. I appreciate the opportunity to appear before the committee and ask that my full statement be entered into the record.

I would like to very briefly summarize that statement at this time.

We are, in many ways, just beginning a conversation about America's role in the world at the end of the cold war. We are asking questions about our vital interests, about the relationship of resources available in terms of the priorities we have here at home and overseas. The questions, I think, do not always have to do with doing more. Sometimes, they have to do with doing less and doing it better.

But, as that conversation is beginning, I believe that the question of organization poses the possibility of diverting us from real attention to the definition of our role in the world and the mission of the agencies before you.

I would like to quote from Vice President Gore's letter to the Congress in February, when he looked at the question of consolidation. There are a couple of smoke screens involved here. Number one is the suggestion that we are talking about fully independent agencies. The agencies that we are talking about are related. Those of us who are at this table meet and begin our day several times a week with the Secretary of State, discussing the common mission

we have and the ways in which the agencies work together. Personnel move back and forth across the agencies. The organization, I think, has wisdom in it, not because it is independent and separate, but because of the flexibility and the management strength of the specialties and special missions of each of the agencies.

This is what the Vice President said when he wrote to the Congress in February:

I have found that consolidation by itself would not produce significant savings. Real savings will result from hard decisions about what we no longer need to do. What can be eliminated, what can be privatized. I found that by focusing on specific areas, we have the opportunity to realize significant savings without incurring the costs of a large scale reorganization. I have therefore ordered that we assess the need for programs, eliminate overlap and duplication and establish common services where that makes sense.

I also weighed the potential disruption that merging these agencies into the State Department would impose upon the conduct of foreign affairs, and the strains it would place on the State Department's management capacity. I found that such a merger would undermine the very substantial reinvention activities being undertaken by each of these agencies. In short, I reached the same conclusion that so many private companies and organizations have reached. Moving boxes is no substitute for real change.

At USIA, we began not after November, but 2 years ago, an ef fort to address the question of real change. The first thing we did was not to talk about our organization as much as our purpose and our mission. We looked at the changing structures of the flow of information in the world. We looked at the changing role of the United States and the changing sense of its vital interests.

We wrote a major paper with many of my colleagues participating. We circulated it to more than 2,000 people inside and outside the government in the summer of 1993. We carried on correspondence and conversations with some 200 people who responded to that research and effort to redefine and understand our mission. Then we began internally to work on the its organizational implications.

I will always be grateful to my colleagues at every level in USIA, men and women who worked with the agency for many years, who participated and continue to this day to participate in that effort. I want to summarize where we are.

If less than a decade ago we would be sitting in this room talking about USIA, we would have been talking about leading an ideological struggle in a bipolar world against Communism and battling a major disinformation campaign financed by a major world power. Today, those are not the realities that we confront. Not that what we confront is less dangerous or threatening, but it is a different world. Let me begin, and I have prepared some charts here. Although I know they will be difficult to read, they summarize some of these points and I hope will give you the opportunity to come back and raise questions later.

Let me begin with our understanding of the mission of the U.S. Information Agency, which is to inform and influence foreign publics in promotion of U.S. national interest, and to broaden the conversation and dialog between Americans, their institutions and their counterparts around the world, to explain and advocate our policies in terms that are credible and meaningful in foreign countries, to provide information about official policies of the United States and about the people's values and institutions which shape