PRINCIPLED AGENTS IN AN AGENCY UNDER SIEGE:
U.S.A.I.D. AND ITS MISSION IN TANZANIA
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
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
TABLE OF CONTENTS
LIST OF TABLES ....................................................... vi
LIST OF FIGURES ....................................................... vii
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
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 .......
Staffing of AID ..........
Moving Money .............
AID and the Principal-Agent
Adverse Selection ........
Moral Hazard.......... ...............
Strong Culture Organizations ...........
Characteristics Which AID Does Not P
Characteristics Which AID Does Posse
The Role of Conflict in AID Policy Char
Intellectual Influences ................
The Structuration of AID in Nested Game
Why AID Will Survive ...................
ossess .................... 252
,ss ........................ 253
Lge ........................ 257
s ......................... 263
APPENDIX A .......................................................... 267
APPENDIX B .......................................................... 268
APPENDIX C. .............................. ............................ 270
LIST OF REFERENCES .................................................. 271
BIOGRAPHICAL SKETCH .....................................................284
LIST OF TABLES
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
New Spending Obligations, 1961-1994..
Support for Infrastructure...........
Support for Social Services..........
Support for Public Administration....
Support for Agriculture..............
Support for Finance ..................
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
Stephen L. Snook
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.
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
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
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.
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
I present a rival hypothesis that AID's behavior at the level of
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
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).
political environment over time. In Chapter 10 I present my
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
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
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
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
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
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
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
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
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
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.
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
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
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
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
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
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
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
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
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.
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.
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
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
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
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
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
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,
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
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
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
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
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.
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
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.
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
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
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
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
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
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,
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
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
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
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.
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
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.
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
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
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
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.
England's position changed from backing free trade to supporting
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
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
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
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
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
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
Tanganyika and the Great Rift Valley, and south of Lake Victoria, Mount
Kilimanjaro and the Serengeti Plains.
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
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
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
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,
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
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
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).
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
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
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
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
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.
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-
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
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,
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
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.
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