During a Wednesday speech at the U.N.'s Millennium Development Goals Summit, U.S. President Barack Obama rolled out the results of his administration's long-delayed review of America's global development policy. The take-away was simple: The United States has to start being picky about how it distributes aid. Gone are the days when Washington can help everyone everywhere. As Obama declared, "We must be more selective and focus our efforts where we have the best partners and where we can have the greatest impact."

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Reform of U.S. foreign assistance programs is long overdue. Development efforts have been governed by a messy and often conflicting set of approaches -- the administration itself notes that government agencies are today pursuing over 1,000 different development goals, objectives, and priorities. Every Congress and administration for the last five decades has tacked on additional language to the 1961 Foreign Assistance Act and other regulations about what aid should look like. The increasing number of agencies now operating overseas has only added to the confusion.

The good news is that Obama gets it. The bad news is that all of this is much easier said than done.

Obama's plan is simple: Pick your countries, pick your priorities. Once America selects a country to focus on, its re-vamped aid system will focus on sustained economic growth, innovation and technology development, and country "ownership" -- that is, getting local input into figuring out what's most important and tailoring the aid specifically to the stated need. The policy requires the administration to update its global development strategy every four years. And the United States will work with other donors to hammer out a sensible division of labor on the plethora of global needs.

There is little to argue with in all of this, except for the fact that it will need some luck -- and a lot of vigilance -- to actually work. The central concept that aid dollars should only go to countries that will use them wisely, for one, is certain to add complications. The George W. Bush administration had in fact begun a limited-scale program based on this principle, the Millennium Challenge Corporation, which applies strict standards and a clear application process to potential recipients. But to this day, some of the top recipients of Washington's funds include countries in which reform remains an afterthought.

Beyond this basic roadblock, there are five main points of tension that could make the bright ideas in the new strategy highly difficult to realize:

Rhetoric versus Reality

Since taking office, both Obama and Secretary of State Hillary Clinton have repeatedly said they want to make the U.S. Agency for International Development (USAID) the "world's premier development agency." But their actions and the actions of the administration generally have people wondering if this is actually the case. The pace of political appointments at the agency has been nothing short of glacial; less than half of the senior political staff positions at USAID have been filled. The State Department, of which USAID is a part, has also resisted provisions that would give the aid agency a stronger voice at the policymaking table. And despite several efforts negotiated between State and the National Security Council to staff USAID more robustly, the agency remains firmly under State's purview. This is problematic because the diplomatic corps is notorious for wanting to use aid dollars to curry short-term favor and influence with host countries, rather than focusing on long-haul development efforts.

The true test of the limits of rhetoric will come when the administration faces the decision whether to help a country that's friendly but not reform-minded. The evidence so far doesn't bode well: Ethiopia and Rwanda, two important U.S. allies, are featured prominently in the administration's new Global Health Initiative -- despite a crescendo of complaints about human-rights violations in both countries.

The Division of Labor

Obama's new policy emphasizes a clear division of labor with other donors and multilateral institutions. But making this happen will be extraordinarily difficult. Developing countries have long complained that every different donor brings with it a variety of different requirements -- and reams of corresponding paperwork. Very little is said in the review about how this division of labor will take place and how donors will collectively reduce or unify the paperwork burden they place on aid-receiving countries. This isn't just about getting everyone to agree; some of the key multilateral agencies, such as the World Bank, are both quite slow in instituting programs and reluctant to impose standards related to good governance or human rights.

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