Principled agents in an agency under siege : U.S.A.I.D. and its mission in Tanzania

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Principled agents in an agency under siege : U.S.A.I.D. and its mission in Tanzania
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PRINCIPLED AGENTS IN AN AGENCY UNDER SIEGE:
U.S.A.I.D. AND ITS MISSION IN TANZANIA





















By


STEPHEN L. SNOOK


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY



UNIVERSITY OF FLORIDA


1996






















ACKNOWLEDGMENTS


I would like to acknowledge the kind assistance of Goran Hyden,

Walter Rosenbaum, David Hedge, M. Leann Brown, Chris Andrew, Robert

Uttaro, Nigel Austin, and Ken Mease for their help and advice. To them

goes much of the credit for success; with me lies the blame for any

error.

















TABLE OF CONTENTS



ACKNOWLEDGMENTS ........................................................ii

LIST OF TABLES ....................................................... vi

LIST OF FIGURES ....................................................... vii

ABSTRACT .............................................................viii

INTRODUCTION ............................................................ 1
Indicator of Change .................................................. 6
Sectors of Activity .......... ...................................... 7
Plan of Dissertation............................................... .8

THEORETICAL CONTEXT .................................................... 12
Theories, Tactics, and Ideologies................................. .12
Theories of Economic Development ............................... 13
Theories of Political Development .............................. 22
Theories of Development Administration ......................... 27
The Consequences of Developmentalism ........................... 32
Tactical Approaches to Development ............................. 33
Ideological Perspectives on Foreign Aid ........................ 42

INSTITUTIONAL CONTEXT .................................................. 47
Influence of American Federalism .................................. 47
AID's External Environments ....................................... .50
AID's Political Environment .................................... 51
AID's Task Environment......................................... .53
AID's Corporate Culture........................................... 54

THE CREATION OF AID .................................................... 58
The Ancestry of AID, 1941-1960 .................................... 62
The Role of the Private Foundations ............................ 63
The Birth of an Official Foreign Aid Program................... 63
Toward Independence in Tanganyika and Zanzibar................. 71
The Founding of AID ............................................ 80
The First Period: Institution Building, 1961-1973................. 82
Kennedy and AID's Formative Years .............................. 85
Johnson, Union, and the Arusha Declaration ..................... 90
Nixon, "Tar Baby" and the New Directions ...................... 103

REACHING THE POOR MAJORITY, 1974-1980............................... 109
Paradigm Shifts in the U.S. and Tanzania .........................109
Toward Equity in American Foreign Aid ......................... 109
The Radicalization of Ujamaa..................................112
Famine and the Ford Administration ...............................116
Crisis in Africa .............................................. 116
The Election of 1976 .......................................... 119
The Heyday of Integrated Rural Development ....................... 119
The Conflict Within the Mission Over the "Big Lie"............. 122
Carter and the Uganda War ........................................ 127


iii










The Carter Doctrine ............................................ 128
War with Uganda............................................... 132
Structural Adjustment and the 1980 U.S. Election.............. 137

THE THIRD PERIOD: FORCING POLITICAL REFORM, 1981-1995............... 140
New Paradigm, Old Paradigm: Reagan and Nyerere................... 140
The Reagan Doctrine........................................... 142
Nyerere and The End of Ujamaa ................................. 145
A Pyrrhic victory ................................................ 147
Rebuilding the AID Program....................................... .150
Learning from Indigenous Knowledge ............................ 153
Institution Building Redux .................................... 153
Mwinyi and the Consolidation of Reform ........................... 154
Bush, Democracy, Desert Storm, and Corruption in AID............. 155
American Aid and Democracy .................................... 157
Desert Shield and Desert Storm ................................ 157
AID's Loss of Bearing......................................... 158
Clinton and the Vivification of the Kennedy Ideal................ 160
A Paradigm Restored........................................... 161
Mwinyi and a New Type of Patronage Politics ...................... 163
The Move to Abolish AID.......................................... .165
U.S. Foreign Aid to Tanzania Under Eight American Presidents..... 167

THEORIES OF CHOICE AND THEORIES OF CULTURE .......................... 170
Choice Theories .................................................... 170
The Principal-Agent Model..................................... .171
A Modest Addition to Theory................................... .177
The First Hypothesis .......................................... 178
A Rival Hypothesis ............................................ 180
Culture Theories ................................................. 180
Types of Organizational Cultures .............................. 182
The Strong Culture Model of Principled Agents................. 183
The Rival Hypothesis Restated ................................. 186

THE CASE STUDY METHOD............................................... 187
The Problem of Conceptualizing the Problem ....................... 187
Challenges to Case Studies....................................... .189
Structuration and Nested Games ................................... 191
Anthony Giddens and Structuration Theory...................... 192
George Tsebelis and Nested Game Theory ........................ 194
Nested Games of Structuration................................ 196
The Case Study Method: Virtues and Limitations................... 197
Virtues of the Case Study Method............................... 197
Limitations of the Case Study Method .......................... 198
Replication Logic and Analytical Generalization............... 199
The Value of the Case Study................................... .200
Data Collection ....................................................200
The Special Problem of Interviewing Elites ....................202

AID: THE ORGANIZATION AND THE WORKER................................ 205
Part I: Policy Change as Paradigm Shifter or Paradigm Extensor ..205
Punctuated Partial Equilibrium in the Political Environment ..207
Entrepreneurship in the Policy Community .....................210
Incrementalism in the Task Environment ....................... 217
Pressure and Confidence: Explaining Paradigm Shifts ............. 219
The Net Effect: AID's Behavior in Tanzania .................... 220
Number of Projects ............................................ 223
Sectors of Activity........................................... 223
Constraints on AID Autonomy ................................... 230
AID and the Other Donors ...................................... 232
Feedback as Control in AID .................................... 233











AID and Its Conditions...
The Structure of AID.....
Part II: Inside AID .........
The First Hypothesis.....
A Rival Hypothesis .......
AID's Culture............
Staffing of AID ..........
Moving Money .............
AID and the Principal-Agent
Adverse Selection ........


..................................... 237
..................................... 238


.,..........
........o..


.......o...
Problem ....
...........


Moral Hazard.......... ...............
Strong Culture Organizations ...........
Characteristics Which AID Does Not P
Characteristics Which AID Does Posse

CONCLUSION ..................................
The Role of Conflict in AID Policy Char
Intellectual Influences ................
Political Influences...................
The Structuration of AID in Nested Game
Why AID Will Survive ...................


.......................... 239
.......................... 239
.......................... 240
.......................... 240
.......................... 241
.......................... 244
.......................... 247
.......................... 247
.......................... 248
.......................... 252
ossess .................... 252
,ss ........................ 253

.......................... 257
Lge ........................ 257
.......................... 259
.......................... 260
s ......................... 263
.......................... 264


APPENDIX A .......................................................... 267

APPENDIX B .......................................................... 268

APPENDIX C. .............................. ............................ 270

LIST OF REFERENCES .................................................. 271

BIOGRAPHICAL SKETCH .....................................................284















LIST OF TABLES


Table


New Obligations and Net Receipts, 1973-1977............... 120
New Obligations and Net Receipts, 1981-1984 ............... 149
Average New Annual Spending by Administration............. 167
Total and Average New Spending Obligations................ 224
Average and Total Spending by Sector...................... 225
Rank Order of Constraints on AID Autonomy................. 230
Opinions on AID Responsiveness to Influences.............. 231
Opinions on AID Responsiveness to Theories................ 232
Opinion on Importance of Feedback ......................... 236
Opinion on Whether AID Encourages Innovation.............. 240
Types of Personnel ........................................ 242
Opinion on Imperative to Move Money ....................... 245
Opinion on Job Competitiveness ............................ 247
Reasons for Seeking Employment with AID................... 248















LIST OF FIGURES


Figure


New Spending Obligations, 1961-1994..
Support for Infrastructure...........
Support for Social Services..........
Support for Public Administration....
Support for Agriculture..............
Support for Finance ..................


..................... 222
..................... 225
..................... 227
..................... 228
..................... 229
..................... 230


vii














Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirement for the Degree of Doctor of Philosophy

PRINCIPLED AGENTS IN AN AGENCY UNDER SIEGE:
U.S.A.I.D. AND ITS MISSION IN TANZANIA

By

Stephen L. Snook

May, 1996

Chairman: Goran Hyden
Major Department: Political Science


This dissertation examines policy change in the U.S. Agency for

International Development (AID) using its mission in Tanzania as a case.

It has two sets of findings. First, it finds that ideological conflict

between conservative realists who view foreign aid as an instrument of

the national interest and liberal altruists who believe that foreign aid

should be given as philanthropy plays a crucial role in Ehapirng AID

policy changes. It finds that the conservative realists dominate the

decisions that quantify aid programs in terms of funding and personnel.

The influence of liberal altruists is limited to issues of program

design and implementation.

Second, the dissertation tests two rival hypotheses. First, it

tests whether the behavior of AID in Tanzania from 1961-1995 can be

explained by the choice-oriented principal-agent model. Second, it

investigates whether the behavior of the agency is better explained by

the strong-culture model of "principled agents." The dissertation finds

in favor of the second hypothesis.


viii

















CHAPTER 1
INTRODUCTION


Legislation was introduced in Congress in the summer of 1995 to

abolish the U.S. Agency for International Development (AID). This

action by Congress helped trigger the 1995-1996 budget impasse. The

termination of a federal agency is a rare event. This study will

explore the reasons why AID was singled out for this special treatment.

AID has long been an unpopular agency. The American public's

dislike of foreign aid giving has led to political conflict about AID at

various levels: between the agency and political officials, within the

agency between headquarters and the field, within individual divisions,

units, and missions, and even within individual employees, who reported

in interviews conducted for this study often being torn between the

necessity of following orders and their personal desire to do some good

in the world.

I will argue that there are essentially two ideological "camps"

within AID and the foreign policy community. Liberal altruists believe

that U.S. foreign aid should be given in a spirit of philanthropy for

humanitarian purposes. Conservative realists believe that foreign aid

is a tool in the diplomatic negotiations kit to be used to promote the

national interest. Some conservatives believe that now that the Cold

War is over AID has served its purpose and can safely be abolished.

Some liberals feel that AID's thirty five-year-old structure is outdated

and in need of a substantial overhaul.

I shall argue that foreign aid policy is made in two "rooms," a

front room where the ostensible intentions of foreign aid are on view

and a back room out of the public eye where a different agenda is










pursued. Conservative realists for whom defense of the national

interest is always the paramount concern dominate the back room where

the decisions regarding the establishment of an aid program and the

level of funding are made. It is they who draw the broad outlines of

foreign aid policy.

Liberal altruists, on the other hand, who historically have

opposed U.S. support for authoritarian oligarchies and have generally

favored "capitalism with a conscience" predominate in the front room.

After the conservatives have decided to establish a program and the

level of aid to be provided to a country, the liberals are given the

less important task of coloririq in the details of specific programs. 1

In the following chapters I will document the different

contradictions and conflicts that have shaped AID policy over the years

using the mission in Tanzania as a case. I shall describe AID as

existing in two distinct spheres, or environments, with the agency

itself comprising a third. AID functions in a political environment in

Washington and a task environment overseas. I will show how the great

distance between its input and output functions causes organizational

complications.

I shall argue that policy is a reflection of ideology.

Bureaucratic culture, or AID's internal environment, can be thought of

as institutionalized ideology. Some or all of the ideology is

internalized by employees through rules and procedures.

AID has since its inception undergone eight major changes in

policy, of which two amounted to shifts in the dominant paradigm. I

define a paradigm shift to mean a complete change in how the issues are

framed and the way problems are approached. I shall analyze the eight



1. I would like to thank Robert Uttaro for suggesting the "two room"
metaphor as well as for the insightful term "capitalism with a
conscience," or the idea that capitalism does not require unrestricted
profit-seeking to produce growth and can be regulated to meet broader
social concerns without undermining economic performance.










policy changes and argue that for a policy change to represent a

paradigm shift, two factors must be present: very high political

pressure from Washington and very low confidence in ongoing programs in

the field.

I shall demonstrate that AID's task environment is characterized

by an unusually high degree of uncertainty. Furthermore, AID's

political environment is likewise a highly uncertain place because AID

is an exceptionally unpopular agency. I shall argue that AID's

perceived dysfunctional or irrational behavior is largely a consequence

of conflict due to environmental uncertainty. I shall argue that today

AID is poised on a knife edge from which it inevitably must fall. It

will either survive and undergo a paradigm shift or it will cease to

exist. AID is the sixth in a series of foreign aid agencies. In the

following analysis I shall show why AID has endured where none of its

forerunners did, and offer a prediction that it will survive the latest

attempt on its life.

For years AID has been accused by the enemies of foreign aid of

being internally dysfunctional, an organization in which the animals

have escaped from their cages and taken over the laboratory. I will

argue that much of AID's evident dysfunctionality is due to political

meddling. I will offer evidence that AID, far from being a corrupt

agency, is a very rare example of a government bureaucracy with a strong

culture of principled agents.

Much of the epistemological debate in the social sciences is

occupied with trying, with notably poor success, to harmonize or

integrate the social antinomies of macro and micro, aggregate and

individual, and structure and agency. Social scientists who have

attempted to move back and forth between these antinomies, especially

graduate students just learning how to "drive," are accused of

committing the ecological fallacy of using data from one level of










analysis to refer to another. I shall argue there is a conceptual

construct, which I shall call "structuration through nested games," that

can close the great divide and capture the interaction between macro and

micro, aggregate and individual, and structure and agency.

Much of AID's behavior is a function of the conflict between the

competing propensities of realism and altruism. Realism refers to the

conservative point of view in foreign policy circles that states are

rational, sensate entities in a conflictual world who act cynically and

aggressively to protect their territorial and political integrity and to

conserve and expand their share of power in the international system

(Krasner 1985: 28). Altruism refers to the liberal viewpoint in foreign

policy circles that humanitarian and egalitarian principles are

important. Like conservative realists, liberal altruists are well aware

of the historic proclivity of states to resort to war to resolve

economic problems. They too wish to protect the U.S. and its allies.

They too subscribe to the basic tenets of Lockean representative

democracy and regulated capitalism. They are more open to ambiguity

than the realists, and prefer thinking of the development effort as one

of fostering a world community by spreading the good news of democracy,

not just reacting in reactionary self-defense. They support efforts to

establish a just international order in which all states have a chance

to do well (Lumsdaine 1993).

The analogue to realism at the individual level of analysis is the

rational choice model of human behavior. Choice theories assume that

the individual is a self-interested, rational actor. Individuals relate

means to ends as efficiently as possible. What ends should be sought

are not specified; choice theories speak to effort, not to outcome

(Rogowski 1978). It is therefore possible for rational actions to have

irrational results. Choice theories understand that the public good










requires a bit of irrationality from everyone.2 The analogue to

altruism at the individual level of analysis is the cultural models of

human behavior. Culture theories see the orientation of the individual

not as the product of utilitarian calculus, but as shaped by

socialization (Eckstein 1988).

I shall concentrate on the one choice theory which has begun to

grow quite popular with both economists and political scientists:

principal-agent theory. The theory originated in studies of the firm by

economists concerned mainly with issues of efficiency. Political

scientists later adapted it to their concerns with issues of power. The

key to the theory is the concept of information asymmetry. All paired

relationships are dominated by the party who controls the information.

Information asymmetry provides a parsimonious explanation of how self-

interested persons in the lower echelons of an organization--where the

most critical information is generated--are able to use their control of

that information to frustrate hierarchical authority for their own gain.

In reconstructing the history of the U.S. foreign aid program, I

will show that the Carnegie Corporation and the Ford and Rockefeller

foundations were significant contributors to the architecture of the

U.S. foreign aid program. The foundations were created at a point in

time when socialist ideology was gaining ground. They were created to

support research to find ways of achieving two objectives: (1) to secure

access to cheap raw materials and to protect investments overseas, and

(2) to mold docile labor forces at home and abroad. When some twenty

years later the U.S. government decided that it was in the American



2. Choice theories can interpret bad social outcomes as the
consequence of individual rational decision making. For example, "the
squalor of . Calcutta is a reflection of the rationality of its
inhabitants." All residents prefer their city to be clean. One person
littering does not make the city dirty. Each individual prefers to
litter rather than go looking for a litter bin. It is rational to
litter. Thus, rational action causes squalor (Basu 1984: 7).










national interest to resist the spread of Communism and created a

foreign aid program to eliminate the conditions which made Communism

appealing, policy makers turned to the foundations to provide the new

foreign aid program with a rationale. I will consider three main bodies

of development theory, four major tactics that have been used to induce

development, and three broad ideological perspectives on foreign aid

that have influenced AID during its thirty-five years of existence.


Indicator of Change


How should the magnitude of change be measured? I will use money

as an indicator of change in AID behavior from 1961-1995.

AID oversees three broad types of assistance: (1) development and

relief aid disbursed as both grants and loans; (2) food aid under Public

Law 480 (P.L. 480), which distributes surplus agricultural produce

either in kind as humanitarian relief or by selling it to generate local

currency counterpart funds to use in projects; and (3) Economic Support

Funds (ESF), which are grants given at the discretion of the President.

ESF and military assistance account for nearly half of all American

foreign aid and go preponderantly to two countries: Israel and Egypt

(Zimmerman 1993). I consider only ESF and development grants and loans

to Tanzania that were obligated for specific projects. I do not

consider P.L. 480 programs or nonproject spending.

I have selected for my indicator of change the amount of new

spending obligations for aid to Tanzania in constant dollars over time.3

I have selected money obligated rather than money spent for two reasons.

First, quantifying streams of aid year by year is difficult (Wood 1986).

Total aid flows consist of myriad forms of inter-government transfers

involving everything from food to commodities to cash. The big



3. Funds have been converted to constant 1987 dollars using the index
in the 1994 Economic Report of the President (Washington DC: U.S.
Government Printing Office).










agriculture projects launched by AID in Tanzania in the late 1960s and

throughout the 1970s, for example, lasted up to ten years. Due to

contingencies, or problems encountered in implementation, the amount

actually disbursed for a given project in a given year often differed,

sometimes substantially, from the amount planned for that year.

Second, when an AID project is authorized, it literally takes on a

life of its own. The acronym LOP, which appears in every AID project

planning document, is significant; it stands for "life of project." The

life of each AID project is carefully mapped out. A date is set for its

end. What activities the project shall engage in during its lifetime

are specified, and schedules, critical paths, and budgets are set.

Because of the inflexibility of this form of planning, when an AID

project comes to life, it is very difficult to change what it is doing

and very nearly impossible to kill. That is why the date of each

project's death is carefully fixed at its inception.

It takes time to design and staff a project. Furthermore, once

they come on line, projects lock in streams of spending. The amounts of

money spent in Tanzania never changed drastically from year to year.

Net receipts disbursed is therefore less an indicator of changes in

strategy than an indicator of changes in the costs of implementation.

The effect of a decision to increase or reduce aid is always lagged.

Changes in AID's strategic behavior in Tanzania are better reflected in

the amount of new spending obligated per year.


Sectors of Activity


I consider the 90 largest projects launched from 1961-1995, and

attribute the full cost of each project to the year it was approved. I

have apportioned new spending obligations by sectoral activity to best

reflect what AID was concentrating on in Tanzania in a given year. I










break activities down into five sectors: (1) agriculture, including

research, food production, and marketing; (2) social services, including

public education, rural water projects, and public health; (3)

infrastructure, including support for light industry, the construction

of highways and buildings, and the renovation of urban water systems;

(4) public administration, including the provision of Western personnel

to fill the "manpower gap" and the training of government officials and

Tanzanian project personnel; and (5) finance, including rural credit

schemes, technical assistance to central banking, and direct cash

transfers for balance of payment support.

In projects that were active in several sectors at once, I have

apportioned the total amount obligated for a project to different

sectors according to an estimate based either on the thumbnail sketch of

each project contained in AID's in-house 1985 history of the Mission, or

in the individual project papers. For example, project 621-0066, Public

Administration Planning, which cost $53,000 in constant dollars and

lasted from 1965-67, is attributed to one year, 1965, and is apportioned

in its entirety to one sector, public administration, because its sole

purpose was to send five leaders of the United Women of Tanzania to

America to observe Republican and Democratic Ladies' auxiliary

activities. On the other hand, project 621-0085, Rural Credit Union

Development, costing $708,000 in constant dollars and lasting from 1968-

74, is attributed to 1968 and is apportioned in thirds to the finance,

agriculture, and public administration sectors because the project

supported activities in all three sectors more or less equally.
i


Plan of the Dissertation


Chapters 1 through 6 constitute the big picture, AID in its

context. Chapters 7 through 10 provide a look inside AID, a portrait of

the individual, or more precisely, an examination of the attitudes of










the development worker. The reader who is interested only in my

application of the principal-agent model to the case of AID and does not

wish to be burdened with the account of its history and its contextual

details may safely skip to Chapter 7.

In the first six chapters I describe the theoretical,

institutional and historical context of AID. In the final four chapters

I descend levels of analysis and pit the rational choice principal-agent

model against the cultural model of the strong organization to see which

better explains the attitudes I found in thirty interviews conducted in

Dar es Salaam, Nairobi, and Washington in 1994-1995. I next discuss the

advantages and constraints of the case study research method, then I

present my findings, conduct the analysis, and draw my conclusions.

In the following chapter, I discuss different intellectual

influences on AID. I review theories of economic and political

development and of development administration, and present evidence that

in the field of international development, most years, practice preceded

theory, in some instances by as much as forty years in time. I discuss

four different tactical approaches to development used over the course

of four decades, and show that the last three were simply reformulations

of elements of the first.

The overarching framework of this study is the conflict between

rival ideologies. I present three contending critical perspectives on

the entire foreign aid project, reject one as inapplicable, and combine

the other two to create a dialectic to interpret AID's behavior in

Tanzania as the product of two competing propensities: realism and

altruism. The conflict between these propensities occurs at both the

institutional and the individual level of analysis.

In Chapter 3, I discuss AID's institutional context. I examine

the political and task environments of the agency and assess the










influence of each. I analyze AID's internal culture to see if it is

better described as a conservative or an innovative agency.

In Chapters 4, 5 and 6, I present the evolution of the American

foreign aid program from 1944-1960 and the subsequent thirty-five year

history of the Mission in Tanzania in three time periods. The time

periods are separated by two significant political events in America,

the major reform of AID's authorizing legislation in 1973, and the

election of Ronald Reagan in 1980.

Beginning with Chapter 7 I descend levels of analysis to the

individual. I present the hypothesis that the principal-agent model can

explain the behavior of the people in the AID mission in Tanzania and

its headquarters in Washington. Principal-agent theory predicts

organizational dysfunction. As such, it is appropriate to a study of

AID because the agency has long been accused of suffering from a host of

bureaucratic pathologies.

I present a rival hypothesis that AID's behavior at the level of
i
the individual is better explained by a very different model. I

hypothesize that AID has created a strong culture of principled agents.4

In Chapter 7, I review the principal-agent literature and the

literature on cultural theories of behavior.

In Chapter 8, I discuss the case study method. I contrast the

logic and generalizability of case studies with those that use

statistical methods.

In Chapter 9, I present my findings. I analyze three linkages

relevant to AID using principal-agent and strong-culture theory. These

are (1) the link between the political environment and the agency; (2)

the link within the agency between headquarters and the field; and (3)

the link between the agency and its task environment. In addition, I

examine the influence of feedback from the task environment to the



4. The term "principled agents" is from Dilulio (1994).





11




political environment over time. In Chapter 10 I present my

conclusions.
















CHAPTER 2
THEORETICAL CONTEXT


In its thirty-five years of existence, AID has come under a number

of intellectual influences, some theoretical, some practical, some

ideological. In this chapter, I discuss three main bodies of

development theory, four major tactics that hate been used to induce

development, and three broad ideological perspectives on foreign aid

that have influenced AID over the years. In each of these discussions I

will indicate the influence conflict has had on AID's behavior in

Tanzania.


Theories, Tactics, and Ideologies


When the United States launched the world's first foreign aid

program in 1948, no country had ever transferred wealth to another in

time of peace without expecting something in return. This was no

exception. Although aid was distributed for ostensibly philanthropic

purposes such as increasing agricultural production and improving public

health, its deeper purpose was threefold: to resist the spread of

Communism, to secure U.S. access to raw materials, and to protect

private American overseas investments. From the outset there was a

conflict between ostensible purposes and hidden agendas. In making the

decision to establish a foreign aid program, the Truman administration

had to answer two questions to the American people. The first was why

foreign aid should be given at all. When this was answered by linking

the policy to issues of national security, a second question had to be

addressed: how and to what ends should aid be given?









Answering the first question involved the making of a policy.

Answering the second involved its implementation. Once the policy was

made, a theory of development to guide practice was wanted.

Unfortunately, there was not yet a precise theoretical statement of the

process of economic development. Theories of economic development took

form after the American foreign aid program had already gone into

operation. The officials of the first U.S. aid agencies, AID's

forerunners, went out into the world to do a job with no paradigm to

guide their conduct. This would be a regular occurrence. In the field

of international development, practice generally has preceded theory;

the cart has usually been out in front of the horse.


Theories of Economic Development


The whole foreign aid endeavor was begun, as I will detail in

Chapter 4, in the interest of preventing another world war. The U.S.

foreign aid program was predicated on a single, fundamental assumption,

justified by Walrasian theory of general equilibrium, that free trade

would be a boon to all. By asserting that excess demand in one area is

always matched by excess supply in some other, and thus sums to zero

(Turnovsky 1977), the Swiss economist Leon Walras showed at the turn of

the century how, if all the conditions of perfect competition (such as

free entry and exit, perfect and instantaneous information, and no

externalities) were simultaneously met everywhere in the world, trade

would move to a Pareto-optimal equilibrium where all countries would

benefit at equal proportion (Riddell 1987).

Officials of the U.S. foreign aid program knew at the outset that

all the conditions of perfect competition could not possibly be met

everywhere simultaneously for some time to come, if at all. In the

interest of preventing another world war, it was therefore necessary for

them to proceed under the assumption that partial free trade was better










than none, and to accept that the U.S. would have to bear the costs of

conducting the experiment to find out if this was true.

The field of development economics, though as old as economics

itself, had lost status during the 19th century, and was practiced at

the periphery until P. N. Rosenstein-Rodan (1943) considered the problem

of industrialization in Eastern Europe, and ten years later R. Nurkse

(1953) considered the problem of capital formation in underdeveloped

countries. From these two works emerged the terms "vicious circle of

poverty" and "the poverty trap" and the concept of a non Pareto-

optimal equilibrium state of underdevelopment.

Walt Rostow (1952) began to develop what would become his stage

theory of economic growth at this time. In his first formulation,

Rostow posited three stages of development, a long evolutionary period

during which crucial social preconditions were achieved, a brief "take-

off" period, and then a long period of sustained economic growth.

Arthur Lewis (1954, 1958) became the second in the series of

economists who would try to theorize a process of economic development.

Lewis more than any other contributor "put development economics on the

map" (Basu 1984). He found the key to explaining poverty in the concept

of the dual economy, or economies characterized by a large agricultural

sector and a small industrial sector. By assuming that there was an

excess of labor in the agricultural sector and that the industrial

sector invested its full profits, Lewis was able to show that ever

rising investment would cause the urban marginal product of labor to

rise, gradually drawing all excess labor from the agricultural sector to

industry, and causing the economy to grow. The reason this was not

happening, in Lewis' view, lay in the interface between economics and

politics. Plantation owners did not want to lose cheap, abundant labor,

"and if they are influential in government, they will not be found using

their facilities for agricultural extension" (Lewis 1954: 149).










The next step in the rebirth of development economics was the most

important: the dynamic growth model. It would become the backbone of

the early American foreign aid program. The theory was developed

independently by two British economists who were attempting to repair a

hole in Keynesian theory. Keynes' short-run aggregate demand model of

economic growth was two decades old by 1957. The major complaint with

Keynesianism was that it was static; it did not show how economic growth

occurred when there was no government intervention (Riddell 1987).

Working separately and using different mathematical methods, Evsey Domar

and R.F. Harrod showed how the insertion of "properly utilized" new

investment in an economy would increase output (Harrod 1959).

Walt Rostow and Max Millikan, formerly of the CIA, promptly

adapted the Domar-Harrod dynamic growth model to the foreign aid

paradigm by proclaiming that foreign aid was a form of investment

(Millikan and Rostow 1957). The next contribution came from Albert

Hirschman (1959). He accepted Lewis' assumption that industry was the

leading sector of development, and theorized that growth in industry

would create "ripple effects" that would spread through the economy and

boost demand for products from other sectors.

In 1960 Rostow published a "noncommunist manifesto" further

developing his theory of linear stages of growth. He increased the

number of stages from three to five and proposed an end state of mass

consumerism. There were three conditions for take-off. There had to be

an increase in the rate of net investment, a high rate of growth in at

least one manufacturing sector, and a favorable institutional

environment to spread the effects (Rostow 1971).

The concept of human capital began to gain currency at this time,

following Theodore Schultz's presidential address at the 1960 meeting of

the American Economic Association (Berman 1983: 109). The importance to

economic development of investment in human capital was quickly










perceived, and education and training would become major components of

nearly every U.S. foreign aid project.

Simon Kuznets (1966) examined the short term effects of economic

change at the initial stages of development. It was already known that

in the first years of growth in developing countries, profits tended to

accrue mainly to the upper classes. Kuznets postulated that over time,

wealth would "trickle down" and raise the income levels of the poor.

That same year two economists at the World Bank, Hollis Chenery

and Alan Stroudt, expanded the emerging paradigm even further by

theorizing that developing countries would suffer predictable "gaps" at

different stages in their development. Specifically, at first they

would face shortages of skills and savings that would limit their growth

in investment. When these gaps were filled, they would then face

shortages of foreign exchange that would limit their growth in trade

(Chenery and Stroudt 1966).

The recommendations that emerged from the body of economic
r
development theory all, either explicitly or implicitly, gave the state

an enormous role to play in the "big push." No matter the metaphor,

whether to break the poverty circle, escape from the poverty trap, get

to the take-off stage, equalize the dual economy, initiate the ripple

effect, invest in human capital, stave off unrest while waiting for

wealth to trickle down, or fill the resource gaps, a strong state was

needed. The problem was that the economists did not consider what the

strong state should be like politically. In ignoring the political

variables, they failed to account for what it is that makes a state

strong.

The leaders in the underdeveloped countries eagerly agreed to the

foreign experts' recommendations for a strong state. Selfless

patriotism was, alas, proving to be a rare commodity in the developing

areas, and many among the first generation of leaders in the emerging









nations quickly acquired a taste for power and its trappings. With

tragic frequency they converted their governments to single party states

and built cults of personality to sandbag themselves in power. Left-

and right-wing authoritarianism became the norm in the Third World.

This development had negative consequences for state strength.

However, while happy to accept the foreign experts' advice to

build strong states, these same leaders generally did not accept their

recommendation for export-led growth. Instead, they opted for the

import-substitution industrialization (ISI) strategies that came out of

the U.N. Economic Commission on Latin America at this time.

ISI was rooted in the very same ideology of economic nationalism

that, as will be seen in Chapter 4, the U.S. foreign aid program was

created to destroy. The World Bank and the International Monetary Fund

strongly supported free trade and opposed ISI based on David Ricardo's

early 19th century theory of comparative advantage. The radical

supporters of ISI justified their viewpoint using the Marxist-Leninist

analysis of imperialism, the conservatives by using Alexander Hamilton's

18th century argument for the protection of infant industries and

Friedrich List's 19th century argument that free trade favored the

economically advanced countries, and that protectionism was appropriate

for countries endeavoring to catch up. Thus began to emerge the

dependency school of political economy. Mancur Olson (1982) later

argued that a significant reason why ISI was embraced so eagerly in the

Third World was because of vigorous lobbying by the groups in each

country who stood to gain the most. The small elite class in the

developing countries had an enormous advantage over the poor majority in

terms of political access and information and a large personal stake in

protectionism (cited in Kudrle 1991: 243).

By the mid-1960s a development paradigm was in place. It was now

accepted in U.S. foreign policy circles as theoretically possible to









induce and accelerate development in the Third World through state-led

programs aimed at maximizing economic growth. Foreign aid programs were

devised to transfer skills through training programs, technology through

commodity import schemes, and capital through investment in

infrastructure. Ironically, these programs went forward alongside ISI

strategies that protected import-substituting infant industries. This

represented another contradiction, this time between the foreign aid

program's goals of an end state of free trade And the protectionist

means to economic growth being practiced by Third World countries.

The American foreign aid program thus went into action as a

dysfunctional bundle of contradictions. In the 1940s and '50s its

officials did not have a body of theory to follow. Their mission to

induce development, combined with ready money and an imperative to move

it, called one into existence. They picked up the different bits of the

emerging paradigm in the order they presented themselves, tried each one

out for a time, then dropped it when the next shiny object caught their

eye. In effect, development economics produced a body of theory that

AID used as a grab bag of development fads.

Cautions were raised along the way. The dynamic growth model

required proper investment. Whether an aid program would have a
l
positive effect would depend upon whether it was productively used

(Rosenstein-Rodan 1961). Corruption, wrong policies, or even

inefficiency within the aid recipient countries would have a negative

effect on development outcomes. Aid planners who prided themselves on

their apolitical "objective" perspective blinded themselves to the very

factors which would soon cause their programs to fail, particularly in

Africa (Sandbrook 1985).

More significantly, a mathematical proof was discovered that

contradicted the fundamental assumption about free trade. The

theoretical challenge to the general equilibrium was introduced as the










general theory of second best (Lipsey and Lancaster 1956-7). The fact

that the conditions for perfect competition were not being

simultaneously met begged the question whether it was valid to assume

that partial free trade was better than no free trade. What happened

when one of the Pareto conditions was violated? Lipsey and Lancaster

found that when one condition was violated, an optimum solution could be

achieved only by departing from all other conditions. There were two

implications. First, the whole project of installing a global free

trade regime was called into question. Second, in theory, there was no

reason why centrally-planned, autarkic economies could not produce

growth on a par with free market, open economies. Then, as if to

underscore the point, the Soviet Union launched Sputnik. Formerly

backward Russia suddenly had shown that state socialism was a viable

path to accelerated development.

These cautions aside, foreign aid program proceeded under the twin

assumptions that partial free trade was better than no free trade and

that if the three Rostowian conditions of increased investment, growth

in one manufacturing sector, and strengthened institutions to spread the

effects could be achieved, through such factors as Hirschman's demand-

stimulating ripple effects and Kuznets' trickling down of wealth,

emerging nations could move quickly to achieve the preconditions

necessary for the take-off into growth toward mass consumerism. Foreign

aid was to serve in lieu of private investment to help the strong

developmental state build the necessary institutions and infrastructure

and to fill the inevitable gaps in skills, technology and capital when

they arose. It looked pretty easy at first.

It did not look that way any longer by 1970. There were problems.

The U.S. and the other donor countries that later took up foreign aid

programs of their own had entered into the aid-giving endeavor with the

idea that foreign assistance was a short-term gap-filling remedy. They










saw their aid as a scarce resource. Unfortunately, the recipient

countries quickly began to see it as a plentiful and permanent

substitute for domestic savings (Tendler 1975). This was another

fundamental conflict.

Worse, gains in production through technological improvement drove

down world prices for primary commodities. Developing countries began

to suffer the effects of deteriorating terms of trade. A group of 77

nonaligned nations formed, and began pressing for multilateral

intervention in the global economy. On May 1, 1974 the U.N. General

Assembly passed a resolution calling for a "new international economic

order" that would improve terms of trade by increasing Third World

control over world economic cycles. The proposal gained the support of

the future Nobel laureate Arthur Lewis (Galtung 1991). Many Third World

governments, including Tanzania, began claiming they were owed foreign

aid as reparations for prior exploitation by the developed countries.

By the mid-1970s, over half of Tanzania's total development budget was

being provided by foreign donors, 85 percent in certain ministries.

There was a serious contradiction between the goal of self-reliance and

reliance on foreign aid.

The import-substitution industrialization strategies that worked

so well in Taiwan and Korea backfired in Tanzania, as they did most

everywhere in Africa. It was known starting out that the ISI strategy

of limiting imports would create shortages in the near term. The state

was expected to address this by rationing. ISI turned into a disaster
I
in Africa because of the unexpected twin decisions made by nearly all of

its governments to subsidize urban food supplies and to extract revenue

from agricultural producers through marketing boards and price controls.

The countryside was taxed to subsidize an urban standard of living.

Large numbers of African farmers began to exit from the formal

economy to sell their produce on the burgeoning black markets that









sprang up in the wake of ISI rationing policies. Others abandoned

commercial farming, either by reverting to subsistence production or by

leaving the land altogether. This was urban migration as Lewis had not

imagined it. Africa's cities grew out of control while agricultural

production declined and the grand industrialization schemes fizzled and

turned into white elephants. By the middle of the second United Nations

decade of development, Africa was further from the take-off stage and

more dependent on food imports and foreign aid than it had been at

independence.

Economists were perplexed why so many African leaders seemed so

complacent about this disastrous turn of events. The explanation proved

to be simple. By creating short-term shortages and giving the state the

task of rationing, ISI strategies produced enormous possibilities for

political patronage. The result was a collision between economic and

political logic. ISI produced economically tragic consequences in

Africa that were very useful to political leaders (Bates 1981).

By the 1980s economists were forced to recognize the impact of

corrupt authoritarianism on economic performance, and a paradigm shift

began. Attention was focused on policy reform. The initial

recommendations were fairly cautious, limited mostly to relaxing

farmgate price controls (Timmer 1986) and restrictions on imports and

foreign exchange. Over the course of the decade, as Cold War tensions

relaxed, the recommendations became more and more austere.

The most significant change was in the prescribed role of the

state. By 1980 the donors began to recognize that most African

governments were not the stabilizing engine of growth and modernization

they had planned on, but had become obstacles to sustainable

development. The role of the state in African development, indeed its

very size, would have to be reduced. The effort shifted to strategies









to circumvent the state, to reach around it and induce development

through private sector initiatives.

A new term came into the development lexicon: governance, "the

exercise of political power to manage a nation's affairs" (World Bank

1989: 60). By 1990 the focus of development economists was squarely on

political factors. When the Berlin Wall came down and the break up of

the Soviet empire began, it was but a short step from eclectic projects

to improve governance to a full blown program to install democracy on a

global scale.

There thus have been five significant contradictions in the

economic domain during the period of this study. (1) Economists called

for a strong state to orchestrate development without considering the

factors that make a state strong. (2) The foreign aid program was

established to promote the goal of global free trade, but it was

implemented alongside protectionist ISI strategies. (3) The donors saw

their aid as a scarce resource to be given voluntarily, while the

recipients saw it as a plentiful resource owed them as a retribution for

past exploitation. (4) Recipients, particularly Tanzania, declared

their goal was self-reliance, yet they became increasingly dependent on

foreign aid. (5) The shortages caused by ISI strategies brought about a

collision between economic and political logic. Shortages that

represented problems to businessmen and economists were assets to

politicians.


Theories of Political Development


While the field of development economics was becoming

reinvigorated in the late 1950s, political scientists examined issues of

political change and wondered if there was a political equivalent to the

stage theory of economic growth. In attempting to answer this question,

political science contributed the second half of modernization theory.









The key question facing U.S. foreign aid officials and developing

area scholars was whether or not democracy was the endpoint of political

development in the sense that mass consumerism was the endpoint of

economic growth. If this were answered in the affirmative, then the

question would become how to implant Western democratic institutions in

the societies emerging from colonialism. America could embark upon the

task of creating a liberal world order in its own image and do it, in

the view of a 1960 presidential commission, "without egotism because of

its deep conviction that such a world order will best fulfill the hopes

of mankind" (Berman 1983: 113).

The search for ways to induce democratic development led first to

investigations of the causes of democracy in North America and Western

Europe. Strong correlations were found between the presence of

democracy and factors such as literacy and urbanization. If the

political system was a dependent variable, it seemed probable that

democracy had socioeconomic requisites (Lipset 1959). Some of these

requisites were also, not surprisingly, preconditions for the take-off

to mass-consuming capitalism.

From the premise that the endpoint of political development was

democracy, the political development paradigm took form in three major

contributions under a conduct of inquiry dominated by Gabriel Almond.

The first contribution distinguished between traditional and modern

political systems and analyzed the different cultural characteristics of

each using a structural-functionalist whole-systems approach (Almond and

Coleman 1960). The second important contribution argued that political

development toward democracy would require structural differentiation,

the development of autonomous subsystems, and cultural secularization

(Almond and Powell 1966). The biggest contribution was the nine volume

Political Development Series, 1963-1978, authored by social scientists

and historians under the sponsorship of the Committee on Comparative










Politics of the Social Science Research Council, which received three-

quarters of its funding from the Carnegie, Ford and Rockefeller

Foundations (Berman 1983: 107). The committeelassumed that political

variables were as important as economic ones and that economic

development could not occur without political development (Almond 1990:

222). The series examined the role of communications, bureaucracy,

institutions, culture, political parties, interest groups, and mass

attitudes in political development, and reflecting upon the increasing

turmoil of the times, suggested political development was shaped by

inevitable crises of national identity, state legitimacy, popular

participation, state penetration of society, and the equitability of the

distribution of goods and services. The key to developing democracy

would be in the sequences in which these crises occurred and the skill

with which they were managed when they came. With that, political

science had its answer to linear stage theory.
I
It had nothing of the sort. Economic development theory had at

its core the Domar-Harrod growth model. Theories of political

development had no equivalent dynamic (Huntington 1971). Victims of

their own happy history, American social scientists had simply assumed

"that all good things go together" (Huntington 1968: 5) and found

correlations to show that they did, but could discern no causal order.

Political development theory was as teleological as "crude Marxism,"

presupposing an endpoint and analyzing real world conditions in terms of

distance from, or proximity to, the ideal (Kesselman 1974).1 Far from

being a dynamic model of change, it was "a host of propositions and

categorical schemes" (Menkhaus 1991). Furthermore, real world events

had shown that rapid economic growth could lead as often to political

"decay" into coups and military takeovers as Vo political development



Unlike Marxism however, the endpoint was not a utopian Communism
never seen before, but the Western experience of democracy and
capitalism (Williams 1993).









toward democracy, suggesting that order and stability might be more

important to a country's welfare than adherence to democratic forms

(Huntington 1968).

Some Third World governments (e.g. Taiwan after the Chinese

Revolution, South Korea after the Korean War, And Brazil under the

junta) maintained stability through authoritarian means and achieved

high rates of growth by practicing protectionism and some degree of

central planning. These government did not wish to be politically

developed. In fact, the governments of most emerging nations mistrusted

the whole idea of political development, and suspected political

researchers of being agents of the CIA (Menkhaus 1991).

The result was that political development projects were tried only

briefly, and then for four reasons disappeared after the 1960s. (1) The

theory was judged inadequate. (2) Political development projects were

besmirched by their implementation as part of the U.S. war effort in

Vietnam and the involvement of U.S. universities with the CIA. (3)

Political development projects proved for the most part to be

politically impossible; the proud governments of newly independent

countries resented such activities as violations of their national

sovereignty. (4) Evidence rapidly accumulated that strong economic

growth did not lead automatically to the requisite improved

socioeconomic conditions for the masses of people.

Political development did not get onto the agenda until the donors

were forced by the failure of their programs to confront the mounting

evidence that politics has an important (if unpredictable) effect on

economic development. As economists began at last to turn their

attention to policy issues, political scientists once more took up

political development as a research agenda. A second wave of political

development scholarship began in the mid 1980s. It quickly converged









with economic thinking on the issue of governance (Hyden and Bratton

1992).

It seemed possible under this new concept "governance" to weave

together the separate strands of political and economic development

theory. Political and economic development were now accepted as

mutually reinforcing (Pye 1990), with governance as something of an

intervening variable between the state and society, the surface along

which politics and economics rubbed. In the new paradigm, the role of

the state was vastly reduced, and the search for the key to success

returned to where it had started in the 1950s, to things internal to

societies (Barkan 1994).

By 1990 the underlying "deep" theories of economic and political

development had brought the contradiction between individual and

collective goods into clear focus (Williams 1993). By the time Bill

Clinton was elected president, the success of both political and

economic development was understood to be mutually bound, with the

solution seen to lie not in the economic but in the human resource base.

Sustainable economic development required a proper enabling environment.

Such an environment could be had only through political means, through

the empowerment of the mass of ordinary people. This meant "change

toward greater democracy" (Zimmerman 1993: 32). To get there would

demand nothing less than the construction of new self-identities among

the people (Williams 1993).

In the domain of politics there were two fundamental

contradictions. First, an unforeseen incongruity arose between

democratic form and political order; the former did not automatically

ensure the latter. Second, the project of political development toward

democracy was not welcomed by the governments of the developing

countries, and was disparaged, as will be shown in Chapter 4, by the

U.S. foreign policy establishment.









Theories of Development Administration


As political development lost status, the seemingly more value

neutral and productive field of economic development came to occupy all

of the U.S. foreign aid agenda save that of the small and comparatively

uncontroversial field of development administration (Kesselman 1974).

Development administration emerged as a subfield within the field

of public administration in the discipline of political science at the

same time that development economics was being rejuvenated. The

earliest formulations, produced with heavy Ford Foundation support, were

consistent with gap-filling theory and the centrality of the strong,

developmental state. To build state capacities, it was deemed

sufficient to train people from the emerging nations in Western

management techniques.

U.S. government and foundation officials alike were disappointed

by the failure of African bureaucracies to behave as expected in spite

of the Western training provided. The wave of coups d'etat that swept

the continent in the mid-1960s was particularly demoralizing.

Corruption and inefficiency spread like fungi. A debate began between

those who favored staying the course and sticking to what B.B. Schaffer

(1969) labelled "administrative development," and those who favored a

different, less structured approach that would take account of the

unique problems surrounding the administration of economic development

in the Third World, what Schaffer referred to as "development

administration."

The comparative study of this problem was dominated by Fred Riggs,
"a one man ideas factory [who came] near to constituting the whole

movement" (Heady 1979, footnote 1: 178). By the late 1960s the field of

comparative public administration was divided roughly into scholars who

studied bureaucratic structures and scholars who studied bureaucratic

contexts. Between these two extremes there gradually emerged a third,









less well-defined position which combined elements of both and would

come to dominate the agenda, an argument I shall call organicismm."

Structuralists looked for differences in such things as hierarchy,

specialization, rules, procedures, impersonality, and selection methods

among bureaucracies in different countries. They felt that if

bureaucracies were properly designed and included appropriate incentive

systems, they would function as intended and be impervious to corrupting

influences from the external environment.

Contextualists thought structures, that is bureaucratic forms,

were immaterial. They sought clues to bureaucratic behavior in the

internal culture of foreign bureaucracies and 4n the politico-socio-

economic environment in which they operated.

Organicists would later argue that neither contextualism nor

structuralism was in and of themselves satisfactory. The behavior of a

given organization was a function of interactions between its internal

culture and the larger environment. The design of structures should

reflect this fact.

The three camps within the field of development administration

produced three very different sets of policy recommendations.

Structuralists argued for a blueprint approach, the grafting of faithful

copies of Western bureaucracies onto the cultures of the emerging

nations. Contextualists had no policy recommendations per se. In

effect they argued that each country would end up with its own

particular form of bureaucratic structure no matter what the donors

tried to do. Organicists, for their part, believed that bureaucracies

should be learning organizations deeply rooted in the cultures they

served.

The central role of the state in the dominant paradigm ensured

that the structuralists won out initially. Their argument in favor of

strengthening Western-style administration in Third World countries was








I
adopted in the 1960s. The contextualists, however, continued to argue

the futility of creating overdeveloped bureaucracies in underdeveloped

countries (Heady 1979). The school which I refer to as the organicists

began to form at this time. They argued in favor of eclectic, adaptive

organizations that worked closely with the people they served and could

learn from their experience (Korten 1980). The organicists were major

contributors to the paradigm shift that occurred in the 1980s when the

two U.N.-led decades of development were succeeded by two decades of

structural adjustment under the leadership of the International Monetary

Fund.

Structuralism

The structuralist camp of the field of development administration

came to dominate the early U.S. foreign aid program because it accorded

so well with the commanding role reserved for the state in the early

theories. The view that a well-designed bureaucratic structure is like

a diving bell that can be lowered into any cultural sea predominated

during the two decades of development.

The definitive example of a structuralist who thought Western

bureaucracy was a universally-applicable structure that, if built right,

would be impervious to the external environment, was David Leonard. He

argued from strong evidence in Kenya that sound administrative

principles and techniques could work well in the developing areas.

Context was mere technical data to use to adjust and fine tune the

universal structure.

Contextualism

Fred Riggs believed that the external environment was the main

determinant of organizational behavior. To argue his point, he focused

on just one dimension of the total environment of the social system--the

government--and distinguished between three types of government:

composite, primordial, and mimetic. Composite governments were both









hierarchic (authoritative) and polyarchic (consensual) "in some kind of

effective, though not necessarily symmetrical, balance with each other"

(Riggs 1975: 163). Primordial political systems were either hierarchic

or polyarchic, but not both. Mimetic governments were an unequally-

balanced mixture of the two. The composite governments of the world

were the modern nation-states of Western Europe, North America, and

Japan. The primordial governments were the traditional political

systems (such as chieftaincies) in the less developed areas that were

passing from the face of the earth. Mimetic governments were those that

were replacing them. The new governments in Africa tended to be highly

unstable because they were badly unbalanced either toward hierarchy in

some form of bureaucratic-authoritarianism or toward polyarchy in some

form of patron-clientelism. In this model, the type of bureaucracy

found in a country was a function of what type of government it had

(Riggs 1975). In actuality the behavior of a given agency in a

government was shaped by many more independent variables than one.

Government agencies typically were part of weak states in strong

societies (Migdal 1988). Adhering to administrative principles was less

important than obeying cultural imperatives such as kinship ties or

"economies of affection" that outweighed other incentives (Hyden 1980).

Administration in the developing countries was negatively affected by

cultural attributes that resisted social engineering.

Organicism

Although the structuralists' policy recommendations were adopted

in the U.S. foreign aid program, the three-sided debate among the

structuralists, contextualists and organicists did not abate, and

intensified after the first early failures of the development program.
(
The result was a deadlock in development administration theory by the

end of the 1960s. As Schaffer expressed it, "The paradox is only too

clear: on the one hand a search for change via administrative means, on









the other a suspicion, a dissatisfaction, a distrust of administration,

and at times a specifically anti-administrative position" (Schaffer

1969: 185). This early mention of anti-government attitudes was a

foretaste of the feast to come.
f
While recognizing that social and cultural norms pervade

bureaucracy, Victor Thompson (1964) stressed the importance of the

internal environment of the organization, and argued in favor of a

"crisis management" form of structure. Agencies behaved in organic,

not mechanical fashions. Adaptation was known to be key to the success

of all organizations, thus bureaucracies should create an innovative

atmosphere in which uncertainty of subject matter did not translate into

fear for job security, free cross-channel communication was promoted,

and influence over decision making was based on skill, not hierarchy.

Schaffer held both structure and context to be important. He

underscored the importance of the conjuncture between an efficient civil

service and a social willingness to "queue." Western bureaucracy was

only one type of administrative structure, andfmight not be best for

societies that did not queue. The two main features of Western-style

bureaucracy were the compartmental nature of its decision making process

and its reliance on the administrator. In societies which did not

queue, compartmentalism produced social disorder as people either

"camped out" or searched for informal avenues of access. Reliance on

the administrator posed the problem of bureaucratic discretion, which in

societies that did not queue generally produced patron-clientelism.

Administrative structures ought to vary according to contextual

differences. Schaffer advocated "administration as 'directive

education,'" meaning education by the organization of the community it

serves (Schaffer 1969: 209).

Thus, while political development never really got onto the

agenda, development administration played a large role in the U.S.
agenda, development administration played a large role in the U.S.









foreign aid program. Training, or what was later called human resource

development, was a substantial feature of most AID missions' project

portfolios. It suffered from one essential contradiction. In many of

the emerging nations, Western bureaucratic principles did not mesh very

well with local cultural norms.


The Consequences of Developmentalism


At no point in the period from 1948 to 1995 was there irrefutable

proof that free markets and democracy yielded more social benefits than

economic nationalism and authoritarianism. It was simply assumed that

they did, and economic models were devised after the fact. The key

postulates of American foreign aid policy were never the product of

scientific knowledge; they were a creed, an article of faith.

Supporting free markets and democracy rationalized continued funding to

Congress by justifying aid in terms of U.S. national security interests

(Packenham 1973). The problem was, with a few notable exceptions such

as Israel and Egypt, in most countries there was seldom any clear

national interest for the U.S. foreign aid program to support. The

problem lay in "the subjective nature of the concept of national

interest, including the lack of intellectual rigor in its application"

(Zimmerman 1993: 34). Foreign aid extended the reach of the concept of

national interest beyond its grasp.

The poor performance of the American foreign aid program in the

1960s and '70s was due to incorrectly-learned lessons from the Marshall

Plan. Officials misconstrued the successful reconstruction and

democratization of the previously industrialized (and in most cases

previously democratic) nations of Europe and Japan for a blueprint of

how to develop Third World countries (Zimmerman 1993). Because foreign

aid officials confused modernization with development (Huntington 1968),

their attempt to apply the Marshall Plan to the Third World was doomed









to failure. The large scale capital-intensive projects and massive

training programs to strengthen institutions, transfer technology, and

build a modern infrastructure--projects of the sort Hirschman (1967)

observed--were naively assumed to be all it would take to spark

sustainable development everywhere.


Tactical Approaches to Development


In the fourteen years from 1948 to 1960 there were five successive

agencies that handled U.S. bilateral aid. When AID was created in 1961,

it was the sixth.

The first extension of bilateral aid was announced by Truman in a

joint session of Congress on March 12, 1947 in response to Britain's

admission it could not meet the crises of leftist insurgencies in Greece

and Turkey. Truman extended military, economic and technical assistance

to these countries. The following year, 1948, Truman established the

first bilateral aid agency, the Economic Cooperation Administration. It

was designed as an expendable agency of the type used by the Roosevelt

administration to combat the Great Depression. It existed for three

years until 1950, and was replaced by the even briefer-lived Technical

Cooperation Administration, which lasted two years from 1950 to 1951.

It was replaced by the Mutual Security Administration, created in

response to the outbreak of the Korean war. This agency lasted three

years, from 1951 to 1953. It went out of existence when the Eisenhower

administration created the Foreign Operations Administration in its

first year in office. This the fourth U.S. foreign aid agency lasted

for all of Eisenhower's first term from 1953 to 1956. The fifth and

last forerunner to AID was the International Operations Administration,

which existed for the four years of Eisenhower's second term.

Each of AID's forerunners, and AID itself, were active in India,

which received its independence on August 15, 1947. The case of India










is significant to this study because nearly every tactical approach to

development that AID was to try in Tanzania was first tried there in the

famous Etawah project. I shall examine four different tactical

approaches to development (by no means an exhaustive list of the

different angles that have been tried) to prove this point.

Integrated rural development

When the U.S. began an aid program in India in 1948, there was, as

we have seen, no theory to guide its practice. This does not mean that

the first American foreign aid workers felt helpless about what to do.

Quite the contrary, armed with a very American1can-do spirit and

confidence in their know-how born of victory in the war, they went right

to work in programs that anticipated the approaches that would follow by

as much as three decades in time.

The sudden appearance of a U.S. foreign aid program caught the

world by surprise; one day the Americans just showed up asking how to

help. The Indians were, naturally, somewhat suspicious. The U.S.

Ambassador Chester Bowles arrived in the country excited about the

Truman vision of linking American "ideals and resources with the efforts

of more than a billion people to secure a better life." He advocated

"an American aid program, on a large enough scale and soundly enough

conceived to fill the gap between the maximum possible savings of

countries like India and the minimum need for a program of economic

development" (Bowles 1955: 196, 331, emphasis Added). Ambassador

Bowles, drawing simply on what he had experienced of social programs as

a high-ranking official in the Roosevelt administration, anticipated

Chenery-Strou t gap theory by almost ten years.

The chief designer of Etawah was Albert Mayer, an architect and

town planner who had served in the country during the war as a

lieutenant-colonel in the U.S. Army Corps of Engineers building

airfields. Mayer had met Jawaharlal Nehru in 1945, and enjoyed a solid









reputation among India's political leaders. He drew on the practical

experience of American missionaries in India and on the findings of

rural sociologists and Department of Agriculture extension officers in

the United States.

In his study of the Etawah project, Gerald Sussman (1982)

identified five key features of the integrated rural development

approach Mayer developed. First, Mayer's basic assumption was that the

American land-grant model of research and extension could be transferred

to India. An expendable Indian government agency would serve as the

vehicle for this transfer of technology.

Second, to be effective, rural development--also called rural

uplift and self-help at the time--would have t9 be rooted in the social,

economic and production bases of society. Projects had to in some way

grow out of the people; they could not be simply transplanted. Mayer

combined the Ghandian program of community development with U.S.

Department of Agriculture rural extension techniques in an integrated

approach to the problem.

Third, Mayer drew from his experience in the U.S. Army using

peripatetic personnel, soldiers with a limited amount of training who

could perform certain tasks reasonable well. The training of Indians

would therefore be crucial. When the Ford Foundation came to India in

1951, it signed on to fund much of the training component of the Etawah

project.

Fourth, there could be no set blueprint, master plan, or

preconceived program. Instead, Mayer's rural development teams would

operate using a problem oriented framework. The initial step would be

simply to identify local problems and needs and whatever local resources

there might be in the community. Reliance on scarce imported resources

would be kept to a bare minimum. Everything the rural development teams









did would be based on the particular circumstances of the community in

which they were working.

Fifth, the project had to have firm high-level political support,

and there had to be good two-way communications within the project

organization between headquarters and the field, and between the

organization and the people of the rural communities. Sussman called

this "inner democratization." Provisions would have to be made to

ensure that the Indian workers would be socialized in this innovative

new participatory method, so that it became a permanent tradition of the

organization.

The Etawah project encountered problems both with the U.S. and the

Indian governments. There was a dispute between Mayer and Ambassador

Bowles. Mayer thought of Etawah as a pilot project. He wanted to do a

few high quality intensive projects in a limited number of villages, and

count on news of the success spreading by word of mouth. Development

would radiate out from the original small core through the extension

process, with early adoption expected to be made by progressive farmers

and entrepreneurs.2

Bowles disagreed, and thought that the paramount concern of the

program should be to help meet the urgent need of the Indian government




2. Theories of how technology is adopted and diffused in the transfer
process grew into a huge body of literature from the 1940s through the
1970s. Experience revealed that rural inhabitants could be ordered into
five generic types, based on their proclivity to adopt new technology.
The most likely to adopt were categorized in the rural sociology
literature as "innovators." Innovative (or progressive) farmers are
those who are well endowed in land, labor, and/or capital. Innovative
entrepreneurs are those with sufficient venture capital or lines of
credit who take risks in profit-making uses offnew technology.
Innovators tend to be the best educated and most cosmopolitan members of
rural communities. The implication of adoption theory was that
development projects should introduce new technology first to
innovators. It could be counted on to diffuse out into the larger
population when the innovators were seen to enjoy success. Another
reason that innovators came to occupy such a large part of development
planners' attention was that they had the capacity to absorb capital.
Focusing on rural elites made it easier to move money (Austin 1996).









to provide every village family with tangible evidence that the

government was concerned about their welfare. Bowles wanted a national

program that would cover the waterfront and be seen by as many people as

possible.

The dispute with the Indian government was twofold. First, there

was the normal turf war over which ministry should direct the program.

Secondly, the program's flexible, problem-solving, participatory

approach conflicted with the highly hierarchical Indian bureaucracy, a

product of centuries of British rule, which was more concerned with

strict protocol and lines of authority.

Perhaps most significantly, the Etawah project conflicted with the

need of both the Indian government and AID's forerunners to move money

quickly. Mayer's approach called for patience, while the interest of

the two governments was to build big programs quickly. The program thus

lost its focus very early, and later lost its political support, and
I
began to wane in the 1960s just as the integrated rural development

approach was being picked up by AID and tried out in many countries,

including Tanzania.

Institution building

The tactical approach to development called institution building

appeared on the scene as the growth-maximizing industrialization

approach of the 1940s and '50s began to run out of steam. Research into

the new tactical approach was heavily funded by AID, and was conducted

under the guidance of Milton Esman and his colleagues from the schools

of the Midwest Universities Consortium for International Activities

(Rondinelli 1987). Institution building projects accounted for half of

new AID spending in Tanzania in the early 1960s and preceded integrated

rural development by half a decade.









Institution building began with three premises learned from past

experience: (1) development was the process of introducing change, (2)

impediments to development were not economic but administrative; and (3)

bottlenecks were due mostly to low levels of administrative

capabilities. The key was to improve the capacity of public agencies,

to convert them from organizations to institutions, meaning to agencies

whose prescribed changes were accepted, valued and functional (Esman

1967, Smart 1970).

The chief problem that institution building ran into was that AID

contracted with universities to provide the technical assistance for

much of its institution building program. The university professors who

went to the Third World came with their pet models of change. For the

most part, they were not able to persuade their host country

counterparts to adopt their ideas (Blase 1973).

Institution building used two features of Etawah. First, it

recognized the importance of properly socializing government officials

so that the Western management techniques being transferred in by

foreign aid became institutionalized traditions. Second, there had to

be a dialogue between the organization and the people it served, so that

the changes the organization proposed to make would be accepted and

become valued by the people.

The learning process

In his brief discussion of "administration as 'directive

education,'" B.B. Schaffer (1969: 209) opened a window to the organicist

school that began to develop in public administration and its subfield

of development administration. Pressman and Wildavsky (1973) observed

the details of the many reasons why policy implementation could go

haywire in the U.S. system. Richard Elmore (1979), concerned with the

emerging backlash against big government on the eve of Reagan's
I









election, stated the obvious that "decisions are not self-executing" and

compared state versus market solutions. He argued that markets could

not meet every social need, and that some bureaucracy was necessary.

The new dislike of bureaucratic discretion would have the unintended and

undesirable effect of "increased reliance on hierarchical controls to

solve implementation problems." He felt that the key to successful

implementation lay in answering the question: where, in the complex

welter of relationships at the delivery level, are the individuals who

have the closest proximity to the problems and what resources do they

need to address it?" The solution he suggested was that policy should

be designed by beginning at the point of the problem and working

backward. He contrasted this "backward mapping" approach to the more

typical "forward mapping" approach, in which a universal solution was

devised beforehand and brought to bear wherever the problem occurred.

David Korten (1980) introduced the concept of the learning

organization. He acknowledged the high level of uncertainty facing

development workers, and listed three possible responses that

development organizations typically exhibited toward their failures: to

deny it; to externalize it; or to embrace it. IThe first response is

that of the self-deceiving organization which spends a lot of time and

effort hiding its errors. The second response is that of the defeated

organization whose members whine "how impossible their task is given the

perversity of the environment which does not respond according to their

wishes." The third is the learning organization which embraces error

"as a vital source of data for making adjustments to achieve a better

fit with beneficiary needs." Successful organizations are learning

organizations that plan with the people and link knowledge to action.

They go through three stages in developing programs in a process that

works from the bottom up: learning how to be effective by working with










the people, learning how to be efficient by developing management

systems, and learning how to expand to build on success. Korten

concluded there were two barriers to success. The first was the

bureaucratic imperative to move large amounts 6f money, the second the

rigid project planning methods that still predominated in 1980.

The similarity of the learning process approach to the Etawah

project is evident. First, it brings problem orientation to a situation

with its various recommendations for backward mapping and embracing

error. Second, by seeking the individuals in closest proximity to the

problem and by beginning with the assumption that agencies must work

with the people to be effective, the learning process approach placed

heavy emphasis on popular participation in planning in order to discover

knowledge and link it to action.

Using indigenous knowledge

Robert Chambers (1983, 1991, 1994) pioneered a cost-effective

technique of assessing development needs called rapid rural appraisal.

He distinguished this from two predominant approaches to project design:

long and dirty and quick and dirty. Long and dirty appraisals are the

favorites of academics. They are costly and time-consuming and speak

more to theory than to practice. They start with reviews of existing

secondary data, move on to surveys of rural attitudes, followed by the

coding and entry of data, and finally end with complex quantitative

analysis. They are frequently delivered after such great lengths of

time that the problem has changed and their recommendations are no

longer relevant when they arrive. Long and dirty appraisals are

generally useless to decision makers.

Quick and dirty appraisals are the favorites of professional

development workers, people Chambers disdained as "development
tourists." They drive or fly out from the capital city and briefly tour
tourists." They drive or fly out from the capital city and briefly tour









the project area by road. They are vulnerable to a host of biases.

They only see what is visible from the car. Oftentimes "old hands,"

they can be arrogantly confident in their preconceived notions and fail

to listen carefully to what is said to them. They often overlook

invisible factors such as patron-client relations, heavy debt, and

patrimonialism, all important to the success of development, but

impossible to see if the analyst is in a big hurry to get back.

Chambers' concept of rapid rural appraisal represented a cost-

effective solution to the "dirty" approaches. It involved a number of

techniques, ranging from the use of rough indicators like the number of

tin roofs in a village or the fatness of the pigs, to using key

informants and focus groups, and advocated mixes of qualitative and

quantitative data.

When the institution building approach went out of fashion in the

late 1970s, its leading theorist Milton Esman joined forces with Norman

Uphoff (1982, 1984) to focus on the role of local organizations in

development. They borrowed from a number of schools of thought and

conceptualized successful local organizations as mediating structures

between the state and the supposed beneficiaries of development aid.

They stressed that local organizations were effective only if they were

efficient, equitable, and if they empowered their members.

Michael Cernea (1991) and other contributors, including Robert

Chambers, expanded from Esman and Uphoff's recommendation that local

organizations be highlighted in development planning, and focused on the

role of cultural endowments. They saw information as particularly

crucial, and argued that the most crucial information of all is gotten

from the people nearest the problem. It was important that development

planners start taking social knowledge into account at the earliest

stages of program design.









These three versions of the tactic of using indigenous knowledge--

rapid rural appraisal, use of local organizations, using social

knowledge--all advocated projects that were long-lived, that varied

according to local circumstance, and thus were highly eclectic, and very

slow-paced and labor-intensive. These were all aspects of the

integrated rural development approach developed by Mayer in the Etawah

project in India.

With the arrival of the tactic of using indigenous knowledge, it

seemed everything was accounted for. Every aspect of the developing

country's social system was on the table save one: the political system

itself. Then U.S. foreign policy changed and the project of promoting

democratization began.

Contradictions occurred between the four tactical approaches

considered here, which all required patience and concentration of

effort, and the two administrative imperatives to spread effects and

move money. A second type of conflict was temporal in nature, a reverse

of the expected order in time between theory and practice. In the field

of international development, practice has nearly always been out in

front of theory.


Ideological Perspectives on Foreign Aid


The final, and arguably strongest intellectual influences on AID

come from ideology. Broadly, there are three contending critical

perspectives on the entire foreign aid project: altruism, realism, and

radical criticism.

Aid as philanthropy

The first of the three perspectives accepts foreign aid for what

it purports to be: simple altruism. The strong correlations between

public opinion in the donor countries about what their foreign aid ought









to be used for and the objectives for which it has ostensibly been

provided support this conclusion. Foreign aid has served "humanitarian

and egalitarian principles" in a good-faith effort to establish "a just

international order in which all states had a chance to do well."

Wealthy countries give aid to poor countries for selfless, not self-

interested reasons, under terms that are "favorable to the economic

development of the recipients and unfavorable to the use of aid for

leverage by the donors" (Lumsdaine 1993: 30, 102, 275).

However, a straightforward altruist perspective of aid does not

hold up in the case of American aid to Tanzania. Declassified portions

of the official record reveal that Washington's chief objective in

establishing an AID program in Dar es Salaam in 1961 was to head off

Communist influence.3 Beginning in 1981 the U.S. instituted a policy of

using American assistance as leverage to force Tanzania to abandon

socialism. These are instances when the United States did not provide

aid to Tanzania for purely benevolent reasons. American aid to Tanzania

cannot be interpreted as pure philanthropy.

Aid as bribes

In the realist perspective of the world as dog eat dog, there is

scant place for altruist sensitivities in the conduct of foreign policy

(Brown 1984: 115-121). Realists typically are pessimistic about the

prospects for development. A truly effective program to accelerate

world economic growth would require a massive transfer of wealth far

beyond what American taxpayers would ever accept. The amount of money

actually available for foreign aid is inadequate for the task; world

poverty is an intractable problem in the near term. This is not to say

that foreign aid has no utility. It is a useful slush fund to "bribe"

Third World governments to support U.S. foreign policy goals (Morgenthau


3. The first American aid to Tanzania was sent in 1955, $981,000 (in
nominal terms) for a single British-run agricultural project.









1962, Bandow 1988). For realists, aid to Africa has never been anything

other than a tool for geopolitical gain (Ungar 1993: 385).

However, an unmixed realist view of aid as pure bribery is also

not tenable in the case of American aid to Tanzania. In the early 1970s

the Nyerere government started becoming hostile toward the United

States. Counseled by the arch-realist Henry Kissinger, the Nixon and

Ford administrations reduced new development assistance to Tanzania

accordingly, tit for tat. New project spending in Tanzania dropped from

$53.1 million in 1973 to $8.4 million in 1974.

Then in 1975, a year when the Tanzanian economy was suffering from

the effects of the first oil shock, the country was stricken with severe

drought. The threat of famine loomed. In response, the Ford

administration reversed its policy and made a $24.4 million loan of food

and cash. This did not result in any change in Tanzanian attitudes; the

Nyerere government remained "a thorn in the side of the U.S." for two

more years of declining relations (USAID, Appraisal, 1978).4 The

increase of aid in 1975 was not a bribe to procure Tanzanian political

support; it was done for humanitarian reasons. American aid to Tanzania

cannot be seen as pure cynical bribery.

Aid as weapon of capitalism

The third perspective on foreign aid is radical criticism. Like

realists, radical critics interpret foreign aid in instrumental terms.

Like realists, they believe foreign aid has nothing to do with altruism.

They too cast scorn on the development enterprise, but for different

reasons. The problem lies not in the inadequacy of resources, but in

the misguided liberal belief that poor countries can prosper under

capitalism. The faith is wrong. The world system is permanently and

unfairly tilted against the developing countries (Wallerstein 1979).


4 Because of inconsistencies in page numbering in many its reports,
page numbers are not included in citations of AID documents.









Foreign aid is a weapon of capitalism used by the donors to pierce

developing countries, a burglar's tool to jimm' open their economies for

exploitation by the donors' transnational corporations (Hayter 1971,

Biersteker 1987). Aid is a Trojan Horse (Weissman 1975).

While perhaps true of U.S. aid programs elsewhere, American aid to

Tanzania was not a Trojan Horse. Tanzania was never very attractive to

foreign investors, American or otherwise. The country has few

resources, and its government from independence onward was hostile to

the interests of foreign capital (Bienen 1967). Aside from a NASA

satellite tracking station in Zanzibar which it removed in 1964, the

U.S. had "no major compelling political, security or economic interests

in Tanzania" (USAID, Appraisal, 1978, emphasis added). AID's mission in

Tanzania never served, as the mission in South Africa has done, to

facilitate the entry of American corporations 4nto the country.

Aid as pragmatic altruism

The radical view of aid as the weapon of capitalism cannot be

sustained in the case of U.S. foreign assistance to Tanzania, but the

altruist perspective of aid as philanthropy and the realist perspective

of aid-as-bribery both in part can. Liberal altruism and conservative

realism are antithetical propensities. As a dialectic, they function as

the primary force that drives AID. The two viewpoints coexist in U.S.

foreign policy councils, but do not have equal weight. Altruist

sympathies have significantly less influence than realist concerns.

AID's mission to promote international development is subordinate to its

obligation to support the national interest.

Liberal altruists have their greatest influence over AID

programming. They inhabit the cracks in the policy structure. When

AID's missions are left to their own devices, they are guided by their










wish to do good in the world. Both the design and implementation of AID

programs reflect altruist sensitivities.

Realist considerations prevail in the two most important decisions

AID must make: whether to provide aid to a country, and how much to

give. With the lone exception of 1975, the amount of new aid given to

Tanzania each year changed according to the attitude of its government

toward U.S. foreign policy. Twice, in 1970 and 1988, the U.S.

substantially increased aid to Tanzania to reward it for cooperation,

and four times--in 1972, 1976, 1983, and 1991--slashed it to punish

Tanzania for defiance.

We have seen how the practice of a U.S. foreign aid program

preceded theory, how the mission to extend economic development helped

call a development paradigm into existence. We have seen that until the

paradigm shift of the early 1980s the core of development theory was

economic; the political system was viewed either as a dependent variable

or as somehow extraneous to development. We have seen that the four

main tactical approaches to inducing development that have been tried

over the years were all attempted by Albert Mayer in the famous Etawah

project in India during the late 1940s and '50s. Finally we have seen

that American aid to Tanzania was not used as a burglar's tool to open

the country up for exploitation by U.S. corporations. However, it was

neither a purely philanthropic nor a purely realpolitik endeavor either.

Instead, as I will show in greater detail below, the strategies

undertaken by the U.S. foreign aid program to Tanzania reflected a

complex dialectic between these two competing propensities, what I have

called pragmatic altruism.
















CHAPTER 3
INSTITUTIONAL CONTEXT


Influence of American Federalism


AID simultaneously exists in two external environments and, like

all complex organizations, embodies an internal culture. Its inputs

(authorizations to act and appropriations of funds) come from its

political environment in Washington. Its outputs (projects and
!
programs) are carried out in its task environment in the developing

world. Much of AID's observable behavior is a consequence of this and

the unusual system of government under which it operates. A brief

discussion of the special problem of American federalism is in order.

The American system of government was designed in the 18th century

by men who were torn between a distrust of centralized power acquired

from the struggle for independence, and a rueful understanding of its

necessity gained from a failed experiment with confederacy.1 The men

who wrote the U.S. Constitution understood the need for effective

government, but they thought it more important to safeguard against

tyranny than to provide for rational administration. They created a

government that, while able to control the governed, first and foremost

is obliged to control itself (Rossiter 1961, W$lson 1989).

To limit government, the framers divided its power in several

ways. The primary division was between the states and the federal

government with all unspecified powers reserved for the states under the


The first central government was formed under a treaty of
friendship between the rebelling colonies called the Articles of
Confederation. The government was so weak it was a detriment to the war
effort and after independence proved to be so unsatisfactory that the
states agreed to a Constitutional Convention. Interestingly, the
southern states that seceded between 1860-1865 tried to reestablish a
confederate form of government.









doctrine of enumeration implied by the 10th Amendment. The second was

to divide the federal government into three branches: a judiciary to

shield the Constitution from the passions of the day, a legislature to

make the law, and an executive to carry it out. The judicial branch was

constructed as a hierarchy of federal courts, while the legislature was

separated into two chambers, the House of Representatives and the

Senate, which were given different structures and powers. The executive

branch alone was left undivided.
(
The framers provided for joint administration of the bureaucracy.

Congress was given control over funding and responsibility for oversight

while the President was given the authority to conduct policy. The

President accomplishes this by delegating power to his appointees who

administer the different parts of the permanent bureaucracy. The

President's appointees must be confirmed by the Senate. With the

exception of federal judges, the President may remove his appointees

without reference to Congress.

In this system AID personnel work under presidential appointees

and are overseen by parallel legislative committees. Among the most

important of these are the House and Senate appropriations subcommittees

which control AID's funding, and the two foreign affairs committees

which oversee its programs. I

The consequence for AID is a peculiar and not particularly

effective mix of centralized and decentralized functions.

Authorization, appropriation, budgeting and accounting are centralized

functions subject at a minimum to Congressional oversight committees,

the Government Accounting Office (GAO), and AID's Inspector General.

Program design and implementation, on the other hand, take place in the

field. Although conducted with significant discretion, these functions

are subject to an internal review process. With the series of reforms

begun in the 1960s, AID's internal review process became an increasing









burden. By 1973 its weight was so heavy that the Tanzania mission was

moved to complain, "as AID's project design techniques have grown in

sophistication and standards have increased, no [mission] can hope to

find the time or expertise to anticipate the questions raised by a

multitude of reviewers at several levels in AID/W" (USAID, FBS, 1973).

Arguably the most commanding control over AID is the power of the

purse, reserved for the Congress. The rules of the House and the Senate

separate the budget making process into two parts: authorization and

appropriation. An authorization is the power granted to an agency to

carry out a specific activity. An appropriation provides the agency
I
with funds (Schick 1980). Funding can also be provided through a

continuing resolution. A continuing resolution allows an agency to

spend at the previous year's rate rather than spend under a new

appropriation (Lee and Johnson 1989: 185).2 Since 1982 the use of

continuing resolutions has become increasingly routine in the U.S.

(Rubin 1985). It was thought remarkable that the 98th Congress passed

five of the thirteen appropriations for which the legislature is

annually responsible under one "giant continuing resolution" (Fisher

1992: 149). The events of 1995-96 rendered this incident less

impressive. In the final quarter of 1995, an unprecedented "budget war"

began between President Clinton and the 104th Congress during which by

year's end virtually the entire federal government was being operated

under a single mammoth continuing resolution. f

It is not hard to see why the American system of government

frustrates rational administration. When Congress and the President

begin pulling in different directions over a particular issue, an agency

(or the entire federal government) may become the rope in a tug of war.

If the President does not approve of the purpose of a particular agency,


2. The use of continuing resolutions originated during the 19th
century as a solution to the problem of distant western military
outposts periodically running out of money or becoming pinched for
supplies at times when Congress was not in session.







I

he can use his appointees to weaken it from within, as happened in the

case of Ronald Reagan and the Environmental Protection Agency. If

Congress objects to the activities of a particular bureau, as happened

to the Central Intelligence Agency during the Ford administration,

Congress may cut its budget (as it did to AID two years running in 1966

and '67) or pass laws to restrict its autonomy (as it has done

repeatedly to AID).

Agencies are not helpless. When the doctrine of enumeration was

overturned by the Supreme Court to permit the Roosevelt administration

to enact its plan to combat the Great Depression, a substantial degree

of de facto power was instantly devolved upon the federal bureaucracy.

The bureaucracy became an unintended fourth branch of government (Meier
I
1980), inefficient, dysfunctional, oligarchical and antidemocratic in

the view of its many latter day critics (Goodsell 1985: 6-11).

Structured as it is to make confrontation more likely than

collaboration, American federalism is a far cry from the Weberian ideal

of rational administration. It is a government of strangers (Heclo

1977).


AID's External Environments


A unique feature of AID is that its external environments are

separated from each other by great geographic distances. The agency's

political environment is in Washington but its task environment is

overseas. The extreme distance between AID's input and output functions

causes it complications. I

Furthermore, both of AID's external environments are characterized

by high uncertainty. International development is an uncertain

business; success requires regular tinkering with program

implementation. Political directives from Washington also result in









tinkering. Unfortunately, the tinkering has tended to have deleterious

effects.


AID's Political Environment


AID's political environment is a highly uncertain place because

AID is a highly vulnerable agency. Its vulnerability stems from two

factors: its impermanent mandate and its lack of a constituency.

AID was established in 1961 as the sixth in a series of agencies

dating back to 1948, all authorized as temporary bureaus under the

method used by Franklin Roosevelt of creating expendable agencies to

perform temporary tasks. AID's impermanent mandate would not be so

serious if AID had a powerful constituency. It does not. AID's

activities are all conducted overseas. Very few Americans see any

direct benefit from it or any other branch of the State Department

(Wildavsky 1988). AID's only support comes from special interest

groups. There is the circle of consulting firms that live off AID

contracts. AID is, in the view of consumer advocate Ralph Nader, a "pot

of gold" for these "beltway bandits" (Dallas Morning News, Aug. 8,

1993). But many nonprofit humanitarian organizations also receive

funding from AID, and they too support the agency. In its year end

newsletter in 1995, the Christian charity Bread for the World declared

its opposition to the Republican proposal for "merging USAID into State,

because that would subject development aid even more to U.S. political

and commercial interests, rather than focus it on the needs of poor

people" (Bread, November/December, 1995). This "do-gooder" lobby, as

one official described it to me, helps bolster AID's altruistic

propensities.
I
The coterie of private consulting firms, universities, charities,

and nongovernment humanitarian relief and development organizations that

implement most of AID's programs is sometimes referred to as the









"development industry." In any given year it captures between 60 and 80

percent of the funds that AID disburses (Tendler 1975, Zimmerman 1993,

Washington Post, Sept. 18, 1993, ABC Television, December 4, 1995).

A retired AID official whose service dated back to the fifth
f
agency, the IOA, expressed the belief that the statistic is misleading,

and lends itself to "facile conclusions." To illustrate, he gave the

example of a project he had seen in Thailand that did nothing more than

pay the salary and perquisites of a single private consultant who served

as an economic advisor to the Minister of Finance and sat in on Thai

cabinet meetings. According to the official, the American advisor had

"a tremendous impact on the macro elements of the economy that weren't

captured in the project report, which simply showed that one hundred

percent of the project budget went to pay the salary of one American."

No matter, the public perception of a cozy relationship between

AID and the development industry exists, and results in suspicions that

foreign aid officials do all they can to perpetuate underdevelopment in

order to maintain their lavish lifestyles at taxpayer expense in

tropical countries far from public view. AID workers are the "lords of

poverty" whooping it up with foreign aid money (Hancock 1989).

Foreign aid has long been America's least popular form of

government spending (Reilly 1988). The year the Clinton administration

entered office, 70 percent of Americans reported feeling that foreign

aid was wasteful of their tax dollars (Associated Press, Sept. 5, 1993).

Arguably, AID is America's "most hated program" (Reuters, Jan. 18,

1993).

U.S. political leaders in Washington have maintained a foreign aid

program against the will of the majority. As will be seen in greater

detail below, this was done in the name of fighting Communism. AID's

political raison d'etre thus dissolved with the Soviet Union. Its

continued existence was suddenly called into doubt. The National









Taxpayer's Union put AID at the top of its list of agencies whose

budgets should be cut. Members of Congress from both parties joined the

long-standing call of AID's enemies for its termination (Dallas Morning

News, Aug. 8, 1993).

AID's political vulnerability has made it a tempting target for

Congress over the years, a whipping boy to punish for displeasure with
(
the policies of the President (Lyons 1994). When, for example, Congress

disapproved of President Johnson's conduct of the war in Vietnam, it

passed laws in 1966 and 1973 to restrict AID's autonomy, and drastically

cut its budget in 1966 and 1967. Angry about Nixon's secretive conduct

of foreign policy, in 1974 Congress reduced the autonomy of the entire

State Department (Schick 1980). Since 1961 Congress has increasingly

dictated which activities AID should engage in and what priority each

should have by passing mandates and earmarking funds.


AID's Task Environment


AID's task environment is characterized by the same high degree of

uncertainty as its political environment. AID addresses a huge range of

problems scattered all over the developing world. There are

uncertainties of supply. Which technology to provide? How to work

effectively under ineffectual host country governments, given regular

unexpected changes in the situation? There are uncertainties of demand.

Excess demand for the benefits that development projects can provide may

lead to violence. Inadequate demand, on the other hand, can turn

projects into white elephants (Hirschman 1967). Success in

international development demands experimentation and an institutional

ability to learn. Unfortunately., these traits are not nurtured in AID.









AID's Corporate Culture


There are conflicts in all large bureaucracies between the

individual and the organization (Downs 1967), but they are particularly

bad in AID. Its personnel are divided into a smaller number of more

powerful ideologically conservative realists, and a larger number of

less powerful liberal altruists. The extreme geographic distance

between AID's input and output functions, with its resources coming from

Washington and its operations overseas, necessitates a fence-straddling,

Janus-faced posture. To protect its resources from its many enemies,

AID must be ever alert to changing moods in Washington. To succeed in

its uncertain mission of developing the poorest countries on earth, it

is "forced to be particularly reliant on its lower ranks for adaptive

and innovative behavior" (Tendler 1975: 24).

However, the incentives AID provides its employees do not

encourage the spirit of innovativeness. AID is governed by the State

Department's management system, with its "tortuously slow

apprenticeship" and its "premium on conformity and on the patronage of

superiors writing efficiency reports, who were in turn awaiting their

own similar advancement through the ranks." AID reflects the State

Department "culture in which the simple declarative sentence was

regarded as risky" (Morris 1977: 34, 36). There is a pronounced fear of

the written word in AID. A review of its archives in the 1970s found

them to consist of sanitized, technical and lifeless reports (Tendler

1975).

A high-placed administrator in Africa confirmed to me that dissent

is not registered in the official record, but is relegated to "back-

channel communications." A one page anonymous memo found circulating in

AID's Washington offices in March 1995 reified AID's culture in listing

the reasons why it is so conservative. AID's culture, the memo

declared, places the highest value on activities that "hold out the









prospect for more money." AID's employees assume stability in recipient

countries. They are more comfortable dealing with economic issues than

the political and social aspects of development. They believe that

unpopular policies "will go away if ignored." Externally, AID resists

"being integrated with other donors," and internally "responds

vertically to bureau hierarchy, and has difficulty organizing

horizontally." The common perception that AID officials enjoy lavish

lifestyles is not wholly unfounded. They are, like embassy personnel,

given beautiful homes and staffs of servants in the countries where they

serve. Their children are educated in private schools. A bit of
I
doggerel circulating in 1996 entitled "The Development Rap" savagely

caricatured the development worker as little better than a smug pig

feeding at the public trough. (See the Appendices for the memorandum

and the poem).

It is not quite that simple. The perquisites of large houses and

staffs of servants not withstanding, all AID officials who go overseas

must live in impoverished countries that bear little resemblance to the

tropical paradises of travel brochures. The cities are, for the most

part, unpleasant places to live. In many, slums encircle the enclaves

where diplomats and development workers reside. Telephones often do not

work. Streets may be broken, traffic clogged. Sanitation systems are

often in poor repair, leading to many water- and insect-borne diseases.

The water is often not drinkable. There are frequent electrical

outages. Crime can be high, and in some countries may be violent. The

families of U.S. officials were evacuated from Zaire in 1992 after the

French ambassador was shot dead by a stray bullet during political

violence. The skeleton crew of U.S. officials who stayed behind went

about Kinshasa armed. In 1996, U.S. officials in Nigeria were only

allowed to leave their island enclave in Lagos by chauffeur-driven

armored car.







I

Living in these sorts of stressful and sometimes dangerous places

puts unique psychological pressures on AID's overseas personnel. An

economist in one of the Washington planning divisions recounted the

anxiety that all AID officials experience in exposing their families to

endemic diseases. Everyone knows a "med-evac" horror story. In many

countries, remnants of Cold War proxy armies and guerrilla insurgencies

roam the countryside and the slums in packs of armed thugs. The

economist recalled the stress of living in Uganda where she learned

"that a grenade launcher sounds different than a rifle." The oftentimes

bleak and sometimes dangerous conditions in the countries where they

serve tend to make AID officials huddle together like immigrant

communities, isolating themselves from the local population and

socializing with the same people they work with (Tendler 1975).

In describing the constant political pounding the agency absorbs,

an official in the Africa Bureau told me, "We suffer from battered

spouse syndrome." Another characterized the agency as "under attack

. an agency under seige." Considering AID's political

vulnerability, the uncertainty of its task environment, and the peculiar

types of stress its officials must endure overseas, it was not

surprising to me to find that many of them feel that working in AID is

like being in London under the blitz.

Thus AID's behavior is very much a function of its institutional

context. The divided control of American federalism makes AID a

peculiar combination of centralized and decentralized functions. Its

impermanent mandate and its unpopularity make its political environment

a very uncertain place. Its task environment is highly uncertain,

requiring AID to be an adaptive organization, but its internal culture

places a premium on conformity and breeds caution and a fear of

forthright language. The great distance separating AID's input and

output functions requires it to adopt a Janus-faced posture to defend









itself against the constant political attacks to which it is subjected

in Washington while groping for solutions to a4l the variegated problems

of underdevelopment in the poorest countries on earth.

















CHAPTER 4
THE CREATION OF AID


AID at its inception in 1961 was a child of long parentage, the

sixth in a succession of U.S. bilateral foreign aid agencies. Its

progenitors in the period 1948-1960 were all brief-lived, existing for

only two to four years each. AID has proven to be very resilient. In

attempting to answer why AID has managed to survive in its hostile

political environment for far longer than any of its ancestors did, I

turn now to a discussion of the different challenges AID has

successfully faced over the years. A detailed understanding of AID's

thirteen-year heritage and its thirty-five year history is crucial to

understanding the subject I will take up in later chapters, the behavior

of its officials today.

In this and the next two chapters I recount both the early history

of the U.S. foreign aid program and the full history of AID, with

special attention to its operations in Tanzania, in the context of the

political histories of the United States and Tanzania. I will show that

from 1941 to 1995 there were three moments of profound change in U.S.

foreign aid policy. The first involved the institutionalization of aid-

giving in a formal program between 1941 and 1948. The second and third

were changes in the program itself. These were caused by two political

events in Washington: the New Directions--the iame of the Foreign

Assistance Act (FAA) reform bill passed by Congress in 1973--and the

1980 election of Ronald Reagan.

Michael Hayes (1992) has developed a theory to explain the

magnitude of policy change in the American political system, why some

policy changes are more substantial than others. Whether a policy









change is marginal or substantial is determined by two factors: whether

knowledge of the social problem is felt to be adequate, and whether

attacking the problem will establish a new role for the government. The

normal functioning of the democratic system described by David

Braybrooke and Charles Lindblom (1963) as incrementalismm," according to

Hayes, occurs whenever the role of the government in an issue area is

established but confidence about what to do is lacking.

I will show that confidence in knowledge of how to achieve

sustainable development was particularly high at three moments in time:

1948, 1973, and 1981. After hitting these highs, confidence slipped in

the intervening years as programs met failure in the uncertain task

environment. The three long intervals between the highs--from the

founding of the U.S. foreign aid program in 1948 to the 1973 New

Directions, from the new legislation to the 1980 presidential election,

and finally from the Reagan administration to date--were periods during

which confidence in the knowledge base gradually faded. These were the

times of incremental change in AID's history, or what Hayes calls

"incremental rationalizing policies."

There are three types of nonincremental policy change. In the

first, which Hayes calls "role breakthroughs," a social problem has been

identified that no one knows what to do about, and which will involve a

new responsibility for the government. This does not apply in the case

of the U.S. foreign aid program because, as I have already shown,

confidence in how to induce development was not lacking in the 1940s

when the new government program was launched.

The next two types of nonincremental change are germane to this

study. The second, which Hayes calls "nonincremental innovation," is

very uncommon. It occurs when confidence in knowledge of what to do is

high but a role for government is not yet been established. The result

is fortuitous; a strategy for dealing with the problem is formulated at










virtually the same moment the problem is determined to be a

responsibility of the government. This is what happened when the

foreign aid program was launched in 1948. In his study of different

World Bank projects, Hirschman (1967) discussed this issue, and

speculated there might be a force he called "the guiding hand" which

calls unexpected problem-solving skills into existence to meet

unexpected problems as they arise.

The third type of nonincremental change, which Hayes calls a

"rationalizing breakthrough," occurs when confidence in knowledge is

high and there is an established government role. The result is new

policies for old problems. Twice in the history of AID, once in 1973 by

order of the Congress, and once in 1981 by order of the President,

"rationalizing breakthroughs" were made in AID policy. Confidence about

what to do was restored.

Hayes' model does not explain why confidence in knowledge changes;

he only states that it does change. There is a theory adapted from

paleontology to American politics by Frank Baumgartner and Bryan Jones

(1993) called "punctuated partial equilibrium" that can handle the

problem.

According to Baumgartner and Jones, whether a policy change is

marginal (incremental) or substantial (nonincremental) is determined by

whether the relevant agency is being subjected to positive or negative

feedback. The meanings they give the terms "positive" and "negative"

are the reverse of their ordinary connotations. Positive feedback is

bad; it brings on stormy weather for agencies. Negative feedback is

good; it means smooth sailing.

Negative feedback means basically no feedback. It occurs when the

American public is basically happy with the status quo, when all is calm

and inputs are predictable. In this case, policy changes are marginal









and occur incrementally. Under conditions of negative feedback, large

inputs are required to produce small changes.

Positive feedback, on the other hand, is disruptive. It occurs

either when control of the agenda changes hands, or when there is a

crisis. When a different party captures the White House, or when new

majorities are created in Congress, new sets of policy alternatives go

into effect (Kingdon 1984). When crises occur, such as the oil shocks

of the 1970s (Jones 1979), public attention suddenly focuses on a

particular issue area (Kingdon 1984), and the government is forced to

respond with new policies.
f
The implication of the theory of punctuated partial equilibrium is

that whenever feedback changes from negative to positive, either new

agencies will be created, such as the Environmental Protection Agency

created to clean up pollution and the Department of Energy created to

meet the energy crisis, or existing agencies will be roused from the

torpor of business as usual and shaken out of their standard operating

procedures. In either case, small inputs cascade into major effects.

The historical changes that occurred in the U.S. foreign aid

program can be explained in terms of changes in the level of confidence

in the knowledge base. When new political actors have taken control of

the agenda, they have typically ordered fresh approaches to old problems

and regenerated confidence about what to do. Thus, when the foreign aid

program was founded in 1948 confidence in the knowledge base was high

but there was no existing role for government. The result was

nonincremental innovation: a strategy for inducing development was

devised the moment the problem of global poverty was identified as a

responsibility for the U.S. government.

AID's establishment in 1961 coincided with the most articulate

theoretical expressions of the development paradigm. Confidence in the

knowledge base was still quite high. The failures of the late 1960s







I

weakened this conviction. The first rationalizing breakthrough that

punctuated AID's policy equilibrium was the 1973 New Directions of the

Congress. This redirected AID in a fresh approach and confidence in the

knowledge base was regained. The two oil shocks and stagflation in the

Western countries combined to produce poor results in the development

task environment, and confidence in what to do flagged. The second

rationalizing breakthrough came after the election of Ronald Reagan.

AID was ordered to redirect its efforts toward private sector

initiatives, and once again AID recovered a measure of certainty. This

gradually wore away as the Cold War fizzled to an end and the political

will to maintain a bilateral aid program waned, leaving AID in the

position it finds itself in today.

The years 1973 and 1981 therefore punctuate, or divide the

agency's history into three time periods. I will show that each period

was characterized by a different dominant strategy and a different set

of development objectives. The dominant strategy of the first period,

1961-1973, was institution building. I treat both AID's prehistory and

the institution building period in this chapter. The second period was

the shortest, the seven years 1974-1980 when the dominant strategy was

reaching the poor majority. I present this second period in Chapter

Five. The dominant strategy of the third period, from 1981 to the

present, has been one of forcing political reform. I present this

period in Chapter Six.


The Ancestry of AID, 1941-1960
f
The birth of the world's first peacetime foreign aid program is

conventionally given as the conference at Bretton Woods, New Hampshire

in 1944. In actuality it had private sector antecedents in the three

largest U.S. philanthropic foundations. John D. Rockefeller, Andrew

Carnegie, and Henry Ford all endowed foundations during the Progressive









era for the dual purposes of thwarting the spread of socialism in the

American work force and securing access to resources abroad. The three

old robber barons were also seeking tax relief (Berman 1983), and may

have been worried about their immortal souls as they faced the prospect

of dying.


The Role of the Private Foundations


The Rockefeller Foundation was an early supporter of the

historically black universities. Its patronage was guided by the

Tuskegee Principle, whereby conservative black elites were to be trained

and sent out to socialize southern blacks into the American system, to

convert them from a disadvantaged and potentially explosively subculture

mired in hopeless poverty into a docile, semi-skilled labor force. The

Rockefeller Foundation helped establish the Social Science Research

Council in the 1920s, in hopes that academic minds could be found to

reconcile private wealth with public welfare. Overseas, the Rockefeller

Foundation supported medical training, notably in China after 1913. The

Carnegie Corporation supported the extension of the Jeanes teacher-

training institutes--established by Anna Jeanes in 1907 to spread the

Tuskegee philosophy--into British Africa in the 1920s. When the Ford

foundation established overseas agricultural and public administration

programs after World War Two, it quickly became, in the words of Dean

Rusk, "the fat boy in the philanthropic canoe" (Berman 1983: 2-3).


The Birth of an Official Foreign Aid Program


The conference at Bretton Woods was the culmination of nearly four

years of negotiations between the Roosevelt administration and the

Churchill government that began in 1941 when Britain was forced to ask

the United States for assistance in its war with Hitler's Germany. This

established a relationship that quickly developed into an inquiry into










ways of establishing a new international economic system that would

prevent a third world war from occurring. The two governments were far

from consensus about what the new economic order should be when they

entered into negotiations. Each had its own iAeas based on its

different experience of the Great Depression.

The British experience

When Britain announced a record budget deficit in 1931, there had

been a panicked flight from sterling, and the British pound fell 25

percent in a few days. Britain abandoned its traditional free trade

policy in response, and adopted protectionist measures for its

manufacturing and agriculture sectors. The lesson the British

government learned was that its colonial system, the Sterling Bloc, had

softened the effects of the depression in both the home country and the

colonies. The colonies had been sheltered from the worst effects of

falling commodity prices, while England had benefitted from near-

exclusive access to raw materials in the territories under its control.
t
England's position changed from backing free trade to supporting

protectionism.

The American experience

The United States moved in the opposite direction, from

protectionism to free trade, as a consequence of its very different

experience of the depression. Since Hamilton's time the U.S. government

had protected domestic industry through tariffs. When the stock market

crashed in 1929 and the depression began, the government responded by

raising already high American tariffs even further with the Smoot-Harley

Bill of 1930, a victory for American isolationists (Gill and Law 1988:

132-134). In the cycle of escalating protectionism that began among the

industrialized countries of the world, the U.S. quickly found itself

squeezed out of the areas of trade dominated by England and France. The

foundations, representing the interests of corporate America, joined









with the government in an effort. of finding ways to penetrate the closed

European colonial markets.

When the Roosevelt administration came to office and gained

control of the political agenda, it began the slow process of convincing

Congress to convert from isolationism and protectionism to

internationalism and free trade. Secretary of State Cordell Hull called

for bilateral reductions in trade barriers in 1934, but the colonial

powers resisted (Nissen 1975). Their ability to resist ended with the

German conquest of France and the beginning of the Battle of Britain.

The U.S. provided assistance to Britain on a cash-and-carry basis

during 1940. By early 1941 Britain was nearly broke. In the spring,

Lord Keynes, advisor to the British Treasury, went to Washington to

negotiate a desperately needed loan. The Lend-Lease Act was approved by

Congress only after strong lobbying by the administration, which

justified the measure to the legislature as a strategic means for future

penetration of the Sterling Bloc. President Roosevelt justified the

measure to the American public in terms that were readily understood,

stating that when one's neighbor's house is on fire, it is well within

one's interests to lend the neighbor a hose.

With collaboration from the foundations, the assistant to the U.S.

secretary of the treasury, Henry Dexter White, produced a proposal for a

postwar system to stabilize world currencies through an international

central bank and a fund to oversee the problems of international

finance. It was understood that the U.S. was the only country capable

of financing any such international lending system, thus, in accordance

with the new U.S. interest in piercing closed trade areas, the White

Plan assigned these new institutions the objective of removing trade

barriers and pressuring countries to adopt free enterprise methods

(Kindleberger 1987).









The White Plan was briefly resisted by a portion of the American

financial community. The banking industry was generally hostile to

Keynesian principles and New Deal policies, but when the proposal

entered into the political debate, a split occurred between the "Main

Street" and "Wall Street" factions of the banking industry, with the

former, made up of the many small midwestern banks, generally favoring

the proposal as potentially profitable for U.S. industry, and the

latter, made up of the few big New York banks with heavy international

interests opposing it ostensibly because concessional lending was a big

giveaway. In actuality the New York banks opposed the White Plan

because they feared government subsidized lending would cut them out of

the market. Wall Street was still seen by a large segment of the

American public as the chief cause of the depression, so the political

base of the international banking industry was shaky. The unified

Democratic government was not sympathetic to their interests. A few

statements by the administration that the White Plan would not compete

with private capital was all that was needed to end the opposition of

the New York banks (Nissen 1975). It was a political fight they could

not win.

The British fought the proposal, but like the New York banks they
(
did not have enough leverage. The war against the Germans had bled

their economy white. The Churchill government recognized the American

maneuvering to penetrate the Sterling Bloc for what it was, a threat to

its economic interests, and protested against the White Plan as a

violation of national sovereignty. London produced its own proposal,

authored that summer by Lord Keynes, for an international "clearing

union" instead of a central bank that would help countries weather any

balance of payment and exchange problems, but which would not be allowed

to interfere in the internal economies of any country (Nissen 1975). In









other words, the British favored unconditional borrowing, while the

Americans insisted on the right to place conditions on their lending.

The British were in no position to bargain. They were over a

barrel, and the Keynes Plan was not considered. The White Plan became

the basis of negotiations that preceded through 1942 and 1943, with the

British fighting a rearguard action and the French government-in-exile

and Canada observing as interested third parties. In April 1944 the

Americans succeeded in dragging the British to the altar.

A "Joint Statement by Experts on the Establishment of an

International Monetary Fund" was released. The proposed fund would have

the right to intervene in the economies of debtor countries. The

British had succeeded only in gaining the promise that the United States

would not exercise the right during the time when countries were making

the transition back to peacetime production. The Bretton Woods

convention sealed the agreement (Nissen 1975, Kindleberger 1987).

When the delegates convened in New Hampshire in July to iron out

the last details of the final document, victory over the Axis was in

sight, the European empires seemed secure, and the Soviet Union was

still an ally. Britain, however reluctantly, joined the United States

in publicly declaring that the first and second world wars had been

caused by jingoistic economic nationalism, and that if a third world war

were to be averted, the conditions which nurtured this ideology would
I
have to be eliminated (Gilpin 1987).

The task of reducing the major incentives for countries to wage

war would require nothing less than the transformation of the entire

world economy. Age old adversarial rivalries would have to give way to

something never seen before, complex interdependence, or "situations

characterized by reciprocal effects among countries" (Keohane and Nye

1991: 123). The delegates did not want to entrust the success of their

scheme to the whims of domestic politics and the vagaries of






I


international diplomacy. They intended to use technical means. The

agreement they signed, once approved by the political leadership, would

peg world currencies to a gold-backed U.S. dollar and create a set of

international institutions designed to lower trade barriers and provide

concessional loans to governments to use either to finance long term

development projects or to remedy short term balance of payment problems

(Gill and Law 1988). These institutions were, respectively, the

International Trade Organization (which was never established because

the U.S. Congress never approved it), the International Bank for

Reconstruction and Development (IBRD, or the World Bank), and the

International Monetary Fund (IMF).

The high hopes for a permanent peace that followed the surrender

of Japan a year after Bretton Woods were dashed in the dozen months it

took Stalin to establish Soviet dominance over Eastern Europe, for the

Communists to resume the civil war in China, and for war ravaged Europe

to begin to exhibit signs of renewed political extremism. It took the

U.S. government until 1947 to develop a policy framework to view these

events. That year President Truman declared that the earth was being

divided into a free world and a world enslaved by Communism, and

challenged the American people to decide which side they were on

(Freeland 1972). President Truman's address to a joint session of

Congress on March 12, 1947 to announce that he was extending military,

economic and technical assistance to Greece and Turkey in response to

Communist insurgencies in the two countries established the precedence
I
of giving grants of money. Dean Acheson's speech in Mississsippi in May

1947 and George Marshall's better known commencement address at Harvard

a month later institutionalized the giving of aid in what came to be

called the Marshall Plan.

Having identified Communism as a threat to American national

security, the Truman administration set about devising a strategy to









contain it by encircling the Soviet Union and Eastern Europe with a

girdle of military alliances and by aiding the embattled Chinese

nationalists (Acheson 1969). The nationalist movements that brought

renewed war to Vietnam and independence to India and Pakistan inspired

nationalist movements in every European colony in the world. Facing

this extraordinary development, the Truman administration deemed that

the desperate poverty of the people living in the colonized areas was

likely to make Communist utopianism appealing to them. A foreign aid

program to improve global standards of living seemed justified as part

of the effort to contain Communism (Packenham 1973).

As it took form, the Truman Doctrine proposed simultaneously (1)

to confront Communism with military force to contain it where it already

existed; and (2) to distribute economic aid to promote peace,

cooperation and prosperity among the nations ot the free world. The

program that resulted, the Marshall Plan [later reorganized as the

Organization of Economic Cooperation and Development (OECD)], did not

pass without opposition. The American people had twice shed blood and

dispensed treasure to win wars to save democracy. Many Congressmen were

reluctant to ask their constituents to pledge new sacrifices to

safeguard the peace. The enactment of the Marshall Plan was a slow and

piecemeal process of persuasion. Congress passed the National Security

Act in 1947 establishing the National Security Council, a unified

Department of Defense under a Secretary of Defense, and the Central

Intelligence Agency (Kemp 1993). It passed the Economic Cooperation Act

a year later in 1948, which authorized the Economic Cooperation

Administration (ECA) to administer the bilateral aspects of the Marshall
(
Plan (Kindleberger 1987).

The ECA was in place by the end of 1948 when Truman narrowly won

reelection and the Democrats lost control of the Congress. Facing a

Republican majority in the House and the Senate in January 1949, with a









fresh Communist crisis looming in Korea, in the fourth point of his

inaugural address, Truman boldly called for the expansion of the U.S.

foreign aid program into all countries emerging from European

colonialism (McCullough 1992). The "loss" of China to Mao's Communist

armies in 1949 helped spur the Congress to pass the 1950 Act for

International Development, which replaced the ECA with the Technical

Cooperation Administration (TCA) and created a Mutual Defense Assistance

program to help countries fight Communism. This arrangement was

superceded by the 1951 Mutual Security Act, passed in response to the

outbreak of the Korean War on June 25, 1950. Primarily a military

measure, it placed all of America's bilateral aid organizations except

the Export-Import Bank under one legislative authorization, and replaced

the TCA with the Mutual Security Administration (MSA).

The 1952 election of Dwight Eisenhower as President gave the

Republicans control of the White House for the first time in thirty

years, but restored a Democratic majority in Congress. In its first

year in office, 1953, the Eisenhower administration reorganized the MSA

into the Foreign Operations Administration (FOA), then reorganized it

again in 1956 as the International Operations Administration (IOA). The

last change to the American foreign aid program made under Eisenhower

was the establishment of the Development Loan Fund in 1957 to conduct

bilateral American lending (Rondinelli 1987).

Eisenhower enhanced the role of the National Security Adviser in

foreign policy making (Kemp 1993: 34). His first crisis in Africa

occurred in Egypt during the election year of 1956. Gamal Abdel Nasser

of Egypt retaliated for the denial of World Bank aid to build the Aswan

Dam by nationalizing the Suez Canal. Britain, France and Israel united

to reopen it by force of arms. Eisenhower intervened by cutting off

supplies of oil until the expedition withdrew.









This act to support Egypt in his first term was contradicted by

Eisenhower's attitude toward nationalism in his second. Based on the

loyalties he formed in the war as supreme commander of the European

theater of operations, as president, Eisenhower was disinclined to

support the nationalist movements rising in the colonies of America's

most crucial allies. He would describe nationalism in his memoirs as a

"destructive hurricane." This gave Senator John F. Kennedy an

opportunity to make a name for himself by declaring his support for the

right of national self-determination (Mahoney 1983).

The stance Kennedy took in the Senate in 1958 won him great favor

among the emerging nations when he was inaugurated President in 1961.

His administration got the Foreign Assistance Act (FAA) through Congress

in its first year in office, and then moved vigorously to win Africa to

the free world by extending liberal amounts of aid and by appointing

dynamic ambassadors. Kennedy cultivated a personal relationship with

the new African leaders, many of whom were as young as he, by receiving

them with great fanfare at the White House (Noer 1989). Among these was

Julius Nyerere of Tanzania, first received after a trip to the U.N. to

request membership for his not yet independent country in the summer of

1961. He came away from the meeting impressed that Kennedy had a much

better grasp of the problems facing his country than the British prime

minister Harold Macmillan (Listowel 1965: 394-395).


Toward Independence in Tanganyika and Zanzibar


The United Republic of Tanzania consists of two parts. The first

is the chain of islands offshore in the Indian Ocean named Zanzibar.

The second and bigger is mainland Tanganyika, a poetic Swahili name that

means Sail in the Wilderness, a reference to the dhows that ply the

great lake of the same name on its western border (Yaeger 1989: 13).

Tanganyika consists of the area north of Mozambique, east of Lake
I










Tanganyika and the Great Rift Valley, and south of Lake Victoria, Mount

Kilimanjaro and the Serengeti Plains.

Mainland Tanganyika

The archeological discoveries made by the Leakey family in the

Olduvai Gorge near Serengeti revealed Tanzania to be an early cradle of

humanity. There is no lineal connection "between the ancient hominids

of the savanna and the people who later populated eastern Africa"

(Yaeger 1989: 6). The earliest fully human inhabitants of Tanganyika

came from migrations of Cushitic people from Ethiopia 10,000 years ago,

followed by Bantu people from far away Nigeria and Cameroon. Later

influxes of Sudanic, Nilotic and Paranilotic peoples gave rise to

Tanzania's wide variety of ethnic groups. By the 9th century AD, Arabs

and Persians were trading regularly along the coast. They established

island city states which came to be called Zanzibar. Arab intermingling

with the coastal Bantus produced the Swahili culture and language. The

area was briefly taken by the Portuguese in the early 16th century, but

was then conquered by Arabs from Oman who united the islands under a

sultanate. The Omani rulers of Zanzibar pushed the northern limit of

Portugese control back south to what is now Mozambique and raided the

heart of Africa for slaves. They established A slave-based plantation

economy in Zanzibar which made it into the world's leading producer of

cloves.

Under the pretense of abolishing the Arab slave trade, the British

established a protectorate over Zanzibar in the early 1800s. The U.S.

opened a consulate in the islands in 1837. It became the point of

embarkment for the European explorers and missionaries, the most famous

of whom was David Livingstone.

During the 1880s a German named Karl Peters, leader of the Society

for German Colonization, signed a series of concessionary agreements

with various Tanganyikan chiefs. The Kaiser granted Peters a charter to









form the German East Africa Company. The British responded by entering

into secret negotiations with the Germans to establish a modus vivendi

in East Africa, without consulting the Sultan. German control was

formalized over the area south of British Uganda and Kenya, east of the

Belgian Congo, and north of Portgugese Mozambique and included Rwanda

and Burundi. Britain retained juridical control over Zanzibar, leaving

the internal affairs of the islands in the hands of the Sultan.

The Germans ran their colonies as military dictatorships. Like

all the colonial powers, they forced the Africans they took under their

control into the cash economy and surplus production by imposing hut and

head taxes. In the drive to catch up with Britain and France, the

Germans were more willing to make heavy sacrifices in their colonies to

build the infrastructures needed to export primary commodities.

This was the case in Tanganyika. The Germans built a new capital

city on the coast at Dar es Salaam, a road network, and two railroads, a

shorter one from the port of Tanga to Moshi, the main town of the

northern coffee producing region, and a second, much longer railroad

from Dar es Salaam to Lake Tanganyika that spanned the width of the

colony. During this period Indians who had been brought to Kenya to

build the British railroad there migrated southward into German

territory and gradually took over petty commerce.

German development of the colonial economy was accomplished by

draconian means of land appropriation and indentured servitude. Even by

the standards of the time, Peters ran a brutal charter company in

Tanganyika. He committed outrage after outrage against the Africans,

taking a harem of dozens of women, having men flogged to death with

sickening routine. . In 1891 the Berlin government responded to

published accounts of these gross excesses by taking over control of

Tanganyika, but it left Peters in authority as civil governor.









The result was a number of uprisings, the strongest of which

forced the Germans to launch two campaigns of pacification. The first

was against the Hehe, lasting eight years from 1891 to 1898. The second

was against the Maji-Maji Rebellion, lasting three years from 1905 to

1907. The brutality of the German scorched earth campaigns led to a

public outcry, and Berlin removed Peters and appointed Albrecht

Rechenberg as governor. He expanded the rights of Tanganyikans and

launched programs to encourage African agricultural production and to

provide for missionary education. The German settlers, however,

protested against the loss of cheap labor, and much of Rechenberg's

reforms were in the process of being reversed by Berlin when World War

One began.

Tanganyika became the scene of fighting. The Belgians hauled the

parts of a small warship by steam tractor overland through the Congo to

Lake Tanganyika where they assembled and launched it to challenge German

control of the lake (the inspiration for the film "The African Queen").

The German military commander, Major General Paul von Lettow-Vorbeck,

conducted a brilliant guerrilla campaign with a few thousand askari

African soldiers against the British who invaded from Kenya. He was

still holding out when the Armistice was signed on November 11, 1918.

After the German defeat, Rwanda and Burundi were turned over to the

Belgians and Tanganyika to the British to rule under League of Nations

mandate, and later as United Nations Trust territories.

Under the U.N. requirements that went into effect in 1945, the

colonial powers were required to put the people of the trust territories

on a course toward self-government. The first step was to establish

internal rule. Britain was tardy in taking steps in this direction in

Tanganyika. It concentrated first on economic development in the

colony, which had seriously lagged since 1914. Britain introduced a

ten-year development plan in 1946 that encouraged both African education










and--in response to pressure from the British settlers in adjoining

Kenya--increased white settlement. This plan was followed by another in

1955 which promised more funding for African agriculture. The British

plan received support from Eisenhower's Foreign Operations

Administration, and the first U.S. foreign aid to Tanganyika was

obligated in 1955. A third development plan was devised in 1960 with

World Bank assistance. One constant in the three plans was the policy

to increase African food and export crop production through persuasive
(
rather than coercive means.

When Tanganyika was converted from a League of Nations Mandate

territory to a United Nations Trust territory in 1945, and Britain was

required to show progress toward internal rule, African political

associations sprang up intent on capturing control of the process. The

principal of these was the Tanganyikan African National Union (TANU),

led by one of the country's few college graduates, Julius Nyerere. Its

platform called for independence and the abolition of the racial

divisions between Arabs, Indians and Africans, which the British--with

their abhorance of racial mixing and their theories of indirect rule--

had institutionalized. TANU gradually drew all organized opposition

groups to it, and became the umbrella for the entire independence

movement.
(
The British organized a political party of Europeans and Indians

to oppose TANU, that it would not have a political monopoly, and held

limited elections for a new legislative council in 1958 and 1959. Ten

of the thirty seats were reserved for Europeans, ten for Indians, and

ten for the vast majority of Africans. Only wealthy and educated

Tanganyikans were allowed to vote. Despite these disadvantages, TANU or

TANU-supported candidates won all thirty seats.

The British pursued an incremental strategy for independence. The

plan called, in effect, for government by bureaucracy, a plan the









African leaders had little choice but to accept. The British plan

anticipated the gap-filling and trickle-down theories it implicitly

assumed by six years. It had six points. (1) Because of a shortage of

skilled administrators, the civil service would remain staffed by

expatriates indefinitely. (2) Because of the complexity of development,

policy would be made not by the executive nor the legislative, but by

the politically neutral (and largely expatriate) civil service. (3)

Because of limited resources, development projects would be conservative

and aimed at the progressive farmers and entrepreneurs most likely to

capitalize on them. (4) Because of the shortage of capital, the new

government would encourage foreign investment.1 (5) To head off capital

flight, the European and Indian communities would retain their

economically privileged positions. (6) TANU would be in charge of

mobilizing support for the plan. The only role given the Tanganyikan

political leadership was the unenviable task of rallying support for a

conservative, inegalitarian approach to development that would not

benefit the members (Yaeger 1989: 29-30).

Nevertheless, the British thought they had a strategy, and

expanded the franchise and the number of seats on the Legislative

Council to seventy-one, with fifty to be contested, eleven reserved for

the Indians, and ten for the Europeans. New elections were held in

August 1960. A prototype cabinet of ten unofficial ministers was chosen

from the elected majority. Nyerere, as leader of the majority party,
f
became chief minister, and "under his leadership swift progress was made

toward independence" (Yaeger 1989: 25). Internal self-rule was

proclaimed on May 15, 1961. New elections were held that year in which

TANU captured all seats except one, which was won by an independent,

pro-TANU candidate, and on December 9, Tanganyika became an independent

country.










The islands of Zanzibar

Zanzibar followed a very different path to independence as a

result of its much worse ethnic divisions. The British, who for over a

century had dominated the islands externally but allowed it internal

rule, established a legislative council in Zanzibar in 1926, thirty

years earlier than in Tanganyika. Despite this clear advantage in

greater experience with internal government, Zanzibar waded through

blood to independence, and then gave it up after only five months to

unify with Tanganyika.

The reason lay in the ethnic hatreds in Zanzibar that had been

accidentally produced by British policy. Because of the long history of

relations with the Zanzibari sultanate, Britain structured the Zanzibar

Legislative Council to be dominated by the Arab minority. The problem

was the traditional Arabs related to Africans as their unequals, as

former slaves. The independence movement that arose in Zanzibar was

less in opposition to the British than in hatred of the Arab ruling

class.

The formal opposition legitimate by the British was comprised of

two main groups. One, the Zanzibar Nationalist Party (ZNP), was

composed of the enlightened, pro-modernization Arab opponents of the

Sultan. Its most radical wing was led by a Marxist named Ahmad Abdul-

rahman Mohammed Babu. In 1963 Babu would break with the ZNP and form

his own party, called the Umma Party, patterned after Nasserist

principles (Lofchie 1965). The second opposition group was the Afro-

Shirazi Union (ASU), comprised of the oppressed peoples, both the dark-

skinned Africans and the lighter, mixed-race Shirazis. The ASU was led

by a waterfront organizer named Abeid Karume.

The British moved to hold the first elections in Zanzibar at the

same time they were holding them in Tanganyika. They expanded the

number of seats on the Zanzibar Legislative Council from twelve to









eighteen, with the six new seats to be elective, and held elections in

1957. ZNP secured none of these, and ASU only1three. The Sultan and

his followers, upon whom the British were bestowing the benefits of

independence, maintained Arab dominance in the islands.

The two parties failed to survive in opposition. When they fell

apart, in stark contrast to the solidarity of the independence movement

in Tanganyika, Zanzibari politics dissolved into a swirl of ever-

changing factions under alphabet soup acronyms, all driven by

heightening class hostility and racial animosity.

Britain preceded as if there were nothing amiss in Zanzibar. It

increased the number of seats on the Council again and scheduled

elections for January 1961. These produced no majority party, and no

change in the status quo. The British persisted, and scheduled another

election for June. When districting gave the Sultan's loyalists a slim

majority of these seats, rioting broke out in which sixty-five Arabs

were killed (Clayton 1981).

In addition to the Marxist-Leninist Ahmad Babu, leader of the

leftist Arabs, and Abeid Karume, leader of the Afro-Shirazi, a shadowy

figure was to play a key role as the trigger of the coming revolution:

John Okello. A Ugandan immigrant with a fierce hatred of Arabs who

believed God spoke to him directly, Okello was the most violent minded

of the three. In 1962, the year Nyerere became leader of independent

Tanganyika, Okello began to form a network of Africans dedicated to the

violent ouster of the Arabs. He made his closest supporters swear an

oath to kill all Arabs between the ages of eighteen and fifty-five by

jumping three times over a potion made of red, white and black colored

stones and the blood and brains of a black cat and a black dog (Clayton

1981: 55). The Sultan's police officers, who had only recently taken

over command of law enforcement from the British, were informed of

Okello's preparations, but did not attach any importance to the reports.









Babu meanwhile was arranging with the Cuban ambassador in Dar es

Salaam for a group of his supporters to go to Cuba to be trained in

revolutionary ideology and practice. After they left for Havana, Babu

helped instigate the burning of the British Information Office in 1962,

for which he served fifteen months in prison. He was released just as

his militants returned from Cuba sporting fatigues, Castro beards, and

snapping off Venceremos salutes. They made quite a splash in the

Tanganyikan capital, and were to be the cause of the persistent belief

in U.S. foreign policy circles that the Cubans were involved in the

coming revolution (Clayton 1981: 70).

The British set a date in June 1963 for internal self-rule for

Zanzibar, and held a final preindependence election in July. The Afro-

Shirazi won a majority of the vote, but the Sultan's loyalists won a

majority of seats. The Arab opposition and the Afro-Shirazis alike were

outraged by the gerrymandered result. Nevertheless, the British invited

the Sultan's supporters to form a government, and at midnight, December

9-10, 1963, gave Zanzibar its formal independence (Lofchie 1965).

It was uhuru ya waarabu tu, independence for the Arabs in the eyes

the Afro-Shirazi, a government that would last less than two months. As

his police continued to ignore reports of the activities of Okello,

Sultan Jamshid commanded the people to address him as "Majesty" and,

contemptuously referring to Karume as "the boatman," made it plain to

the Afro-Shirazis that they were to be the subjects of the loyal Arabs

(Clayton 1981: 49, 62-63).

In this seething climate John Okello launched his revolution on

January 11, 1964. A group of his men awoke Karume and took him by dhow

to Dar es Salaam to protect him in case of the revolution failing or

Arab reprisal. The revolt was a bloody success. The Sultan barely

escaped with his family. Somewhere between 5,000 and 10,000 Arabs were
slaughtered. When Karume and Babu were told of Okello's plans to
slaughtered. When Karume and Babu were told of Okello's plans to










include them in a revolutionary government, they sailed from Dar es

Salaam to Zanzibar and landed in the midst of chaos and carnage.

Horrified at the butchery occurring in the streets all over the islands,

Zanzibar's leadership rallied to Karume. Babu quickly asserted control

over the most radical faction, and an ill-defined revolutionary

government took shape on January 24 under Karuie's overall leadership,

with Okello ranked twelfth on a council of thirty and thus excluded from

the cabinet, which consisted of the first eleven names.

Nyerere rushed 130 policemen to help restore order and the British

landed a unit of infantry. Okello did not take his demotion lightly.

He had to be told to cease coming armed to council meetings, and began

to quarrel heatedly with Karume over the issue of the nationalization of

land, which Karume opposed. Their arguments continued through February

until, worried about having such an unstable man in the ruling council,

with Nyerere's cooperation, Karume and Babu invented a ruse that they

were called by Nyerere to urgent conference in Tanganyika, and managed

peacefully to remove Okello from the islands, ultimately to Nairobi,

where he would be imprisoned (Clayton 1981).
f
The Founding of AID


This was the climate in which AID opened a mission in Tanganyika,

the first independent country in East Africa. Kennedy's 1961 FAA

incorporated the existing agency, the IOA, and the Development Loan Fund

into a new bureau, the centerpiece of Kennedy's new foreign aid program,

the U.S. Agency for International Development. Kennedy also created the

Peace Corps and the Alliance for Progress. Peace Corps and AID were set

up as semi-autonomous branches of the State Department. In all

countries where they were to be active, both would maintain offices

physically separate from the embassy, but the Peace Corps and the AID

country directors would be under the authority of the ambassador.









The establishment of AID was less the founding of a new agency

than a substantial reorganization and reorientation of a previously

existing one. Three presidents would serve in office during the

thirteen years of AID's 1961-1973 institution building period.

AID's planning system

From its inception, AID's strategies for Tanzania were expressed

in formal plans, according to a method established on the recommendation

of a group of social scientists called the Charles River Group who met

shortly after the passage of the FAA and recommended that the project

approach of AID's forerunners be abandoned in favor of comprehensive

country programming (Packenham 1973). In the 1960s, AID's country plans

were named the Country Assistance Program (CAP). They were revised on

an annual basis. In 1972 under the Nixon administration the name was

changed to the Development Assistance Program (DAP). The document was

renamed the Country Development Strategy Statement (CDSS) in 1977 during

the Carter administration. In 1989 under the Bush administration it

became the Country Program Strategic Plan (CPSP), and a multiyear

planning framework was established. Under the Clinton administration in

1995 it was completely revamped as the Strategic Planning Framework

(SPF). In politically stable countries not experiencing some form of

crisis, the planning framework is five years it time.

Initially, most U.S. foreign assistance was delivered through

bilateral channels overseen by AID. In its early years, AID was the

leading institution of the American foreign aid program. However, over

the course of its first decade of existence, the bulk of U.S. assistance

was gradually shifted from bilateral to multilateral channels. This was

done to protect a larger proportion of foreign aid from the political

process (Nissen 1975, Tendler 1975, Weissman 1975). AID lost its

preeminence to the World Bank. From 1961 to 1970 American multilateral

aid grew seven times faster than bilateral aid. While the World Bank's










loan commitments quadrupled and its personnel doubled, AID's

appropriations were reduced by 20 percent and its personnel was halved

(Wood 1986).

AID's personnel system

AID has three basic categories of personnel. The first is U.S.

Direct Hires (USDH), permanent American employees of the federal

government with full diplomatic status and perquisites. The second is

Foreign National Direct Hires (FNDH), permanent foreign employees of the

federal government paid at local wage rates, which in the case of

Tanzania have generally been about one-tenth of American salaries. The

third is contractors and consultants. These can be Americans or host

country or even third country nationals. There are various types of

contracts that AID awards. These range from open-ended contracts for

administrative work in the offices either in Washington or in the

missions, to close-ended contracts for the implementation of specific

projects in the field.


The First Period: Institution Building, 1961-1973


Tanganyika began to experience racial discord after independence

in early 1962, but it never approached anything like the bloodbath that

would occur two years later in Zanzibar. Facing a bureaucracy dominated

by Europeans whose mandate placed them outside his political reach, and

an economy dominated by an Indian merchant class, at the first stirring

of ethnic hatred in the first month of the first year of independence in

January, Nyerere tried to douse the flames, but found TANU to be

unresponsive to his orders. The effective mobilizer of popular support

for independence proved to be an ineffective instrument of central

control. Many members of the TANU youth wing were rowdies who thought

their position entitled them to mete out curbside justice by roughing up

Indian shopkeepers and levying informal taxes on them. The left wing of







f

the party leadership began immediately to voice the desire of the lumpen

proletariat for a share of the civil service jobs held by the British,

and of the wealth of the Indian petty bourgeoisie. They managed to

criticize Nyerere's moderate, non-racialist policy (without criticizing

Nyerere himself) by implying that he was the unwitting stooge of the

foreigners.

Nyerere took two actions to calm the fever. He "made an example

of ill-mannered Europeans who continued to adopt an attitude of racial

arrogance." Four persons accused of discrimination were deported. The

"Star Chamber technique" opened a "political safety valve" that may have

prevented an explosion of frustration such as was looming in Zanzibar,

but it also scared off potential investors who wondered, if the rule of
!
law could be set aside so blithely, what this meant for property,

contracts and wage agreements (Listowel 1965: 408-409).

The second was the more serious. Facing the fierce attacks by the

left wing of the TANU National Executive upon his appeasing policies,

Nyerere offered to resign to dedicate himself to reorganizing TANU and

to develop a governing ideology. To the astonishment of many, perhaps

including himself, his resignation was accepted. Nyerere stepped down

after merely two months in office as leader of independent Tanganyika,

and turned his duties over to Rashidi Kawawa, a founding member of TANU.

Nyerere withdrew from public life into private reflection.1

Kawawa set about creating an oligarchical structure based on patronage.

He began by raising the minimum wage, followed that by declaring that

the civil service would be Africanized, then pushed through a Preventive

Detention Act which gave the state sweeping powers of imprisonment

without trial, and finally produced a republican constitution that went

into effect on the first anniversary of independence, December 9, 1962,



1. Interestingly in the same year that Richard Nixon did likewise
after suffering defeat in the California gubernatorial election.









following a national election. Nyerere came out of retirement to run

for the new office of president, and was swept1back into power by a huge

majority.

During his eleven month sabbatical Nyerere had devoted himself to

producing an official and enforceable ideology for TANU. He rejected

the competitive and contractual political philosophy of Locke, and

embraced the organic and consensual (and potentially authoritarian)

political philosophy of Rousseau. He looked to the African extended

family as the basic unit of society, and addressed a dialectic of three

issues: equality, democracy and socialism. His ideas on these issues

would become the core of the ideology he was to call Ujamaa. Usually

translated as "familyhood" Ujamaa was to become the philosophical basis

for the unique form of socialism that would be practiced in Tanzania for

the next twenty years.
r
Nyerere accepted as a given the belief common to African

subsistence farmers that the amount of resources is fixed, and proceeded

from this assumption under zero-sum logic. Before colonialism it had

been considered disgraceful for one member of a kinship group to have

too much if another had too little. African clans had affected

redistribution through moral sanction (Yaeger 1989). Nyerere thought

this system could be revived and adapted to modern conditions. The

whole nation was therefore to be organized along the lines of a

traditional African clan.

Second, Nyerere decided that while majority rule was a noble

principle, the Western version of democracy as the clash of competing

interests was to be rejected. Lockean representative democracy would be

eschewed in favor of Rousseauian direct democracy. Rousseau had written

glowingly of the city-republics of his native 18th century Switzerland

where "bands of peasants are seen regulating affairs of State under an

oak, and always acting wisely" (Ebenstein 1958: 416). Nyerere thought










this system could be replicated on a larger scale in 20th century

Africa, and wrote in a widely-circulated pamphlet his vision of a

Tanganyikan direct democracy in which "the elders sit under a big tree

and talk until they agree" (Yaeger 1989: 32).

Third, Nyerere combined the first two ideas into a vision of a

distinctively African form of socialism that would work toward the

ideals of economic equality and democratic political participation

through the mechanisms of an ideologically unifying party. The key to

achieving this future for the Tanzanian nation would be a strong single-

party state.

This decision was fully consistent with the development paradigm

of the day, but it raised an important question: would the superpowers

leave Tanzania alone to blaze a new trail between capitalism and

communism (Bienen 1967)? Nyerere was acutely aware of what he would

call the second scramble for Africa, the competition between the

Communists and the democracies for the loyalties of the emerging

nations. He became an early and strong advocate of non-alignment and,

cognizant that his vision would require enormous resources to achieve,

declared Tanzania's willingness to accept assistance from any quarter as

long as it was given unconditionally (Rogers 1992).


Kennedy and AID's Formative Years


John Kennedy created AID as part of an effort to distinguish more

clearly between American military aid and aid for economic development.

He did this in hopes that a more benevolent economic aid program would

serve to support democracy in the emerging nations. The activism of his

administration produced a scattershot approach to development in

Tanzania. From 1961, when AID opened a mission in Dar es Salaam, to

1963 when Kennedy was killed, a total of 22 projects were launched and a

total $54.1 million in new spending was obligated, an average of seven










new projects launched each year costing an average $2.5 million each,

$18 million in new spending obligated per year.

Nine projects were authorized in 1961 before Tanganyika was fully

independent, and $22.8 million in spending was obligated. The Mission's

first country plan was written from 1961-62 and submitted in January

1963 two months after Nyerere returned to powet, ten months before

Kennedy's death in Dallas. The plan had two main thrusts: to improve

Tanzania's physical infrastructure, its roads and urban water systems in

particular; and to strengthen and build national institutions,

particularly the civil service and institutions of higher learning

(USAID, History, 1985). The Ford Foundation, the fat boy in the canoe,

came on board in support of AID's plan to help build a new college

campus from scratch in Dar es Salaam, staff it with expatriate faculty

while Tanganyikans were trained, and join it to the previously

established Makerere University in Kampala, Uganda and Royal College in

Nairobi, Kenya in a proposed University of East Africa. The Ford

Foundation also supported a program to Africanize the civil service, and

made a heavy investment in institution building in Tanzania (Berman
(
1983).

Institution-building and gap-filling criteria were to shape the

selection of AID objectives in Tanzania in the first thirteen years. At

another, higher level, however, AID was guided by what one former

foreign officer was to describe as the State Department "ideology of

imperial benevolence" (Morris 1977: 27) and the parallel noblesse oblige

of the foundations (Berman 1983: 2). The Mission's first country plan

followed the orders laid down in a document entitled "Tanganyika,

Department of State Guidelines for Policy and Operations." The first

country plan was fully reflective of State Department ideology.

The State Department had three key objectives in Tangariyika: (1)

to establish "a strong and responsible government," (2) to prevent










Communist penetration of the government and the economy, and (3) to

ensure "the continued reliance of Tanganyika on Western sources for the

major portion of its economic and technical assistance." In recognition

of the fact that the State Department objectives had no development

component, the Mission added another: "economic development of a

responsibly governed Tanganyika at a satisfactory rate" (USAID, CAP,

1963a).

The second country plan of September 196? reaffirmed the Mission's

objectives of "continued growth of the present system of government

under moderate leadership." The priority meant "minimizing any move by

Tanganyika toward racism, the anti-West pro-Communist brand of

neutralism, authoritarian government and militarism." Of particular

concern was the "denial of sensitive areas of the government and economy

to the Bloc, and continued reliance on Western sources for the major

portion of economic and technical assistance" (USAID, CAP, 1963b).

AID's first two country plans referred to Tanzania's World Bank-devised

first and its own subsequent second national development plans, but only

to show how the Mission's objectives were in alignment with and

supportive of (but not derived from) Tanzania's national development

goals (USAID, CAP, 1963a, 1963b, 1965, 1966).

In the first country plan the Mission stated its belief, based on

the Charles River Group recommendations, that programmed planning and

implementation through "project assistance provides the best form of aid

at this time" (USAID, CAP, 1963a). AID's use of projects as the primary

vehicle for implementing its programs did not change until 1995 when,

under the Strategic Planning Framework implemented by the Clinton

administration, projects would be replaced by a poorly understood

concept called "results packages." Briefly, these are bundles of

desired results toward which all' planning is inclined.










The foreign policy establishment

The U.S. foreign policy establishment in 1960 was dominated by an

East Coast elite of Ivy League intellectuals, retired soldiers, and

millionaires. Critics of both the left and the right would later argue

that the attempt by Kennedy to align the interests of scholarship,

security, and capitalism in the name of spreading the good news of

democracy undermined the integrity of all three.

The ideology of the foreign policy establishment Kennedy found in

place at his inauguration was wholeheartedly conservative, realist,

Keynesian liberalism. The establishment's understanding of the world

was based on the principles of free trade and the Truman Doctrine, its

experience shaped by the lessons of the successes of the New Deal and

World War II, all tempered by the sober reminder of McCarthyism. They

equated Communism with Fascism and remembered how the foreign service

officers who were serving in China when it was "lost" were publicly

humiliated as soft on Communism and driven out of the service during the

witch hunts. Confident in their worldview, scornful of public opinion,

they treated foreign affairs as their private concern (Morris 1977).

The Kennedy administration transferred the leadership of

Eisenhower's IOA wholesale into AID. With the great number of embassies

and missions he opened in Africa, foreign service careers quickly became

invested in the continent far out of proportion to Africa's strategic

importance to the United States. A clientelist mentality took hold

among the State Department and AID personnel who went to Africa. They

developed their own "isolated and private view of foreign policy," and

whenever necessary joined forces to commit "little bureaucratic

deceptions to conceal the client's failures lest [they] lose what meager

call they had on Washington's programs and attention" (Morris 1977: 18).

AID personnel recognized the career opportunities in Kennedy's foreign

aid initiative, and along with the rest of the foreign policy










establishment greeted it enthusiastically, but along with the rest of

the foreign policy establishment they disdained Kennedy's desire to link

aid to democracy. The old hands considered that to be overly optimistic

and naive (Lyons 1994).

AID's planners in Tanzania were part of the disparaging chorus.

They stated outright in their first country plan that the

administration's "hopes for Tanganyika's tranquil political progress

under a classic Western system of parliamentary democracy and civil

rights are exaggerated." That already "political developments [had]

disappointed many observers" was understandable; Tanzania was a

"xenophobic. . emerging, ill-prepared and very self-conscious nation"

(USAID, CAP, 1963a).

In the second country plan submitted two months before Kennedy was

shot, the Mission informed Washington anew that it would not link

American assistance to democracy, but rather would "attempt to persuade

Tanganyikan leaders to follow democratic processes." The Mission

strongly believed that hectoring a proud and newly independent

government would be unprofitable; "any attempt to relate the level of

U.S. assistance directly to political objectives would be violently

resented and unproductive" (USAID, CAP, 1963b). This was reaffirmed in

the third country plan of October 1964, submitted after Tanganyika and

Zanzibar had unified, a month before Lyndon Johnson was reelected. It

stated that "any overt attempt to tie the level of U.S. assistance to

political conditions would be both unproductive and resented by the

local leadership we seek to strengthen" (USAID, CAP, 1964).

Although it thus eschewed political conditionality, consistent

with the principle of the right of interference dating back to the White

Plan, the U.S. placed conditions on its assistance to Tanzania. It

simply made them easy at first. The initial condition was that the

Nyerere government not become procommunist.










This was seen as a real danger at the time. "Tanganyika's desire

to pursue a policy of neutrality vis a vis the world's major power

blocs. . may make the U.S. objective of preventing Communist

penetration of sensitive areas difficult to attain, when confronted by a

Tanganyikan desire to balance Communist and Western influences. This

same attitude will tend to complicate U.S. efforts to secure Tanganyikan

support for major Free World foreign policy positions." A big American

foreign aid program was needed to counter the "large-scale incursion of

Communist assistance and influence" that the U.S. intelligence community

was reporting lest "the present leadership. . be exchanged for another

far less congenial to U.S. objectives" (USAID, CAP, 1963a).


Johnson, Union, and the Arusha Declaration


John F. Kennedy was assassinated on November 22, 1963, just four

months after Nyerere's reception at the White House in July for his

second meeting with Kennedy, on the only state visit to the U.S. he

would ever make.

The man who succeeded Kennedy in office could not have been more

different. Lyndon Johnson was unschooled, untravelled and unread

(Tucker 1994: 313). He was uncomfortable dealing with international

affairs, and with people from different countries. He often complained

that "foreigners are not like the folks I am used to" (Goldman 1969:

447), "not like the folks you were reared with" (Lyons 1994: 247). His

humble background made him deeply sympathetic to the plight of the poor,

and more comfortable among foreigners of low station than suave foreign

diplomats. During a tour of rural India, Johnson described to a rapt

group of peasants "his boyhood experience drawing water from the well,

showing how the rope occasionally slipped and burned the palms of his

hands. They rubbed their palms too" (Heinrichs 1994: 27).









Johnson's background also made him crude, culture-bound and

susceptible to prejudices. When television coverage of the starvation

in Biafra in early 1968 began to galvanize public opinion to intervene,

Johnson's lack of action drew sharp criticism from presidential

candidate Richard Nixon, and unfavorable commentary in the media. After

one particularly compelling television report was aired, Johnson

telephoned the under secretary of state for Africa and angrily ordered

him to send relief to "get those nigger babies off my TV set" (Morris

1977: 42).

Johnson's attitude toward Africa contrasted sharply with

Kennedy's. To Johnson, Africa was "the farthest corner of the world

. . the place to threaten to send indiscreet officials who drew his

ire." Unlike Kennedy who paid great attention to Africa and tried to

assist its economic development in hopes of helping democracy take root

there--an unpopular idea he tried and failed to force through a

recalcitrant foreign policy establishment--Johnson delegated as much

responsibility for African affairs to the State Department as possible

and urged the European powers to accept overall responsibility for the

continent. The administration wanted to avoid playing the role of "Mr.

Big" in Africa (Lyons 1994: 245, 248). Africa became "the last issue

considered, and the first aid budget cut" (Morris 1977: 17).

The Mann Doctrine and the "Big Lie"

Fully cognizant of his shortcomings in foreign affairs, Johnson

entrusted responsibility for foreign aid policy to a fellow Texan,

Thomas Mann. The Mann Doctrine, issued on March 18, 1964, pronounced

what was to be for the next seventeen years the "Big Lie" of the U.S.

foreign aid program.

The Mann Doctrine began mildly enough by stressing that foreign

aid should be for self help, not charity, a slogan Johnson liked and

used often. It committed AID to four strongly realist, conservative










objectives: economic growth, the protection of U.S. overseas

investments, opposition to Communism, and, most significantly,

nonintervention in the internal affairs of countries (Packenham 1973).

In one fell swoop this fourth point of the doctrine abandoned the

principle of a U.S. right to interference and sacrificed Kennedy's

support for democracy in favor of support for economic growth and

political stability (Tulchin 1994: 230). Politics was officially deemed

unimportant to development. The "Big Lie" was strongly supported by the

new national security advisor Walt Rostow when he took the position in

1965. The Mann Doctrine was fully consistent with Rostow's linear stage

theory of development, so central to the dominant paradigm.

Revolution, mutiny and union

Two months after Johnson succeeded Kennedy in office two events in

January 1964 focused attention squarely on Tanganyika and Zanzibar: the

revolution in Zanzibar and the mutiny a week later of the Tanganyikan

army. In the colonial era the military in Tanganyika was part of the

King's African Rifles. At independence it consisted of two battalions

and numbered about 2,000 men, British armed, British trained, and

British officered. Although Africanization of the civil service began

in 1962, it was not extended to the armed forces. By the end of 1963,

there was no Tanganyikan soldier above the rank of captain.

Dissatisfaction in the ranks grew.

When the Revolution broke out in Zanzibar, Nyerere ordered the

first batallion, stationed in Dar es Salaam, to leave their barracks and

move into the city in preparation for embarkment to support Karumbe.
f
Instead, inspired by the success of John Okello, on January 19 the first

batallion took control of the key points and communications in the city

and announced a coup d'etat. Nyerere fled into hiding. Looting and

violence against Indians broke out, and the mutiny spread to the second