WASHINGTON — A new report from the Center for American Progress calls for a radical overhaul of the U.S. security assistance program, including shifting roughly $7 billion in funding streams from the Pentagon to the State Department to ensure stronger, more cohesive oversight.

The report, from Max Bergmann and Alexandra Schmitt, argues that the current system of funding for foreign militaries is “dysfunctional and bifurcated,” and that the Biden administration should look to reset the relationship between the departments of State and Defense.

The current system is “both inefficient and ill-suited for the present foreign policy environment,” the authors write in the report, obtained first by Defense News. “The new era of great power competition and today’s threats of climate change, pandemics, and other nontraditional challenges demand a new and more integrated, agile, and wholistic approach” to U.S. efforts around the globe.

The report was published March 9.

The Center for American Progress was home to several national security-focused advisory teams for the Biden campaign, and has emerged as a more significant player since Biden’s election. Neera Tanden, who has led the organization since 2011, was Biden’s pick for budget chief before being unable to gather votes in the Senate, Kelly Magsamen, a CAP expert, is serving as Defense Secretary Lloyd Austin’s chief of staff.

Speaking to Defense News, Bergmann argued that no one “sat down 10 years ago and said this how we want to structure how the U.S. provides security assistance. Crises and problems developed around the world, and then there was a push to do something.”

The resulting structure is one where State funds are restricted to pots of money with little flexibility, whereas combatant commanders have more leeway to spread money around — while only having to focus on defense issues and not broader foreign relations topics such as human rights or economic goals.

“When you provide flexible resources to DoD and not the State Department, you make the Pentagon the interlocuter that foreign countries want to engage with,” said Bergmann, who worked at State from 2011 to 2017. “And that inevitably puts the Pentagon in the driver’s seat for U.S. foreign policy.”

The shifting of funds would come from two pots of money within the defense budget.

The first would come from the relatively-new Section 333 train and equip authority, which the authors argue is duplicative of State’s Foreign Military Financing (FMF) program — an overlap that’s privately been echoed by state officials since Section 333 was created.

The second would come from the Pentagon’s long-term development funds, including the Afghanistan Security Forces Fund, the Counter-Islamic State of Iraq and Syria (ISIS) Train and Equip Fund, and the Ukraine Security Assistance Initiative fund. Those dollars are recurring streams designed to help those specific countries build up their indigenous capabilities.

In the report, the authors are also critical of State’s setup, calling the status quo “not fixable” without major reforms. A top-down review of how to create more flexibility in all of State’s programs would have to go hand-in-hand with any reform efforts.

The shift would benefit overall U.S. goals, the authors argue, because it would provide greater, centralized oversight into how foreign arms financing is being used and how it fits into America’s broader geopolitical goals. This centralization would matter not just for the administration, but in Congress, where oversight of the programs would go from eight committees to just the four committees controlling State funding.

Getting Congress on board will be vital, and both authors acknowledged that on the Hill, it’s easier to flow funds to DoD than to State — and especially tricky to take money from the Pentagon and shift it to Foggy Bottom. Bergmann, however, said the start of the Biden administration, with a Secretary of State in Anthony Blinken who is extremely close to Biden, is the time to make the effort.

“We’re not talking about increased funding, just moving the location of where that funding is,” Bergmann said. “We’re talking ultimately about a bureaucratic shift. and while that oftentimes seems impossible, often just a little bit of political leadership can make changes like that happen very quickly.”

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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