PUBLISHED BY THE AMERICAN FOREIGN SERVICE ASSOCIATION JANUARY-FEBRUARY 2019

ECONOMIC WORKS FROM GUITARS TO GOLD: TALES FROM THE FIELD

AFSA TAX GUIDE AFSA TAX GUIDE 2018

FOREIGN SERVICE January-February 2019 Volume 96, No. 1

Focus on Works

23 What Is Economic Diplomacy and How Does It Work? The U.S. Foreign Service is at the forefront of crafting policy and carrying out economic diplomacy to advance the strategic and security interests of the . By Tony Wayne 25 View from the E Family: Empowering Growth, Securing Our Future By Peter Haas, Judith Garber and Kent Logsdon 28 Economic Officers 35 for the Future Economic Diplomacy New appreciation for the centrality from the FSJ Archive of economics in foreign policy makes it an ideal time to throw light on the making of an economic officer. 36 COVER By Charles Ries From Guitars to Gold: 31 The Fruits of Economic

Diplomacy DECEMBER 2015 FSJ Six Elements of This selection of first-person Effective Economic/ accounts showcases the work Feature members of the Foreign Service Secretary of State Mike Pompeo do around the world every day to 56 Exchange Programs has made commercial diplomacy promote U.S. business. a foreign policy priority. Pay Off for Americans Here’s how to get it right. Exchange programs are a two-way street when it comes By Shaun Donnelly and to commerce and industry. Daniel Crocker By Marie Royce

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 5 FOREIGN SERVICE

Perspectives 100 Reflections Departments 7 The Way We Were—State and President’s Views the New Commercial Service 11 Letters Economic Diplomacy Works By Harrison Sherwood 14 Letters-Plus By Barbara Stephenson 16 Talking Points 10 89 In Memory Letter from the Editor In the Beginning, 92 Books There Was Econ Diplomacy By Shawn Dorman Marketplace 20 Speaking Out 102 95 Classifieds Improving the Local Lens 97 Real Estate Economic Career Track Uganda By Virginia Bennett By John Woynicki Jr. 99 Index to Advertisers

AFSA NEWS THE OFFICIAL RECORD OF THE AMERICAN FOREIGN SERVICE ASSOCIATION

59 Call for Nominations: 2019-2021 AFSA Governing Board 60 State VP Voice—Where Does the Econ Track Lead? 61 USAID VP Voice—USAID’s Economic Diplomacy Makes a Difference for U.S. Economic Growth 62 FAS VP Voice—Feeding the World through Economic Diplomacy 63 AFSA on the Hill—Showing the New Congress that Economic Diplomacy Works 63 Getting the Most Out of Your Social Security 67 66 AFSA Dues Change for 2019 66 Accepting Nominations for Sinclaire Language Award 67 USAID VP Participates in Blacks in Government Panel 68 67 Governing Board Meeting, November 2018 68 2018 AFSA Tax Guide

On the Cover—A sampling of FSJ covers featuring economic/commercial diplomacy through the years, starting with the very first Journal. Design by Caryn Suko Smith, Driven by Design, LLC.

6 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL PRESIDENT’S VIEWS

Economic Diplomacy Works

BY BARBARA STEPHENSON

s we at AFSA were pulling AFSA’s ongoing work with congressional together this special double champions stands directly on the shoulders edition of The Foreign Service of the work you, members of the Foreign A Journal highlighting eco- nomic diplomacy, Service, do all around the world. devoted its Nov. 23 editorial to “the basic understanding that has worked to America’s advantage since World War unattractive. And, as a first-tour what I could do under the rubric of the II,” under leadership from both politi- economic officer in , I helped policy guidance provided in that cable: cal parties: “Those leaders all accepted establish the rules to protect intellectual “Promoting broad-based, responsible, that, with less than 5 percent of global property and then saw the fruits of that and sustainable economic growth helps population but more than 20 percent of effort—including Panamanian owner- to stabilize regions and creates new and the global economy, the United States, ship of the resulting legal framework, growing markets for U.S. companies. A more than any other nation, depends which protected their intellectual prop- transparent and level playing field for on and benefits from predictable rules. erty as well as ours—20 years later when U.S. investment in these countries coun- It needs a world where business execu- I returned as . ters real and growing challenges such as tives can go forth and come home with- I suspect that many members of ’s Belt and Road initiative.” out fear of kidnapping, where ships can the Foreign Service can say the same When members of Congress visit ply the ocean without armed escorts, thing—that, whatever your cone or your post, I urge you to be prepared to where contracts are honored and dis- specialty, your work on behalf of our tell them what you and your colleagues putes fairly adjudicated.” country has established rules, removed are doing to help American companies Elements of this editorial could obstacles and opened markets so compete—and win. If you find, as I have have been lifted directly from my work American businesses can compete on a so often found, that the you requirements as a U.S. Foreign Service reasonably level playing field and thrive have to work with comes in significant officer over the decades. One of my around the world. measure from the positive impression overarching goals as ambassador to I was delighted to see the related made by American companies—maybe Panama was ensuring that the Panama cable that went out in early November because they are known for treating Canal remains open to world com- to all diplomatic and consular posts—18 their workers fairly and promoting on merce, so that ships can ply the oceans. STATE 112364, “Boosting Commer- merit, maybe because they inspire awe I also devoted considerable time and cial Diplomacy Around the World.” with their problem solving and project country team energy to resolving the The ALDAC, which makes clear that management—be sure to mention that kidnapping of an Secretary Pompeo has made commer- to visiting CODELS as well. American busi- cial diplomacy a foreign policy priority, When American businesses thrive ness executive in provides practical tips to strengthen our overseas, it not only means greater a way that made ability as a country to support U.S. busi- prosperity at home, it also often directly the prospect of ness interests (see excerpt on p. 33). boosts American global leadership by holding another If I were looking today for a way to tie reminding people abroad what they American citizen my work requirements statement to a key most admire about our country. We for ransom very U.S. foreign policy priority, I would see know how to get things done.

Ambassador Barbara Stephenson is the president of the American Foreign Service Association.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 7 When members of Congress directly Diplomacy Center. The associate the great work of the Foreign very first edition of the Service overseas with prosperity here FSJ, then called Ameri- at home, it helps them justify providing can Consular Bulletin, is the funding and authorities needed to filled with articles about put a full Foreign Service team on the practical steps to enable field, to cover every base, to win the commerce, from the role game. Kim Greenplate, AFSA’s director of consular officers in of advocacy, devotes her column this paying advance wages month (see page 63) to “Showing the to seamen working on New Congress that Economic Diplo- American vessels in macy Works.” foreign ports, to proper As the Foreign Service seeks to postage for trade rebuild in the wake of recent hiring letters. The letter from freezes as well as a decade-long decline the editor explains that in funding for core diplomacy, we need “the Consular Service vigorous support from Congress. With was organized by our rising competition from China and Government for the other countries, we need that support purpose of furthering urgently, to avoid ceding yet more the interests of American ground. businesses abroad.” AFSA’s ongoing work with congres- I share this as a sional champions stands directly on the reminder that this— shoulders of the work you, members of Foreign Service support The firstForeign Service Journal. the Foreign Service, do all around the for American business— world. I encourage you to polish your is not some new-fangled thing. Nor is new luxury hotel in China, the audience own stories of success (or even failure, it ancillary. It is foundational to our at the San Francisco Commonwealth which can be equally instructive), so purpose. It is a major reason why the Club immediately saw how our global you can share them with members of U.S. Foreign Service was created, why network of embassies delivers for local Congress when they visit your post. we exist. business—and they grasped also my And please read the Economic In my AFSA role as the “voice of the further point that the resulting display Diplomacy Works stories in this collec- Foreign Service,” I have spent a fair bit of American design excellence boosts tion for inspiration and practical tips on of time on the road telling the proud our country’s image with everyone who doing your own job better. If you are in story of the Foreign Service to Ameri- sees it. Washington, please join us for the Eco- cans all over this great country of ours. When we in the Foreign Service nomic Diplomacy Works panel AFSA is One part of our story that I know reso- make this mission—helping American hosting with the U.S. Diplomacy Center nates is what we do to increase prosper- businesses compete and win—a prior- at noon on Jan. 15. And watch AFSA’s ity at home. When I explained how the ity, we help build a domestic con- daily media digest for links to “Ameri- Foreign Service worked to open markets stituency, and we shore up bipartisan can ” podcasts on the theme of overseas for American-grown soy, the support in Congress for an adequately economic diplomacy. audience at Farm Fest in southern Min- funded Foreign Service. We also directly In March we will mark the 100th nesota immediately grasped that what and concretely bolster America’s global anniversary of The Foreign Service Jour- we do matters to them. leadership by refusing to cede the nal. We’ve been reviewing our FSJ digi- When I explained how the Foreign game—a game whose rules the United tal archives in preparation for a centen- Service helped a local firm get a stun- States wrote—to rivals and adversar- nial exhibit in partnership with the U.S. ning glass sculpture into the lobby of a ies. n

8 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL FOREIGN SERVICE

Editor in Chief, Director of Publications Shawn Dorman: [email protected] www.afsa.org Managing Editor Susan Brady Maitra: [email protected]

Associate Editor CONTACTS Donna Gorman: [email protected] AFSA Headquarters: ADVOCACY Publications Coordinator (202) 338-4045; Fax (202) 338-6820 Director of Advocacy Dmitry Filipoff: [email protected] State Department AFSA Office: Kim Greenplate: [email protected] (202) 647-8160; Fax (202) 647-0265 Advertising Manager USAID AFSA Office: BUSINESS DEPARTMENT Allan Saunders: [email protected] (202) 712-1941; Fax (202) 216-3710 Director of Finance and Facilities Art Director FCS AFSA Office: Femi Oshobukola: [email protected] Caryn Suko Smith (202) 482-9088; Fax (202) 482-9087 Controller Kalpna Srimal: [email protected] Editorial Board GOVERNING BOARD Controller, Accounts Payable and Alexis Ludwig, Chair President Administration James “Jim” Bever Hon. Barbara Stephenson: Cory Nishi: [email protected] Fred Boll [email protected] Angela Bond Administrative Assistant and Office Manager Secretary M. Allyn Brooks-LaSure Ana Lopez: [email protected] Karen Brown Cleveland Hon. Tom Boyatt: [email protected] Scholarships and Events Coordinator Shawn Kobb Treasurer Theo Horn: [email protected] Harry Kopp Hon. Earl Anthony “To ny ” Wayne: John G. Rendeiro Jr. [email protected] COMMUNICATIONS AND MEMBERSHIP Priyadarshi “Pri” Sen State Vice President Director of Communications and Membership Dinah Zeltser-Winant Ken Kero-Mentz: [email protected] Ásgeir Sigfússon: [email protected] USAID Vice President Communications and Marketing Manager Jeff Levine: [email protected] THE MAGAZINE FOR FOREIGN AFFAIRS Allan Saunders: [email protected] FCS Vice President PROFESSIONALS Manager, Retiree Outreach and Engagement The Foreign Service Journal (ISSN 0146-3543), Daniel Crocker: [email protected] Christine Miele: [email protected] 2101 E Street NW, Washington, D.C. 20037-2990 is FAS Vice President Online Communications Manager published monthly, with combined January-February Kimberly Svec Sawatzki: [email protected] Jeff Lau: [email protected] and July-August issues, by the American Foreign Service Retiree Vice President Association (AFSA), a private, nonprofit organization. Member Accounts Specialist Material appearing herein represents the opinions of the John K. Naland: [email protected] Ashley Dunn: [email protected] writers and does not necessarily represent the views of State Representatives Awards Coordinator the Journal, the Editorial Board or AFSA. Writer queries Karen Brown Cleveland and submissions are invited, preferably by email. The Perri Green: [email protected] Journal is not responsible for unsolicited manuscripts, Don Jacobson Retirement Benefits Counselor photos or illustrations. Advertising inquiries are invited. Deborah Mennuti Dolores Brown: [email protected] All advertising is subject to the publisher’s approval. Roy Perrin AFSA reserves the right to reject advertising that is not Lillian Wahl-Tuco in keeping with its standards and objectives. The appear- LABOR MANAGEMENT ance of advertisements herein does not imply endorse- USAID Representative General Counsel ment of goods or services offered. Opinions expressed in William C. Hansen Sharon Papp: [email protected] advertisements are the views of the advertisers and do FCS Alternate Representative not necessarily represent AFSA views or policy. Journal Deputy General Counsel subscription: AFSA member–$20, included in annual Lola Gulomova Raeka Safai: [email protected] dues; student–$30; others–$50; Single issue–$4.50. FAS Alternate Representative Senior Staff Attorneys For foreign surface mail, add $18 per year; foreign airmail, Thom Wright Zlatana Badrich: [email protected] $36 per year. Periodical postage paid at Washington, D.C., BBG Representative and at additional mailing offices. Indexed by the Public Neera Parikh: [email protected] Steve Herman Affairs Information Services (PAIS). Labor Management Counselor APHIS Representative Colleen Fallon-Lenaghan: Email: [email protected] Jeffery Austin [email protected] Phone: (202) 338-4045 Retiree Representatives Senior Labor Management Advisor Fax: (202) 338-8244 Hon. Alphonse ‘Al’ La Porta James Yorke: [email protected] Web: www.afsa.org/fsj Philip A. Shull Labor Management Coordinator © American Foreign Service Association, 2019 Patrick Bradley: [email protected] STAFF PRINTED IN THE U.S.A. Grievance Counselors Chief Operating Officer Heather Townsend: [email protected] Postmaster: Send address changes to Russ Capps: [email protected] Labor Management Advisor AFSA, Attn: Address Change Executive Assistant to the President Michael R. Wallace: [email protected] 2101 E Street NW Jennie Orloff: [email protected] Washington DC 20037-2990 Law Clerk Office Coordinator Benjamin Phillips: [email protected] Therese Thomas: [email protected] Staff Assistant PROFESSIONAL POLICY ISSUES Allysa Reimer: [email protected] Director of Professional Policy Issues Julie Nutter: [email protected]

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 9 LETTER FROM THE EDITOR

In the Beginning, There Was Econ Diplomacy

BY SHAWN DORMAN

elcome to 2019 and to the international economists in “Economic Tax Guide, which will help you navigate January-February edition Officers for the Future.” And what do you what’s new for Foreign Service taxpay- of The Foreign Service Jour- think? Are great economic officers politi- ers. In addition, please see the Call for Wnal, in which we examine cal officers first? Nominations for the 2019-2021 AFSA economic diplomacy from many angles— FCS Officer Daniel Crocker and Governing Board, and consider giving and from all over the world. Ambassador (ret.) Shaun Donnelly (now back to your profession by running for an This is a unique issue, in that it ties at the U.S. Council for International AFSA position. in closely with AFSA’s priority Economic Business) offer six practical—some might As we were wrapping up this issue, Diplomacy Works initiative and aims to say “actionable”—elements of effective President George H.W. Bush passed away. bring it all together under one roof, one economic/commercial diplomacy. Throughout his life—as a member of Con- cover. Ambassador Barbara Stephenson Then we come to the up close and gress, ambassador to the United Nations spells out the initiative in her President’s personal tales of economic diplomacy at and U.S. representative to the People’s Views column. work in “From Guitars to Gold: The Fruits Republic of China, and as CIA director, Ambassador (ret.) Tony Wayne opens of Economic Diplomacy.” I regret that we vice president and president, and well the focus section with an overview, “What could not include all the submissions we into his 90s—he crossed paths with and Is Economic Diplomacy and How Does It received, but the 13 selected cover a lot of left an impression on so many in the Work?” We get the “View from the E Fam- fertile ground. diplomatic community. It is his dedica- ily: Empowering Growth, Securing Our Assistant Secretary for Educational tion to public service and his civility that Future” in a message from Peter Haas, and Cultural Affairs Marie Royce tells how resonate so strongly today. Judith Garber and Kent Logsdon, the exchange programs pay off for Americans We plan to publish a collection of FS three principal deputy assistant secre- and serve economic diplomacy goals. memories of the former president and taries leading the bureaus of the Under Excerpts from the FSJ archive show would welcome your input. Please email Secretary for Economic Growth, Energy that the U.S. Foreign Service has been your contribution—a short anecdote (up and the Environment. focused on economic diplomacy from to 400 words) and/or a high-resolution The Speaking Out column by recently the beginning—we chose examples from photo of a note from him that you cherish retired Economic Officer Virginia Ben- 1919, 1942, 1971 and 2005, including a and think is appropriate to share—by nett, “Improving the Economic Career remarkable org chart from the first page Jan. 10 to [email protected] (subject line: Track,” is an insider’s look at the chal- of the very first edition of the Journal. The George H.W. Bush Memories). lenges faced by economic-coned officers top box in the chart says “American Busi- Finally, the Journal is seeking a competing for promotion and seeking a ness,” and all Foreign Service work flows dynamic, super-organized magazine viable career path. from there! production manager and professional Ambassador (ret.) Charlie Ries, who Please do peruse that inaugural editor familiar with the Foreign Service worked on economic issues for State for Journal by going to the FSJ digital archive for a new position of Managing Editor. more than 30 years at www.afsa.org/fsj-archive, newly (Current Managing Editor Susan Maitra and is now a vice upgraded with an archive-only search will become our Senior Editor.) Check the president at the RAND function. I challenge anyone to open AFSA website (www.afsa.org/jobs-afsa) Corporation, helps one old FSJ and not find themselves still for the announcement; apply by Jan. 14. distinguish between exploring hours, days later. Thanks for reading. Please keep in economic officers and AFSA News includes the 2018 AFSA touch and continue the conversation by responding to what you read in this and Shawn Dorman is the editor of The Foreign Service Journal. other issues of the Journal. n

10 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL LETTERS

Place-Based Strategy hand-wringing to answer the questions Is the Future of the Foreign Service?” Works she poses. She employs the regular shibbo- Which is the unfortunate thing about Thanks to the Journal and to Jim leths about appealing to State employees’ Amb. Bodine’s article. Nealon for his October article, “The ‘Place- pride and sense of sacrifice, while remind- Morgan Liddick Based’ Strategy in Honduras,” suggesting ing them to behave. She could have saved FSO, retired a reasonable—and both herself and her readers valuable time Stuarts Draft, Virginia ultimately the with a briefer and more relevant list: only—way to solve 1. Cultivate applications from state Chronic Medical Honduras’ and universities as well as Harvard and the Conditions and the FS other Central Walsh School, because talent comes from As FSJ readers are aware, chronic American coun- everywhere. It may even be that graduates medical issues can be difficult to com- tries’ crime/drug from places where people grow stuff and bine with a Foreign Service commit- problems, reduc- make things better represent the average ment, which comes with the “worldwide ing their emigra- American than those from Ivy League availability” obligation and medical tion situation schools, or legacy appointees. clearance requirement. and eliminating 2. Don’t just tell junior officers they are I was struck by Barbara Bodine’s the ugly border crises facing both valued; show them. Regular and extensive thoughtful piece in the September Jour- and the United States. training as part of a logical career path that nal (“Who Is the Future of the Foreign Increasing funding and effective man- moves officers along clear lines of Service?”), which, despite its laudable agement of a well-designed USAID pro- specific developing expertise and inclusiveness, made no men- gram would be money much better spent greater authority would do this. tion of medically challenged than increasing our border control forces 3. Don’t lie. FSOs are not persons, those with disabili- and building fences. I hope you might dis- stupid. They clearly and quickly ties, or more senior persons seminate Jim’s message to all members of see that the “needs of the who work at State. Congress. They should be interested. Service” that shuttle many State has yet to deal openly Jon W. Stewart among the sticky places with these aspects of its person- USIA FSO, retired on earth are the same that nel system. Persons who become Bothell, Washington move a favored few of their chronically ill are expected to colleagues from Berlin to quietly resign from their careers, Change the FS, Paris to London. while persons with physical dis- Change the Future 4. Since the Foreign Service involves abilities are not recruited as Foreign I read with interest Ambassador work abroad, service in Washington, D.C., Service officers and not part of America’s Barbara Bodine’s article in the September should be brief and occasional. Foreign diversity of talent deployed abroad. issue of The Foreign Service Journal, asking assignments should be key to promotions. While consideration of these aspects of questions that appear like clockwork every Service in hardship posts should receive human resources (HR) policy may run up few years. How does the Foreign Service real, not just theoretical, consideration. against privacy issues, they remain valid find the best? How does it keep them? She These changes would require no concerns for State. With recent advances followed that with an impassioned argu- structural adjustments, no new bureaus, in pharmaceuticals and medical treat- ment for the status quo. no radical departures. In at least three ment, illnesses such as diabetes, heart “Who Is the Future of the Foreign Ser- instances, they simply require that the disease, cancer, Parkinson’s, multiple vice?” Look at the seventh floor at State. reality of the department’s treatment of sclerosis and other ailments are becoming It’s a self-selecting system, so that’s what FSOs conform more closely to its rhetoric. lifetime health management issues, not it will look like until the cows come home. But since the extant crop of soon-to-be death sentences. “Who Should Be the Future of the Foreign leaders at State have invested far too much Given the aging population of the Service?” might have been more useful. time and effort in the current system, I United States, working life spans are Amb. Bodine goes through familiar look forward to the next iteration of “Who lengthening and more people are opting

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 11 to work longer before retirement. Further, I am now in my third with Hitler, Mussolini and Ataturk. our intellectual capital is shifting up the month here, undergoing When my husband and I were demographic ladder, and capturing this both diabetic analysis posted to Budapest, Madeleine talent will entail re-engaging senior work- and, soon, my fifth sur- related how her husband secured ers. State’s re-employed annuitant (REA/ gery (amputations included) the job of military attaché there in WAE) program already acknowledges this fighting against an aggressive diabetic 1953 by demonstrating to the ambassador reality. infection. his ability to make a proper martini. A deeper issue is whether our country Although all my doctors have agreed Madeleine also recounted playing is willing to be represented overseas by that my situation is a direct result of my bridge with two Hungarian journalists its full diversity of talent, including those 30-plus years as a Type 1 diabetic, they the night before they were arrested for with functional disabilities. Is a mobility- also agree that by consistently focus- espionage in 1955 during the harshly impaired cultural affairs officer any less ing first and foremost on securing and repressive regime of Mátyás Rákosi. In an effective than one who walks well? Is an advancing the best interests of the United effort to divert the couple’s children, Mad- economic officer who meets contacts at States while leaving the care of my dia- eleine went sledding with their 6-year-old accessible venues necessarily less pro- betes as a distant (and often neglected) daughter Kati Marton—who later became motable than others in her or his class? second priority, I constructed my own a journalist and author, and the wife of Clearly, ability to do the job should be medical dilemma. I hope active-duty Richard Holbrooke. of paramount importance, but I believe Foreign Service members will take note Madeleine could tell a story and mix a that unfair presumptions about that still of this. martini with the best of them. dominate HR decisions. State risks losing While my immediate future here is not Beatrice Camp talent and diversity by de facto limiting its yet clear, no matter my situation, being a FSO, retired vision of who is a competent representa- member of the U.S. Foreign Service has Arlington, Virginia tive of the United States abroad. always been my top concern. Much more When I tried to initiate a support than a job, it was a calling. Answering Happy 100th Birthday, group for people with Parkinson’s disease that call, from the recruit level up to and George Vest at State, I had little support from the across the threshold to the Senior Foreign Ambassador George Vest turned 100 Bureau of Medical Services and little Service, was never easy. But it was the on Christmas Day 2018. I recently spent response from colleagues—largely due to greatest 33-year odyssey I could have ever time with him and share here a few the unspoken fear that admitting to medi- dreamed of. thoughts on the man I like to call “Mr. cal issues is career suicide. Good luck to AFSA in nurturing many Foreign Service.” I hope we can start to discuss these more national security odysseys in the George Vest joined the Foreign Service issues out loud. future. in 1947 and achieved the rank of Career Paul Rohrlich Timothy C. Lawson Ambassador in 1987. His mind is as sharp FSO, retired Senior FSO, retired today as ever. He still lives in his old house Falls Church, Virginia Bangkok, in Bethesda; his lovely wife, Emily, died in August 2015. Health and Gratitude Coming into Their Own His was an illustrious career. After I enjoyed reading the Thanksgiv- Thank you for Francesca Huemer graduating from the University of Virginia ing email from AFSA President Barbara Kelly’s article “Coming into Their Own in 1941 and entering the Army, Capt. Vest Stephenson. It was an important message ‘Write’—A Look Back at an FS Women’s took part in the North African campaign of gratitude for all members during this Writers’ Group” in the November issue. as an artillery observer. In 1947, he joined holiday season, and spoke loudly about I was especially happy to see mention of the Foreign Service and was sent to Ham- the growing health of the AFSA organiza- Madeleine Meyer, who remains vivid in ilton, Bermuda, where, among the British, tion for the future. our memories. The quote about Madeleine he said it was the only time he ever wore I write from my hospital bed at the meeting Mother Teresa complemented “the proverbial striped pants.” Bangkok Hospital in Hua Hin, Thailand. stories she told us about her encounters His next tour was as political officer

12 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL at Embassy Ottawa, followed by a stint become Department of State spokesman. , not political appointees. as Canada desk officer. In 1959, Vest was After that tour ended, George was named Following in the footsteps of Loy named political adviser to the supreme assistant secretary for European affairs at Henderson, Roy Atherton and many oth- allied commander, , General Lauris the request of Secretary of State George ers, George Vest richly deserves the title Norstad, in Paris. He then moved, still in Shultz, who asked President Ronald Rea- of “Mr. Foreign Service.” We remember Paris, to be the top aide to NATO Execu- gan later to name him ambassador to the him fondly, and wish him a Happy 100th tive Secretary Lord Richard Coleridge European Communities. Birthday! from 1961 to 1963. In 1985, George Vest became Director Alan Lukens This was followed by a year at the General of the Foreign Service. He regret- Ambassador, retired Naval War College in Newport, after ted that he could not stop the onslaught Chevy Chase, which he became deputy director of the of political appointee ambassadors of Political/Military Bureau. both parties who took good jobs from CORRECTION In 1967, George moved to Brussels to FSOs. He called this “a disease” that nei- In the October In Memory, we inad- become (DCM) ther party could seem to control. vertently identified Willard “Bill” De Pree to the European Community Office. In George Vest continued a custom, long as William. We apologize for this error. 1969 he moved to be DCM of the NATO since forgotten, of hosting retirement cer- He was beloved in the AFSA community, Delegation, still in Brussels. emonies for chiefs of mission, handing making the error especially embarrass- Following that tour, Secretary of them a flag and a glass of champagne. He ing. His name was spelled correctly in the State Henry Kissinger called him back to did this only for career Foreign Service Appreciation in the same issue (p. 52). n

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 13 LETTERS-PLUS

Response— Beyond Oldthink on Diversity BY STEVE WALKER, DEPUTY ASSISTANT SECRETARY, BUREAU OF HUMAN RESOURCES, U.S. DEPARTMENT OF STATE

etired FSO Richard W. Hoover Diversity and inclusion—the intentional clearly cares deeply about the effort to attract, recruit, retain and sustain Foreign Service as an institu- a highly skilled, diverse workforce—is in and different perspectives to inform our Rtion, but his comments about good part about ensuring that all depart- thinking as we grapple with diplomatic diversity (FSJ, November 2018, Let- ment employees feel welcomed and challenges. ters) reflect outdated assumptions and valued. It’s taking care of the team. Here are some quick practical exam- misperceptions. The idea that “diversity” I completely agree with Mr. Hoover ples off the top of my head to answer Mr. is quotas that sacrifice professional qual- that we should never compromise on Hoover’s question: ity for demographic correctness is Diver- or lose “Foreign Service essentials” • Having LGBT employees or employ- sity Oldthink. So, for that matter, is the (patriotism, intelligence, knowledge and ees with disabilities as part of post’s assertion that the State Department isn’t character). Diversity/inclusion and high political section would likely enhance an serious about diversity and inclusion, professional standards are not mutually embassy’s human rights efforts, because and that nothing has changed because exclusive. their experiences would provide insights our efforts have been inadequate. Mr. Hoover should see our newest on what would be the most effective In fact, over the last several years the Foreign Service generalists and special- approach. department has made significant prog- ists, with whom I’ve had the privilege of • During a political section discussion ress on diversity and inclusion. These interacting. They are awesome. Truly. of host-country center-periphery issues, are not a “program,” but rather a cultural After seeing their enthusiasm, commit- the views of an officer born and raised value that manifests itself in a number of ment and intelligence firsthand, you in rural Appalachia or a small town in reinforcing efforts to create a workplace would walk away, as I have, confident Montana might provide insights that in which all employees feel valued and that the Service’s future is in good hands. would supplement those of officers born, have the same opportunity to succeed in Mr. Hoover asks: What exactly does raised and educated in cosmopolitan advancing the president’s foreign policy diversity bring to the table in terms of urban areas. agenda. achieving optimal foreign policy for- • In countries where it is difficult Through our Diplomats in Residence mulation and execution? A lot, actually. for men to interact with women, hav- program and other efforts, we deliber- Having different perspectives enhances ing female officers enables the embassy ately recruit to assemble the most highly problem-solving; there are organizational to have a broader talented and highly diverse pool of studies that show that the more diverse (PD) reach and to get a fuller and more candidates possible so that we can hire work teams are and the more inclusive accurate understanding of political and based on merit (as specifically required a corporate culture is, the happier and economic dynamics. Female commer- by the Foreign Service Act) a workforce more productive these teams will be. cial officers could potentially tap into that reflects America. We are proud of More specifically, in the diplomatic neglected markets that could result in these efforts. context, in addition to doing outstanding wins for U.S. companies. But our broader goal is to realize the work generally, officers from underrepre- • Employees who operate in a work- results-producing collaboration envi- sented groups strengthen our diplomatic place of civility and respect can devote sioned by the Secretary of State’s “One toolkit. Because we have an increasingly their time and energy to achieving U.S. Team, One Mission, One Future” vision. diverse workforce, we have additional objectives rather than dealing with

14 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL energy-draining and mission-eroding potentially different points of view that scious bias and seeking to eradicate prejudice or sexual harassment. make such engagement more authentic sexual harassment—we aim to ensure • Entry-level officers who are “digital and thus more effective at confronting that all employees feel included and natives” may have insights more senior anti-U.S. propaganda. empowered to contribute to our mission. supervisors do not that could have • Diversity and inclusion are how we One team, one mission, one future. An significant benefits, for example, for eco- walk the talk of American values. Female inviting, inclusive workplace is a rising nomic sections that deal with technol- FSOs publicly representing U.S. policy in tide that lifts all boats. n ogy sectors and products, or for political male-dominated societies or a chief of and PD sections seeking to address the mission with a same-sex spouse can be “youth bulge” in some countries. More a powerful symbol of American values. I experienced officers may have a broader recall the powerful statement President historical context and deeper institu- Ronald Reagan made when he appointed tional knowledge that would be useful for an African-American ambassador to junior colleagues seeking to understand South Africa during the apartheid era. Share your thoughts and respond to developments in their The bottom line: “Diversity” is for and about this month’s issue. host countries. about all employees, not a particular Submit letters • Engagement on human rights by demographic group or groups. Through to the editor: employees of color enhances these energetic and intentional diversity and [email protected] efforts by providing additional and inclusion efforts—e.g., by fighting uncon-

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 15 TALKING POINTS

H.R.7153—Championing Commerce’s Country Commercial Guide The bill also emphasizes the need to American Businesses to create one annual, country-specific train our diplomats on matters of com- Through Diplomacy Act guide focused on critical information mercial diplomacy. n Nov. 16, Representative Michael companies rely on when assessing OMcCaul (R-Texas) and Representa- whether to do business in a particular City of Sues tive David Schweikert (R-Ariz.) intro- country. Trump Administration duced the Championing American Busi- The bill would also require all embas- n Nov. 28 the City of Baltimore filed nesses Through Diplomacy Act of 2018. sies to submit an annual report to the Osuit against the Trump adminis- The new law, which will likely have to State Department detailing the specific tration in the U.S. District Court for the be reintroduced for consideration in the actions they took in the year prior to help District of Maryland, claiming that the 116th Congress, would support economic businesses achieve market access and administration secretly changed the and commercial diplomacy by codify- assessing levels of private-sector com- State Department’s definition of “public ing the position of assistant secretary of mercial competition from other strategic charge,” a provision in immigration law State for economic and business affairs, competitor nations. The Secretary of that limits who can immigrate to the responsible for matters pertaining to State would then be required to prepare United States. international economic and business a report for Congress on general com- According to the suit, the administra- matters in the conduct of foreign policy. mercial diplomacy trends, as well as tion recently began enforcing changes It would also require combining the assessments of commercial activity that it made to the Foreign Affairs Manual in Department of State’s Investment Cli- could threaten U.S. national security in January 2018, making it harder for immi- mate Statement with the Department of strategic areas. grants to reunite with their families by barring potential immigrants if they have ever used federal, state or local assistance SITE OF THE MONTH: WWW.LETSGOBAGS.COM programs “of any kind,” including school lunches and public vaccination programs. ou know you need a go bag. They’ve been The Baltimore City Solicitor and the Ytelling you this at every post arrival briefing nonprofit organization For- since you joined the Foreign Service. But do you ward teamed up to bring the suit, claim- have one yet? ing the change hurts Baltimore’s large It’s a daunting task, pulling together all the immigrant community and is a violation pieces you might need for some future unspec- of federal law. ified emergency, and it’s a task that’s easy to neglect when you’re constantly bidding and packing and moving and unpacking. That’s Ambassador Tracker: where Let’s Go! Bags comes in. Recent Trends Started by Richard Miles, a Foreign Service family member currently based ecretary of State Mike Pompeo’s in Gaborone, letsgobags.com offers curated suggestions and checklists SState Department is rapidly sending for what to put in your own go bag, sometimes called a “Bug Out Bag.” The forward nominees for ambassadorships. “Go!Bag” motto is “go fast—stay safe.” Since July 1, 48 nominations have been The site offers pre-built kits, as well as options to design your own bag using announced. These include nominees an assortment of products that Miles has researched and road-tested. Speak- for long-vacant positions in countries ing of roads, he’s also got suggestions for your car kit, your first kit, and even ranging from Ireland and Saudi Arabia to a pet kit. The site brings in a bit of revenue through Amazon affiliate links. and Qatar. Of those nominees, We feature this website not to promote particular products but to let read- 36—or 75 percent—are career members ers know about a useful resource for suggestions on what you need to have on of the Foreign Service. hand when you have to be ready to go. However, the Senate has slowed No more excuses. It’s time to finally put that go bag together. significantly in its processing and con- firmation of nominations. Since July 1,

16 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL only 15 ambassador nominations have These include assistant secretaries for the cent, are career members of the Foreign been confirmed, including nominees for Bureaus of East Asia and the Pacific and Service, while 63, or 48.5 percent, are Somalia, Moldova, and Suriname. Political-Military Affairs, the Director political appointees. The long-awaited Currently, 53 ambassador nominations General of the Foreign Service and three hearing for Carol Perez, picked to be are awaiting action. USAID assistant administrator positions. the new Director General, was held on At press time, AFSA was tracking a Confirmations have similarly slowed Dec. 4. There was no vote at the time of total of 32 ambassador vacancies. Vacant, to a trickle on this front, however, with this writing. in this instance, means that no one has only five of the nominees confirmed As is customary, AFSA expects the been nominated or confirmed for the since July 1. AFSA is tracking 18 senior Senate to confirm all noncontroversial position of ambassador and the previous nominations that the Senate has yet to nominations—including most, if not all, incumbent has left post. act on. career FS nominations—before the end Nominees for various senior posts at Through November 2018, the Trump of the 115th Congress, so these statistics State and USAID also continue to come administration has nominated 130 should improve after this issue has gone forward, with 11 nominations since July 1. ambassadors. Sixty-seven, or 51.5 per- to press.

Our diplomatic personnel on the ground in Heard on the Hill Petty Officer First Class Glen “Bub” Doherty these countries have unique insights on their and Senior Chief Petty Officer Tyrone Woods political and economic complexities. We must were Navy SEALS doing what they loved, do more to use this information to help the serving as security personnel in and private sector do business abroad and support working to protect U.S. diplomats. Ambassa- U.S. foreign policy in upholding global stability. dor J. Christopher Stevens and Staff Sergeant —Rep. Michael McCaul (R-Texas), in a Nov. 26 Sean Smith combined for 31 years of service press release regarding the Championing Ameri- with the U.S. State Department. In honor of can Businesses Through Diplomacy Act of 2018. the memory of these four brave men killed during those fateful 13 hours in Benghazi,

It’s critical we protect our frontline civilians JOSH our bill formally recognizes them with the who serve in the most dangerous corners of our world. This Congressional Gold Medal for their heroism and dedication includes adapting to new technologies that compromise to our country. security and ensuring that the State Department works to —Facebook post from Rep. Brian Mast (R-Fla.) specifically address vulnerabilities exposed through location- on Nov. 21, 2018. tracking consumer devices. I’m glad to see the Senate Foreign Relations Committee voted in favor of the Protecting Diplomats We have lost so many lives and expended so much on con- from Surveillance Through Consumer Devices Act today, and flicts that don’t seem to ever get resolved. Addressing fragility hope to see it sent to the president’s desk soon. Today’s passage brings us closer to the root causes of these conflicts and we brings us one step closer to comprehensively protecting those owe it to our servicemen and women, to members of our who risk their lives in service to our nation. Foreign Service, and to the American people to do that. Time —Representative Joaquin Castro (D-Texas), member of the and again, our research has shown that focusing on fragility House Foreign Affairs Committee and House Permanent will be a much more effective way of creating more sustain- Select Committee on Intelligence, and First Vice Chair of the able peace and security around the world. Congressional Hispanic Caucus, in press release on Nov. 28, 2018. —Rep. Bill Keating (D-Mass.), ranking member of the Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade and Co-Chair of the Congressional Counterterrorism Caucus, regarding the House’s passage of the Global Fragility and Violence Reduction Act on Nov. 27, 2018.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 17 Canadian Diplomats Speak Out on “Havana Contemporary Quote Syndrome” Climate change is running faster than we are and we must catch up group of Canadian diplomats is sooner rather than later, before it is too late. For many people, regions, Aspeaking out about the mysterious even countries, this is already a matter of life and death. It is hard to overstate illness that struck them in Cuba. the urgency of our situation. Even as we witness devastating climate impacts A dozen embassy staff members and causing havoc across the world, we are still not doing enough, nor moving fast their children—about a third of Canada’s enough, to prevent irreversible and catastrophic climate disruption. embassy population in Havana, suf- Governments and investors need to bet on the green economy, not the grey. fered from the same mysterious ailment That means embracing carbon pricing, eliminating harmful fossil fuel subsi- that caused the United States to draw dies and investing in clean technologies. It also means providing a fair tran- sition for those workers in traditional sectors that face disruption, including down its embassy in Havana. Dubbed through retraining and social safety nets. the “Havana Syndrome,” the cause of the We also have a collective responsibility to assist the most vulnerable com- illness has still not been determined, and munities and countries—such as small island nations and the least developed the Canadians have thus far been largely countries—by supporting adaptation and resilience. Cities, regions, civil society silent on the topic. and the business community around the world are moving ahead. What we On Nov. 18 the Canadian diplomats need is more political will and more far-sighted leadership. This is the challenge spoke to The Globe and Mail about what on which this generation’s leaders will be judged. happened to them—and the symptoms Climate action is not just the right thing to do—it makes social and economic they continue to endure. The group is sense. “especially outraged at the implication Climate change is the single most important issue we face. It affects all our that they are overreacting or exaggerat- plans for sustainable development and a safe, secure and prosperous ing—or the suggestion, made by some world. —United Nations Secretary General António Guterres speaking at the Dec. 3 opening of the neurologists critical of the official U.S. 24th annual U.N. climate conference (COP24) in Katowice, Poland. diagnosis, that the brain injuries could have been caused by stress or emotional trauma.” Like their U.S. counterparts, many not acceptable to be the sacrificed sheep. former diplomats such as Tony Blinken, have served multiple times in war-torn That’s just not an acceptable solution.” Anne Patterson, Samantha Power, countries and places prone to diseases Susan Rice, Wendy Sherman and Linda and political violence, and say they are Call to Halt Support for Thomas-Greenfield. “not the overly reactive type.” War in Yemen The conflict in Yemen has received “You’re talking about people who ore than two dozen senior former more international attention since have been through military coups, states MObama administration officials the Oct. 2 killing of journalist Jamal of emergency, hurricanes, cyclones, who issued a statement on Nov. 11 calling on Khashoggi at the Saudi Arabian have evacuated large number of people the Trump administration to cease all in Istanbul. in crisis,” one of the diplomats told The support for the Saudi Arabia-led coalition On Nov. 28 the Senate voted 62 to Globe and Mail. fighting the Houthi rebellion in Yemen. 37 to advance a resolution demanding “We understand foreign policy is not “We unsuccessfully tried conditional an end to U.S. support for the coalition. always about transparency. We get that support to the coalition,” the officials Foreign Policy noted that the vote reflects everything doesn’t need to be in the - wrote, and called instead for a diplo- “growing anger among lawmakers” over lic because that may not suit our national matic solution to the conflict, which has the administration’s continuing support interests,” said one unnamed diplomat. become a major humanitarian crisis for Saudi Arabia following Khashoggi’s “But not when it comes to the detriment resulting in an official death toll of more murder. of our family, our health and our safety. than 57,000 people. The Hill reported on Nov. 28 that Sec- That is where we have to draw the line. It’s Signatories include well-known retary of State Mike Pompeo and Defense

18 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Secretary James Mattis addressed Con- it less ugly. But it’s important to remain gress mere hours before the vote took involved. Talks are scheduled to hap- place, urging senators not to vote for the pen soon.” measure because the Saudi-led coali- On Dec. 12, the Senate voted 57 to tion is working to counter terrorism in 38 to end U.S. military involvement in the Arabian Peninsula and curtail Iran’s Yemen, and also voted unanimously to regional influence. condemn Saudi Crown Prince Moham- In his prepared remarks, Secretary med bin Salman in connection with the Mattis said: “We cannot limit civilian killing of Jamal Khashoggi. casualties or advance the peace effort commencing early next month in Swe- This edition of Talking Points was den by disengaging.” compiled by Donna Gorman, Ásgeir Secretary Pompeo said: “I know the Sigfússon and Shawn Dorman. conflict in Yemen is ugly. We are engaged in diplomacy all around the world to make it less so—and have actually made

50 Years Ago

Go Ahead and Plan

hy, then, should many minds boggle at ...Wthe idea of planning an American for- eign policy for the years from now to 2001? There is no logical and reasonable answer, except to say that they shouldn’t. Granted, the world may meet with nuclear catastrophe long before that date. But also, you or I might be run over and killed next week at Twenty-First Street and Virginia Avenue by a dashing young lady in an MG or a Porsche. The possibility of disaster always lurks, in public events as in private lives. The only sensible thing to do is to postulate some reasonable assumptions and go ahead and plan. These assumptions, as we said earlier, must not be too cheerful, or we should not be stimulated to undertake the tough work of planning. But neither should they be too discouraging. It makes no sense to assume a thermo- nuclear holocaust, destroying the industrial parts of the world, because there is no way really to plan in advance for a world in ruins. Our assumptions should be of such a nature that they generate planning requirements, and then we should go ahead and plan. Let us then try to lay down some planning postulates for the next 32 years, and then attempt to work out their implications for American foreign policy from now to the year 2001. —From “Looking Ahead to the Year 2001,” by Frank Snowden Hopkins, FSJ, January 1969.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 19 SPEAKING OUT

Improving the Economic Career Track

BY VIRGINIA BENNETT

had the privilege of chairing the pro- Why, despite their good work, were econ motion panel for FS-2 to FS-1 politi- officers all over the world not persuasively cal- and economic-coned officers demonstrating that they ought to be moving Ia few summers ago (cones are now officially called career tracks). It was a up the Foreign Service ladder? terrific experience for which I was grate- ful, and one which I heartily recommend to others. As an economic-coned officer, I found to win, and keep a close eye on the lead- For years promotion panels have this perplexing and troubling. I served as ing indicators of major political turmoil found the same basic realities: The deputy chief of mission in Athens from when people vote their wallets in a standouts are immediately apparent, 2011 to 2014, when the free fall of the democracy or take to the streets because as are the under-performers, with the Greek economy threatened the stability they can’t feed their families or buy remaining 90 percent of officers some- of the largest U.S. trading partner, the needed medicines. place in between. The job itself matters European Union. I knew firsthand how Nonetheless, file after file left our less than excellent performance in that critical our econ team was to mission panel unconvinced that the officers job. And the quality of the documenta- success in promoting and advancing involved were ready to succeed at the tion matters, particularly clear examples U.S. interests, and how closely the policy FS-1 level. Why, despite their good work, related to the sweeping assertions about community in Washington, D.C., was were econ officers all over the world an officer’s abilities and potential. watching economic developments we not persuasively demonstrating that Reading what ultimately totaled were covering. they ought to be moving up the Foreign thousands of files equipped me with a I also knew that economic diplomacy Service ladder? I came to a couple of great deal of granular evidence that over- was fundamental to the broadest U.S. conclusions. whelmingly supported all these points. interests, not just in Athens, but all over At the same time, however, another nar- the globe. Economic officers work to Two Conclusions rative was also clear to me: the economic level the playing field for U.S. businesses, First, economic sections—in contrast officers whose files we read were having assess and advance implementation of to political sections or combined pol/ a hard time documenting the potential to the frame- econ sections—generally are just too serve successfully at a more senior level. works that permit America’s businesses small to provide officers at the FS-2 level the opportunity to demonstrate mean- During a more than 25-year Foreign Service career, Virginia Bennett served ingful leadership and management skills five U.S. presidents in a wide variety of assignments in Europe, Asia and Latin and potential. The “Iraq tax”—positions America, in multilateral settings and in Washington, D.C. She capped her career taken from posts to staff the Iraq war—of as the acting assistant secretary of State for the Bureau of Democracy, Human the early to mid-2000s was heavy, and Rights and Labor. She also served as deputy chief of mission in Athens, as a economic sections seemed particularly deputy executive secretary for Secretary of State and as executive assistant/chief hard hit. This was perhaps because of staff to Deputy Secretary of State . She retired from the Foreign Service in eliminating one position from a five- November 2017. person section is a greater relative loss

20 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL than taking one officer from a 10–person The relative allocation of billets in the Foreign section. Service has simply not kept up with the reality An economic-track senior officer that political influence and national interests recalled to me her experience running a 10-person combined pol/econ section, are closely intertwined, indeed interdependent, attributing her relatively rapid promo- with economic issues. tion to the leadership and management skills she had had the opportunity to demonstrate in that combined section. contributed to this pattern, as well as the The interests of traveling or resident That rang true to me, in contrast to many push to get out-of-cone experience codi- American citizens are directly affected of her peers who struggled to demon- fied under the Professional Development by the state of the local economy, as are strate their management chops with so Program requirements. security interests and the management few direct reports. While I can attest to the value of out- section’s work. That said, there are arguments for and of-cone experience, particularly with Meeting payroll for local staff usu- against combining political and eco- regard to the management of human or ally depends on whether the banks nomic sections. Aggregating sections can other resources, notching only a couple are functioning in the host country. I bring more officers under an FS-1’s man- of tours as an econ officer does not still have vivid memories of (literally) agement, which is a good opportunity inspire absolute confidence in promo- measuring safes with the management for the FS-1 to bolster their own manage- tion board members that an officer can counselor and financial management ment skills. An FS-2 section deputy then hold their own at the FS-1 level in cone, officer in Athens, two years before the has the opportunity to serve in an acting where they are still likely to have to serve. Greek banking system finally collapsed capacity in a section of more meaningful And that’s precisely what promotion in 2015, and obtaining a waiver from size and impact. panels are looking for—clarity from the State to keep enough cash on hand to A downside to combined sections documentation in the file that an officer make payroll. We did this because of is the elimination of either the politi- can successfully serve at the next level. what we were hearing about the viabil- cal or the economic section at country ity of Greek banks, their non-performing team meetings, as well as the potential A Broader Issue loans, and the fears of Greek citizens elimination of an econ skill code posi- In my opinion, however, there is a (who were keeping cash on hand just in tion. Promotion rates are related to the broader issue that has led to the distor- case). number of billets (i.e., positions by skill tions cited above. It is this: The relative Our Athens consular team had count- code). With fewer skill code positions, allocation of billets in the Foreign Ser- less examples of U.S. citizens who were you get to promote fewer officers in that vice has simply not kept up with the real- affected by the collapsing safety net. cone over time. ity that political influence and national And our regional security officers were This is true across all career tracks, interests are closely intertwined, indeed constantly monitoring and advising the and sensibly so—why promote people interdependent, with economic issues. I mission and American business com- into a rank if you don’t need their spe- think that is the underlying problem we munities of protest and other activity cific skills at that rank? Combining sec- need to solve, not just for the develop- related to the long downward spiral in tions may, therefore, lead to a downward ment of career econ officers, but to the economy and the negotiations with trajectory in promotability for the econ ensure the most effective American Greece’s creditors. skill code. diplomacy. I won’t even get into the impact of the Second, I concluded that many In my view, no one can truly under- local economy on U.S. interests from the candidates simply did not have enough, stand a country and serve to advance standpoint of our Defense Department or even any, in-cone experience at America’s interests there without some colleagues, or the many other critical their current grade. The relatively rapid knowledge about what is happening sections that contribute to mission suc- promotion speed to FS-2 levels overall in its economy. This holds true beyond cess in all our posts overseas. But I don’t at that particular point in time may have the political and economic sections. think any would contradict the view that

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 21 We urgently need to get more FS-2 economic positions overseas.

we need to have more, rather than less, information on what economic currents are shaping a country. Who among us is immune from the impact of economic events at home? No matter what anyone does for a living or believes as a faith, the economy touches us all. I would argue that both for the of growing our economic officers and— most importantly—effectively promoting U.S. interests, we urgently need to get more FS-2 economic positions overseas. AFSA is urging the State Department to add 300 econ jobs in the field. We don’t need 300 new FSOs to do that—we just need to shift 300 jobs out of Washington. The unprecedented levels of bipartisan support for U.S. global leadership has translated into funding in the appropri- ate line item of the department’s budget to do so. While I’m no longer in the depart- ment, I hear that there are efforts under- way to recreate a more positive career path for economic officers. That would be good for them and, more importantly, would pay dividends for the United States. America’s businesses are innova- tive and agile. They deliver what they promise, and when they get to compete on a level playing field, they win. Our Foreign Commercial Service and Foreign Agricultural Service colleagues contrib- ute enormously to achieving those wins. But they can’t do it without economic sections working on the structural con- text in which U.S. businesses seek to land a deal. n

22 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL FOCUS ECONOMIC DIPLOMACY WORKS What Is Economic Diplomacy and How Does It Work?

The U.S. Foreign Service is at the conomic statecraft and economic diplo- forefront of crafting policy and carrying macy involve using diplomatic skills with out economic diplomacy to advance economic tools to advance a country’s economic, political and strategic goals. the strategic and security interests The overarching economic statecraft of the United States. and the day-to-day economic diplomacy are enormously important parts of the BY TONY WAYNE United States’ international policy. Get- ting this right can provide a huge boost, just as getting it wrong can be very costly. EEconomic statecraft and diplomacy are much broader than support for sales from U.S. farms and businesses overseas or support for the investments Americans make in other coun- tries, as important as that work is for America’s prosperity. They include the use of to punish or deter bad actors in the world, ranging from terrorist financiers and drug smugglers to corrupt officials. They involve mobilizing inter- national assistance and financing for partner countries emerg- ing from conflicts or natural disasters. They involve building support to set and enforce international rules and norms so that Earl Anthony “Tony” Wayne retired from the Foreign corruption and bribery are less acceptable, for example, or to Service as a Career Ambassador in 2015. He served make trade in “conflict diamonds” and other smuggled minerals as ambassador to Mexico and , deputy am- more difficult, or to facilitate international air transportation or bassador in Afghanistan, principal deputy assistant telecommunications (think internet and cell phone) connectiv- secretary in the Bureau of European and Eurasian ity. Affairs and assistant secretary of State for economic and business Economic statecraft forges policies to decide which countries affairs, among other positions. He is a member of the 2017-2019 AFSA merit U.S. financial and development assistance, how much and Governing Board and serves as the association’s treasurer. under what conditions. Then U.S. economic diplomacy negotiates

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 23 The United States has long practiced economic statecraft to Economic statecraft and open markets for U.S. goods and services and to boost global diplomacy are much broader prosperity and stability, but over the last two decades increas- than support for sales from ing attention has been given to the added sway gained by U.S. farms and businesses using economic tools and diplomacy in a systematic, strategic way to support partners, to change or punish harmful behav- overseas or support for the ior and to win support for U.S. international priorities. This is investments Americans make even more essential in a world where economic competition in other countries. is increasingly fierce and not always fair, and where other gov- ernments may have much more influence in economic areas than they have in the military or other spheres. China’s grow- ing international clout and its agreements with host govern- aggressive economic diplomacy ments for effective use of that aid is one example that highlights and, very importantly, works to the urgent need for effective, assure effective implementation multipronged economic state- of aid and reform programs. craft by the United States. Economic diplomacy In this issue of The Foreign includes building international Service Journal, you will find coalitions to help countries outstanding examples of U.S. For- recover from financial crises. eign Service officers carrying out It entails convincing host- economic diplomacy as part of government leaders to apply America’s broader foreign policy. the policies and measures I have seen this work flourish most likely to strengthen their firsthand in Mexico, Europe, economies and provide jobs Afghanistan and Argentina. The for their people, even if the emblematic cases that follow, reforms have political costs. drawn from my time as assistant In all these areas, the secretary for the Bureau of Eco- U.S. Foreign Service is at the nomic and Business Affairs (EB) COURTESY OF TONY WAYNE TONY OF COURTESY forefront of crafting policy FSO Tony Wayne, at right, speaks with OECD Secretary from 2000 to 2006, illustrate the and carrying out economic General Angel Gurria about efforts to enhance the antibribery importance of Foreign Service convention and other topics on the agenda at the May 2006 diplomacy for the good of the OECD ministerial meeting. networks and partnerships in United States. The Foreign Washington, D.C., and overseas. Service, and our Civil Service colleagues in the foreign affairs agencies, work with partners The Problem of Terrorist Financing at Treasury, Commerce, the Office of the U.S. Trade Represen- On Sept. 11, 2001, I was traveling with Secretary of State tative, Defense and other agencies to develop, implement and in Lima, , where, among other objectives, hone these approaches. In Washington, D.C., as well as over- we were exploring with Peru’s president how the United States seas, Foreign Service officers are essential players in creating could use its economic tools to support that newly re-emerged strategies, in winning agreement from partners and building democracy. This mission was disrupted by that day’s terrorist international coalitions, and in implementing policies and attacks. On the flight home and then with my colleagues in EB, programs to achieve good outcomes in other countries and we searched for ways the economic team at State could help regions. The Foreign Service brings unparalleled international define and build a strong international response to that attack. knowledge and experience to the table in Washington that Previously several of us had worked to hone and strengthen regularly help focus, refine and implement U.S. policies. the use of international economic sanctions as a tool of diplo-

24 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL View from the E Family: Empowering Growth, Securing Our Future By Peter Haas, Principal Deputy Assistant Secretary (PDAS), Bureau of Economic and Business Affairs; Judith Garber, PDAS, Bureau of Oceans and International Environmental and Scientific Affairs; and Kent Logsdon, PDAS, Bureau of Energy Resources

conomic security is national security. The “E fam- prosperity through energy development. ENR focuses on Eily” bureaus—Economic and Business Affairs (EB), energy security and cooperation around the globe, including Energy Resources (ENR), and Oceans and International regional initiatives such as Trans-Atlantic Energy Security, Environmental and Scientific Affairs (OES)— Eastern Mediterranean Energy Integration, Enhanc- advance this core principle of the Trump admin- ing Development and Growth through Energy, and istration’s National Security Strategy. Economic Access to Global Energy Resources. officers around the world strive to empower Meanwhile, OES highlights the United States’ growth and secure our future. success in reducing emissions through technology America’s prosperity underwrites our national and innovation, while engaging internationally to security. A robust U.S. economy that creates promote a balanced approach to energy, econom- Peter Haas new American jobs depends on strong economic ics and the environment to protect American growth. We are known for our efforts to fight for a businesses. level playing field for American workers and com- Against the growing threat of pandemics and panies. Our work includes protecting and enforc- infectious diseases, OES leads diplomatic engage- ing intellectual property rights. We lead aviation ment on the Global Health Security Agenda to negotiations that underpin 5 percent of U.S. gross build countries’ capacity to detect, prevent and domestic product and 11 million transportation- respond to disease outbreaks like Ebola. We also Judith Garber related jobs. protect national security through diplomatic out- We demand that international institutions do reach to fight conservation crimes and preserve more to promote economic rules that enhance the well-being of our oceans and the region. free, fair and reciprocal trade and set transpar- Together the E family safeguards critical ent standards. We are all involved in promoting national assets from security risks associated with and expanding advocacy for U.S. commercial and foreign investment in areas such as infrastructure, defense products and services abroad, as well as sensitive technologies and private information. Kent Logsdon attracting foreign direct investment to the United Our goal is to protect national security while main- States. These efforts are critical for the long-term security taining openness to investment, considering that foreign- of our country. owned companies in the United States employ more Sanctions are a critical part of our foreign policy. than seven million U.S. workers. President Trump greatly EB and ENR lead sanctions programs in more than 25 strengthened these efforts through the Foreign Investment countries to reduce threats that put U.S. citizens at risk Risk Review Modernization Act, which expands the authori- and jeopardize global stability. We used them recently to ties of the Committee on Foreign Investment Review to lead the world in pressing North Korea on denucleariza- examine investments and take action to block those that tion. We have reimposed them on the Iranian regime to threaten our national security. pressure them to change their malign behavior. We have Through all of these avenues, and in many other ways, also ramped up sanctions on in light of its actions the E family bureaus use America’s global leadership in Ukraine and its destabilizing impacts elsewhere, and on to strengthen our domestic economy, empower growth Venezuela, aiming to restore democratic processes there. and secure our collective future. You’ll find many other Energy is critical to U.S. national security and prosper- examples highlighted in this edition of The Foreign Service ity. ENR is leading department efforts to promote energy Journal that showcase the wonderful work our economic; security for the United States and its partners and allies, energy; and environment, science, technology and health stimulate U.S. economic growth that benefits American officers do around the world. This is the cutting edge of business and people, and foster global political stability and diplomacy in the 21st century.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 25 partnerships so that even initially hesitant governments were Economic officers have willing to join the United States in “designating” individuals, worked hard to ensure that nongovernmental organizations (NGOs), charities and banks the international growth of the who were helping fund terrorism. This was a long, hard process. In Washington, we had to internet and high tech supports forge interagency agreement on targets and tactics. Then our America’s economic interests, embassy teams had to persuade host governments to join in as well as its commitment to the effort. The debates in Washington were often intense, but the free flow of information. Foreign Service expertise helped win interagency consensus on how to most effectively build an international coalition and win support in every part of the world. At State, as part of the process, EB hosted weekly inter- macy, including working through differences with European agency meetings that included all geographic bureaus to partners. We had learned that a sanction approved by the define the way forward and to coordinate work among United Nations Security Council under Chapter VII of the U.N. embassies. In the months and years that followed, the Charter had the force United States rallied of law in many other many countries to join countries. We suggested the effort. They desig- pursuing a U.N. Secu- nated scores of entities rity Council resolution for sanctions, froze focused on sanctioning more than a hundred financial and other sup- million dollars in funds port for terrorism as an and assets, and made it initial step. much harder for others With approval from to fund terrorists. Each State Department lead- freeze was implemented ership and the White globally within 48 hours. House, we partnered In a December 2005 with the Bureau of report, the 9/11 Public International Organiza- Discourse Project, an tion Affairs and the U.S. NGO formed by some

Mission to the U.N. to WAYNE TONY OF COURTESY members of the 9/11 write and present a draft At a meeting of the Chamber of Commerce in São Paulo in April 2006, Commission to ensure FSO Tony Wayne, third from left, encourages more U.S.-Brazil trade and resolution; within a few commerce. implementation of the days, the U.N. Security commission’s recom- Council passed Resolution 1373. It was to become the “go to” mendations, identified the EB-led effort against terrorist international framework for stifling terrorist financing. financing as the most effective anti-terrorist work to date However, passing that resolution was just the start. We in (giving it a grade of A-). Much of that success was fueled and EB partnered with the National Security Council, Treasury steered by Foreign Service officers. and the intelligence and law enforcement communities to craft a U.S. executive order along the same lines. Then, with Support for Economic Reform, Reconstruction partners in other State Department bureaus and in embassies and Rebuilding around the world, we set out to build an international coali- Interestingly, the second highest score given by that same tion to implement the U.N. resolution. We worked to persuade 2005 report on 9/11 recommendations was a “B+” for policies governments to change their own laws and practices to outlaw supporting economic reform in the regions of concern. In the terrorist financing, to freeze assets and to build international fall of 2001, as EB began to work on blocking terrorist financing,

26 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL it also began a concerted effort to develop initial economic sup- port and reform packages for countries from Turkey to Pakistan The debates in Washington were that would be affected by the repercussions of the 9/11 attacks. often intense, but Foreign Service In this EB worked closely with the relevant State geographic expertise helped win interagency bureaus, as well as with USAID, Treasury, USTR, the NSC and, eventually, the international finance institutions. consensus on how to most One priority focus was Afghanistan, thinking through effectively build an international and building international support for economic and other coalition to staunch terrorist nonmilitary assistance for that country following the initial financing. military actions against the Taliban regime and al-Qaida. EB stepped into the breach to lead efforts to organize three international donor conferences focused on Afghanistan. In coordination with State regional bureaus, the EB team worked colleagues daily across a host of issues during these years. This with the U.N. Development Program and the World Bank, as work included helping to ensure U.S. and global energy security well as with , the European Union and the Persian Gulf via sufficient oil production in the Persian Gulf; the develop- countries. ment of new oil deposits in the Caspian region, Africa and This was an intensive effort. For weeks during the run-up to elsewhere; and helping bring renewable and other alternative the first Tokyo donors conference on Afghanistan, for example, energy sources into play for the European Union and others. we held twice-daily phone calls with the Japanese and other key The work involved organizing demarches by our embassies sponsors to develop what became an internationally agreed- to change specific unfair practices vis-á-vis U.S. intellectual upon framework for assistance needs, to rally initial aid pledges property in economies around the world, from Canada to Tai- and to achieve the return of Afghan assets from around the wan to Argentina. The work included building a new model for world to help the fledgling government in Kabul. The initial development assistance with the creation of the Millennium conferences were considered a success, and the focus shifted Challenge Corporation and a consensus on new development correctly to work on the ground in Afghanistan. strategies among the Group of 8 countries. It entailed help- The Afghanistan conferences were precursors to subsequent, ing to engineer effective debt relief in Africa, for example, and equally intense international reconstruction efforts led out of getting our closest European partners to implement their anti- EB to help revive Iraq’s economy after toppling Saddam Hus- bribery commitments to level the field for U.S. companies and sein, to rebuild severely damaged parts of Southeast and South to reinforce good governance. Asia after the 2004 tsunami and to support recovery from the These efforts also included vastly expanding the number terrible 2005 earthquake in Pakistan. In each of these cases, the of Open Skies agreements around the world to support travel economic teams at State, USAID and at our embassies around and tourism. Economic officers have worked hard to ensure the world were essential in constructing international coali- that the international growth of the internet and high tech tions and mobilizing many billions of dollars in aid to help supports America’s economic interests as well as its commit- key partners. These efforts all included the nitty-gritty work of ment to the free flow of information. Also important was the interagency decision-making in Washington; initiating frequent invaluable work done to support many trade negotiations, outreach to other governments, NGOs and businesses to build specific commercial disputes and important sales opportu- agreement; organizing successful gatherings overseas; and nities for U.S. companies in different countries. In scores of beginning the complex work of delivering aid, as well as trying instances, Foreign Service officers in Washington and overseas to encourage best practices in recipient countries. This was eco- were essential to achieving good outcomes. And this vital work nomic diplomacy in vigorous action, with the Foreign Service continues. front and center. The United States needs well-crafted and skillfully imple- mented economic statecraft for its prosperity and security. It A Vast Array of Economic Diplomacy Issues needs effective day-to-day economic diplomacy by its Foreign Beyond these striking examples, the EB team used its Service officers to ensure that America’s statecraft achieves the partnerships among State, U.S. embassies and U.S. agency best for our country. n

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 27 FOCUS ECONOMIC DIPLOMACY WORKS Economic Officers for the Future

nternational economics is once again at the forefront of New appreciation for the centrality foreign policy. Accounts of serious trade disputes, a U.S. of economics in foreign policy makes effort to derail a new gas pipeline from Russia to Europe, it an ideal time to throw light on the stiff new economic sanctions on Iran and concern about making of an economic officer. imports of automobiles fill the front pages of American dailies. It sometimes feels like the 1980s all over again. BY CHARLES RIES But this time, the much higher public salience of foreign policy issues amid sharp polarization, accelerating climate change, the growing role of China in the international order and radical changes in communications technology (including Isocial media) put the old issues in a new perspective and chal- lenge old ways of doing business. It is a good time, therefore, to consider how the Foreign Ser- vice should recruit, train and nurture a strong cadre of economic officers for the decades ahead.

Economic Officer vs. International Economist The key distinction between a Foreign Service officer in the economic career track and an international economist is this: The core responsibilities of economic officers are not Charles Ries, a Foreign Service officer from 1977 solely, or even principally, about studying economic develop- to 2008, served as ambassador to Greece; principal ments. While these FSOs must understand what is happening deputy assistant secretary for European affairs; economically in whatever area of the world (or multilateral or coordinator for economic transition in Iraq; Minister- plurilateral organization) they are assigned, that is not enough. Counselor for economic affairs in London and at the The FSOs should also be in a position to fashion and carry out U.S. Mission to the European Union in Brussels; and in other domes- strategies to advance the national interest and build relation- tic positions in the Bureau of Economic and Business Affairs and the ships to maintain U.S. economic interests. Outcomes matter in Office of the Under Secretary for Economic and Agricultural Affairs. diplomacy. He is currently vice president, international, at the nonprofit RAND To my mind (and this may be a heretical thought) economic Corporation. officers must be, first of all, accomplished political officers,

28 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL in that they must understand how governments make deci- Working Washington sions about issues that affect U.S. foreign policy and economic A well-rounded economic officer should seek several and interests, and divine what political forces are being brought to varied Washington assignments to lay the groundwork for effec- bear to affect the policies of America’s partners, or adversaries. tiveness in the senior ranks. This can include functional bureaus, Such insights and understandings are vital to devising strategies like the Bureau of Economic and Business Affairs (EB) or the to advance U.S. foreign economic programs and interests. Also, Bureau of Oceans and International Environmental and Scien- economic officers should have all the reporting, public speaking tific Affairs, and the regional bureaus, as well as details outside and representational skills of any political or public diplomacy of State such as to the National Security Council or the Office of officer, coupled with a strong understanding of economic issues. the U.S. Trade Representative (USTR). (In this connection, it is of While economic FSOs should be able to engage confidently on course a pity that details to Treasury, Commerce, or inflation or exchange rate policy with a Central Bank official, Homeland Security are more difficult to arrange.) they don’t need to build a model themselves. But they should As with overseas service, the objective should be to learn how be able to figure out how to secure a commitment in a trade to get things done, including in the interagency process, rather agreement, negotiate an international air services accord, help than to admire problems. Again, in order to succeed, writing, a U.S. company land a major trade deal or fashion congressional advocacy and reporting skills are vital, along with economic testimony. expertise and literacy. But even here, the comparative advantage of economic officers in the interagency process can be misun- Training derstood. Economic officers who have political and public diplomacy The advantage of having economic officers in Washington— skills are also ideally suited to make the connections and frame and State involvement, in general, on economic issues—is the the broad perspectives that today’s world requires. The ability to insight they have into overseas developments, not their fluency integrate political, economic and regional insights is what the in Washington-speak. When an economic policy discussion next generation of U.S. foreign policy will need, and economic turns, for instance, to what the Japanese might do with respect to officers with wide expertise are well positioned to make great a U.S. initiative or unexpected development, the meeting should contributions at entry- and mid-level positions—and, of course, turn to the State economic officer, who will explain it objectively as senior leaders in the future. based on experience on the ground and based on outreach to As the Foreign Service Institute trains the economic officers colleagues in the field. But the meeting will only do that reliably of the future, and as senior officers mentor the leaders of the next if the State officer has done the homework and is in touch with generation, such insights should be kept in mind. Economic offi- economic-track colleagues in the field. cers should get the training and opportunities in writing, report- Too often, economic officers in Washington assignments, ing and political analysis that political officers get, even as they especially in the main EB offices, seek to become junior Trea- develop deep understanding of the nuances and foundational sury, USTR, Department of Energy or Federal Communications concepts of trade, monetary policy, environment and science. Commission (and the like) domestic agency officials, based on Just as every FSO should understand the basic laws and their participation in interagency decision-making and - regulations affecting visa adjudication and American Citizen tative processes. But that is not the best strategy. The real value Services, so too should every economic officer (at least, and added in having the State Department in the economic field, as maybe other cones as well) understand the framework of sanc- elsewhere, is that the department has a worldwide network of tions policies. What is a Special Designated National? What economic officers in the field who know the issues, constraints kinds of goods require International Traffic in Arms Regulations and local contexts. licenses? For this, the Financial Times newspaper or The Econo- Other agencies may believe that the United States just needs mist magazine are better reading material than the Journal of the to lay down policies to its partners and they will respond. But American Economic Association. experience has shown that skills in advocacy and linkage make a And lest we forget, language skills are as relevant for an difference. If you agree that context, contacts and the right spin economic officer as they are for a political officer to pick up cul- make a difference in accomplishing negotiating goals, helping tural nuances (even though many host-government economic businesses with problems or in stopping bad behavior, you need officials often have good English skills). a State economic officer on the case.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 29 Getting Promoted is solely a factor of their knowledge of the technical stuff, the The principles for promotion in the economic track should department will treat them as subject-matter experts rather than be the same as for any other track: great potential for leader- officers. ship, strong interpersonal skills, and substantive experience and Perhaps more than any other track, economic officers get knowledge. As far as the latter is concerned, I don’t think eco- experience in negotiations on behalf of the nation, one of the nomic officers are, or should be, a breed apart. As I have noted, highest callings of the diplomacy profession. And when it comes economic officers should not see themselves as analytical econo- time to do something else, Foreign Service economic experience mists, but rather diplomats charged with advancing U.S. interests is more easily transferable to the private sector than many other in the economic, environmental, scientific and related fields. specialties. Economic officers must be literate in economics and in The State Department’s economic expertise is vital to advanc- policy, and knowledgeable about business trends. Economic ing U.S. economic interests worldwide and is very rewarding for officers should understand foreign government systems and the officers, as well. As far as the latter is concerned, consider the political trends that affect the ability of governments and interest advantages of the economic track: officers who successfully help groups to cooperate with the United States. If officers think this American business succeed or take down foreign trade barri- way, they may impress ambassadors and senior officials, and lay ers make an appreciable difference to American communities the groundwork for promotion to the Senior Foreign Service and and businesses. Few other areas of foreign policy have such an assignment to senior leadership positions. If, on the other hand, immediate and direct connection to communities and constitu- economic officers think, or are led to believe, that promotion encies in the United States. n

30 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL FOCUS ECONOMIC DIPLOMACY WORKS

Six Elements of Effective Economic/ Commercial Diplomacy

BY SHAUN DONNELLY AND DANIEL CROCKER

conomic security is national security, and issues these days and can win State and Commerce Depart- national security is economic security. This ment officers recognition and promotions. statement might have aroused some eye- Presidents, national security advisors and Cabinet secretaries rolling from State Department “old boys” of both parties over the past two or three decades have come to around Foggy Bottom, on Capitol Hill and see this new importance of commerce and economics in broader around the Washington elite cocktail circuit U.S. foreign policy. Most observers also acknowledge the need for of the 1950s and 1960s. But, as in so many the U.S. government to step up its efforts in economic/commer- other areas, the worlds of economic and cial diplomacy. commercial diplomacy have been increas- Three fundamental realities underline the importance for our ingly mainstreamed into today’s policies and strategies for country of an effective economic/commercial diplomacy pro- Enational security in the United States and around the world. gram. First, more than 80 percent of global purchasing power now China’s ambitious Belt and Road strategy, with its use of lies outside the United States, including several large emerging aggressive financing and promotion of Chinese companies markets with annual gross domestic product (GDP) growth rates and labor to further its geopolitical aims, underscores the that are double our own, or more. Second, it’s an ultra-competi- challenge that the U.S. government—and U.S. commercial tive world; in all key sectors, American companies face broader, interests—face throughout the world. Trade promotion, deeper and more aggressive foreign competitors, some of whom smashing foreign market access barriers and helping U.S. promote their standards, military platforms and state-subsidized exporters and investors win competitive deals are front-page or state-owned companies for both commercial and political gain.

Shaun Donnelly is a retired State Department economic-coned Foreign Service officer, now working as vice president for investment policy and financial services at the U.S. Council for International Business. He held a series of senior positions in the State Depart- ment’s Bureau of Economic and Business Affairs, including five years as principal deputy assistant secretary. He also served as U.S. ambassador to Sri Lanka and the Maldives, and as assistant U.S. Trade Representative for Europe and the .

Daniel Crocker is a career member of the Senior Foreign Service in the Commerce Department, and is currently the Foreign Commercial Service vice president on the Governing Board of the American Foreign Service Association. His most recent overseas assignment was as commercial counselor in Madrid. He previously served in Mexico, Brazil, Panama and the Dominican Re- public, in addition to stints at Commerce headquarters as director of the Office of Digital Initiatives and executive director for the Western Hemisphere. He is a member of the 2017-2019 AFSA Governing Board and FCS vice president.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 31 mercial diplomacy. Their career Foreign Service officers are on More than 80 percent of global the front lines. But programs at the Department of Agriculture, purchasing power now lies the Export-Import Bank and the Trade and Development Agency outside the United States, also need to be incorporated and aggressively funded. Worryingly, the Export-Import Bank is now in limbo because of congressional including several large emerging inaction, putting several important U.S. exporters at a competi- markets with annual GDP growth tive disadvantage. An effective economic/commercial diplomacy rates that are double our own. program is a great investment and will pay for itself, but it does require sustained appropriations, good coordination and strong leadership. We’re not just competing with Europe, Canada and Japan these 2. Top leaders must be personally involved. Cabinet mem- days; China, , Korea, Brazil, Mexico and Singapore, among bers, the vice president and the president need to consistently others, now have world-class firms with aggressive support from engage foreign counterparts to push U.S. competitors in major their governments. And third, like it or not, we are in a new world deals around the world. Cabinet and sub-cabinet officials must of globalization, supply chains, data flows and blockchains. be available to lead trade missions and economic dialogues. And Yesterday’s companies and yesterday’s strategies will not in the field, ambassadors must be personally engaged. If a chief prevail. We can, as some American political leaders are wont to of mission opts to delegate economic/commercial diplomacy to do, opt to complain, invoke protectionist barriers and cry foul; but staff, it sends a clear message to senior foreign decision-makers. just playing defense and trying to deny new realities is not a win- Ambassadors need not be economic experts; they simply need ning strategy. With more than 80 percent of America’s labor force to be forceful, effective diplomats. U.S. ambassadors such as Stu working in a disintermediated service sector and a rapid increase Eizenstat, Jon Huntsman, Charles Ford and Tony Wayne, who had in automation in manufacturing, erecting barriers in response to strong economic and business backgrounds, have been very effec- goods trade imbalances risks ignoring future sources of American tive. But so were legendary diplomats like Tom Pickering, Frank commercial competitiveness and job growth. Wisner, Kristie Kenney and , who had little hands- We see six critical elements in an effective U.S. economic/com- on experience in the economic area. They are just great diplomats. mercial diplomacy program. Effective economic/commercial diplomacy is more about leader- l. International commerce and economics must be top ship, diplomacy and hard work than it is about economic policy or priorities. The U.S. government can’t compete and win on the commercial contract details. Understanding the growing strategic cheap; we can’t just mail it in. Recent passage of the BUILD Act, importance of U.S. commercial wins in certain areas (e.g., new which wraps the Overseas Private Investment Corporation into a LNG ports and regasification infrastructure) should make it easier newly created U.S. International Development Finance Corpora- for U.S. ambassadors to take the lead in the field. tion that will be able to further U.S. economic interests through 3. The Commerce and State Department partnership is criti- strategic investments overseas, is a strong indication of bipartisan cal. Frankly, over the years there has been some counterproduc- and administration support for an effective program. Across the tive rivalry between the State and Commerce Departments, and political spectrum, U.S. lawmakers are recognizing the competi- between individuals at various levels in Washington, D.C., and at tive threat to our national interests posed by what appears, at first posts around the world. Such rivalry—sometimes personal, some- glance, to be simple promotion of Chinese commercial interests times over whether an individual issue or event is “economic” (i.e., in countries as disparate as Montenegro, Sri Lanka and Nicaragua. State-led) or “commercial” (i.e., Commerce-led)—is not totally However, though the U.S. government’s expertise is deep, it is also surprising. After all, President Franklin D. Roosevelt gave the State fragmented. Short of a dramatic restructuring of federal agencies, Department full responsibility for international economic/com- we owe it to U.S. taxpayers to coordinate efforts better—not only mercial diplomacy in 1939. But based in large part on a perception across federal agencies but also with state and local governments. that State had not consistently and effectively led commercial Within the federal government, State and Commerce will issues and support for U.S. business, the 1980 Foreign Service Act certainly need to play a leading role. As foreign affairs agencies pulled that responsibility out of State, transferred it to Commerce with a global footprint and diplomatic accreditation, they are and established the Foreign Commercial Service. uniquely poised to be the field-forward force for economic/com- The divorce was painful, especially at State, and left scars,

32 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL A FOREIGN POLICY PRIORITY

UNCLASSIFIED Date: Nov 07, 2018 From: SECSTATE WASHDC Action: ALL DIPLOMATIC AND CONSULAR POSTS COLLECTIVE Subject: Boosting Commercial Diplomacy around the World

1. Summary: The purpose of this message, written in collaboration most of which have, fortunately, faded with time. But with the Commerce Department, is to strengthen our collective work we can no longer afford to let bureaucratic rivalries, in commercial diplomacy by clarifying the roles, initiatives, and tools personal egos or arcane debates about whether of the State and Commerce Departments in advancing American busi particular issues are “economic” or “commercial” get ness interests overseas. … State and Commerce collaboration is key to U.S. company success overseas and to supporting jobs here at home. - in the way. Any U.S. ambassador should expect—and There is so much that we do – and can expand on – together, and we both State and Commerce officers should deliver— hope this cable helps strengthen our ability as a country to support a coordinated position on issues of commercial U.S. business interests. End summary. importance. We see some very encouraging signs of Com- 2. Secretary Pompeo has made helping American companies a foreign merce/State cooperation. In 76 countries repre- policy priority. Commercial diplomacy helps create jobs and prosper ity at home and advances the economic prosperity goals in the Presi senting 90 percent of U.S. export markets FCS and dent’s National Security Strategy. Promoting broad-based, responsible,- State economic officers are collaborating closely to and sustainable economic growth helps to stabilize regions and cre - tackle market barriers and unfair trade practices, ates new and growing markets for U.S. companies. A transparent and - and protect U.S. investment interests. It is espe- level playing field for U.S. investment in these countries counters real cially encouraging to see numerous examples of and growing challenges such as China’s Belt and Road initiative.

Commerce/State cooperation overseas on emerg- 3. We ask that you engage proactively not only at the transactional, ing issues such as digital trade, standards and but also at the transformational level. Doing so will advance key for regulations, intellectual property rights, financing eign policy goals, such as a stable and prosperous Indo-Pacific region, infrastructure and combating corruption. In the our priorities at the of the Americas, Iraqi reconstruction, - past, such issues might have been fertile ground our commercial and security interests in Europe, and prosperity and stability in Africa. In advancing commercial interests, we also advance for bureaucratic rivalry. In another 60 countries broader economic priorities, such as fighting corruption, pursuing where there are no FCS officers, a formal Partner greater aviation options for U.S. consumers, and supporting conflict- Post program gives State economic officers full free diamonds. Every office in EB and many offices throughout the responsibility for all commercial and business Department contribute to our commercial diplomacy. … support work, in coordination with Commerce’s –Excerpted from the U.S. State Department cable domestic network of 106 U.S. Export Assistance 18 STATE 112364, E.O. 13526. Centers and nearby FCS posts. Further, State has opened its innovative Business Facilitation Incentive Fund, a program that offers incen- tives for State/Commerce cooperation in the field in the form of inward foreign direct investment (FDI) into small grants to posts to fund creative initiatives in support of U.S. the United States, bringing technology, capital and good jobs exporters. to local communities around America. Commerce Secretary A very promising recent initiative is State/Commerce coop- Wilbur Ross, like his predecessors, hosted the fifth summit of this eration on the annual Benjamin Joy Award. As President George Commerce-led program, which has contributed to $44 billion Washington’s first American consul and commercial agent in in investment into the country over the last six years. State has India, the award’s namesake, Benjamin Joy, was an early exemplar pitched in fully in recent years to promote the event, help Com- of U.S. commercial and economic diplomacy. Commerce and merce strategize on foreign business and government leaders to State have jointly established and funded the competitive award, invite, and fund participation of U.S. ambassadors in key markets fully sharing the nomination, selection and ceremonial functions. to personally escort select foreign delegations. And like Secretary The first two annual winners—teams of FSOs from State and before him, Secretary of State Mike Pompeo was an Commerce, as well as Locally Employed staff, at Embassy Addis enthusiastic and supportive speaker at this year’s summit. Ababa and Embassy Vientiane—have been inspiring examples of Of course, a bread-and-butter element of any effective com- cooperation to directly benefit U.S. business, especially small and mercial/economic diplomacy is high-level advocacy—both medium-sized businesses. project advocacy and, increasingly, policy advocacy. Here again, Another great example of Commerce/State cooperation is interagency cooperation is critical, both in the field and in Wash- the annual “SelectUSA” Investment Summit, designed to attract ington. Commerce’s Advocacy Center has continued to grow

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 33 embassy support for American business. At post, members of the As American companies compete ambassador’s country team need to check their agency equities to grow, prosper and win, they at the door and deliver a coordinated strategy that serves U.S. will need support from the national interests. 5. Don’t forget the states and cities. Often, especially in the government across a much effort to attract FDI into the United States, partnerships with U.S. wider agenda. states and cities are critical in winning a deal. For potential inves- tors, issues like the local workforce, infrastructure and taxes can be determining factors. And those are generally state and local in reach, effectiveness and interagency participation. State and responsibilities in our unique federal system. Here Commerce’s U.S. embassies overseas are vital partners. The interagency team SelectUSA team can play a vital coordinating role, and is increas- moves quickly to review potential advocacy cases, then sort out ingly providing data-driven analysis of such factors for every post and implement a coordinated, often escalating, plan of letters, that is promoting inward investment. phone calls and travel by senior Commerce, State or other sub- 6. American business has a broad agenda in today’s and cabinet officials, Cabinet members, the ambassador and/or the tomorrow’s global economy. While export of goods, old- vice president and president. This high-level personal advocacy fashioned manufactured goods, is in some ways the easiest sort is delivering results: In Fiscal Year 2017, the Advocacy Center of business to address, the U.S. government needs to recognize confirmed $42 billion in wins for U.S. companies, supporting the realities of today’s global economy. As American companies hundreds of thousands of American jobs. compete to grow, prosper and win, they will need support from 4. But it’s not just a State/Commerce effort. It’s not enough the government across a much wider agenda: services, regulatory for just State and Commerce to be all-in on economic/commercial coherence, license arrangements, international joint ventures, sup- diplomacy. America and American business need a well-coordi- ply chain relationships, inward investment to the United States and nated, all-of-government effort. For agricultural sales, investment outward investment by U.S companies to foreign markets. A truly and technical issues, the Department of Agriculture needs to take supportive, comprehensive “Team USG” approach to support our the lead; and they do. Similarly, senior Treasury Department offi- companies will have to be able to address that full range of issues. cials are integral when American banking, insurance and financial Consolidating, deepening and strengthening a U.S. govern- services companies need support. When foreign governments ment support program for our businesses led by Commerce and are pursuing defense products and services, senior Department State is not easy. The issues are complicated and fast-changing; of Defense and military officials, combatant commanders and the competition is fierce and ever-intensifying. We’re optimistic resident defense attachés play a vital role. As noted above, on that with strong Commerce and State Department leadership, the infrastructure and other capital-intensive projects, agencies like U.S. government is up to the task. But it will take an aggressive “all- the U.S. Agency for International Development, the Millennium hands, all-levels, all-agencies” approach. Challenge Corporation, the Export-Import Bank, TDA and the Although it was completed more than a year ago, we would newly created U.S. International Development Finance Corpora- refer readers to a set of two reports on economic/commercial tion can play important roles. diplomacy, “Support for American Jobs,” from the American At posts overseas, sometimes the key information an American Academy of Diplomacy. These reports contain some detailed potential exporter or investor needs at a critical moment may best analysis and recommendations for effective action (full disclosure: come from the embassy labor attaché, the regional security officer one of this article’s authors is also co-author of those reports), and or a political or administrative officer. Political officers weigh in on they suggest areas for work, including Commerce/State personnel cases moving through the local courts, and Department of Home- exchanges, increased industry involvement in training of commer- land Security officials have a role in foreign customs and ports cial and economic officers, and targeted trade missions. But the contracts. They have the local contacts, expertise and insights that central point is that while more can, and will, remain to be done, help U.S. companies win on a level and transparent playing field. America is well-positioned to compete and win in today’s global The basic point is that the entire embassy staff needs to be on economy. And strong U.S. government support for our businesses the economic/commercial team for U.S. business. As noted above, and workers must be a bedrock element of our national economic hands-on ambassadorial leadership can be the key to effective security strategy. n

34 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL FOCUS ECONOMIC DIPLOMACY WORKS—FROM THE FSJ ARCHIVES

In the Beginning, versa are no longer heard, the protection There Was Economic of U.S. business interests abroad remains Diplomacy an important foreign policy objective American Consular Bulletin, of the U.S. Government. Most of the Vol. 1, No. 1, March 1919 operational responsibility for protecting In publishing the “AMERICAN CON- U.S. overseas investment falls naturally SULAR BULLETIN” in cooperation with on the State Depart- the American Consular Association, ment, specifically on there is a real desire to further the closer diplomatic missions relations between the united States Con- abroad. … sular Service and American Business. ... Those with So that American firms entering the experience in commercial foreign field may have as economic/commer- complete information as possible as cial work are aware to the many ways Consular represen- that U.S. businesses abroad frequently tatives can be of assistance, it is our fail to consult with the embassy about purpose to devote, from time to time, a The first page of the very firstFSJ . company policy decisions that affect not part of this book to this subject as well only their own operation but those of as to have departments that will treat of the customs, shipping the entire American business community and official relations. relations, credits, principal import, etc., of all countries where our This is a foolish situation. Shouldn’t more preventive medicine Consular representatives are stationed. be practiced by the U.S. Government? Cannot a way be found —Excerpted from the “Editorial Note” to encourage U.S. investors abroad to seek guidance on major issues, to encourage their acceptance of such counsel and yet The New Duties of Our Foreign Service preserve their ultimate sovereignty over their own operations? The American Foreign Service Journal, Vol. 19, No. 7, July 1942 —Samuel F. Hart, FSO, Chief of State/USAID Economic An editorial in the May issue of The Foreign Service Journal made and Public Administration activities in San Jose this striking observation: “With the United States a full-fledged belligerent, the construc- Commercial Diplomacy: The Next Wave tive diplomacy of peace has vanished, the Foreign Service Journal, Vol. 82, No. 4, April 2005 every-day concerns of consular routine have April 1, 2005, marks the 25th anniversary of the creation of the yielded in importance to the new demands U.S. & Foreign Commercial Service. In honor of that milestone, growing out of the emergency.” a variety of initiatives are being planned. What are these new demands? They This past December, Commerce Assis- include the negotiation of lend-lease agree- tant Secretary and USFCS Director General ments, the working out of widespread systems of preclusive Rhonda Keenum and Tony Wayne, State buying, securing sources of materials needed for the prosecution Department Assistant Secretary for Economic of the war, and preventing the enemy from enjoying the use of and Business Affairs, formalized new coordi- American commercial and financial facilities. nation arrangements between the USFCS and —Christian M. Ravndal, FSO, the State Department to support and advance Chief of the American Hemisphere Office our current commercial diplomacy program. Both leaders real- ized that after 25 years, the absence of a formal mechanism to American Overseas Investment: consult and plan was a major obstacle to a more effective world- A Policy for the 1970s wide program to advance U.S. commercial interests. Foreign Service Journal, Vol. 48, No. 8, August 1971 —Charles Ford, FSO, AFSA Vice President for the Although is currently out of vogue in most cir- Foreign Commercial Service cles and arguments over whether business follows the flag or vice

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 35 FOCUS ECONOMIC DIPLOMACY WORKS

Bob Taylor works with an employee in Cameroon to fine-tune the settings for cutting ebony.

From Guitars to Gold:

ften the best diplomatic work leaves no trace because it is achieved behind the scenes, through partnership and shared effort—and an insistence on giving all credit to others. Which is why, when we began planning this special issue six months ago, we put out a call to active-duty and retired members of the Foreign Service, solicit- ing their best stories about practicing economic diplomacy— O“from the smallest success no one outside post would ever hear about, to the biggest, headline-grabbing accomplishment.” This collection, selected from the many submissions we received, illustrates the critical, everyday work of the U.S. Foreign Service around the world on behalf of the United States in the realm of eco- nomic and commercial diplomacy. Our thanks to all who shared their experiences. —The Editors

36 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Ebony for Chinese companies did not engage in any form of corporate Taylor Guitars social responsibility. For more and more Cameroonians, it was increasingly evident that the bloom was off the Chinese invest- Cameroon, 2015 ment rose. By Michael S. Hoza Our embassy approached the government of Cameroon with an alternative—American companies and investors. We pro- In 2015 Cameroon was an island of rela- moted U.S. companies based on “four points”: they would create tive stability in a very troubled subregion, hosting half a million jobs for Cameroonians; they would transfer technology to Cam- refugees from conflicts in neighboring states. It was besieged eroon; they would adhere to the Foreign Corrupt Practices Act by many of the ills afflicting its neighbors: piracy in the Gulf and maintain transparent accounting; and they would engage in of Guinea, Boko Haram’s violent extremism in the Lake Chad corporate social responsibility for the betterment of the Camer- Basin, waves of infectious disease threatening its population and oonian people, flora and fauna. rapacious neocolonial trade practices by many Chinese compa- One of our greatest success stories was Taylor Guitars, one of nies. the leading manufacturers of acoustic guitars in America. The U.S. government had gained a measure of access and As a young man many years ago, Bob Taylor went into his influence with the government of Cameroon through our part- father’s garage and made his first guitar. By 2015 he was selling nerships to fight piracy, violent extremism and health pandem- well over 140,000 guitars a year in the United States alone, and The Fruits of Economic Diplomacy

ics. We found dedicated Cameroonian professionals who used he got all of the ebony that he needed for his guitars from the our training and equipment to drive piracy out of Cameroonian trees of Cameroon. waters, drive Boko Haram back into Nigeria, eradicate polio and Bob Taylor’s vision for ebony production from Cameroon stop outbreaks of bird flu virus and Ebola. The United States was dovetailed with our embassy’s “four points” policy for commer- increasingly seen as a reliable partner, and we used that cred- cial advocacy. He began by assuming ownership (with Spanish ibility to open the door for American companies hoping to do partner Madinter) of the ebony mill, Crelicam. In addition to business in Cameroon, a country that was widely disparaged for the 75 Cameroonians directly on Crelicam’s payroll, he worked its unwelcoming business environment. with banks to establish transparent payment mechanisms Chinese business practices in Cameroon had been ruinous for thousands of individual Cameroonian suppliers. Bob for the country. First, Chinese companies did not create jobs walked the talk of creating jobs for Cameroonians—and the for Cameroonians. They imported their own labor from China, jobs he created were good jobs. He brought in state-of-the-art and often left the laborers stranded in Cameroon after the machinery to process the ebony to the exacting specifications project was completed. Second, China extracted raw materials, demanded by his guitar factory, and trained Crelicam employ- but never transferred technology to enable Cameroonians to ees to operate and maintain the machines. Bob was often in develop value-added manufacturing. Third, Chinese companies Cameroon, not in a suit and tie, but in overalls, working along- were directly responsible for an overwhelming rate of corruption side his Cameroonian partners. that was choking the socioeconomic environment. And, finally, As much as he enjoyed seeing the Crelicam operation grow

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 37 Bob Taylor, foreground, works with colleagues in Cameroon on the equipment he brought into the country.

Excellence for his responsible harvesting of ebony, but he was not content to stop there. He forged a partnership with the University of California, Los Angeles, and the Congo Basin Institute in Yaoundé to grow ebony seed- lings, and developed a mechanism to make it worthwhile for small farmers to tend the seedlings until they could grow on their own. Investing more than half a million dollars of his own money, he got the program off the ground in Cameroon—and can now say that he is planting more ebony than he cuts down. We were so proud of his initiative that we planted two of his seedlings on the embassy compound and one at the ambassador’s PHOTOS COURTESY OF BOB TAYLOR residence, amplifying the program through a in expertise and productivity, Bob was not doing this out of pure public diplomacy campaign. altruism. Shipping fine finished pieces of ebony to his guitar In Cameroon the reaction to the Taylor Guitars initiative was factory in the States was a lot less expensive than shipping whole instructive. Pro-American sentiment went up wherever the Creli- ebony logs. And apart from lowering his production costs, Cam- cam story was told. French commercial logging companies came eroonians with good jobs represented the beginnings of a middle to us to ask how they could start similar reforestation programs. class that would eventually become consumers of his product. And the Chinese ambassador thanked me, as the example of During one visit Bob was surprised when he entered the Taylor Guitars helped him discipline some of the more wayward office of the local tax assessor, who made it clear that a large companies from his country. bribe was all it would take to give Crelicam and Taylor Guitars a The Minister of Environment of Cameroon signed a private- clean tax audit for the year. He walked out of that tax office and public partnership agreement with the company at the United straight into my office at the embassy to tell me what had hap- Nations Climate Change Conference held in Bonn in 2017 to pened. partner in ebony propagation under the direction of Taylor Thanks to a close working relationship, the embassy soon Guitars and the Congo Basin Institute. And the Cameroonian had an audience with the minister of finance, a young, Western- government sent a trade delegation to the United States to find trained, progressive and highly respected technocrat. By the more American companies like Taylor Guitars. time the meeting was over, Bob Taylor was promised a fair audit The Taylor Guitars model served as the kernel around which and was notified of his eligibility for a tax holiday for foreign we built our broader commercial engagement. The reputation investors who create Cameroonian jobs. While it is unfortunate for transparency we developed, as well as the new channels of that we had to go all the way to the ministerial level to get a just communication we pioneered within the Cameroonian govern- outcome, we were grateful for the opportunity to bring Crelicam ment and the private sector, created openings for other U.S. to the minister’s attention. It was our way of building a healthy companies to successfully bid on and receive contracts and business “microclimate” around an American company in what other opportunities. was otherwise acknowledged to be a difficult business environ- ment. Michael S. Hoza entered the Foreign Service as a When it came to corporate social responsibility, Bob Taylor management-coned officer in 1985. He has served in proved to be one of the finest examples of American entrepre- 11 overseas postings, including as U.S. ambassador to neurship. He won the Secretary of State’s Award for Corporate Cameroon from 2014 to 2017.

38 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Protecting resolution passed in the U.S. Congress praising the Italian govern- Intellectual ment for its efforts in dealing with the piracy problem. The case was an interesting example of how an embassy can Property Rights be an activist in conceiving programs and putting together coali- tions to help solve serious problems for American companies. We Italy, 1990s were successful because we had sufficient staff in the economic By Kevin McGuire section, a staff that was well-trained and capable of maintaining strong ties to relevant host-country officials and There is a great deal of attention today on to the local business community. problems with intellectual property rights (IPR) Disney representatives, who had previ- violations, particularly by China. This is not a ously avoided coming around to see us, heard new issue, and it is worth noting that a great deal about our success. They had earlier decided of progress has been made in this area over the to address their film piracy problems through years through persistent bilateral and multilat- the courts, but that approach was proving eral diplomatic efforts. In the late 1980s, we at expensive, time-consuming and largely fruit- Embassy Seoul spent a great deal of time and less. After our partnership with BSA produced effort on such issues, with significant success. But results, Disney asked us for help, as well. So we as I discovered after being transferred to Rome sat down with a Disney team and plotted out as economic minister counselor in 1990, IPR a somewhat different strategy for dealing with COURTESY OF KEVIN MCGUIRE problems are not always restricted to developing Mickey Mouse and Kevin their problem. nations. McGuire reminisce about past We used many of the same players in the battles. The U.S. Business Software Alliance informed Italian government, starting with the foreign us that they planned to seek U.S. trade retalia- ministry and the prime minister’s office, and tion against Italy because of the tremendous amount of pirated also the parliament and law enforcement agencies. We got Disney software that was being sold and used there. We suggested that and other moviemakers who had been affected by piracy to spon- perhaps a better way would be to work with us at the embassy sor seminars for judges and supervisory police officials to educate to put together a program to address the problem. The BSA was them on the nature of the problem and ways to get rid of it. Once enthusiastic about trying that approach; and so, working closely again, we found strong Italian support for action, in part because with their representatives, we organized an all-out blitz. proceeds from many of the pirated videos were going to organized We approached Italian companies involved in software/hard- crime, the Mafia and its equivalent in other parts of the country. ware-related products and found they shared our concerns. Ital- Before we got involved, things happened along the follow- ian businesspeople were very eager to participate in developing a ing lines. A film courier would come into the country carrying program that would put new laws in place and enforce them. We a sealed bag with copies of a first-run movie. The movie was went to the foreign ministry and the prime minister’s office, and supposed to be delivered to the relevant theaters the next day, we talked to political party representatives. We got the BSA and but the Mafia would pay off the couriers. They had warehouses their Italian colleagues to come up with specific draft legislation set up with hundreds of recording machines, so they could make that would help solve the problem and also asked for suggestions thousands of top-quality copies overnight and have vendors out on how enforcement could be improved. on the street selling them before the film was released. As a result With cooperation from Italian ministry officials, we sold of our efforts laws were strengthened, and the police put addi- the package to the parties in the coalition government, and the tional people on the monitoring side, closing down illegal copy- legislation passed. New enforcement techniques were also put ing facilities and arresting street vendors. Judges began handing in place to help police the new regulations. I remember getting down heavy punishments for violations. It was another example phone calls from Italian contacts saying, “You’re a real pain in of what an adequately staffed embassy can do when confronted the neck. I’ve got the Carabinieri in my office looking for pirated with a problem. software.” The effort was so successful that instead of pushing Very few Americans know about these types of diplomatic for a special Section 301 action against the Italians, the BSA got a accomplishments. The BSA people were very gracious, both pri-

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 39 vately and publicly, in their praise of the embassy, including with other overextended Asian economies. It boasted world-class the U.S. Congress; but, unfortunately, that is atypical. However, I macroeconomic management, a solid foreign investment greatly valued the Mickey Mouse T-shirt my staff gave me for my inflow, rich natural resources and an emerging middle class. birthday as a reminder of our excellent antipiracy work. Though sitting atop a corrupt system for decades, President Suharto had kept things stable and economic deals flow- Kevin McGuire joined the Foreign Service in 1966. He served as am- ing. Even when Indonesia followed other regional countries bassador to Namibia, deputy chief of mission and economic minister and floated the rupiah in August, Jakarta’s in-the-know circle counselor in Korea, and economic minister counselor in Italy, in stayed calm. addition to economic jobs in Greece, Ireland and Washington, D.C., In October 1997 Ambassador J. Stapleton Roy, an inspir- in the bureaus of Economic and Business Affairs and International ing leader, summoned our economic section to his office. He Organizations. After retirement in 2004 he became a senior inspec- told us he didn’t want the embassy to keep telling Washington tor in the Office of the Inspector General and director of the Rangel that the fundamentals were sound and have the Indonesian International Affairs Program. For more on what economic officers do economy “come crashing down around our ears.” Economic and how the Foreign Service helped build a comprehensive economic Counselor Judith Fergin and her deputy, Pat Haslach, told us to system that has served U.S. interests in the post-World War II era, see dig deeper. Judith, working her huge network of contacts, began his oral history at www.adst.org. daily phone briefings back to State and Treasury. Banking con- tacts I had met a few months earlier now sounded worried. They said funds from abroad—which Indonesian firms relied on to keep rolling over short-term U.S. dollar loans—were drying up. As things grew more uncertain, FSI economic course cochairman Barry Blenner was my lifeline. I often called him at night, taking advantage of the 12-hour difference, to talk through the worsening situation and prepare for the next day. For example, I once confidently briefed the ambassador and country team about the need for the government to sterilize The Asian Financial Crisis: the money supply, keeping the overall supply stable as foreign assets were increasingly withdrawn, based on Barry’s explana- The Ground View tion the night before. from Jakarta By January 1998 there were no more illusions about Indone- sia. The exchange rate, our main instability indicator, suddenly Indonesia, 1997 weakened to 12,000Rp/USD compared to just 2,400 in August. By Brian McFeeters The crisis hit the real economy. Half-built skyscrapers in central Jakarta became deserted sites, and businesses shut down. Real The 1997-1998 Asian financial crisis began, most observers later GDP would decline by 13 percent that year. Ambassador Roy agreed, on July 2, 1997, when the Thai government allowed the called us in again, saying that a senior Treasury official wanted baht to float against the U.S. dollar, throwing a wrench into the his bottom-line assessment on where Indonesia was heading. region after an amazing decade of growth. The same day, my He gave us until close of business. family and I arrived in Jakarta, and I began my third FS assign- Pat Haslach, running the section that day, gathered us in ment, as finance and development officer at U.S. Embassy the common area and asked us each to write a short summary Jakarta. of the situation and our recommendations. A mid-level officer, Coming directly out of the Foreign Service Institute’s nine- I felt empowered, recognizing that other senior officers might month economic training, I would love to be able to say that have taken sole lead on such a high-priority project. We jointly I saw the financial storm on Indonesia’s horizon and alerted described the situation as dire and government credibility as Washington about it. Instead, as I began to meet government low. We suggested that a senior U.S. government official come officials and foreign bank executives, I believed what they told meet with President Suharto to recommend that his govern- me: the fundamentals were sound. Indonesia was not like the ment seek International Monetary Fund assistance. A few days

40 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL later, Secretary of the Treasury Larry Summers came, and Suharto reluc- tantly agreed to negotiate with the IMF. Had the problems been solely eco- nomic in nature, the IMF intervention package agreed to in April may have righted the ship. But by then the crisis was political, too; and we worked with political section colleagues to convey the emerging reality to Washington. A front-page newspaper photo of IMF Chief Michel Camdessus standing over Suharto with his arms crossed signaled to many status-conscious Indonesians that their president had knuckled under. I called financial-sector contacts to ask questions about the economy, and they answered by saying that Suharto needed to go. COURTESY OF ALAFFIA OF COURTESY In early May 1998 riots that, in retro- Ambassador David Gilmour (center), Alaffia CEO Olowo-n’djo Tchala (third from right) and a spect, appear to have been staged broke delegation of senior Whole Foods Market officials dedicate a partnership-financed primary out across the Jakarta metro area and school in rural northern Togo. elsewhere in Indonesia. That was the beginning of the end. In late May, Suharto stepped down, resign- Social ing after his Cabinet and key military leaders abandoned him. By then, my family and I had been evacuated back to Wash- Entrepreneurship ington, out of concern about mounting street violence and Takes Center an expected million-person march in front of the presidential Stage palace near the embassy. We relied on management section colleagues to put us on chartered flights out of the panicky city. The crisis that began as a financial phenomenon developed into Togo, 2017 a political and security crisis that the whole mission needed to By David Gilmour cope with. In July 1998 my family and I returned to a different Indo- In sub-Saharan Africa, U.S. embassies strengthen commercial nesia. The worst of the financial crisis was over, as the contro- ties and promote economic growth to achieve our national versial but effective IMF stabilization policies took effect. But security goal of making African countries stable and reliable Indonesia was knocked down and sobered, taking the better partners for the United States. That task is especially chal- part of a decade to get back to 1997 economic levels. lenging in Francophone Africa, where the language barrier and obstacles in the operating environment can discourage Brian McFeeters is a Senior Foreign Service officer American companies from investing. currently serving as a senior adviser to the counselor In Togo, our embassy tackled the problem by creating of the State Department. He was previously principal partnerships with private-sector companies, civil society and deputy assistant secretary of the Bureau of Economic the host government to promote , environmental and Business Affairs, deputy chief of mission in Jakarta, and has protection and public health, while working to improve the served much of his career in Asia and Europe. He won the Salzman business climate and encourage trade with the United States. Award for Excellence in International Economic Performance in 1999. A small post like Lomé with a limited foreign aid budget

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 41 COURTESY OF ALAFFIA OF COURTESY Ambassador David Gilmour visits the Olympia, Washington, headquarters of Alaffia, guided by CEO Olowo-n’djo Tchala and company staff.

might seem to have little to offer partners, but we crafted a Growth and Opportunity Act Forum, which brought together unique approach to attract them. When Togo was selected for 39 AGOA-eligible African nations and the United States for a Millennium Challenge Corporation Threshold program, a this annual dialogue to foster increased U.S.-Africa trade and team of American and Togolese economists set out to identify investment. the binding constraints in its economy. The embassy seized Using MCC and other activities like the AGOA Forum, we the opportunity of that MCC research project to significantly branded the embassy as the most prominent advocate for ramp up our contacts within the business community. improving Togo’s business climate. The private sector saw We launched a series of dialogues with businesspeople value in our activities and perceived us as an ally, and our to learn about their challenges and listen to their ideas for enhanced convening authority brought numerous partners to improving Togo’s investment climate. I stressed the need to the table. improve the business environment in nearly every speech I With that support, we collaborated on projects that offered gave, and we strongly promoted entrepreneurship programs. businesses the opportunity to demonstrate good corporate We initiated a public-private working group to promote Eng- citizenship, while enriching Togo’s human capital. To support lish-language teaching, stressing the economic opportunities educational advancement, local companies joined us to spon- for young people and the benefits to a business community in sor a national English-language competition in which more search of talent. than 10,000 Togolese high school students from more than Our team established a “U.S.-Togo Business Forum” of 600 schools participated. Students gained valuable skills, and American-associated businesses and promoted the services businesses could recruit talented scholars when they gradu- of regional resources like the USAID West Africa Trade and ated. The embassy collaborated with U.S. company Contour Investment Hub and the Foreign Commercial Service. We also Global to outfit a donated bus with computer equipment supported the government of Togo in hosting the 2017 African and scientific gear, creating a mobile learning lab that visited

42 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL schools to offer hands-on experience We collaborated After we highlighted social with science, technology, engineer- entrepreneurship and fair trade at ing and math. on projects that the AGOA Forum in Lomé, organic We also teamed up with American offered businesses supermarket giant Whole Foods companies, U.S. alumni of exchange Market sent a delegation to Togo to programs and the Togolese govern- the opportunity to deepen its supply chain connections ment to create a nonprofit organi- demonstrate good with West Africa. The government zation to promote environmental of Togo is considering a “fair-trade education and carry out community corporate citizenship. friendly” marketing campaign for the cleanup activities, which regularly country. drew several hundred volunteers. Embassy Lomé’s business part- In health care, we enlisted an American company to pay the nerships produced winning results for everyone involved. We shipping costs of donated medical equipment from the United helped American companies showcase their corporate citizen- States to outfit hospitals in Togo’s underdeveloped rural areas. ship while enhancing the business climate and demonstrated We also leveraged U.S. Defense Department funding to attract the tangible ways that diplomats assist U.S. businesses over- an American company to help renovate and equip a health seas. By promoting social entrepreneurship and fair trade, we clinic in a populous Lomé neighborhood. enhanced America’s image, communicating that U.S. consum- Our most fruitful partnership was with the Olympia, Wash- ers are responsible global citizens who care about the welfare ington-based company Alaffia, which makes natural skin and of producers in developing countries. hair care products from African ingredients like shea butter We showed that fair trade raises rural incomes and reduces and coconut oil. Founded by a returned Peace Corps Volunteer dependence on foreign aid by helping producers tap rapidly and her Togolese husband, Alaffia operates on a fair trade and growing new markets. We helped change the Togolese mind- social entrepreneurship model that emphasizes doing good set about the role of government, and proved that citizens can works while generating jobs and making profits. work with businesses to make positive changes in their com- This “conscious capitalism” approach is rapidly gaining munity. Our embassy partnerships were a multiplier that vastly popularity in the United States, where American consumers stretched our limited resources, inspired our staff members increasingly demand products that are responsibly sourced and improved morale. and environmentally sustainable. For African countries with The Secretary of State’s Office of Global Partnerships agriculture-based economies, fair trade and social entrepre- recognized our efforts with its annual Partnership Excellence neurship represent exciting new opportunities to supply natu- Award and cited Lomé as an “Embassy to Watch” in its 2018 ral and organic products, and to increase economic prosperity annual report. Alaffia was the recipient of the 2018 Secretary of for their citizens. State’s Award for Corporate Excellence for Women’s Economic Inspired by Alaffia’s success, Embassy Lomé made social Empowerment. entrepreneurship a centerpiece of our trade promotion activi- ties. I visited the company’s Washington state headquarters David R. Gilmour is a career member of the Foreign to highlight both the creation of American jobs and the social Service, class of Minister-Counselor. He served as impact in Africa. We organized a campaign to educate the deputy assistant secretary in the Bureau of African Togolese about social entrepreneurship and opportunities Affairs at State from 2011 until his appointment as in the fast-growing $200 billion American market for natural, ambassador to Togo in December 2015. Prior to that, he served as organic and fair-trade products. director of the Office of Public Diplomacy in the Bureau of African We showcased American and Togolese social enterprises at Affairs, deputy chief of mission for U.S. Embassy Panama City, and the embassy’s Independence Day celebration and organized a public affairs counselor for U.S. Mission Geneva. He also served major conference on social entrepreneurship. Following that as deputy chief of mission in Lilongwe and as public affairs officer conference, the Togolese government established a special for U.S. Consulate General Sydney. Ambassador Gilmour’s earlier public-private task force to promote social enterprises and assignments include Cameroon, Costa Rica, Senegal and South recommend policy changes to facilitate their formation. Africa.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 43 Ensenada restaurant associations, universities and large . As a result, Cicerone developed more than 10 new potential contracts in Baja California and a host of new contacts with whom to explore further business relationships. In addition, numerous Southern California and Baja California breweries have partnered to brew and distribute beer on both sides of the border, increasing their visibility and economic success in both consumer markets. Women are underrepresented in the Mexican craft Beer Diplomacy: Craft Brewing industry. As part of the consulate’s support to the Ensenada Beer and U.S. Agricultural Export Congress, we brought together female representatives from the agri- Promotion culture, marketing, brewing, industry advocacy and certification parts of the Baja California, Mexico, 2018 industry. In one of the best-attended ses- By Preeti Shah sions of a three-day conference in Ensenada in March 2018, we hosted a Consulate General Tijuana applied an panel, “Women in Brewing,” in which array of business promotion and public five women from both countries dis- diplomacy tools to the growing craft cussed inclusion, diversity and gender beer industry in Baja California over four equality in the field of craft beer. Con- months last year to further three U.S. necting female brewers from Southern

Mission Mexico goals: expansion of U.S. NORIEGA MARIA TIJUANA/JOSE CONSULATE U.S. California with Baja California female Founding members of the U.S.-Mexico women’s exports and business; development of brewing nonprofit “Dos Californias Brewsters” brewers facilitated business and men- local entrepreneurship, small businesses at the Ensenada BeerFest last March. toring relationships. One immediate and the workforce; and promotion of result was that Baja California women gender equality. Working with our interagency partners from the established the first Mexican chapter of the Pink Boots Society, a Foreign Agricultural Service and the Foreign Commercial Service, beer industry nonprofit designed to build mentorship opportuni- we developed a multipronged program that pulled together ties for women in brewing. experts and participants from each stage of beer brewing, includ- This cross-border group also went a few steps further and ing marketing and export, to promote U.S. economic growth while brewed unique beers for the Ensenada BeerFest, using the profits simultaneously supporting young, mostly female entrepreneurs in from their sales to endow scholarships for young female brewers Mexico. to get their brewing science certificates at Baja California uni- Mexico’s craft brewing industry is rapidly expanding, versities. The group’s binational board also established itself as a and Baja California has the highest concentration of craft nonprofit in Mexico and plans to continue brewing together with breweries in the country. U.S.-grown and and the goal of supporting young female brewers. U.S.-manufactured brewing equipment are key to their success. Craft brewing was an ideal vehicle—especially in the border Through sustained engagement with the brewing industry, we region that embraces U.S. trends and interests before the rest of solidified the U.S. role as a key economic driver in the binational Mexico—to showcase the benefits of export and business promo- border region, and ensured U.S.-grown agricultural exports would tion, as well as to highlight U.S. commitment to entrepreneurship, be the preferred base ingredients to brewing craft beer in Mexico. gender equality and workforce development. (And we got to We also tapped into the Cicerone certification program, a U.S. sample some terrific products along the way.) business-sponsored initiative that educates and certifies beer serv- ers, brewers and critics, much like the process a sommelier goes Preeti Shah joined the Foreign Service in 2004 and has through to become a certified wine expert. Cicerone representatives served in Mexico, Afghanistan, Turkey, Nicaragua and were eager to gain a foothold in the Mexican market, and we con- several tours in Washington, D.C. She is a public diplo- nected them with representatives of the brewers’ guild, Tijuana and macy-coned officer and is headed next to Indonesia.

44 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Open Skies, State Department officials raised the issue with their Brazilian Open Markets counterparts to make clear the importance we placed on this agreement in the context of the overall bilateral relationship. Embassy officers and Locally Employed staff intensively Brazil, 2018 engaged Brazilian legislators and industry representatives. By Paul Brown Over a five-month period, from October 2017 through Febru- and Naomi C. Fellows ary 2018, we strategized and executed a missionwide, vote-by- vote advocacy effort in Brazil’s Congress. We made the case In 2011 the United States and Brazil signed a bilateral Open for Open Skies with the Brazilian travel, tourism and business Skies Air Transport Agreement to provide new market access groups who would benefit from the agreement, encouraging options for the airlines of both countries. Open Skies agree- them to advocate with their congressional representatives in ments give the public expanded choices for flights and services favor of Open Skies ratification. and offer exporters more choices when they ship goods. These The embassy’s insight into the Brazilian Congress and its benefits would only become available once the agreement internal dynamics generated an effective advocacy effort. Our entered into force—but for that to happen, Brazil’s National Open Skies ratification team held meetings—both group and Congress needed to ratify the agreement. From 2011 to 2016, individual—with legislators and staffers, using statistics to however, the agreement remained with the Brazilian executive highlight the concrete results of successful Open Skies agree- branch and legislature. In the meantime, air links between the ments signed with other countries and showing Open Skies two countries were limited, affecting both market entry and as a win-win agreement for both parties. The team spent days services. on the floor of the Brazil- Delay in reaching a new ian Congress tracking how agreement imposed real The team spent days on the members were voting and costs on both countries. The engaging congressional staff United States is the biggest floor of the Brazilian Congress when the vote became close. market for international tracking how members Weeks of patient, hands-on flights with Brazil: U.S. air diplomacy led to the agree- carriers transport more than were voting and engaging ment’s ratification, first by 60 percent of the passengers congressional staff when the the lower house in December between the two countries. 2017, then by the Federal But they could not reap the vote became close. Senate in February 2018. The full benefits of their invest- embassy then worked with ment in Brazil or with Brazil- Brazilian counterparts to use ian airlines without Open Skies in place. Alliances and pro- the visit of Deputy Secretary of State John Sullivan in May 2018 posed joint ventures between U.S. and Brazilian airlines—the to finalize entry into force. norm in the liberalized aviation markets of several other impor- U.S. airlines celebrated Brazil’s entry into force of the Open tant Latin American partners—also remained at a standstill Skies Agreement on May 23, 2018. One major U.S. airline will pending entry into force of the new agreement. now be able to move plans forward on a joint venture with a With the arrival in office of a new Brazilian president in Brazilian carrier. Combined, these two carriers transport more 2016, U.S. Embassy Brasilia, working closely with the State than 40 percent of all passengers traveling between the United Department and interagency colleagues, undertook a con- States and Brazil. Another U.S. airline has since increased its certed campaign to put ratification of the agreement at the investment in a Brazilian airline by more than $100 million. top of our bilateral economic agenda. The ambassador and As a result of the new agreement, these airlines and others will country team members repeatedly raised the issue with Brazil- be able to offer new flight options for travelers and shippers in ian officials and legislators. The embassy facilitated a visit by both countries. Brazilian congressional leaders to Washington, D.C., where U.S. To put these gains in context, the U.S. commercial aviation officials were able to stress the benefits of ratification. Senior industry supports more than 5 percent of U.S. GDP and more

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 45 than 10 million jobs. Our dedicated team, both in Brazil and in consultant and banker from Arizona. Ambassadors John Dinger Washington, made this important U.S. industry even stronger. and Pamela Slutz also supported this risky endeavor, one that could have blown up in our faces. Paul A. Brown is the director of the Office of Aviation When I arrived at post in August 2001, Pete Morrow was Negotiations in the Bureau of Economic and Business already several months into his new job as Khan Bank CEO. At Affairs. He joined the Foreign Service in 1988 and has the time it was still referred to as the Agricultural Bank of Mon- served overseas in São Paulo, London, , Sin- golia—Khan Bank came later, when Pete tapped into Mongolia’s gapore and Kuala Lumpur. His assignments in the department have history to rebrand the bank and give it a new name. focused on trade, nonproliferation, global health, climate change, The bank had been launched during Soviet times to furnish anti-corruption and investment, among other issues. Mr. Brown credit to herders in Mongolia’s vast countryside. More recently, served on a detail to the National Security Council as director for during the country’s democratic era, it had been bankrupted the Group of 8 and as senior adviser to the under secretary for eco- twice, in each case following elections. After he took over as nomic, business and agricultural affairs. CEO, Pete often showed visitors the relevant World Bank assess- Naomi C. Fellows is the deputy economic coun- ment from the time, which gave little cause for optimism: “No selor in Brasilia, Brazil. She joined the Foreign amount of financial remediation will save this bank,” it read. Service in 1996 and has served in Conakry, Bogotá, “The only thing to do is shut it down.” Yaoundé, Managua and Moscow. Her domestic After the bank’s second bankruptcy, the government of Mon- assignments include tours as staff assistant in the Bureau of West- golia had approached my predecessor at USAID in desperation, ern Hemisphere Affairs; desk officer for , Burundi and asking for help to select and fund a new senior management the Democratic Republic of the Congo; and deputy director for the team—that’s how Pete came to join the bank. AF/PD, INL/I Policy Program. I had a bird’s-eye view of what unfolded, both as a Khan Bank The authors would like to thank Gabriela Fontenele, Nathan board member and as the new director of a five-person USAID Halat, Adedeji “Deji” Okedeji, Kevin O’Reilly, Francisco Sadeck, mission (myself, three Mongolian office staff and a driver), -pos James Story and Ricardo Zuniga for their input and for their work sibly the smallest USAID mission in the world. USAID contrib- on the Open Skies program. uted $2 million to $3 million over 30 months to support this unlikely effort to save the bank. USAID brought Morrow in, and he ran Khan Bank like a “real” bank, demanding staff accountability and scrutinizing loans to ensure viability. He was especially effective at resisting politically motivated lending and hiring. Usually bank restructuring involves deep cutbacks. But Mor- row increased the number of branches from 269 to more than 350. He also doubled the number of staff from 800 to more than 1,600. Many of his new hires were women, and the senior Khan Transforming the Bank management team remained overwhelmingly Mongolian, not expatriate. He viewed Khan Bank’s human resources as its Agricultural Bank of Mongolia most important asset. Morrow introduced new computers and financial products, Mongolia, 2003 including a creative new pension loan that ensured elderly herd- By Jonathan Addleton ers only had to travel to town once or twice a year rather than monthly to collect their modest pension checks, thus reducing Financial sector reform is not for the fainthearted. But the transfor- transactional costs. mation of Mongolia’s Agricultural Bank is an inspiring example of Remarkably, the bank turned a profit after only six months, what can happen when the embassy country team works together. later emerging as one of the largest corporate taxpayers in the Ed Birgells, my predecessor as USAID mission director to Mon- country. Rather than receiving subsidies, it contributed mightily golia, was a major contributor, as was Pete Morrow, a financial to the national budget.

46 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL COURTESY OF JONATHAN ADDLETON JONATHAN OF COURTESY Khan Bank in downtown Ulaanbaatar.

The end game for Khan Bank was always privatization. Now fund tens of thousands of new solar panels, satellite dishes that it was a successful bank, however, the government expressed and motorcycles. To cite one example, the percentage of herder interest in retaining it, at least through the next election, and some families placing solar panels on their gers (yurts) increased from donors privately asked USAID to reconsider privatization. 15 percent to more than 75 percent, illustrating one way in which But the embassy resisted this change, and we continued the steppe was changing. to work with the Mongolian State Property Committee to find USAID also worked with the economic section and front office a new owner. In March 2003 Khan Bank was sold to a joint to promote change in Mongolia’s financial sector in other ways, Japanese-Mongolian consortium. Soon after, the new owners including privatizing the country’s Trade and Development Bank signed a management contract with our team, including Pete and establishing a new microfinance bank, XacBank, which was Morrow. The new owners, not U.S. taxpayers, would pay the bills. formed by consolidating two separate USAID and United Nations The bank sold for $6.9 million, nearly twice its assessed value. Development Programme informal microfinance programs. In I left Mongolia in spring 2004, one year after privatization. yet another example of effective interagency cooperation, this Five years later, I returned to Mongolia, this time as ambassador. effort was also supported by commodity proceeds from the U.S. Pete Morrow, who has since passed away, was still in Ulaan- Department of Agriculture. baatar, continuing to serve as CEO. I asked him how much he All these efforts focused on financial-sector reform were largely thought Khan Bank was now worth. He estimated $100 million, successful, enhancing U.S. government credibility, moving Mon- nearly 15 times its selling price. golia toward a market-based economy and strengthening eco- During the intervening years, Khan Bank had paid tens of nomic and commercial ties between the two countries. They also millions of dollars in taxes. The number of bank branches now provided unusual opportunities for USAID to work with three of exceeded 500 and the number of employees, virtually all Mongo- the four largest private banks in Mongolia, demonstrating the suc- lian, surpassed 5,000. cess of a practical, hands-on approach to financial-sector reform More importantly, Khan Bank had further expanded its in ways that benefited both the United States and Mongolia. loan portfolio in rural Mongolia, providing credit that helped And this was just the beginning. The Khan Bank turnaround

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 47 On the Economic Front Lines in the Vietnam War

Vietnam, 1964 By Theodore (Ted) Lewis

I was assigned to the joint State-USAID economic section in Saigon from 1965, when the American military buildup in Vietnam got seriously underway, through

COURTESY OF JONATHAN ADDLETON JONATHAN OF COURTESY 1967, the eve of the Têt Offensive. It was a An advertisement for Khan Bank over a busy thoroughfare in dangerous and difficult assignment, but Ulaanbaatar. the economic section team displayed the core disciplines of the Foreign Service: willingness to confront any challenge, no matter strengthened positive perceptions of the U.S. government in a how daunting; readiness to accept any assignment, no matter how country living in the shadow of both Russia and China. More difficult; and determination to meet any deadline, no matter how broadly, success at Khan Bank opened the door to expanded short. commercial relations with the United States, most notably on The 1954 defeat of the French at Dien Bien Phu had resulted the part of Boeing, which sold its first aircraft to Mongolia as the in their withdrawal from Vietnam and the division of the country national airline transitioned toward an all-Boeing fleet; General into North and South Vietnam. North Vietnam was left to the Electric, which exported medical equipment, locomotive engines communist-inclined Viet Minh (later Viet Cong), with the anti- and wind turbines; and Caterpillar, which supplied heavy equip- communist Ngo Dinh Diem as president of South Vietnam. For ment during the rapid expansion of Mongolia’s mining sector. some years the South remained quiescent, but in the early 1960s Looking back, the engagement with Khan Bank remains in the local Viet Cong, supported by the North, became increasingly a special category, one that has been a point of pride on return active. When the South proved unable to contain them, American trips to Mongolia, where the familiar green and white Khan Bank military support was extended, first with advisers and then with logo that was introduced by the USAID-funded management combat troops; American troop strength reached nearly 400,000 team is visible everywhere. Without a doubt, it was one small by the end of 1966. USAID mission, supported by a patient embassy country team The military buildup necessarily injected vast purchasing willing to trust its USAID colleagues to take informed risks, that power into an economy in which production, especially agricul- made this possible. tural production, had already been disrupted. Much more money was chasing far fewer goods, with a high potential for runaway A five-time USAID mission director (India, Pakistan, inflation. The resulting general instability would undercut or even Cambodia, Mongolia and Central Asia), Jonathan negate the military effort. The economic section’s task was to work Addleton also served as U.S. ambassador to Mongolia; with the South Vietnam government to contain the inflation and USAID representative to the European Union in Brus- assure a sufficient supply of basic goods, especially food, for the sels; and U.S. senior civilian representative for Southern Afghanistan civilian population. in Kandahar. His most recent books include Mongolia and the United The pressures were unrelenting. We worked long hours, often States: A (Hong Kong University Press, 2013) and seven days a week. Our assignments often involved the risk of The Dust of Kandahar: A Diplomat Among Warriors in Afghanistan being killed or captured. Yet, believing that the war’s outcome (Naval Institute Press, 2016). He retired from the Foreign Service in might depend on what we did or failed to do, we persevered. And January 2017 and is now an adjunct professor at Mercer University as brilliantly led by the economic counselor, we largely succeeded. in Macon, Georgia, where he also serves as executive director of the The staple Vietnamese food was rice. Prior to the war Vietnam American Center for Mongolian Studies. had been a major producer and exporter of rice; but because of

48 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL the war rice production in South Vietnam—though the country of the piaster by a third in June 1966 was decisive in ensuring the was comprised largely of the fertile Mekong River Delta—had country’s economic stability and the welfare of its people. turned from surplus to deficit. Rural sections of the country were Despite the efforts of the economic and other embassy sec- still self-sufficient. But the cities, especially Saigon with its two tions, we lost the war. Were our section’s efforts then wasted? Not million people, were another matter. To meet their requirements, entirely, for they remain a shining example of economic achieve- imports were needed. ment through courage and commitment. The question was how much domestic production could be expected, leaving how large a gap to be filled by imports. Stock The Reverend Theodore (Ted) Lewis is a retired FSO levels, both urban and rural, also had to be taken into account. We who worked for both USAID and State from 1951 to lacked reliable statistics, and with large sections of the Mekong 1984. He served in Pakistan, the Democratic Republic Delta under Viet Cong control and travel in the countryside haz- of the Congo, Korea and Laos, and did three tours ardous, answering this question was difficult. Yet we were able to in Vietnam. His book, Theology and the Disciplines of the Foreign do so with sufficient accuracy. Service, was reviewed in the April 2015 FSJ. Pork came second only to rice in the Vietnamese diet, but supplies were easier to track: Most pigs were brought to the municipal slaughterhouse in Saigon, and figures could be Global Alliance for obtained from its director. One of my jobs was to bicycle there once or twice a week, riding through Saigon’s streets in the dim Trade Facilitation light of early morning (slaughtering was performed before dawn on account of lack of refrigeration). Vietnam, 2015 In view of urban dependence on the countryside for rice, By Kimberly Rosen pork and other foodstuffs, members of the economic section and Paul Fekete were required to make frequent trips outside of the city to check on conditions. Travel was in almost all instances by air, the For many years, USAID has supported provincial roads being too insecure to drive on. Provincial cities global efforts to promote international like Can Tho were reasonably safe, but forays into their environs trade and foster economic growth in were dangerous. Still, this did not deter us. developing countries. Since the early Equally important was the demand side of the inflation 2000s much of the focus has been on the equation, distorted by the massive purchasing power injected reduction of “frictions” to trade flows— by the rapid American military buildup. There was not much those policies and practices that constrain the physical move- scope for curbing inflationary pressures through fiscal policy. ment of goods. Trade facilitation, as it has come to be known, is Collecting—let alone increasing—taxes in the midst of the war based on the acknowledgement that policy liberalization alone presented great difficulty for the South Vietnam government, cannot ensure the growth of trade if businesses continue to face which at the same time had to make large war expenditures. barriers to the movement of their products into and out of other The principal instrument remaining to curb inflation was the countries. exchange rate. One of the most significant initiatives undertaken by USAID American spending meant that abundant dollars were avail- in this realm has been the 2015 creation of the Global Alliance able to finance imports. And when importers bought dollars with for Trade Facilitation, a public-private partnership to develop piasters (the local currency), the amount they paid was taken out effective, private sector-based solutions to trade problems. of the money supply, thereby reducing domestic demand. These Established with four other donors and with such multinationals amounts depended on the piaster-dollar exchange rate: the higher as Walmart, FedEx and UPS, GATF’s objective has been to sup- the rate, the more piasters were removed. Devaluation of the piaster port the implementation of the World Trade Organization Trade was therefore essential, but it would have to be coordinated with the Facilitation Agreement by making sure that the private sector is South Vietnam government. Further, the discussions would have to included in the development of commercially meaningful tech- be kept secret, so as not to tip off speculators. As negotiated by the nical assistance interventions. section’s leadership, both these conditions were met. Devaluation The WTO TFA, which entered into force in 2017, requires par-

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 49 Because it is working to correct this prob- lem, the project enjoys the support of major U.S. firms such as UPS, Ford, Intel, Amazon and Walmart, as well as local Vietnamese entities such as the Vietnam Chamber of Commerce and Industry and the American Chamber of Commerce in Vietnam. The project will also positively benefit U.S. companies that already sell their products in Vietnam, such as General Electric and Caterpillar. COURTESY OF THE GLOBAL ALLIANCE FOR TRADE FACILITATION USAID’s support of GATF advances the Alliance Director Philippe Isler speaks at the launch of the GATF project in Morocco. agency’s mission of helping our partners ticipating countries to minimize bureaucratic delays by border become self-reliant and capable of leading their own develop- control agencies (e.g., Customs, Agriculture, Standards) that con- ment journeys while also promoting American prosperity by stitute a costly burden on traders. The simplification, moderniza- strengthening and expanding markets for U.S. businesses. Reduc- tion and harmonization of export and import processes—trade ing the time and cost of trade helps both local businesses seeking facilitation—will reduce average costs to WTO members by 14.3 greater commercial opportunities through trade and U.S. firms percent and could create 20 million new jobs, particularly in that are pursuing opportunities in markets developing countries. It will have a greater effect on global GDP such as those in Africa, , Eastern Europe and Asia. than the complete elimination of all trade tariffs. Another significant, but underappreciated, benefit of enact- Vietnam is the location of one of GATF’s flagship projects. ing trade facilitation reforms is that international businesses are There, working with the government and the private sector, more likely to invest in places where they know that red tape will the alliance is implementing a bond system that will yield be minimized, making it easier to move their goods. This can significant benefits to the business community. Since Vietnam have a positive effect on development and can make U.S. busi- concluded a bilateral trade agreement with the United States nesses more competitive in the global marketplace. in 2001 and joined the WTO in 2007, it has become an increas- ingly important market for U.S. companies. When Vietnam joined Kimberly Rosen joined USAID as an FSO in 2000 the WTO it committed to creating a regulatory environment and is currently a deputy assistant administrator in conducive to the operation of competitive enterprises, including the Bureau for Economic Growth, Education and smooth importation and exportation across its borders. Environment. Previously, she served as the mission The project aims to reduce “hold” rates for imports and director in Kyrgyzstan, director of the West Africa Affairs Office in exports through the establishment of a customs bond system. USAID’s Africa Bureau, deputy mission director in Liberia, director Vietnam’s hold rate—the time it takes for duties and taxes to be of the Economic Growth Office in USAID/Afghanistan and deputy paid and certificates to be obtained, during which time Customs office director of the Economic Growth Office in the Central Asia holds the shipment in its physical possession—has traditionally Republics Regional Mission. been among the highest in Asia. By reducing hold rates, Vietnam Paul Fekete is a senior trade adviser in USAID’s will be able to reach its goal of becoming a more efficient manu- Bureau for Economic Growth, Education and En- facturing platform for the region. vironment. He joined USAID in 2010 after working It can take days or even weeks for Customs officials to release as an international economic consultant for entities shipments in Vietnam. Their understandable concern is that such as the World Trade Organization and the World once goods are released, there is no way to ensure compliance Bank. He has worked throughout the African continent as well as in with Vietnam’s laws and regulations. At the same time, import- other developing countries on trade policy, , ers and exporters are unable to predict when they will get their and WTO accession and compliance issues. He is also an adjunct goods out of Customs, making it difficult to plan, let alone assistant professor at Syracuse University’s Maxwell School, where deliver, time-sensitive shipments to domestic and international he teaches graduate courses on international economics, U.S. trade customers. policy and policy formulation.

50 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Commercially Viable, Conflict- Free Gold

Democratic Republic of the Congo, 2017 By Kevin Fox “Private sector engagement is fundamental to our goal to end the need for foreign assistance.” —Mark Green, USAID Administrator

The Democratic Republic of the Congo is home to more than 1,100 mineral substances and a potential mineral wealth of $24 trillion. However, almost all of the gold from the artisanal and small-scale mining (ASM) sector in the DRC is smuggled out of the country, and revenues are often laundered in illicit schemes in Uganda, Rwanda and the Middle East. Mineral smuggling finances armed groups and militia activity in the eastern DRC, perpetuating the wider conflict that has already claimed millions of victims. Although donors have spent tens of millions of dollars to stem the flow of conflict minerals, progress has been slow. USAID development experts and State Department diplo- STORYUP mats recognized that co-creation and a market-based approach Two artisanal gold miners from the COOMIANGWE mining was needed to finally break the link between conflict and the cooperative at Nyamurhale in the Democratic Republic of the gold trade. Toward this end, USAID implementing partners on Congo in 2017. the ground worked with ASM cooperatives to build capacity, develop traceability and certification systems, and strengthen considered an important step in creating supply chains that are partnerships with Congolese market actors. conflict-free and led by the private sector. This success led to posi- Success came in August 2018 after years of engaging with tive press coverage from major media in the jewelry industry. those involved in both the upstream and downstream supply- Looking to the future, USAID is working with the private sec- chain. A USAID pilot project was able to facilitate the first tor to address the systematic challenges of conflict minerals that export of conflict-free gold to the United States from South Kivu harm both business and the public. Within the field of interna- province in the wartorn eastern DRC. It was the culmination of tional development, USAID created a more flexible procurement years of dedicated work by officers to build trust with the private option that allows the government to work directly with poten- sector, working jointly to develop a commercially viable solution tial collaborators and beneficiaries to “co-create” innovative to a seemingly intractable development challenge. approaches to tackling complex development challenges. In an interagency effort, USAID and U.S. State Department USAID held a co-creation workshop in Kinshasa that brought FSOs collaborated in the field and back in Washington to cultivate together more than 70 participants to tackle this complex chal- partnerships with responsible American companies like Google, lenge. Over a three-day period they developed more than 26 inno- Richline, Signet and Asahi Refining. The clean gold was exported vative concepts that used exciting technology like blockchain and by Fair Congo, processed by Asahi Refinery in the United States, blended tools to mobilize finance, and new approaches to encour- made into gold earrings by the Richline Group and sold by age increased private sector engagement and co-investment to Signet Jewelers through brands like Zales and Kay Jewelers. This ensure conflict-free gold supply chains. first-ever export of fully traced and clean gold was small, but it is Private-sector representatives at the workshop helped develop

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 51 STORYUP Aerial view of the artisanal and small-scale mining (ASM) community at Nyamurhale, South Kivu, DRC.

Roughly 500,000 persons directly depend on ASM for survival income in eastern DRC, and it is estimated STORYUP that this income indirectly benefits as many as three million family members. Inset: Conflict-free artisanal gold from eastern DRC. More than 95 percent of artisanal gold—estimated at 40 metric tons per year, with a value of $1.8 billion—is mined illegally and smuggled out of the country. Convincing Nigerians to Buy American

Nigeria, 1981 By George Griffin

STORYUP I went to Lagos as commercial counselor in November 1981. An artisanal miner removes clay deposits using a manual hand-scrubbing method. Processing artisanal gold is very At the time Nigeria was the source of our fourth-largest trade labor-intensive, and sometimes mechanization is not deficit because of our oil imports, and the United States was sustainable on small-scale sites. Nigeria’s second-largest export market. My job was to convince the Nigerians, since we were buying a lot of their oil, that they and vet these new ideas alongside others representing civil needed to reciprocate by buying more American goods. Com- society, donors and governments. One industrial miner even petition was fierce, and the commercial section’s workload was reported that he learned more about artisanal and small-scale huge. mining in three days than he had learned in a 25-year career Ambassador Tom Pickering viewed the commercial function working in the DRC. of the embassy as one of the more important aspects of his job. The new projects that will be awarded should be rolled out He wanted a political officer as head of the commercial section, this winter, helping catalyze investment and financing from the saying you can’t dissociate the two. I worked closely with the private sector to increase exports of “clean” conflict-free gold and political and economic sections, and we formed a bilateral busi- improve the livelihoods of miners. These collaborations will drive ness council made up of business leaders from both countries innovation at the intersection of business and development to who agreed to try to influence their governments to facilitate reduce donor subsidization of responsible minerals trade and, business. A year after the council was formed, Vice President hopefully, one day end the need for its existence. George H.W. Bush came to Lagos to bless it. Nigerians were not catalog or internet buyers. They wanted Kevin Fox currently serves in the Democratic Republic to touch, feel, drive or play with whatever was being sold. With of the Congo as the director of the Economic Growth this in mind, we organized big trade shows, sharing the cost Office. He joined the Foreign Service in 2009 and previ- with several other posts. Our primary focus was to help small ously served one tour in and two tours with American businesses who otherwise couldn’t afford to market USAID/West Bank and Gaza. He has a passion for developing market- their goods and services abroad. driven solutions to development and has helped leverage more than Under the terms of the Foreign Corrupt Practices Act we $100 million in private capital for USAID programs in the field during worked with only the most trustworthy Nigerian businesspeo- his career. Prior to USAID, he was an operations manager for a Fortune ple. I tried to convince the American business community that 500 company, managed construction projects in Costa Rica and the it was not a fatal blow to have to comply with the FCPA, while Dominican Republic, and was a Peace Corps Volunteer in . making clear what would happen to them if they got caught

52 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL violating it. We suggested firms Nigerians were not catalog provincial capital of a province should calculate what they would where Chevron had significant otherwise have spent on bribes or internet buyers. They operations was briefly overrun. and instead call it an immediate wanted to touch, feel, drive American petroleum companies profit. We said the best approach actively participated in the frequent was to shine a spotlight on their or play with whatever was security meetings conducted by the competitors’ bribes, something being sold. embassy’s regional security officer we would help them with. as we sought to keep each other The new Foreign Commer- safe and the companies sought to cial Service Director, Rick McIlhenny, convened an all-Africa/ protect their multimillion-dollar investments. I, as well as other Middle East commercial counselors’ conference in Nairobi. He embassy officers, traveled several times a year to Chevron’s iso- insisted that we do a lot of reporting, something FCS officers lated offices and production facilities in the northern Cabinda were not used to doing. I calculated that during the course of province to meet and offer support and reassurance to the many my tour we facilitated $20 billion worth of business, and our Americans working there. trade deficit with Nigeria dropped by $2 billion in that time. American company representatives consulted frequently with me and with the embassy’s economic/commercial officer George Griffin entered the Foreign Service in 1959 on their plans and operations. On issues where the embassy and retired after 40 years at 15 posts and several State could assist, such as the renewal of Chevron’s exploration and Department offices. His last postings abroad were as production lease, I advocated for the companies on behalf of deputy chief of mission in Nairobi and consul general the U.S. government with the Angolan government. During that in Milan. Primarily a political officer and South Asia expert, he also same period, Exxon-Mobil consulted closely with the embassy served as commercial minister in Lagos and in Seoul. He was the and bid successfully on several major offshore petroleum recipient of the 1982 James Clement Dunn Award for managerial exploration blocks. (It has since become a major producer of excellence, especially in commercial and economic affairs. petroleum from its deepwater blocks in Angola.) In addition, the embassy offered advice and support as Chevron and other U.S. petroleum companies launched significant social responsi- Keeping Americans bility activities in Angola. The embassy and the oil industry worked together during Safe During a this time, enabling the companies to maintain, even expand, Civil War operations and production through the most difficult and dangerous years. Since then, Chevron alone has surpassed five Angola, 1999 billion barrels of petroleum production from its fields in Angola, By Joseph Sullivan while Chevron and Exxon-Mobil each produce more than 100,000 barrels of petroleum a day from their Angolan opera- tions. U.S. petroleum companies have been exploring and producing U.S. Embassy Luanda supported American businesses to oil from offshore sites in Angola for more than 60 years. Since its function in a difficult environment and worked very closely with establishment in 1994, U.S. Embassy Luanda has worked closely American companies to help keep their employees and their with American petroleum companies as they expanded existing facilities safe in the midst of a war. production, bid for newly opened exploration areas and estab- lished their operating conditions with the Angolan government. Joseph G. Sullivan served as the U.S. ambassador During my time as ambassador to Angola, the final stage of to Angola from 1998 to 2001. During 38 years as a the country’s long civil war erupted and the embassy’s rela- Foreign Service officer, he also served as ambassador tionship with Chevron, the largest U.S. petroleum producer to Zimbabwe, chief of mission in Cuba and deputy in Angola, and other American petroleum companies was assistant secretary for inter-American affairs. Ambassador Sullivan is particularly intense on the security front. In early 1999, the retired and lives in California.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 53 Horizons on its six-billion-mile journey to the most distant part of the universe ever explored by a spacecraft. Economic officers and other embassy personnel joined forces with NASA, coordinating logistics, addressing security issues and ensuring foreign government engagement. For example, General Services Office staff facilitated the import of telescopes and other sensitive equipment. Locally Employed staff arranged fleets of trucks and lodging for research teams in remote regions of Patagonia and Senegal, while regional security office colleagues worked with local law enforcement to ensure the safety of U.S. astronomers and their partners. Economic officers obtained host-country support and planned PARKER CHRISTIAN HINTON CHRISTIAN PARKER for future science collaboration. As New Horizons project leader Marc Buie remarked to U.S. Ambassador to Senegal Tulinabo NASA's New Horizons Mushingi: “The expeditions simply could not have been executed without the flexibility of the U.S. embassy teams.” Senegal, , South Africa, The astronomy expeditions faced unique challenges. The first Argentina, U.S.A., 2016 – Present hurdle was the need for a bilateral agreement between NASA By John Fazio and Heath Bailey and each host-country government to facilitate the import of equipment and data sharing. To speed up implementation in Who does the National Aeronautics and Space Administration Senegal, Embassy Dakar—in close coordination with State’s rely on to execute the most ambitious and challenging ground Office of the Legal Adviser—used an exchange of diplomatic astronomy experiments ever conducted? The State Department, notes, with NASA’s standard agreement attached, to get all of course! parties pointed in the same direction in record time. Early in Over the past two years, teams of economic officers and the process, State’s Senegal desk officer facilitated a meeting their colleagues from missions in Dakar, Bogotá, Pretoria, Cape between NASA’s Office of International Relations and the Sene- Town, and Buenos Aires galese ambassador in Washing- worked day and (mostly) ton, D.C., to secure support for night to champion the cause the expedition. Together, these of by sup- actions laid the diplomatic porting dozens of astrono- groundwork to ensure the tele- mers working on NASA’s New scopes and astronomers would Horizons mission. arrive on time in Dakar. Launched in 2006, NASA’s No strangers to interna- New Horizons spacecraft tional exchanges, economic encountered Pluto in 2015 officers facilitated this mul- and will soon—on New Year's tinational cooperation and Day 2019—fly by a Kuiper helped build the capacity of belt object nicknamed Ultima our host country partners. In U.S. EMBASSY IN ARGENTINA/JORGE GOMEZ ARGENTINA/JORGE IN EMBASSY U.S. Thule, giving planetary scien- New Horizons project lead Dr. Marc Boie (left), Dr. Adriana Argentina, the national space tists insight into the origins of Ocampo of NASA (center) and Felix Menicocci of CONAE present agency, CONAE, connected our solar system. To optimize occultation findings in Buenos Aires. NASA to the local resources New Horizon’s instrumentation and trajectory, NASA sent and expertise of provincial governments, which was crucial to teams of astronomers overseas on five separate expeditions to the success of the expeditions. The expeditions also benefited collect data on Ultima Thule’s size, shape and surface reflec- from security escorts, weather reports and the use of commer- tivity. This information will also help to mitigate risks to New cial trucks to shield the telescopes from the fierce Patagonian

54 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL U.S. and Senegalese astronomers test a telescope prior to deployment. COURTESY OF JOHN FAZIO wind. Provincial police even closed the national highway for made significant, but initially unrecognized, contributions to two hours so that lights and vibrations from vehicular traffic NASA’s space program. would not affect data collection. As NASA’s Adriana Ocampo Having organized the New Horizons visits, embassy staff stated: “The team succeeded, thanks to the help of institutions took full advantage of them to stimulate future U.S. science like CONAE, and all the goodwill of the Argentinian people. and technology collaboration with science ministries, univer- This is another example of how space exploration brings out sities and astronomers. In fact, NASA has offered to return to the best in us.” Senegal in mid-2019 to present the findings of the flyby and to In Senegal, embassy officers worked with the Ministry of conduct a workshop for Senegalese planetary scientists, while Higher Education, Research and Innovation to coordinate the Argentina’s space agency will pursue an expanded bilateral participation of 22 Senegalese scientists. While these scientists dialogue on space science. NASA plans to conduct similar had solid theoretical training, this was the first opportunity astronomy expeditions in other countries over the next few many of them had ever had to join a field expedition using years—and you can be sure the Foreign Service will be there sophisticated observation equipment. Senegal’s President to promote U.S. science agencies and ensure their continued Macky Sall also recognized the opportunity the expedition rep- global leadership role. n resented to build bridges of international science cooperation. Sall, a geologist by training, invited the entire expedition team John Fazio joined the State Department as an FSO in to the presidential palace to celebrate this collaboration. 2012 and currently serves in the Office of U.S. Foreign The New Horizons expeditions provided an unparalleled Assistance Resources. He previously covered science opportunity to promote U.S. leadership in science, technology and technology issues for Embassy Buenos Aires and and research. Local media treated NASA scientists like rock was the human rights officer in Manila. Before joining the Foreign stars, highlighting their achievements through print, TV and Service, he was a Presidential Management Fellow with the U.S. radio interviews, as well as numerous public speaking engage- Department of Housing and Urban Development and worked in the ments. This outreach connected NASA to local communities Chicago field office for six years. Prior to that, he was a Peace Corps outside of the capital cities and influenced a diverse audience Volunteer in Paraguay. with the positive message of science diplomacy. In Dakar, the Heath Bailey is the economic section chief at Em- public affairs section organized a presentation on women in bassy Dakar. A member of the Foreign Service since science by two New Horizons team members to introduce a 2007, his previous posts include Nairobi, Manila, screening of the movie “Hidden Figures,” which tells the true Riga, and San Jose. He practiced law in Las Vegas for story of three African-American female mathematicians who eight years before joining the Foreign Service.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 55 FEATURE EXCHANGE PROGRAMS PAY OFF FOR AMERICANS Exchange programs are a two-way street when it comes to commerce and industry.

BY MARIE ROYCE

conomic diplomacy works because of international businesswomen were in Dallas on an International people. And the State Department’s Visitor Leadership Program, “Alumni as Economic Multipliers.” Bureau of Educational and Cultural All of the participants had previously been on an exchange and Affairs is in the people business. We were returning to the United States to make new connections. are making the connections that are They met with U.S. companies in Dallas and several other U.S. helping solve the business problems of cities, sharing best practices with American colleagues. today and tomorrow, both abroad and “I think we can be really self-focused if we don’t expose our- in the United States. selves to things that are different, and ideas that are different, and Take, for example, Ange Noelle Muco people that are different,” says American Stephanie Giddens of of Burundi and American Erica Hall, chief impact officer of the Vickery Trading, which hires refugee women to assist with mak- EAkola Project, an international fashion design company with ing their clothing line. “Until you get to know people, until they a flagship store in Dallas, Texas. On a recent State Department become your friends, and you do business with them, that makes exchange for female entrepreneurs, the two women shared the all the difference in the world,” says American Valerie Freeman, story of how they connected their two supply chains at a critical CEO of the Imprimus Group, also of Dallas. Both Stephanie and time, benefiting both of their businesses. Ange and her fellow Valerie took time from their schedules to meet with the interna- tional women. Marie Royce was sworn in as assistant secretary Ange and the women in her group join thousands of State of State for educational and cultural affairs in Department exchange participants who return home with new March 2018, following unanimous Senate con- ideas after meeting with Americans across our great country. firmation. She is a businesswoman and former However, there is another story that is less often told—but as professor. important—regarding how exchange programs also help Ameri-

56 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL can companies, like those of Erica, Stephanie and Valerie. The U.S. National Security Strategy lays out four pillars, including the need to promote American prosperity. The strategy states that to succeed in this 21st-century geopolitical competi- tion, America must lead in research, technology and innovation. And one way that American companies are achieving this goal is through connections made on exchange programs. Take Mike Matesic from Idea Foundry in Pittsburgh, Pennsyl- vania, who participated in the State Department’s Young Leaders of the Americas Initiative reverse exchange program for Ameri- cans who host international YLAI participants. After completing his nine-day visit in Santiago, Chile, he told us: “We have identi- fied several potential partners which we are following up with to discuss collaboration. This will support the transfer of innovations and talent between Santiago and Pittsburgh, in both directions.” The economic benefit to Americans is also felt when partici- pants come to the United States from other countries. On our Community Solutions program, Abdulsalam Mohammed of Ghana partnered with his host supervisor, Michelle Wilson from Global Ties in Akron, Ohio. Together they created the Accra-Akron Partnership Board, engaging the mayors of both cities to increase fair trade and collaborate to boost businesses in both cities. One of the most powerful statements about exchange pro- grams comes from Susan Cohig of the National Hockey League, who tells us that the espnW Global Sports Mentoring Program has helped her organization rethink their business challenges on a more global scale and take advantage of new opportunities. “It’s helped make us better as an organization,” she says. Her mentee Olga Dolinina returned to Ukraine to start “Break the Ice,” which works with kids from war-torn areas to provide the support and training they need to succeed and contribute to society. Each year 40,000 State Department-sponsored participants and more than 300,000 private sector sponsored participants, U.S. DEPARTMENT OF STATE OF DEPARTMENT U.S. who are overseen by the State Department on programs like Olga Dolinina, second from right, a Ukrainian alumna from Camp Counselor and Summer Work Travel, bring direct eco- the 2014 U.S. Department of State and espnW Global Sports nomic benefits to the American people, while contributing to Mentoring Program, returned to the United States last March our nation’s security. Well over 90 percent of ECA’s appropria- for a special one-week activity with the National Hockey League and U.S. Women’s National Hockey Team. During the visit, tion is spent in the United States or invested directly in Ameri- Dolinina reunited with her mentor, NHL Senior Vice President can citizens or American organizations. Susan Cohig, second from left, who says the GSMP helped make We could not do the work we do without organizations like the NHL a better organization. Dolinina and Cohig posed for this picture with NHL Counsel Nicole Allison, at left, and NHL Global Ties, with their network of 100 organizations serving all Executive Vice President for Media and Business Affairs Elaina 50 states. Mostly comprised of volunteers, these citizen diplo- Lombardo, at right. mats make connections in their communities with businesses Dolinina participated in the 2014 GSMP as head of and organizations, then connect them to international partici- development for the Ukraine Athletics Federation. Since then she has established “Break the Ice,” an after-school ice hockey, table pants. And I am proud that ECA is expanding our pool of U.S. hockey and therapy program to support children in Donetsk who private sector partners. These partners range from professionals have been affected by the conflict and violence in the region.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 57 who share their specialized skills Acquiring the skills to work Cruz, California, tell us that with foreign exchange partici- they would not be open with- pants, to schools and universities in the global economy is out exchange participants hosting educational exchanges enhanced through foreign on Summer Work Travel, and businesses that host foreign who can work in late spring professionals who, in the pro- language learning and or early fall when Ameri- cess, contribute to Americans’ can students are in school. international expertise and exposure to foreign cultures These participants bring new networks. and professional perspectives to American We expand economic pros- businesses, while also allow- perity by increasing the capa- opportunities abroad. ing these businesses to stay bility of Americans to operate open longer, after American internationally and furthering the reach of U.S. businesses and students return to school. institutions. Acquiring the skills to work in the global economy To increase global competitiveness, ECA helps to interna- is enhanced through foreign language learning and exposure to tionalize workplaces and U.S. campuses, supporting profes- foreign cultures and professional opportunities abroad. sionals and foreign students who study and work alongside Thousands of businesses across this country tell us they are Americans. State Department exchange programs are making a stronger because of exchange participants. Seasonal busi- real difference in our economy and in our global economic and nesses in destinations like Ocean City, Maryland, and Santa trade relationships—one exchange participant at a time. n

58 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL AFSA NEWS THE OFFICIAL RECORD OF THE AMERICAN FOREIGN SERVICE ASSOCIATION

Call for Nominations: 2019-2021 AFSA Governing Board

Do you want to represent your • USAID Representatives (1) position descriptions for colleagues and help ensure • Alternate FCS all officer positions, go to that the voice of the Foreign Representative (1) www.afsa.org/board. Service is heard on the Hill and • Alternate FAS around the country? Do you Representative (1) Nomination Procedures want to participate in the man- • USAGM Representative (1) Nominating Candidates. CALENDAR agement and modernization of • APHIS Representative (1) Any AFSA regular member in January 1 New Year’s Day a multimillion-dollar organiza- • Retired Member good standing (i.e., a member AFSA Offices Closed tion with a large staff and real Representatives (2) whose dues are automatically impact in Washington? These positions have two- deducted or who has paid January 14 If so, consider joining the year terms beginning July 15, dues as of Feb. 1, 2019) may Deadline: Sinclaire Language Award next AFSA leadership team by 2019. AFSA bylaws require nominate any person (includ- Nominations running for a position on the that Governing Board mem- ing themselves) for any of the 2019-2021 AFSA Governing bers participate via in-person available positions for which January 15 Board. attendance at regularly sched- the nominee is eligible. The 12-1:30 p.m. uled meetings of the board following requirements apply Panel Discussion: “Economic Diplomacy Works” Election Call within 60 days of taking office to nominations: U.S. Diplomacy Center Election of AFSA Officers on July 15 or appointment to 1. No member may nomi- and Constituency Repre- office thereafter, and through- nate more than one person for January 16 sentatives. This election call, out their term in office. each officer position or more 12-1:30 p.m. AFSA Governing issued in accordance with The president and State, than the number of represen- Board Meeting Article VII(2)(a) of the AFSA USAID, FCS and FAS vice tatives established for each bylaws, constitutes a formal presidents are full-time posi- constituency. No member’s January 21 notice to all AFSA members of tions detailed to AFSA. These name may appear on the bal- Martin Luther King Jr. Day the opportunity to participate employees are assigned over lot for more than one position. AFSA Offices Closed in the nomination and election complement and are eligible 2. All nominations must January 22 of a new Governing Board. for time-in-class extensions. be submitted in writing by 12-1:30 p.m. The active-duty representa- letter, cable, fax or email. To “Retirement Planning Call for Nominations tive positions are not full time, be valid, they must, without 5 to 10 Years Out” Available Positions. but they are given a reason- exception, be received no February 5 The following positions will able amount of official time later than 5 p.m. on Feb. 1, Webinar: “Reviewing be filled in this election: to attend meetings regarding 2019. All written nominations Your Retirement Plan” Officers labor management issues. must be addressed to the February 18 • President Governing Board members AFSA Committee on Elec- Presidents Day • Secretary are required to attend monthly tions, 2101 E Street NW, Wash- AFSA Offices Closed • Treasurer lunchtime board meetings ington, D.C., 20037. Members February 20 • Vice President for State and may volunteer to serve on overseas can send “AFSA 12-1:30 p.m. • Vice President for USAID additional committees. To see Continued on p. 64 AFSA Governing • Vice President for FCS Board Meeting • Vice President for FAS Important Dates: February 27 • Vice President for Retirees Feb. 1, 2019 Deadline for nominations Time TBD Feb. 15, 2019 Committee on Elections announces Webinar: “The View Constituency candidates’ names from Washington” April 28, 2019 Ballots and candidate statements mailed Representatives March 15 June 12, 2019 Ballots counted Deadline: AFSA • State Department July 15, 2019 New Governing Board takes office Representatives (6) Scholarship Applications

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 59 STATE VP VOICE | BY KENNETH KERO-MENTZ AFSA NEWS

Views and opinions expressed in this column are solely those of the AFSA State VP. Contact: [email protected] | (202) 647-8160

Where Does the Econ Track Lead?

Before coming to State in as deputy economic chief, As of June 2018, there were roughly January 2000, I’d spent covering a range of issues 1,550 State FS economic officers, about five years on Capitol including the environment, Hill covering a range of legis- science, technology and but only 700 econ positions by grade. lative issues including trade, health (ESTH) portfolio, nar- environmental protection, cotics, IPR, agriculture and agriculture, transportation, commercial development. for 2000, with only 59 mem- virtually halting hiring from intellectual property rights I loved it; but sadly, that bers. Of those 59, four hit 1995 to 1999. (IPR), water resources and, was the last time I worked their mandatory retirement In fact, the first “large” of course, foreign policy. exclusively on econ issues age and retired. Another 11, A-100 class of about 90 So when I was offered the full time. including nine women, left. came on board in April 1999, opportunity to join the For- When I started serving The retention issues we hear with a second following in eign Service, I opted—after here at AFSA, my A-100 col- about in the Foreign Service, July. That means that in some thought—to become leagues began to reach out especially for women, were April 2019, and thereaf- an economic officer. I’d to me with concerns about certainly true for my class. ter, the number of officers enjoyed the areas I’d been the slow rate of promotions. Of the 44 remaining who will have completed covering for my congres- We all remember how awful officers, 17 are FS-2s—about 20 years of service will sional bosses, and it seemed the promotion rates were 40 percent. I was shocked increase dramatically, and a natural fit as my career in in 2017, especially for econ the numbers were so high. the number eligible to retire public service continued. officers (who were, for the And of those 17 FS-2s, fully will jump as well. Will we see But somehow, as careers fifth year in a row, the least- 15 are econ officers, and not a spike in those leaving as go, the opportunities to do promoted cone). even one of those 15 was FS-2s? Will we see a spike a lot of substantive econ In 2018 we got hit again. promoted in 2018. in those TICing out as FS-2s work seemed elusive. I did The numbers were a smidge All of a sudden, that before reaching age 50? my consular tour, covered better, but with fewer than 6 expectation of reaching FS-1 As of June 2018, there mainly political issues on percent of econ officers pro- within 20 years starts to were roughly 1,550 State FS the Greece and Turkey desk, moted from the FS-2 to FS-1 look doubtful—at least for economic officers, but only and went to Baghdad after level, it was still tough going. econ officers. What’s gone 700 econ positions by grade. the “mission accomplished” Folks were getting worried, wrong? Why are so many In an up-or-out system, photo op, where I managed as was I. Would some run strong officers stuck? Is this where in-cone experience is the reconstruction of the out of time, TIC out? Would the new normal, or is the critical to promotion, how Iraqi National Assembly others retire as FS-2s? This department just ignoring a the heck are we supposed to building. didn’t make sense to any growing problem? get ahead when the oppor- To get things back on of us. The expectation is I was still working on the tunities are so sparse? track, I then took the chal- that a “normal” career path Hill when the Newt Gingrich These are just a few of lenging 10-month econ for tenured officers means “Contract for America” revo- the questions we’re rais- course at FSI. When I bid, I reaching FS-1 within 20 lution and the subsequent ing with the department. bid only on econ jobs, but years, give or take. government shutdowns led We’ll keep our members when the handshake came, Last year I took a quick to slashing budgets for our posted as we learn more I got a pol/mil job in Berlin. look at the “autobiography” federal departments, includ- about this, and as you’ll read Berlin was great, of course, book we were given at the ing the Department of State. throughout this edition of and the portfolio was cer- start of A-100, and I noticed And while most depart- the Journal, we’ll continue tainly interesting, but I’d just some interesting data ments opted for a reduc- pushing the department finished the econ course! points. About 25 percent of tion-in-force to shrink the to reinvigorate the econ It wasn’t until my next my A-100 colleagues have size of government, State career path, and the career tour, in Sri Lanka, that I left the Foreign Service. We nobly refused. We reached paths of all members of the finally served in my cone, were a relatively small class our draconian reductions by Foreign Service. n

60 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL USAID VP VOICE | BY JEFFREY LEVINE AFSA NEWS

Views and opinions expressed in this column are solely those of the AFSA USAID VP. Contact: [email protected] | (202) 712-5267

USAID’s Economic Diplomacy Makes a Difference for U.S. Economic Growth

Over the past 10 years, almost U.S. jobs. Increased exports to Economic diplomacy overseas makes a two-thirds of the growth in a more distant and less well- difference for U.S. businesses at home by U.S. goods exports was to known country, Indonesia, increasing access to markets and thereby major USAID partner coun- resulted in more than 20,000 tries. This powerful statistic, U.S. jobs. increasing sales, leading to business from a May 2018 USAID Why do USAID’s programs growth and more U.S. jobs. publication, “Shared Inter- and Foreign Service officers est: How USAID Enhances make such a difference to U.S. and guidance on undertaking totaled $3.6 billion. U.S. Economic Growth,” businesses and their exports? partnerships and alliances This is not to say that emphasizes the importance Don’t U.S. businesses have overseas. USAID’s programs alone of USAID’s work in raising up the staff and business acu- Taken together, these account for the almost two- the economic prospects of men to identify opportunities guides give USAID FSOs, thirds growth in U.S. goods the United States, as well as and conclude business deals especially those working on exports to major USAID part- promoting peace and stability. in other countries without economic diplomacy, the skills ner countries. USAID works This month’s Foreign Ser- USAID’s assistance? and competencies to succeed collaboratively with Foreign vice Journal aims to show how As businesses will them- in building the trust, respect Service officers in other parts economic diplomacy works. selves tell you: without the and mutual understanding of the U.S. government, as Every Foreign Service officer, opportunity and the frame- that lead to needed changes in well as other donors, non- past and present, should read work to do business, the the business environment of governmental organizations, this issue—and then give it to risks frequently outweigh the our partner countries and to the private sector and the a friend or family member to opportunities. This is espe- the kinds of results reported in countries themselves. read. cially true in the case of many “Shared Interests.” There is no denying that The state of the U.S. of USAID’s partner countries. Like this issue of The doing business in the coun- economy is an important USAID’s partner countries Foreign Service Journal, tries where USAID works is issue for Americans, who are face a number of challenges “Shared Interests” points to riskier than doing business worried about China’s expan- in the areas of customs many USAID success stories with, say, European countries. sion and growing economic regimes, financial markets, in economic development. A But as “Shared Interests” doc- influence around the world, infrastructure and gover- USAID guarantee for a loan uments, the value-added sup- and what that means for U.S. nance, all of which combine from JP Morgan Chase to an port that USAID’s economic businesses and U.S. citizens. to create a business environ- African financial institution diplomats provide in these Economic diplomacy over- ment that U.S. companies see is both financing agribusi- tricky business environments seas makes a difference for as too risky. USAID’s work nesses across East Africa and makes all the difference. U.S. businesses at home by makes a difference for U.S. supporting JP Morgan Chase’s The agency’s “expert increasing access to markets businesses as they navigate business investment. advice and support, tailored and thereby increasing sales, these markets. In India, a project directly to country situations,” the leading to business growth In 2008 USAID pub- assisted by USAID to build 46 report concludes, “can bring and more U.S. jobs. During the lished its economic growth megawatts of solar rooftop huge economic dividends.” 10 years referenced in “Shared strategy, “Securing the systems was awarded to the Given the proven, positive Interest,” the growth of U.S. Future.” This strategy is U.S. company Azure Power (so effects our work has on the exports of goods and ser- complemented by focused much for China always win- U.S. economy, how could we vices to Asia and the Pacific guides on trade, developing ning infrastructure contracts). even consider reducing our produced some 3.4 million a business-enabling environ- “Shared Interests” notes that commitment to keeping our American jobs. In Brazil, ment, infrastructure, access in 2015 U.S. exports of power USAID Foreign Service officers export growth during the to finance and more. USAID generation infrastructure to in the field? n same period added 137,000 has also developed strategies USAID-assisted countries

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 61 FAS VP VOICE | BY KIMBERLY SAWATZKI AFSA NEWS Views and opinions expressed in this column are solely those of the AFSA FAS VP. Contact: [email protected] | (202) 720-3650

Feeding the World through Economic Diplomacy

The U.S. Department of grow their businesses as we Our market intelligence helps American Agriculture’s economic diplo- apprise them of foreign mar- farmers, ranchers and exporters make macy is as engaged as ever. ket opportunities, produc- The Foreign Agricultural Ser- tion and trade forecasts, and informed decisions about how and where vice expands and maintains changes in policies affecting to grow their businesses. access to foreign markets for U.S. agricultural exports and U.S. agricultural products by imports. exporting isn’t as simple as cooperators provide FAS with removing trade barriers and U.S. Secretary of Agri- putting our farm surplus a wealth of knowledge and enforcing U.S. rights under culture Sonny Perdue has on a boat for the next port. technical support on how to existing trade agreements. placed international trade Although today’s farmers promote their commodities. We work with foreign govern- front and center. Before produce more and feed more FAS’ global network of ments, international organi- Secretary Perdue came to people than at any other agricultural attachés and zations and the Office of the USDA, FAS shared an under time in history, feeding our Locally Employed staff, U.S. Trade Representative to secretary with two dissimilar growing planet remains a coupled with our strategic establish international stan- domestic agencies, and trade challenge. Fortunately, FAS partnerships with U.S. agri- dards and rules to improve was often overshadowed by doesn’t have to confront cultural associations, is the accountability and predict- their issues. In keeping with these challenges alone. In envy of other nations. We use ability for agricultural trade. a congressional directive in addition to our collabora- this advantage to increase And we develop markets the 2014 Farm Bill, Secretary tion with numerous other U.S. agricultural exports, by partnering with 75 coop- Perdue created an under sec- U.S. government and USDA boost employment and erator groups representing a retary for trade and foreign agencies, we partner with incomes in the U.S. agricul- cross-section of the U.S. food agricultural affairs whose job more than 70 U.S. nonprofit tural and export sectors, and and agricultural industry and is to “wake up every morning trade associations, called support American farmers managing a toolkit of market seeking to sell more Ameri- “cooperators,” that represent and ranchers. development programs to can agricultural products in producers of myriad food and The best part of our jobs help U.S. exporters develop foreign markets.” agricultural products. as agricultural attachés is and maintain markets. We Under Secretary Ted This public/private being able to witness the also support U.S. agricultural McKinney lives by that motto, partnership ensures that fruits of our labor. It might exporters through export and he has pushed ahead with FAS understands and advo- be in the form of a thank- credit guarantee programs a vision of “leaving no stone cates the whole-of-industry you email from a small U.S. and other types of assistance. unturned.” He has led a record interests of U.S. agricultural business that is exporting We help developing countries number of trade delega- sectors, and both parties for the first time; or seeing improve their agricultural tions and seeks to broaden benefit from each other’s an American product on a systems and build their trade the reach of U.S. agricultural knowledge and experience. A grocery store shelf overseas capacity, thereby enabling exporters by networking at cooperator may seek guid- that did not or could not their participation in the the people-to-people level ance from FAS on how to best enter the country before; or global economy. in difficult-to-reach markets enter a new market, including witnessing the passage of Through FAS’ global such as Southern Africa, introductions to major play- trade-enabling legislation network of 93 offices cover- Central America’s Northern ers, knowledge of the market that we helped create. ing 171 countries, we are the Triangle, South China and and relevant regulations, Every day, we recognize eyes, ears and voice of U.S. India. Trade missions help and advice or warnings on why and how economic diplo- agriculture around the world. generate sales by facilitating approaches or pitfalls. At the macy makes a difference for Our market intelligence introductions and opening same time, some cooperators U.S. agriculture. Are you con- helps American farmers, doors where language barriers have decades of experience in vinced that FAS has the best ranchers and exporters and lack of familiarity obscure foreign markets, and pro- jobs in the government? We make informed decisions opportunity. vide similar guidance to our are! Come join us at https:// about how and where to FAS recognizes that attachés and staff. In all cases, usajobs.gov. n

62 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL AFSA ON THE HILL | BY KIM GREENPLATE, DIRECTOR OF CONGRESSIONAL ADVOCACY

As Democrats take the Showing the New Congress that majority in the House of Rep- Economic Diplomacy Works resentatives and Republicans keep their majority in the Sen- ate, political gridlock in a split AFSA’s economic diplo- their experiences of success- a continuing resolution that Congress is inevitable—and macy works (EDW) initia- ful economic diplomacy, and included State/USAID fund- likely not much will become tive includes a line of effort AFSA was able to reach 25 ing. We also spent the weeks law in the next two years. focused on convincing Con- percent of Senate offices with after the midterm elections This is especially impor- gress that the U.S. Foreign our EDW message in one go! analyzing the implications of tant to consider when looking Service is a vital part of the AFSA was delighted to the newly elected member at the timeline for FY20 solution to competition from share with those Senate class for our future efforts. appropriations bills. Remem- China and other countries offices a letter signed by 96 With a new congressional ber that Congress was the on political, commercial and business associations that landscape forming in 2019, authoritative voice in rejecting economic fronts. rallied behind the EDW effort, AFSA will pivot its advocacy the administration-proposed Throughout the fall, AFSA’s asking Secretary of State strategy to match the envi- cuts to the State/USAID EDW initiative generated Mike Pompeo to send more ronment and focus on creat- budget. bipartisan support in both FSOs abroad and linking the ing new supporters. AFSA cur- As 2019 begins, AFSA is congressional chambers and Foreign Service to their own rently has champions on the calling on new members of kept the work of the Foreign prosperity. The letter bol- Hill who are supportive of the Congress to support the U.S. Service on the minds of Capi- stered our advocacy efforts Foreign Service regardless of Foreign Service and help tol Hill staff during election on the Hill by demonstrating their committee assignments, make economic diplomacy season. This was critical as support from the business and we seek to replicate this work for the American people Fiscal Year 2019 State/USAID community, which regularly support with the new class in by putting an increased funding reached a decision influences Congress. the 116th Congress. number of Foreign Service point—and congressional AFSA continued its EDW In 2018 AFSA was able positions in the field. This work on FY20 appropriations efforts despite the uncer- to demonstrate for current show of support can help cre- is not far away. tainty that plagued the con- members of Congress that a ate a firewall that protects the As part of this initiative, gressional schedule leading field-forward Foreign Service Foreign Service once again, AFSA hosted an event for into the 116th Congress. On posture is a highly cost-effec- as Congress rejects any deep Senate staff on Oct. 12 in the Hill, legislators faced a tive way to counter competi- funding and personnel cuts conjunction with the Senate longer-than-usual fall session, tion and retain American proposed by the adminis- Foreign Service Caucus. We midterm elections, congres- global leadership; we must tration going into the FY20 brought in retired Foreign sional leadership elections now replicate this effort with appropriations cycle. n Service officers to present and, finally, the expiration of about 100 new members.

Getting the Most Out of Your Social Security

On Nov. 6, AFSA welcomed Ed Zurndorfer of EZ Accounting and Financial Services. Mr. Zurndorfer, an expert on Social Security, presented updated strategies to more than 60 members to help them understand and maximize their Social Security benefits. He discussed marriage, divorce, death and taxes as they affect benefits and took questions from audi- ence members. Did you miss this presentation? You can watch the video at www.afsa.org/video. AFSA/DONNA GORMAN AFSA/DONNA

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 63 AFSA NEWS

Call for Nominations Continued from p. 59 ment officials and confidential ment official or confidential may have a conflict of inter- employees, as well as those employee is prohibited on the est or potential conflict of Channel” cables marked for in positions that may raise or part of any individual having interest include those who are delivery to the AFSA Elections appear to raise a conflict of participated in the manage- “engaged in personnel work Committee. Email nomina- interest (as defined below) ment of a labor organization in other than a purely cleri- tions can be sent to election@ when the new Governing Board for purposes of collective cal capacity” (for example, afsa.org. Faxed nominations takes office on July 15, may not bargaining or having acted employees assigned to can be sent to (202) 338- participate in Governing Board as a representative of a labor nonclerical positions within 8244. discussion, deliberations or organization during the pre- the HR Bureau) and “employ- 3. Nominations may be decisions relating to labor- ceding two years. (2) For the ees engaged in criminal or submitted individually or in management issues. They purposes of paragraph (1)(A) national security investiga- slates. To qualify as a slate, a may participate in AFSA Board (ii) and paragraph (1)(B), the tions of other employees proposed slate must have a activities that do not relate term “management official” or who audit the work of minimum of four candidates to labor-management issues. does not include (A) any chief individuals to ensure that from at least two constituen- The Foreign Service Act also of mission; (B) any principal their functions are discharged cies. Slate designations will be imposes a two-year pre- and officer or deputy principal honestly and with integrity” noted on the ballot. post-AFSA “cooling off” period officer; (C) any administrative (such as employees assigned on employees who occupied or personnel officer abroad; or to DS investigative units or Qualifications for Governing or will occupy positions within (D) any individual described those assigned to the OIG). Board Membership. Indi- their agency that involve labor- in section 4102(12)(B), (C), See Section 1012(1) and (2), viduals meeting the following management relations or the or (D) of this title who is not 22 USC 4112(1) and (2) of the qualifications are eligible for formulation of personnel poli- involved in the administration Foreign Service Act. nomination to one of the avail- cies and programs of a foreign of this subchapter or in the As discussed above, the able positions: affairs agency. formulation of the personnel Foreign Service Act precludes 1. The individual must be a. Section 1017(e) of the policies and programs of the these categories of individuals an AFSA regular member in Act, 22 USC 4117(e) states: Department.” from participating in labor- good standing by Feb. 1, 2019 “Participation in labor organi- b. Section 1002 (12), 22 management issues while and remain in good standing zations restricted. (1) Notwith- USC 4102(12) of the Act serving on the Governing through the election process standing any other provision defines a management official Board. and, if elected, for his or her of this subchapter (A) partici- as “an individual who: is a The Foreign Service Act term of office. pation in the management of chief of mission or principal also imposes a two-year pre- 2. The individual must not a labor organization for pur- officer; occupies a position and post- “cooling-off period” have a conflict of interest as poses of collective bargaining of comparable importance to which restricts the movement defined in Section 1017(e) or acting as a representative chief of mission or principal of Foreign Service employees of the Foreign Service Act. of a labor organization for officer; is serving as a deputy between certain positions on Please see the “Conflicts of such purposes is prohibited to the foregoing positions; the AFSA Governing Board Interest” section below for under this subchapter (i) is assigned to the Office of and certain Washington-based more information. on the part of any manage- the Inspector General; or is positions. 3. Active duty members ment official or confidential engaged in labor-manage- • Pre-AFSA restrictions: Any presenting themselves as employee; (ii) on the part of ment relations or the formula- individual who has served: 1) candidate for president or any individual who has served tion of personnel policies and in a management position in constituency vice president as a management official or programs of a foreign affairs Washington in which he or she must hold an active security confidential employee during agency.” has engaged in labor-manage- clearance. the preceding two years; or c. Section 1002 (6), ment relations or the formula- (iii) on the part of any other 22 USC 4102(6) of the tion of personnel policies and Conflicts of Interest. Section employee if the participation Act defines a confidential programs; or 2) as a confiden- 1017(e) of the Foreign Service or activity would result in a employee as “an employee tial employee to one of these Act restricts employees serv- conflict of interest or apparent who acts in a confidential management officials within ing in certain positions within conflict of interest or would capacity with respect to an two years prior to taking office their agencies from partici- otherwise be incompatible individual who formulates in AFSA, is precluded from pating in labor-management with law or with the official or effectuates management participating in labor-manage- issues while serving on the functions of such employee; policies in labor-management ment issues while serving on Governing Board. Manage- and (B) service as a manage- relations.” Employees who the Governing Board.

64 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL AFSA NEWS

• Post-AFSA restrictions: tee on Elections (using the the “Instructions to Candi- accompanying the ballot Employees who have partici- same addresses indicated dates,” which will be posted by or (ii) by online vote. More pated in collective bargaining above under “Nominating the Committee on Elections detailed balloting instructions while serving on the AFSA Candidates”). Following at www.afsa.org/elections by will accompany the ballots. Governing Board may not receipt of nominations, an Dec. 14, 2018. serve: 1) in a management authorized representative of 2. Supplementary State- Vote Counting and position in Washington that the Committee on Elections ments. Should candidates Announcement of involves labor-management will promptly communicate wish to mail supplementary Results relations or the formulation with each nominee (exclud- statements to the member- On or about June 12, 2019, of personnel policies and pro- ing members who nominate ship, AFSA will make its the Committee on Elections grams; or 2) as a confidential themselves) to confirm their membership mailing list or will oversee ballot tabula- employee to such manage- willingness to be a candidate. address labels available to tion and declare elected the ment positions, for two years Nominees must confirm their the candidate upon request candidate receiving the after leaving AFSA. Members acceptance in writing (using and at their expense. Further greatest number of votes for should consider these restric- the same addresses indi- information on this and other each position. Candidates or tions before deciding whether cated above under “Nomi- campaign procedures will be their representatives may be to run for AFSA Governing nating Candidates”) to the included in the “Instructions present during the tally and Board positions covered by Committee on Elections no to Candidates” mentioned may challenge the validity of these restrictions. later than 5 p.m. EST on Feb. above. any vote or the eligibility of Please direct questions 5, 2019. Any nominee whose 3. Other Methods of any voter. The committee will regarding this issue to Sharon written acceptance of nomi- Communication. Depart- inform candidates individually Papp, General Counsel, by nation is not received by the ment of Labor requirements of the election results by the email: [email protected]. All Committee on Elections by prohibit individuals from using swiftest possible means and other election-related queries this time will be considered government or employer will publish the names of all should be addressed to the to have declined candidacy. resources (including email elected candidates in the next Committee on Elections by 2. All candidates accept- accounts) to campaign for issue of The Foreign Service email at [email protected]. ing a nomination must iden- AFSA positions. Journal. Elected candidates In addition to the above, tify the position or positions will take office on July 15, due to AFSA efforts to educate they have filled for the past Voting 2019, as provided in the Congress on issues related two years prior to accepting Ballots will be distributed bylaws. to Foreign Service conditions the nomination. All candi- on or about April 28, 2019, to The Committee on Election of employment, legislative dates not seeking a full-time each regular AFSA member as members and supporting staff proposals and other issues AFSA position (President, of March 28, 2019. Candidates members may be reached at directly impacting the Foreign State VP, USAID VP, FCS VP, or their representatives may [email protected]. Service, employees serving in FAS VP) must also identify observe the ballot distribu- congressional fellowships may the agency position they will tion process if they so desire. Committee on Elections not serve on the AFSA Govern- be serving in beginning on Each member may cast one Members ing Board. A conflict or poten- July 15, 2019, when the Board vote for President, Secretary, Nan Fife, Chair (State) tial conflict of interest exists takes office. This information Treasurer and, in addition, one Candice Bruce (FAS) between their position in is necessary to ensure com- vote for a constituency Vice Linda Caruso (FCS) AFSA and their official duties. pliance with section 1017(e) President and each Represen- Jorge Dulanto-Hassenstein AFSA members serving as of the Foreign Service Act. tative position in the mem- (USAID) congressional fellows may run ber’s constituency. Mort Dworken (Retiree) for the AFSA Governing Board Campaigning Regular members may Michael Riley (State) provided their fellowship ends 1. Campaign Statements. cast their votes for candidates before the incoming board All candidates will be given listed on the official ballot, Staff Members takes office on July 15, 2019. the opportunity to submit or by writing in the name(s) Russ Capps, campaign statements for dis- of member(s) eligible as of Chief Operating Officer Accepting a Nomination semination to AFSA members Feb. 1, 2019, or by doing both. Sharon Papp, 1. A nominee can indi- with the election ballots. To be valid, a ballot must be General Counsel cate his or her acceptance Further information regarding received by 8 a.m. on June 12, TBD, of a nomination by written such statements and editorial 2019, either (i) at the address Election Coordinator n response to the Commit- deadlines will be contained in indicated on the envelope

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 65 AFSA NEWS

AFSA Dues Change for 2019

AFSA has increased dues for Price Index, published by the Active-duty and retired paychecks and annuities. 2019 by 2.3 percent for all Department of Labor, since members paying dues via Those paying annually will be individual membership cat- the effective date of the payroll and annuity deduc- billed the new rate on their egories. In concrete terms, previous dues increase. AFSA tion will see a small increase regularly scheduled renewal this amounts to an increase last increased its member- in the amount automati- date. n of between nine and 37 cents ship dues rate in January cally deducted from their per pay period, depending on 2018. an individual’s membership This increase will provide Retiree category. the association with a stable Annuity 2018 2018 2019 2019 In accordance with Article and predictable income Level Annual Bi-Weekly Annual Bi-Weekly IV of the AFSA bylaws, the source, which allows AFSA Annuity under $25K $70.82 $5.90 $72.45 $6.04 Governing Board can choose to continue offering excel- Annuity of to increase dues by no more lent member services and $25k-50K $111.30 $9.27 $113.86 $9.49 than the cumulative increase advancing member priori- Annuity of in the national Consumer ties. $50k-75K $148.65 $12.39 $152.07 $12.67 Annuity $186.11 $15.51 $190.39 $15.87 Active Duty over $75K Retiree Foreign 2018 2018 2019 2019 Spouse $55.65 $4.64 $56.93 $4.74 Service Annual Bi-Weekly Annual Bi-Weekly Grade

SFS $412.43 $15.86 $421.91 $16.23 Associate FS 1, 2, 3 $318.86 $12.26 $326.20 $12.55 Category 2018 2019 FS 4, 5, 6 $182.58 $7.02 $186.78 $7.18 Annual Annual Associate $114.36 $116.99 FS 7, 8, 9 $96.53 $3.71 $98.75 $3.80 Membership

ACCEPTING NOMINATIONS FOR SINCLAIRE LANGUAGE AWARD

AFSA is now accepting nominations for the 2018 Matilda W. Sinclaire Language Award. The deadline is Jan. 14, 2019. Thanks to a generous bequest from the late Foreign Service officer Matilda W. Sinclaire, AFSA spotlights members of the U.S. Foreign Service from any of the foreign affairs agencies who have excelled in their study of a Category III or IV lan- guage and its associated culture. Mastery of foreign languages and knowledge of the culture of the host coun- try are critical skills in today’s diplomacy. Candidates may be nominated by their ANNOUNCEMENT language training supervisors at the Foreign Service Institute, by instructors in field schools or by post language officers. Awardees receive a $1,000 prize and certificate of recognition. For information about the 2018 winners, check out the May edition of The Foreign Service Journal. For further information, please contact AFSA Awards Coordinator Perri Green at [email protected] or (202) 719-9700. Read more about the Sinclaire Awards at www.afsa.org/sinclaire. n

66 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL AFSA NEWS

USAID VP Participates in Blacks in Government Panel Discussion COURTESY OF JEFFREY LEVINE JEFFREY OF COURTESY On Oct. 16, the USAID chapter of Blacks in Government (BIG) held a panel discussion, “Tackling Workplace Bullying and Harassment: #OurProblem,” to raise awareness of the individual and organizational impacts of workplace bullying and harassment. Panel members discussed the varying roles of leaders, supervisors and other employees when bullying becomes an issue in the workplace and talked about the effects bullying and harassment have on workplace productivity and employee retention. Panel members included Sylvia Joyner, vice president USAID AFGE (above left); AFSA USAID VP Jeffrey Levine (right); Erin Brown, president of USAID-BIG; Gary Juste of the SDAA Bureau for Human Capital and Talent Management; and Rachel Kaul, USAID Staff Care.

AFSA Governing Board Meeting, November 14, 2018

Membership Committee: The Governing Board must review each request for associate membership. By unanimous consent, the board approved one such request. Treasurer: It was moved and seconded that the board adopt the proposed 2019 budget as presented. The motion was approved. Governance Committee: By unanimous consent, the board voted to send proposed AFSA bylaw amend- ments to the Committee on Elections. These proposed amendments will be published in full in the March issue of AFSA News. n

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 67 AFSA NEWS

of the PDF forms and instructions, and they include links to prior versions. Always check the applicability and “last reviewed” dates of these resources. Even then, some credits, deductions or other calculations (e.g., depreciation, foreign asset reporting, or a 1031 exchange) should only be done by a professional competent in that area. We begin with the April 15, 2019, deadline for filing 2018 individual income tax returns (Form 1040 plus applicable schedules, worksheets and other necessary forms). A discussion of extensions and the new, shorter 1040 follows. Next, we provide the marginal tax brackets and rates for 2018 income, standard deduction and personal exemption. We’ve added a section on the child tax credit to complete the story about the increase of the standard deduction and elimination of the personal exemption. Readers will also find information about relocation expenses, the foreign earned income exclusion and foreign asset reporting. There have been changes to the law regard- ing various itemized (and other separately claimed) deduc- tions. The qualified business interest deduction is new to the tax code. Personal residence-related tax benefits have also changed; a more general discussion of “basis” should help readers with any large assets, not only houses. News about gifts, retirement and estate tax planning, as well as a 2018 Federal and State full Circular 230 notice, round out the federal section. That is followed by the state-by-state guide, which includes infor- Tax Provisions for the mation on state domicile, income tax rates and retirement Foreign Service incentives. AFSA Senior Labor Management Adviser James Yorke ([email protected]), who compiles the Tax Guide, would like The American Foreign Service Association is pleased to to thank Sam Schmitt, Esq., of the EFM Law Company, for release this year’s Tax Guide. The annual AFSA Tax Guide is preparing the section on federal tax provisions; and Chris- designed as an informational and reference tool. This 2018 tine Elsea-Mandojana, CPA, of Brenner & Elsea-Mandojana, guide summarizes many of the tax laws that members of LLC, along with Shannon Smith, Esq., and Hallie Aronson, the Foreign Service community will find useful, including Esq., of Withers Bergman, for their contributions to the sec- changes mandated by the Tax Cuts and Jobs Act of 2017. tion on foreign accounts and asset reporting. Although we try to be accurate, many of the new provi- sions of the tax code and the implications of Internal Rev- Filing Deadlines and Extensions enue Service regulations have not been fully tested. There- The deadline for filing 2018 individual income tax returns is fore, use caution and consult with a tax adviser if you have April 15, 2019. Anyone posted abroad is allowed an automatic specific questions or an unusual or complex situation. two-month extension to file. To use it, write “taxpayer abroad” For 2018, “all income from whatever source derived” at the top of your 1040 and attach a statement explaining that must be reported by U.S. taxpayers worldwide. Adjustments, you are living outside of the United States, and that your main deductions and credits remain matters of “legislative grace.” place of business or post of duty is also outside the United It is important to know more about those statutes, regula- States and Puerto Rico. An additional automatic extension tions, forms and instructions, which are almost always more may be obtained by filing Form 4868. There are no late-filing or technical than this summary. late-payment penalties for returns filed and taxes paid by the Accordingly, AFSA recommends following up with IRS respective extension dates (June 17 and Oct. 15), but the IRS product pages for each form and publication mentioned will charge interest on any amount owed from April 15 to the within this guide. The IRS designed these as extensions date it receives payment and late payment fees.

68 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL The New 1040 Is Much (E) Supplemental Profit Shorter … But One of or Loss from Realty, Part- Six New Schedules nerships or LLCs, S-Corpo- May Be Required rations, trusts or estates. IRS Form 1040 appears to Note that the standard be much shorter this year. deduction, qualified busi- The new form is sufficient ness income deduction for taxpayers who only need (QBID), child tax credit and to report W-2 income and credit for other dependents will only claim the standard are still reported on the deduction. It is so simple 1040. The 1040 instructions that the 1040-A or 1040-EZ and relevant IRS product from past years has been pages explain more about abolished. However, one of each of these schedules six schedules will be neces- and worksheets. Taxpayers sary for taxpayers in several who use software or pay a circumstances. The new preparer should compare numbered schedules are their completed returns required for: with the respective blank (1) Those with other forms and schedules to income, such as capital check for errors or missed gains or Schedules C or forms. E business income, or for taxpayers who can claim Standard Deduction certain deductions like The Tax Cuts and Jobs Act educator expenses, health of 2017 raised the standard savings accounts or student deduction amounts: loan interest deduction; • $12,000 for individuals filing separately; (2) Those who owe tax on a child’s unearned income or the • $24,000 married filing jointly; alternative minimum tax (AMT); • $18,000 for heads of household. (3) Those who can claim nonrefundable credits such as Small additional amounts are allowed for dependents, the foreign tax credits, the standard child tax credit or education elderly and blind taxpayers. credits (Form 8863); (4) Those who owe other taxes such as self-employment, Personal Exemption unpaid Social Security and Medicare taxes, or household The Tax Cuts and Jobs Act eliminated the personal exemption. employment taxes; Beginning in 2019, the IRS will issue a revised W-4 that will no (5) Those who can claim certain refundable credits, includ- longer offer withholding exemptions. ing overpayments of estimated tax, net premium tax credits and the health coverage tax credit; or Child Tax Credit, Additional Credit and Dependent (6) A taxpayer who has a foreign address. Credit The familiar, lettered schedules may also still be necessary Any lost benefits from the reduced personal exemption are to calculate: partially made up for by the increased child tax credit—now (A) Itemized Deductions. Schedule A has been changed to $2,000 per qualifying child up to age 17. This includes: account for the cap on state and local taxes, home mortgage (1) A taxpayer’s child, sibling, stepsibling, half-sibling or interest limits and the removal of miscellaneous itemized their descendant; deductions. There is no longer an overall cap on itemized (2) With the same principal place of abode for half the tax deductions, but miscellaneous itemized deductions have been year; eliminated; (3) Who meets certain age requirements (i.e., minors); (C) Profit or Loss from a Sole Proprietorship; (4) Does not provide more than half their own support; and (D) Capital Gains & Losses; and (5) Does not file a joint return with their spouse.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 69 AFSA NEWS

The $2,000 credit per qualifying child begins to phase out period (the period may be different from the tax year). for those with a modified adjusted gross income of $200,000 AFSA understands that IRS auditors have denied the FEIE ($400,000 for married filing jointly). Similarly, a nonrefundable for Foreign Service spouses and dependents for failing to meet credit of up to $500 is available for eligible dependents who do the bona fide residence or tax home elements of this test. not qualify as children. Both are calculated on the IRS Child Tax The U.S. Tax Court has explained that the congressional Credit and Credit for Other Dependents Worksheet. The work- purpose of the FEIE was to offset duplicative costs of maintain- sheet, along with a flow chart for determining “Who Qualifies as ing distinct U.S. and foreign households. Increasing ties to the Your Dependent,” can be found in the 1040 instructions. foreign country by personally paying for a foreign household, paying local taxes, waiving for matters Official Relocation Expenses Paid by the State related to your job, paying for vacation travel back to the Department under IRC Sec. 912 Remain United States, becoming a resident of the foreign country and In April 2018, Charleston General Financial Services (CGFS) working in the foreign country over the long term are other advised AFSA that, based on an unofficial opinion from the IRS, factors the federal courts have cumulatively recognized as all travel authorized under Section 901 of the Foreign Service establishing a foreign tax home. Act, which includes Permanent Change of Station (PCS), R&R, The physical presence test, which requires that 330 full emergency visitation travel and medevacs, is exempt from days during a calendar year are spent physically in a foreign taxation under the terms of IRC Section 912. country (not just outside the United States, so travel time does not count), has successfully been used by members to meet Foreign Earned Income Exclusion the second element of the test where bona fide residence The Tax Cuts and Jobs Act of 2017 did not change the laws cannot be established. If relying on physical presence, you are governing the FEIE. As such, taxpayers living and working advised to record all your travel carefully and to keep copies of overseas may be eligible for this exclusion, but not if they are visas and tickets to substantiate the 330 days if audited. employees of the U.S. government. In 2018, the first $103,900 The U.S. Tax Court took up three FEIE cases in 2018, of earned overseas as a (non-USG) employee or self-employed which the most relevant to the Foreign Service was O’Kagu v. person may be exempt from income taxes but not self-employ- IRS, 151 T.C. No. 6 (Sept. 19, 2018). There, a binding D.C. Circuit ment taxes. Court precedent required the Tax Court to conclude that To receive this exclusion the taxpayer must: Sidney O’Kagu was an employee of the U.S. government for tax (1) Establish a tax home in a foreign country, which is the purposes. As such, he did not qualify for the FEIE, despite his general area of the taxpayer’s “main place of business, employ- argument that the Office of Management and Budget catego- ment or post of duty.” (In other words, where the taxpayer is rized him as a contractor under 22 USC Sec. 2669(c). All three “permanently or indefinitely engaged to work as an employee cases are available via Google Scholar by searching “foreign or self-employed individual.”) and earned” income. (2) Either (a) meet the “bona-fide residence” test, which Important note on claiming FEIE: Taxpayers must add the requires that the taxpayer has been a bona-fide resident of a amount excluded under the FEIE back to AGI to figure what foreign country for an uninterrupted period that includes an their tax liability would be, then exclude the tax that would entire tax year, or (b) meet the “physical presence” test, which have been due on the excludable income alone, to properly requires the taxpayer to be present in a foreign country for at calculate their tax liability with an FEIE exclusion. For example: least 330 full (midnight-to-midnight) days during any 12-month A Foreign Service employee earns $80,000 and their teacher spouse earns $30,000. All else being equal, tax liability on $110,000 gross income is $16,079; tax on $30,000 foreign CHILD CARE TAX CREDIT WHEN OVERSEAS income is $3,219; and, therefore, net tax liability is $16,079 To claim the child care tax credit while serving minus $3,219, or $12,860. overseas, you must submit IRS Form 2441. Pursuant to the 2441 instructions: “If you are living abroad, your Foreign Accounts & Asset Reporting care provider may not have, and may not be required to When a U.S. person (defined as a citizen, resident or green get, a U.S. taxpayer identification number (e.g., SSN or card holder) has offshore income, assets, accounts and/or Employer Identification Number). If so, enter ‘LAFCP’ entities, their U.S. income tax and reporting obligations can (Living Abroad Foreign Care Provider) in the space for the become a minefield of potential penalties. Many additional care provider’s taxpayer identification number.” reporting forms apply to such taxpayers, but only a handful of accountants have the expertise to identify which forms need

70 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL to be completed and how to complete them correctly. The pen- alties for mistakes and missing forms can be astronomical. U.S. persons are taxed on their worldwide income. Members of the Foreign Service must report a wide variety of offshore assets and transactions pertaining to offshore activities on specific U.S. reporting forms, even if they are stationed abroad. For example, the Foreign Bank and Financial Accounts Report (FBAR), which is filed separately from the tax return, must be filed by U.S. persons with bank accounts and other report- able offshore financial interests (including some life insurance policies and pensions) that have an aggregate value exceeding $10,000 for any moment during the year. A misstatement on Schedule B can be used against a taxpayer. Failing to report an account on an FBAR, intentionally or unintentionally, can lead to penalties from $12,459 per account, per year (for conduct that is deemed non-willful) to the greater of $124,588 or 50 percent of account balances per account, per year (for conduct that is deemed willful), along with a host of other criminal penalties up to and including jail time. To make matters worse, FBAR penalties can be greater than the value of the asset. In a similar vein, U.S. persons with ownership or signa- ture authority over a foreign bank account of any value must include this in Part III of Schedule B of Form 1040. This often- overlooked section is critically important and lets the IRS know whether it can expect an FBAR filing for a taxpayer in a given year. Since Form 1040 is signed by the taxpayer under penalty of perjury, a misstatement on this schedule can be used against a taxpayer. Taxpayers with interests in some foreign financial assets must also file Form 8938 if the total value of such assets exceeds the applicable statutory reporting threshold (i.e., for unmarried persons living in the United States, more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year). Errors relating to this form may result in a penalty in excess of $10,000. In addition, the statute of limitations for assessment on a foreign asset report- ing form (including, but not limited to, Form 8938) remains open for three years after the date on which the form is ulti- mately filed. There are also specific reporting forms for taxpayers who: 1) have interests in or engage in transactions with offshore entities, trusts and pensions; 2) have investments in foreign mutual funds; 3) receive substantial gifts from non-U.S. persons; and 4) wish to claim the benefit of a treaty-based return position. Many of these reporting forms must be filed even if they have no impact on tax liability. Taxpayers with foreign assets may want to work with a quali- fied tax professional, experienced in the realm of foreign asset

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 71 AFSA NEWS

reporting, to avoid errors. Provide the tax preparer with a com- Foreign sales tax (Value Added Tax) is not deductible. plete set of statements for each asset, each and every year, and In 2018, the aggregate amount of taxes 1, 2 and 3 and sales save every bank, life insurance and pension statement received taxes deducted in lieu of income taxes is capped at $10,000 from a financial institution for a minimum of seven years. for married filing joint or individual returns ($5,000 per person if married filing separately). Foreign real and personal property Itemized Deductions, Particularly Disallowed taxes may not be deducted. State and local income taxes for Miscellaneous Deductions 2018 are treated as if they were paid that year, even if they Although the overall limit on specific itemized deductions were paid in 2017. Finally, there is no $10,000 limit for these does not apply for 2018, miscellaneous itemized deductions taxes if they are paid while carrying on a trade or business. have been eliminated for 2018. Travel expenses for a job, union AFSA recommends that taxpayers wishing to claim this deduc- dues, professional education, tax preparation fees, investment tion read IRS tax topic 503 and IRC Section 164. expenses and other expenses for the production of taxable income are among the miscellaneous itemized deductions for Medical & Dental Expenses individuals that can no longer be deducted (compare 2017 with In 2018, taxpayers can deduct medical expenses to the extent 2018 Schedule A). For Foreign Service members, unreimbursed they exceed 7.5 percent of their adjusted gross income (AGI), employee expenses (which include home leave expenses) including health and long-term care insurance, but not health will not be deductible on Schedule A in 2018. One silver lining insurance premiums deducted from government salaries. The is that W-2 employees probably will not have to complete a current law increases this floor to 10 percent of AGI in 2019 Schedule A, while contractors and small businesses operating (filed April 2020). AFSA recommends that members claiming as sole proprietors, LLCs or S-corporations can deduct many of these deductions read IRS publication 502, tax topic 502 and these same expenses on Schedules C and E. IRC Section 213.

A New Deduction: QBID Charitable Contributions The 2017 tax reform legislation left us with this new deduc- Up to 60 percent of a taxpayer’s income base can be deducted tion, the qualified business income deduction (QBID), deemed for charitable contributions. Common issues include contrib- important enough to be included on the revised 1040. While it uting to a qualified organization, properly documenting con- may be very attractive to deduct up to 20 percent of qualified tributions of $250 or more, accounting for benefits received income from a qualified trade or business in addition to 20 in return for donations and calculating the income base. AFSA percent of qualified real estate investment trust (REIT) income recommends Publication 526 and IRC Section 170. or qualified publicly traded partnership (PTP) income, the devil is in the details. Home Mortgage Interest All caveats for the four separate legal definitions can be The cost of personal borrowing is not usually deductible. found in IRC Sec. 199A, which is long, complex and difficult to However, qualifying mortgage interest on loan balances of up understand. Start instead by reading the instructions for 1040 to $750,000 of for acquisition debt for married filing jointly line 9 and the simplified QBID worksheet to determine if you or individual returns ($375,000 per person for married filing qualify. Tax services and software companies are also publish- separately) and up to $100,000 home equity debt ($50,000 ing more reader-friendly information on this topic with varying married filing separately) for loans secured by a primary or degrees of reliability (and terms of service disclaimers). secondary residence that are also used to improve that resi- Publication 535 will likely be useful after it is revised for 2018. dence may qualify for a deduction. Home equity debt used to If after studying these resources you still believe you qualify for fund any purpose other than to purchase or improve the quali- the QBID, contact a tax preparer competent in this area. fying residence is no longer deductible. AFSA recommends IR 2018-32, Publication 936, and IRC Sections 163(h) and 163(h) Itemized Deductions That Are Still Allowed (3)(F) for further reading on this and on the deductibility of Taxes, Including State & Local Real Property & Income Taxes “points” on a mortgage. There are only four kinds of deductible nonbusiness taxes: (1) State and local real property taxes; (2) State and local personal Business Use of Home & U.S. Real Property Held for the property taxes; (3) State, local and foreign income, war profits Production of Income and excess profits taxes; and (4) generation-skipping transfer Taxpayers may still be entitled to deductions for the business tax on income distributions. State and local general sales taxes use of part of a home. may be deducted in lieu of (not in addition to) income taxes. When income is earned by renting out the home, for

72 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL example, deductions the taxpayer claims for mortgage interest remain deductible beyond the limits discussed above; however, they become an expense for the production of rental income instead of a personal deduction under the mortgage interest expense provisions (Schedule E rather than Schedule A). This distinction has new significance due to the limits on the cost of mortgage interest for personal use and the cap on state and local taxes. Amounts in excess of these limits may be deductible, as are depreciation, repairs and operating expenses beyond the above limits. Note that depreciation of business property must be accounted for and claimed in the tax year it occurs. Failure to do so will result in the loss of the deduction during the rental period of the property, but the taxpayer will still have to pay the IRS back for a depreciated basis when they eventually sell. AFSA recommends consulting a professional in addition to Topic 509, Publication 587, the instructions for Form 8829, and IRC Sections 162, 212 and associated regulations. Professional assistance will also be necessary for a possible IRC Section 1031 Exchange of like-kind, real property located in the United States, which is held for the production of income (not a per- sonal residence).

Selling a Principal Residence A taxpayer may still exclude up to $250,000 ($500,000 if mar- ried filing jointly) of long-term capital gain (but not the afore- mentioned repayment of unclaimed rental depreciation) from the sale of a principal residence. To qualify for the full exclusion amount, the taxpayer: (1) must have owned the home and lived there for at least two of the last five years, beginning on the date first occupied, before the date of the sale (but see Military Families Relief Act, below); (2) cannot have acquired the home in a 1031 exchange within the five years before the date of the sale; and (3) cannot have claimed this exclusion during the two years before the date of the sale. An exclusion of gain for a fraction of these upper limits may be possible if one or more of the above requirements are not met. Taxpayers who sell their principal residence for a profit of more than $250,000 ($500,000 for married filing jointly) will owe capital gains tax on the excess. AFSA recommends Topic 701, Publication 523, IRC Sec. 121 and related regulations.

Circular 230 Notice: Pursuant to U.S. Treasury Department Regulations, all tax advice herein is not intended or written to be used, and may not be used, for the purposes of avoiding tax-related penalties under the Internal Revenue Code or promoting, marketing or recom- mending advice on any tax-related matters.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 73 AFSA NEWS

Military Families Tax Relief Act of 2003 Read Tax Topic 703, Publication, 551, 1040 Schedule D with According to the Military Families Tax Relief Act of 2003, the instructions, IRC Sections 1011, 1012 and 1014 through 1017 five-year period described above, beginning on the date you and associated tax regulations beginning at 26 CFR Sec. first occupy your residence, may be suspended for members 1.1012-1. of the Foreign Service for any 10-year period during which the Recent iterations of the annual tax seminar offered by taxpayer has been away from the area on a Foreign Service Christine Elsea-Mandojana through the Foreign Service Insti- assignment, up to a maximum of 15 total years. tute have illustrated how mistakes in tracking basis can result Failure to meet all of the requirements for this tax benefit in incorrectly reported gain or loss from the sale of a principal (points (1) through (3) in the Selling a Principal Residence sec- residence. tion above) does not necessarily disqualify the taxpayer from claiming the exclusion. However, the services of a tax profes- Federal Estate & Gift Taxes sional will probably be necessary if one of these requirements In 2018, the first $11.2 million of a decedent’s aggregate estate is not met. In addition to the recommended reading from the was exempt from the federal estate tax. That amount will previous section, AFSA recommends IRC Sec. 121(d)(9) and 26 increase to $11.4 million for decedents (up to $22.8 million CFR Sec. 1.121-5. for the surviving spouse with a portability election on Form 1041) who pass away in 2019. The same amounts would apply Adjustments & Basis in Your Property to (and are reduced by) lifetime gift-giving over the annual Tracking a property’s basis begins with its cost (either to tax-free gift exclusion. The limit on the exclusion for gifts given purchase or build). Taxpayers most commonly want to track in 2019 remains $15,000 ($30,000 for gifts split by married the basis of their home. This calculation encompasses cash couples). paid, money borrowed to purchase, debt forgiven in lieu of cash given and the fair market value of property or services Retirement Savings exchanged as part of the transaction. Associated taxes, Finally, in 2019 the limit on contributions to 401(k)s and the commissions and mortgage settlement fees also form part Thrift Savings Plan will increase to $19,000 for individuals. of the initial cost basis. When building, some investments in The limit on IRA contributions will increase to $6,000 per construction, improvements during ownership and improve- person. ments over the life of the asset (new rooms and fixed struc- tures like decks, windows, roofs, and siding) must be added Conclusion to the basis of the home. The 2018 tax year is the first to be affected by the Tax Cuts Basis might be reduced (adjusted downward) for casu- and Jobs Act of 2017 and administrative reforms by the IRS. alty losses, outstanding debt forgiven or dispositions of the Some reforms, such as combining the personal exemption property. The basis of depreciable property (structures, not with the standard deduction and augmenting the child tax land) that has been converted for business use (like renting credit will further improve the W-2 beginning in 2019. Other out a home) must be recovered by depreciation and amor- changes, like adding six new schedules to make good on a tization each year. Note the availability of “bonus deprecia- campaign promise about filing taxes on a post card, are less tion” for capital assets used in business, subject to wear and exciting and may actually make filing taxes more compli- tear, that are acquired from 2018 through the end of 2025. cated. Failing to depreciate still reduces basis at the time of the The effect of all this appears to be an overall reduced tax sale (though the tax benefit of depreciation cannot then be bill for most Americans and businesses with income taxed in recovered). the United States. This occurs in the context of a 2017 bull Capital outlays and expenses of selling the home will market, 2018 bear market, improved consumer confidence also offset any gain from a sale. That gain includes cash and a moderate rebalance in the midterm. AFSA hopes the and the fair market value of other property received or debt advice and references here educate members as they deter- discharged. The legal and financial effects of various home mine the extent of their tax liability under the current law uses, investments and costs can be less than intuitive, which and as we await further changes in 2019. n is one reason AFSA recommends the services of a tax pro- fessional. Foreign Service members should track the basis, adjust- ments and financial effects of legal acts like gifting, inheri- tance or business use of major assets (like your home).

74 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL cases, the states will make a determination of the individual’s 2018 STATE TAX income tax status based on other factors, including where the PROVISIONS individual has family ties, has been filing resident tax returns, is registered to vote, has a driver’s license, owns property or where the person has bank accounts or other financial holdings. Liability In the case of Foreign Service employees, the domicile might Every employer, including the State Department and other be the state from which the person joined the Service, where foreign affairs agencies, is required to withhold state taxes for his or her home leave address is or where he or she intends to the location where the employee either lives or works. Employ- return upon separation. For purposes of this article, the term ees serving overseas, however, must maintain a state of domi- “domicile” refers to legal residence; some states also define it as cile in the United States where they may be liable for income permanent residence. “Residence” refers to physical presence tax; the consequent tax liability that employees face will vary in the state. Foreign Service personnel must continue to pay greatly from state to state. taxes to the state of domicile (or to the District of Columbia) Further, the many laws on taxability of Foreign Service pen- while residing outside of the state, including during assignments sions and annuities also vary by state. This section briefly covers abroad, unless the state of residence does not require it. both those situations; in addition, see the separate box on state Members are encouraged to review the Overseas Briefing tax withholding for State employees. We also encourage you to Center’s Guide to Residence and Domicile, available on AFSA’s read the CGFS Knowledge Base article on the Tax Guide page of website at www.afsa.org/domicile. the AFSA website. Domestic Employees in the D.C. Area Domicile and Residency Foreign Service members residing in the metropolitan Wash- There are many criteria used in determining which state is a ington, D.C., area are generally required to pay income tax to the citizen’s domicile. One of the strongest determinants is pro- District of Columbia, Maryland or Virginia, in addition to paying longed physical presence, a standard that Foreign Service per- tax to the state of their domicile. sonnel frequently cannot meet due to overseas service. In such Virginia requires tax returns from most temporary residents.

TAX WITHHOLDING WHEN ASSIGNED DOMESTICALLY

The State Department withholds an employee’s state Financial Services does not adjudicate state income taxes according to his or her “regular place of duty” when tax elections when you are serving overseas, since in assigned domestically—for details, see “New Procedures for those circumstances, it is the employee’s responsibility Withholding and Reporting Employees’ State and District of to accurately designate a state for which income taxes Columbia Income Taxes,” Announcement No. 22394 (Nov. 4, will be withheld. However, on the employee’s return to a 2014; available via the intranet). This reflects some juris- domestic assignment, CGFS will evaluate the employee’s dictions’ imposition of income taxes on nonresidents who state tax withholding election based on his or her new derive income within their boundaries despite residence or official domestic duty station pursuant to Announcement domicile elsewhere. No. 22394. Members residing or domiciled in a jurisdiction other Finally, this determination does not mean that you than the one in which they earn income may need state must relinquish your state of domicile if it is different taxes to be withheld for their residence and domicile juris- than your official duty station. “Domicile” and “residence” dictions. If you reside or are domiciled in a jurisdiction other are different from “regular place of duty.” As long as you than that of your regular place of duty, you may secure an maintain your ties to your home state you will be able to exemption from this withholding method by satisfying the change your withholdings, if you so wish, back to your requirements detailed by CGFS Knowledgebase (available home state when you go overseas. See the Overseas via the intranet at http://kb.gfs.state.gov/) Issue 39479. Briefing Center’s guide to Residence and Domicile, avail- Note that the Bureau of the Comptroller and Global able on AFSA’s website at www.afsa.org/domicile.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 75 AFSA NEWS

Most states allow a credit, however, so that the taxpayer pays the higher tax rate of the two states, with each state receiving a STATE OVERVIEWS share. We recommend that you maintain ties with your state of ALABAMA domicile—by, for instance, continuing to also file tax returns in Individuals domiciled in Alabama are considered residents and that state if appropriate—so that when you leave the D.C. area are subject to tax on their entire income, regardless of their for another overseas assignment, you can demonstrate to the physical presence in the state. Alabama’s individual income District of Columbia, Virginia or Maryland your affiliation to your tax rates range from 2 percent on taxable income over $500 home state. for single taxpayers and $1,000 for married filing jointly, to 5 Also, if possible, avoid using the D.C. or Dulles, Va., pouch Zip percent over $3,000 for single taxpayers and $6,000 for mar- code as your return address on your federal return because, in ried filing jointly. some cases, the D.C. and Virginia tax authorities have sought Write: Alabama Department of Revenue, 50 N. Ripley, back taxes from those who have used this address. Montgomery AL 36104. Phone: (334) 242-1170 States That Have No Income Tax Website: https://revenue.alabama.gov There are currently seven states with no state income tax: Email: Link through the website, “About Us,” Alaska, Florida, Nevada, South Dakota, Texas, Washington and then “email us.” Wyoming. In addition, New Hampshire and Tennessee have no tax on earned income, but do tax profits from the sale of bonds ALASKA and property. Alaska does not tax individual income or intangible or per- sonal property. It has no state sales and use, franchise or fidu- States That Do Not Tax Nonresident Domiciliaries ciary tax. However, some municipalities levy sales, property There are 10 states that, under certain conditions, do not tax and use taxes. income earned while the taxpayer is outside the state: Califor- Write: Tax Division, Alaska Department of Revenue, nia, Connecticut, Idaho, Minnesota, Missouri, New Jersey, New P.O. Box 110420, Juneau AK 99811-0420. York, Oregon, Pennsylvania (but see entry for that state below) Phone: (907) 465-2320 and West Virginia. Website: www.tax.state.ak.us The requirements for all except California, Idaho and Oregon are that the individual should not have a permanent “place of ARIZONA abode” in the state, should have a permanent “place of abode” Individuals domiciled in Arizona are considered residents outside the state, and should not be physically present for more and are taxed on any income that is included in the Federal than 30 days during the tax year. California allows up to 45 days Adjusted Gross Income, regardless of their physical presence in the state during a tax year. in the state. Arizona’s tax rate ranges in five brackets from All 10 states require the filing of nonresident returns for all a minimum of 2.59 percent to a maximum of 4.54 percent income earned from in-state sources. Foreign Service employ- of taxable income over $310,317 married filing jointly or ees should also keep in mind that states could challenge the $155,159 for single filers. status of overseas government housing in the future. Write: Arizona Department of Revenue, Customer Care, “State Overviews” below gives brief state-by-state informa- P.O. Box 29086, Phoenix AZ 85038-9086. tion on tax liability, with addresses provided to get further infor- Phone: (602) 255-3381 mation or tax forms. Tax rates are provided where possible. Website: www.azdor.gov As always, members are advised to double-check with their Email: [email protected] state’s tax authorities. While AFSA makes every attempt to provide the most up-to-date information, readers with specific ARKANSAS questions should consult a tax expert in the state in question. Individuals domiciled in Arkansas are considered residents We provide the website address for each state’s tax authority and are taxed on their entire income, regardless of their physi- in the state-by-state guide, and an email address or link where cal presence in the state. The Arkansas tax rate ranges in six available. Some states do not offer email customer service. brackets from a minimum of 2.4 percent to a maximum of 6.9 We also recommend the Tax Foundation website at www.tax- percent of net taxable income over $82,600. foundation.org, which provides a great deal of useful informa- Write: Department of Finance and Administration, Income tion, including a table showing tax rates for all states for 2018. Tax Section, P.O. Box 3628, Little Rock AR 72203-3628.

76 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Phone: (501) 682-1100 and 2) during the 548-day period, is not present in Connecti- Website: www.arkansas.gov/dfa cut for more than 90 days; and 3) does not maintain a per- Email: Use Contact Form on “Contact Us” page of the manent place of abode in the state at which the domiciliary’s website. spouse or minor children are present for more than 90 days. Connecticut’s tax rate for married filing jointly rises from 3 CALIFORNIA percent on the first $20,000 in six steps to 6.9 percent of the Foreign Service employees domiciled in California must excess over $500,000, and 6.99 percent over $1,000,000. For establish non-residency to avoid liability for California taxes singles it is 3 percent on the first $10,000, rising in six steps (see Franchise Tax Board Publication 1031). However, a “safe to 6.9 percent of the excess over $250,000 and 6.99 per cent harbor” provision allows anyone who is domiciled in state but over $500,000. is out of the state on an employment-related contract for at Write: Department of Revenue Services, 450 Columbus Blvd, least 546 consecutive days to be considered a nonresident. Suite 1, Hartford CT 06103. This applies to most FS employees and their spouses, but Phone: (860) 297-5962 members domiciled in California are advised to study FTB Website: www.ct.gov/drs Publication 1031 for exceptions and exemptions. The Califor- Email: Contact through the “Contact us” page on the website. nia tax rate for 2018 ranges in eight brackets from 1 percent of taxable income under $8,544 for singles and $17,088 for joint DELAWARE filers, to a maximum of 12.3 percent on taxable income over Individuals domiciled in Delaware are considered residents $572,980 for singles and $1,145,960 for joint filers. Nonresi- and are subject to tax on their entire income, regardless of dent domiciliaries are advised to file on Form 540NR. their physical presence in the state. Delaware’s graduated Write: Personal Income Taxes, Franchise Tax Board, P.O. Box tax rate rises in six steps from 2.2 percent of taxable income 942840, Sacramento CA 94240-0040. under $5,000 to 6.6 percent of taxable income over $60,000. Phone: (800) 852-5711 (inside the U.S.); (916) 845-6500 Write: Division of Revenue, Taxpayers Assistance Section, (outside the U.S.) State Office Building, 820 N. French St., Wilmington DE 19801. Website: www.ftb.ca.gov Phone (302) 577-8200 Email: Link through the website’s “Contact Us” tab. Website: www.revenue.delaware.gov Email: [email protected] COLORADO Individuals domiciled in Colorado are considered residents DISTRICT OF COLUMBIA and are subject to tax on their entire income, regardless of Individuals domiciled in the District of Columbia are consid- their physical presence in the state. Colorado’s tax rate is ered residents and are subject to tax on their entire income, a flat 4.63 percent of federal taxable income, plus or minus regardless of their physical presence there. Individuals domi- allowable modifications. ciled elsewhere are also considered residents for tax purposes Write: Department of Revenue, Taxpayer Service Division, for the portion of any calendar year in which they are physi- P.O. Box 17087, Denver CO 80217-0087. cally present in the District for 183 days or more. The District’s Phone: (303) 238-7378 tax rate is 4 percent if income is less than $10,000; $400 plus Website: www.colorado.gov/revenue 6 percent of excess over $10,000 if between $10,000 and Email: Link through the website’s “Contact Us” tab on the $40,000; $2,200 plus 6.5 percent of excess over $40,000; “Taxation” page. $3,500 plus 8.5 percent of the excess over $60,000; $28,150 plus 8.75 percent of any excess above $350,000; and 8.95 CONNECTICUT percent over $1,000,000. Connecticut domiciliaries may qualify for nonresident tax Write: Office of Tax and Revenue, Customer Service Center, treatment under either of two exceptions as follows: Group 1101 4th St. SW, Suite 270 West, Washington DC 20024. A—the domiciliary 1) did not maintain a permanent place of Phone: (202) 727-4829 abode inside Connecticut for the entire tax year; and 2) main- Website: www.otr.cfo.dc.gov tains a permanent place of abode outside the state for the Email: [email protected] entire tax year; and 3) spends not more than 30 days in the aggregate in the state during the tax year. Group B—the domiciliary 1) in any period of 548 consecu- tive days, is present in a foreign country for at least 450 days;

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 77 AFSA NEWS

FLORIDA calendar year; and 4) you did not claim Idaho as your federal Florida does not impose personal income, inheritance, gift or tax home for deducting away-from-home expenses on your intangible personal property taxes. Property tax (homestead) federal return; and 5) you were not employed on the staff of a exemptions are only available if you own and permanently U.S. senator; and 6) you did not hold an elective or appointive reside on the property. Sales and use tax is 6 percent. There office of the U.S. government other than the armed forces or are additional county sales taxes which could make the com- a career appointment in the U.S. Foreign Service (see Idaho bined rate as high as 9.5 percent. Code Sections 63-3013 and 63-3030). In 2018 Idaho’s tax Write: Taxpayer Services, Florida Department of Revenue, rate rises in six steps from a minimum of 1.125 percent to a 5050 W. Tennessee St., Bldg. L, Tallahassee FL 32399-0100. maximum of 6.925 percent on the amount of Idaho taxable Phone: (850) 488-6800 income over $11,2793 for singles and $22,558 for married Website: floridarevenue.com/taxes filers. A nonresident must file an Idaho income tax return if his Email: Link through the website, go to “Taxes,” then or her gross income from Idaho sources is $2,500 or more. “Tax Information,” then “Questions?” Write: Idaho State Tax Commission, P.O. Box 36, Boise ID 83722-0410. GEORGIA Phone: (800) 972-7660 or (208) 334-7660 Individuals domiciled in Georgia are considered residents and Website: www.tax.idaho.gov are subject to tax on their entire income, regardless of their Email: [email protected] physical presence in the state. Georgia has a graduated tax rate rising in six steps to a maximum of 6 percent of taxable ILLINOIS income over $10,000 and above for joint married filers and Individuals domiciled in Illinois are considered residents and $7,000 for single filers. are subject to tax on their entire income, regardless of their Write: Georgia Department of Revenue, Taxpayer Services physical presence in the state. Effective for income received Division, 1800 Century Blvd.NE, Atlanta GA 30345-3205. after June 30, 2017, Illinois Public Act 100-0022 increased the Phone: (877) 423-6711, Option #2; or contact through Illinois income tax rate for individuals from a flat rate of 3.75 Georgia Tax Center (login required). percent to a flat rate of 4.95 percent of net income. Website: http://dor.georgia.gov/taxes Write: Illinois Department of Revenue, P.O. Box 19014, Spring- field IL 62794-9014. HAWAII Phone: (800) 732-8866 or (217) 782-3336 Individuals domiciled in Hawaii are considered residents and Website: www.revenue.state.il.us are subject to tax on their entire income, regardless of their Email: Link through the website, “Contact Us,” then “Taxpayer physical presence in the state. For tax year 2018, Hawaii’s Answer Center.” tax rate rises in 12 steps from 1.4 percent on taxable income below $2,400 for single filers and $4,800 for joint filers, INDIANA to a maximum of 11.00 percent for taxable income above Individuals domiciled in Indiana are considered residents and $200,000 for single filers and $400,000 for joint filers. are subject to tax on their entire income, regardless of their Write: Oahu District Office, Taxpayer Services Branch, physical presence in the state. Indiana’s tax rate is a flat 3.23 P.O. Box 259, Honolulu HI 96809-0259. percent of Federal Adjusted Gross Income. Several counties Phone: (800) 222-3229 or (808) 587-4242 also charge a county income tax. Website: http://tax.hawaii.gov Write: Indiana Department of Revenue, Individual Income Email: [email protected] Tax, P.O. Box 40, Indianapolis IN 46206-0040. Phone: (317) 232-2240 IDAHO Website: www.in.gov/dor Individuals domiciled in Idaho for an entire tax year are Email: Link through the website’s “Contact Us” tab. considered residents and are subject to tax on their entire income. However, you are considered a nonresident if: 1) IOWA you are an Idaho resident who lived outside of Idaho for at Individuals domiciled in Iowa are considered residents and least 445 days in a 15-month period; and 2) after satisfying are subject to tax on their entire income to the extent that the 15-month period, you spent fewer than 60 days in Idaho income is taxable on the person’s federal income tax returns. during the year; and 3) you did not have a personal residence Iowa’s 2018 tax rate rises in eight steps from 0.36 percent to in Idaho for yourself or your family during any part of the a maximum 8.98 percent of taxable income over $71,910, for

78 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL both single and joint filers. MAINE Write: Taxpayer Services, Iowa Department of Revenue, Individuals domiciled in Maine are considered residents and P.O. Box 10457, Des Moines IA 50306-0457. are subject to tax on their entire income. Since Jan. 1, 2007, Phone: (800) 367-3388 or (515) 281-3114 however, there have been “safe harbor” provisions. Under the Website: https://tax.iowa.gov General Safe Harbor provision, Maine domiciliaries are treated Email: Use email form on “Contact Us” page of the website. as nonresidents if they satisfy all three of the following condi- tions: 1) they did not maintain a permanent place of abode in KANSAS Maine for the entire taxable year; 2) they maintained a perma- Individuals domiciled in Kansas are considered residents nent place of abode outside Maine for the entire taxable year; and are subject to tax on their entire income, regardless of and 3) they spent no more than 30 days in the aggregate in their physical presence in the state. In 2018 the tax rate is 3.1 Maine during the taxable year. Under the Foreign Safe Harbor percent on Kansas taxable income under $15,000 for single provision, Maine domiciliaries are also treated as nonresidents filers and under $30,000 for joint filers, rising to 5.7 percent if they are present in a foreign country for 450 days in a 548- on income over $30,000 for single filers and $60,000 for joint day period and do not spend more than 90 days in Maine dur- filers. ing that period. Maine’s tax rate in 2018 is 5.8 percent on Maine Write: Kansas Taxpayer Assistance Center, Scott State Office taxable income below $21,450 for singles and $42,900 for joint Building, 120 SE 10th Street, Topeka, KS 66612-1103. filers, 6.75 percent up to $50,750 for singles and $101,550 for Phone: (785) 368-8222 married filing jointly, and 7.15 percent over those amounts. Website: www.ksrevenue.org Write: Maine Revenue Services, Income Tax Assistance, Email: [email protected] P.O. Box 9107, Augusta ME 04332-9107. Phone: (207) 626-8475 KENTUCKY Website: www.maine.gov/revenue Individuals domiciled in Kentucky are considered residents Email: [email protected] and are subject to tax on their entire income, regardless of their physical presence in the state. Kentucky’s tax rate MARYLAND ranges from 2 percent on the first $3,000 of taxable income Individuals domiciled in Maryland are considered residents rising in five steps to 6 percent on all taxable income over and are subject to tax on their entire income, regardless of $75,000 for both single and joint filers. their physical presence in the state. Individuals domiciled Write: Kentucky Department of Revenue, 501 High Street, elsewhere are also considered residents for tax purposes Frankfort KY 40601. for the portion of any calendar year in which they are physi- Phone: (502) 564-4581 cally present in the state for an aggregated total of 183 days Website: www.revenue.ky.gov or more. Maryland’s tax rate is $90 plus 4.75 percent of Email: Link through the website’s “Contact Us” tab. taxable income over $3,000 up to $100,000 if filing singly and $150,000 if filing jointly. It then rises in four steps to LOUISIANA $12,760 plus 5.75 percent of the excess of taxable income Individuals domiciled in Louisiana are considered residents over $250,000 for singles or $15,072 plus 5.75 percent of and are subject to tax on their entire income, regardless of the excess over $300,000 for married filers. In addition, their physical presence in the state. Louisiana’s tax rate is Baltimore City and the 23 Maryland counties impose a local 2 percent for the first $12,500 for single filers or $25,000 income tax, which is a percentage of the Maryland taxable for joint filers, 4 percent over $12,500 for singles and over income, using Line 31 of Form 502 or Line 9 of Form 503. $25,000 for joint filers, and 6 percent for over $50,000 for The local factor varies from 1.75 percent in Worcester County single filers or $100,000 for joint filers. (and for nonresidents) to 3.2 percent in Baltimore City, and in Write: Taxpayer Services Division, Individual Income Tax Montgomery, Prince George’s, Queen Anne’s, Wicomico and Section, Louisiana Department of Revenue, P.O. Box 201, Baton Howard counties (see website for details for all counties). Rouge LA 70821-0201. Write: Comptroller of Maryland, Revenue Administration Phone: (225) 219-0102 Center, Taxpayer Service Section, 110 Carroll Street, Annapolis Website: www.revenue.louisiana.gov MD 21411-0001. Email: Link through the website’s “Contact LDR Online tab” Phone: (800) 638-2937 or (410) 260-7980 on the “Contact Us” page. Website: www.marylandtaxes.com Email: [email protected]

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 79 AFSA NEWS

MASSACHUSETTS MISSOURI Individuals domiciled in Massachusetts are considered resi- An individual domiciled in Missouri is considered a nonresi- dents and are subject to tax on their entire income, regard- dent and is not liable for tax on Missouri income if the individ- less of their physical presence in the state. Salaries and most ual has no permanent residence in Missouri, has a permanent interest and dividend income are taxed at a flat rate of 5.10 residence elsewhere and is not physically present in the state percent for 2018. Some income (e.g., short-term capital gains) for more than 30 days during the tax year. Missouri calculates remains taxed at 12 percent. tax on a graduated scale up to $9,072 of taxable income. Any Write: Massachusetts Department of Revenue, Taxpayer taxable income over $9,072 is taxed at a rate of $315 plus 6 Services Division, P.O. Box 7010, Boston MA 02204. percent of the excess over $9,072. Phone: (617) 887-6367 Write: Individual Income Tax, P.O. Box 2200, Jefferson City Website: http://www.mass.gov/dor MO 65105-2200. Email: Link through the website’s “Contact Us” tab. Phone: (573) 751-3505 Website: https://dor.mo.gov/contact MICHIGAN Email: [email protected] Individuals domiciled in Michigan are considered residents and are subject to tax on their entire income, regardless of their phys- MONTANA ical presence in the state. Michigan’s tax is 4.25 percent. Some Individuals domiciled in Montana are considered residents Michigan cities impose an additional 1- or 2-percent income tax. and are subject to tax on their entire income regardless of Detroit imposes an additional 2.4 percent income tax. their physical presence in the state. Montana’s tax rate for Write: Michigan Department of Treasury, Lansing MI 48922. 2018 rises in six steps from 1 percent of taxable income under Phone: (517) 636-4486 $3,000 to a maximum of 6.9 percent of taxable income over Website: www.michigan.gov/treasury $17,900. See the website for various deductions and exemp- Email: [email protected] tions. Write: Montana Department of Revenue, P.O. Box 5805, MINNESOTA Helena MT 59604-5805. Individuals domiciled in Minnesota are considered residents Phone: (866) 859-2254 or (406) 444-6900 and are subject to tax on their entire income, regardless of Website: https://mtrevenue.gov their physical presence in the state. Minnesota’s tax rate in Email: Link through the website’s “Contact Us” tab. 2018 is 5.35 percent on taxable income up to $25,890 for sin- gles or $37,850 for married joint filers, rising in three steps to NEBRASKA a maximum of 9.85 percent on taxable income over $160,020 Individuals domiciled in Nebraska are considered residents for single filers or $266,700 for married filing jointly. and are subject to tax on their entire income regardless Write: Minnesota Department of Revenue, 600 North Robert of their physical presence in the state. For 2017 the individual St., St. Paul MN 55146-5510. income tax rates range in four steps from a minimum of 2.46 Phone: (800) 652-9094 or (651) 296-3781 percent to a maximum of 6.84 percent of the excess over Website: www.taxes.state.mn.us $30,420 for singles and $60,480 for joint filers. If AGI is over Email: Use button under “Contact Us.” $261,500 for single filers or $313.800 for joint filers an addi- tional tax of between 0.438 and 0.183 percent is imposed. MISSISSIPPI Write: Department of Revenue, 301 Centennial Mall South, Individuals domiciled in Mississippi are considered residents P.O. Box 94818, Lincoln NE 68509-4818. and are subject to tax on their entire income, regardless of their Phone: (402) 471-5729 physical presence in the state. Mississippi’s tax rate is 3 percent Website: www.revenue.state.ne.us on the first $5,000 of taxable income (first $1,000 exempt), 4 Email: Link through the website’s “Contact Us” tab. percent on the next $5,000 and 5 percent on taxable income over $10,000 for all taxpayers, whether filing singly or jointly. NEVADA Write: Department of Revenue, P.O. Box 1033, Jackson MS Nevada does not tax personal income. Sales and use tax 39215-1033. varies from 6.85 percent to 8.1 percent depending on local Phone: (601) 923-7700 jurisdiction. Additional ad valorem personal and real property Website: www.dor.ms.gov taxes are also levied. Email: Link through the website’s “Contact Us” tab. Write: Nevada Department of Taxation, 1550 College Pkwy,

80 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Suite 115, Carson City NV 89706. NEW YORK Phone: (866) 962-3707 or (775) 684-2000 There is no tax liability for out-of-state income if you have Website: www.tax.state.nv.us no permanent residence in New York, have a permanent residence elsewhere and are not present in the state more NEW HAMPSHIRE than 30 days during the tax year or you were in a foreign The state imposes no personal income tax on earned income country for at least 450 days during any period of 548 and no general sales tax. The state does levy, among other consecutive days; and you, your spouse and minor children taxes, a 5 percent tax on interest and dividend income of more spent 90 days or less in New York State during this 548-day than $2,400 annually for single filers and $4,800 annually period. Filing a return is not required, but it is recommended for joint filers, and an 8.5 percent tax on business profits, to preserve domicile status. The tax rate for 2018 rises in including sale of rental property. There is no inheritance tax. six steps from a minimum of 4.5 percent to 6.33 percent of Applicable taxes apply to part-year residents. taxable income over $21,400 for single filers and $43,000 Write: Taxpayer Services Division, P.O. Box 637, Concord NH for married filing jointly; 6.57 percent on taxable income over 03302-0637. $80,650 for single filers and $161,550 for joint filers; 6.85 Phone: (603) 230-5000 percent on taxable income over $215,400 for single filers or Website: www.revenue.nh.gov $323,200 for joint filers; and 8.82 percent over $1,077,550 for single filers and over $2,155,350 for joint filers. In New NEW JERSEY York City the maximum rate is 3.876 percent over $90,000 A New Jersey domiciliary is considered a nonresident for New for joint filers and over $50,000 for single filers. Filing is Jersey tax purposes if the individual has no permanent resi- required on Form IT-203 for revenue derived from New York dence in New Jersey, has a permanent residence elsewhere sources. and is not physically in the state for more than 30 days during Foreign Service employees assigned to USUN for a normal the tax year. Filing a return is not required (unless the nonresi- tour of duty are considered to be resident in New York state for dent has New Jersey-source income), but it is recommended tax purposes. See TSB-M-09(2)I of Jan. 16, 2009 at http://www. in order to preserve domicile status. Filing is required on tax.ny.gov/pdf/memos/income/m09_2i.pdf Form 1040-NR for revenue derived from in-state sources. Tax Write: New York State Department of Taxation and Finance, liability is calculated as a variable lump sum plus a percentage Personal Income Tax Information, W.A. Harriman Campus, from a minimum of 1.4 percent of taxable gross income up to Albany NY 12227. $20,000, in three steps to 6.37 percent between $75,000 and Phone: (518) 457-5181 $500,000, and a maximum of 8.97 percent on taxable gross Website: www.tax.ny.gov income over $500,000 for both single and joint filers. Email: Link through the website’s “Answer Center” tab. Write: New Jersey Division of Taxation, Technical Services Branch, P.O. Box 281, Trenton NJ 08695-0281. NORTH CAROLINA Phone: (609) 292-6400 Individuals domiciled in North Carolina are considered resi- Website: www.state.nj.us/treasury/taxation dents and are subject to tax on their entire income, regardless Email: Link through the website’s “Contact Us” tab. of their physical presence in the state. North Carolina’s flat tax rate is 5.499 percent for 2018. (For 2019 it will be 5.25 NEW MEXICO percent.) Residents must also report and pay a “use tax” on Individuals domiciled in New Mexico are considered residents purchases made outside the state for use in North Carolina. and are subject to tax on their entire income, regardless Write: North Carolina Department of Revenue, P.O. Box of their physical presence in the state. The basis for New Mexi- 25000, Raleigh NC 27640-0640. co’s calculation is the Federal Adjusted Gross Income figure. Phone: (877) 252-3052 or (919) 707-0880 Rates rise in four steps from a minimum of 1.7 percent to a Website: www.dornc.com maximum of 4.9 percent on New Mexico taxable income over $16,000 for single filers and $24,000 for married filing jointly. NORTH DAKOTA Write: New Mexico Taxation and Revenue Department, 1100 Individuals domiciled in North Dakota and serving outside the South St. Francis Drive, Santa Fe NM 87504. state are considered residents and are subject to tax on their Phone: (505) 827-0700 entire income. For the 2018 tax year, the tax rate ranges in Website: www.tax.newmexico.gov four steps from 1.1 percent on North Dakota taxable income Email: Link through the website’s “Email Us” tab. up to $38,700 for singles and $64,650 for joint filers to a

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 81 AFSA NEWS

maximum of 2.90 percent on taxable income over $424,950 PENNSYLVANIA for singles and joint filers. Pennsylvania’s tax rate is a flat 3.07 percent. Pennsylvania tax Write: Office of State Tax Commissioner, State Capitol, 600 authorities have ruled that Pennsylvania residents in the U.S. E. Boulevard Ave., Dept. 127, Bismarck ND 58505-0599. Foreign Service are not on active duty for state tax purposes, Phone: (701) 328-1247. and thus their income is taxable compensation. For non-Foreign Website: www.nd.gov/tax Service state residents, there is no tax liability for out-of-state Email: [email protected] income if the individual has no permanent residence in the state, has a permanent residence elsewhere and spends no OHIO more than 30 days in the state during the tax year. However, Individuals domiciled in Ohio are considered residents and Pennsylvania does not consider government quarters overseas their income is subject to tax, using the Federal Adjusted to be a “permanent residence elsewhere.” Filing a return is not Gross Income figure as a starting base. Ohio’s 2018 tax rate required, but it is recommended to preserve domicile status. File starts at a minimum of 1.98 percent on taxable income over Form PA-40 for all income derived from Pennsylvania sources. $10,650, rising in six steps to a maximum of 4.997 percent on Write: Commonwealth of Pennsylvania, Department of Rev- taxable income over $213,350 for single and joint filers. Ohio enue, Taxpayer Services Department, Harrisburg PA 17128-1061. also charges a school district income tax of between 0.5 and 2 Phone: (717) 787-8201 percent, depending on jurisdiction. Website: www.revenue.pa.gov Write: Ohio Department of Taxation, Taxpayer Services Cen- Email: Link through the website’s “Contact Us” tab. ter, P.O. Box 530, Columbus OH 43216-0530. Phone: (800) 282-1780 or (614) 387-0224 PUERTO RICO Website: www.tax.ohio.gov Individuals who are domiciled in Puerto Rico are consid- Email: Link through the website’s “Contact Us” tab. ered residents and are subject to tax on their entire income, regardless of their physical presence in the Commonwealth. OKLAHOMA Normally, they may claim a credit with certain limitations for Individuals domiciled in Oklahoma are considered residents income taxes paid to the United States on any income from and are subject to tax on their entire income, regardless of sources outside Puerto Rico. Taxes range from 7 percent of their physical presence in the state. Oklahoma’s tax rate taxable income up to $25,000 to 33 percent of the taxable for 2018 rises in eight stages to a maximum of 5 percent on income over $61,500 for all taxpayers. taxable income over $7,200 for single filers and $12,200 for Write: Departamento de Hacienda, P.O. Box 9024140, married filing jointly. San Juan PR 00902-4140. Write: Oklahoma Tax Commission, Income Tax, P.O. Box Phone: (787) 622-0123, Option 8 26800, Oklahoma City OK 73126-0800. Website: www.hacienda.gobierno.pr Phone: (405) 521-3160 Email: [email protected] Website: www.tax.ok.gov Email: [email protected] RHODE ISLAND Individuals domiciled in Rhode Island are considered residents OREGON and are subject to tax on their entire income, regardless of their Individuals domiciled in Oregon are considered residents and physical presence in the state. The 2018 Rhode Island tax rate is are subject to tax on their entire income, regardless of their 3.75 percent of taxable income up to $62,550 for all filers, 4.75 physical presence in the state. For 2017, Oregon’s tax rate percent for income over $62,550 and 5.99 percent of taxable rises from 5 percent on taxable income over $3,450 for single income over $149,150 for all filers. Also, a 2010 change treats filers and $6,900 for married filing jointly, in three steps to 9.9 capital gains as ordinary taxable income. Refer to the tax divi- percent on taxable income over $125,000 for single filers and sion’s website for current information and handy filing hints, as $250,000 for joint filers. Oregon has no sales tax. well as for forms and regulations. Write: Oregon Department of Revenue, 955 Center St. NE, Write: Rhode Island Division of Taxation, Taxpayer Assistance Salem OR 97301-2555. Section, One Capitol Hill, Providence RI 02908-5801. Phone: (800) 356-4222 or (503) 378-4988 Phone (401) 574-8829, Option 3 Website: www.oregon.gov/DOR Website: www.tax.state.ri.us Email: [email protected] Email: [email protected]

82 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL SOUTH CAROLINA Income reported on the federal return be reported on the state Individuals domiciled in South Carolina are considered resi- return regardless of the taxpayer’s physical presence in the dents and are subject to tax on their entire income, regardless state. Some taxpayers will be able to claim either a taxpayer of their physical presence in the state. South Carolina ‘s 2018 tax credit or a retirement tax credit, or both (see website for tax rates rise in six steps from 3 percent on the first $5,940 of explanation). South Carolina taxable income to a maximum of 7 percent of Write: Utah State Tax Commission, Taxpayer Services taxable income over $14,860 for all filers. Division, 210 North 1950 West, Salt Lake City UT 84134. Write: South Carolina Tax Commission, P.O. Box 125, Phone: (800) 662-4335, Option 0, or (801) 297-2200, Option 0 Columbia SC 29214. Website: www.tax.utah.gov Phone: (844) 898-8542 Option 3, or (803) 898-5000 Email: Link through the website’s “Contact Us” tab. Website: www.sctax.org Email: [email protected] or through the “Contact Us” tab VERMONT on the website. Individuals domiciled in Vermont are considered residents and are subject to tax on their entire income, regardless of their SOUTH DAKOTA physical presence in the state. The 2018 tax rate ranges from There is no state income tax and no state inheritance tax. 3.35 percent on taxable income under $38,700 for singles and State sales and use tax is 4.5 percent; municipalities may add $64,600 for joint filers to a maximum of 8.75 percent on taxable up to an additional 2.75 percent. income over $195,450 for singles and $237,950 for joint filers. Write: South Dakota Department of Revenue, 445 East Capi- Write: Vermont Department of Taxes, Taxpayer Services Divi- tol Ave., Pierre SD 57501-3185. sion, 133 State St., Montpelier VT 05633-1401. Phone: (605) 773-3311. Phone: (802) 828-2505 Website: http://dor.sd.gov Website: www.tax.vermont.gov Email: Link through the website’s “Contact Us” tab. Email: [email protected] or through the website’s “Contact Us” tab. TENNESSEE Salaries and wages are not subject to state income tax, but VIRGINIA for 2018 Tennessee imposes a 3 percent tax on most divi- Individuals domiciled in Virginia are considered residents and dends and interest income of more than $1,250 (single filers) are subject to tax on their entire income, regardless of their or $2,500 (joint filers) in the tax year. This is planned to be physical presence in the state. Individuals domiciled elsewhere reduced by 1 percent per year until elimination on Jan. 1, 2021. are also considered residents for tax purposes for the portion Write: Tennessee Department of Revenue (Attention: Tax- of any calendar year in which they are physically present in payer Services), 500 Deaderick St., Nashville TN 37242. the state for 183 days or more. These individuals should file Phone: (615) 253-0600 using Form 760. In addition, Virginia requires nonresidents to Website: www.tn.gov/revenue file Form 763 if their Virginia Adjusted Gross Income (which Email: [email protected] includes any federal salary paid during time they are residing in Virginia) exceeds $11,950 for single filers and married filing TEXAS separately, or $23,900 for married filing jointly. There is no state personal income tax. State sales tax is 6.25 Individual tax rates are: 2 percent if taxable income is less percent, with local additions adding up to 2 percent. than $3,000; $60 plus 3 percent of excess over $3,000 if Write: Texas Comptroller, P.O. Box 13528, Capitol Station, taxable income is between $3,000 and $5,000; $120 plus 5 per- Austin TX 78711-3528. cent of excess over $5,000 if taxable income is between $5,000 Phone: Customer Service Liaison (888) 334-4112 and $17,000; and $720 plus 5.75 percent if taxable income Website: www.comptroller.texas.gov is over $17,000. In addition, using Form R-1H, Virginia allows Email: Use email options on “Contact Us” page employers of household help to elect to pay state unemploy- of the website. ment tax annually instead of quarterly. Write: Virginia Department of Taxation, Office of Customer UTAH Services, P.O. Box 1115, Richmond VA 23218-1115. Utah has a flat tax of 5 percent on all income. Individuals Phone: (804) 367-8031 domiciled in Utah are considered residents and are subject to Website: www.tax.virginia.gov Utah state tax. Utah requires that all Federal Adjusted Gross Email: Link through the website’s “Contact Us” tab.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 83 AFSA NEWS

WASHINGTON There is no state income tax and no tax on intangibles such 2018 STATE PENSION as bank accounts, stocks and bonds. Residents may deduct AND ANNUITY TAX Washington sales tax on their federal tax returns if they itemize deductions. State tax rate is 6.5, percent; local additions can The laws regarding the taxation of Foreign Service annuities increase that to 10.4 percent in some areas. vary greatly from state to state. In addition to those states Write: Washington State Department of Revenue, that have no income tax or no tax on personal income, there Taxpayer Services, P.O. Box 47478, Olympia WA 98504-7478. are several states that do not tax income derived from pen- Phone: (800) 647-7706 sions and annuities. For example, Idaho taxes Foreign Service Website: www.dor.wa.gov annuities while exempting certain categories of Civil Service Email: Link through the website’s “Contact Us” tab. employees. Several websites provide more information on individual state taxes for retirees, but the Retirement Living WEST VIRGINIA Information Center at www.retirementliving.com/taxes-by- There is no tax liability for out-of-state income if the individual state is one of the more comprehensive and is recommended has no permanent residence in West Virginia, has a permanent for further information. residence elsewhere and spends no more than 30 days of the tax year in West Virginia. However, nonresident domiciliaries are required to file a return on Form IT-140 for all income derived from ALABAMA ARKANSAS West Virginia sources. Tax rates rise in four steps from 4 percent Social Security and U.S. The first $6,000 of income of taxable income over $10,000 for joint and single filers, to 6.5 government pensions are from any retirement plan or percent of taxable income for joint and single filers over $60,000. not taxable. The combined IRA is exempt (to a maximum Write: Department of Tax and Revenue, The Revenue Center, state, county and city general of $6,000 overall). Social 1001 Lee St. E., Charleston WV 25337-3784. sales and use tax rates range Security is excluded from Phone: (800) 982-8297 or (304) 558-3333 from 7 percent to as much as taxable income. There is no Website: www.wvtax.gov 8.65 percent. See also www. estate or inheritance tax. Email: [email protected] revenue.alabama.gov/taxpay- State sales and use tax is erassist/retire.pdf. 6.5 percent; city and county WISCONSIN taxes may add another 5.5 Individuals domiciled in Wisconsin are considered residents and ALASKA percent. are subject to tax on their entire income, regardless of where No personal income tax. Most the income is earned. Wisconsin’s 2018 tax rate rises in four municipalities levy sales and/ CALIFORNIA steps from 4 percent on income up to $11,450 for single filers or or use taxes of between 2 and Pensions and annuities are $15,270 for joint filers to a maximum of 7.65 percent on income 7 percent and/or a property fully taxable. Social Security over $252,150 for single filers or $336,200 for joint filers. tax. If over 65, you may be is excluded from taxable Write: Wisconsin Department of Revenue, Customer Service able to claim an exemption. income. The sales and use tax Bureau, P.O. Box 8949, Madison WI 53708-8949. rate varies from 7.25 percent Phone: (608) 266-2486 ARIZONA (the statewide rate) to 11 per- Website: www.revenue.wi.gov Up to $2,500 of U.S. govern- cent in some areas. CA Pub 71 Email: Through the “Contact Us” link on the website. ment pension income may be lists all rates statewide. excluded for each taxpayer. WYOMING There is also a $2,100 exemp- COLORADO There is no state income tax and no tax on intangibles such as tion for each taxpayer age Up to $24,000 of pension or bank accounts, stocks or bonds. State sales tax is 4 percent. 65 or over. Social Security Social Security income can Local jurisdictions may add another 2 percent sales tax and 4 is excluded from taxable be excluded if the individual is percent for lodging. income. Arizona state sales age 65 or over. Up to $20,000 Write: Wyoming Department of Revenue, Herschler Building, and use tax is 5.6 percent, is exempt if age 55 to 64. 122 West 25th St., Cheyenne WY 82002-0110. with additions depending on State sales tax is 2.9 percent; Phone: (307) 777-5200 the county and/or city. local additions can increase it Website: http://revenue.wyo.gov/ to as much as Email: [email protected] n 11.2 percent.

84 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL CONNECTICUT GEORGIA ILLINOIS KANSAS Pensions and annuities are Up to $35,000 of retirement Illinois does not tax U.S. U.S. government pensions are fully taxable for residents. income may be exclud- government pensions, TSP not taxed. There is an extra Social Security is exempt able for those aged 62 or distributions or Social Secu- deduction of $850 if over if Federal Adjusted Gross older or totally disabled. Up rity. State sales tax is 6.25 65. Social Security is exempt Income is less than $50,000 to $65,000 of retirement percent. Local additions can if Federal Adjusted Gross for singles or $60,000 for income may be excludable raise sales tax to 11 percent in Income is under $75,000. joint filers. Statewide sales for taxpayers who are 65 some jurisdictions. State sales tax is 6.5 percent, tax is 6.35 percent. No local or older. Social Security with additions of between 1 additions. is excluded from taxable INDIANA and 4 percent depending on income. Sales tax is 4 percent If the individual is over age jurisdiction. DELAWARE statewide, with additions of 62, the Adjusted Gross Government pension exclu- up to 3 percent depending on Income may be reduced by KENTUCKY sions per person: $2,000 jurisdiction. the first $2,000 of any pen- Government pension income is exempt under age 60; sion, reduced dollar for dollar is exempt if retired before $12,500 if age 60 or over. HAWAII by Social Security benefits. Jan. 1, 1998. If retired after There is an additional stan- Pension and annuity distri- There is also a $1,000 exemp- Dec. 31, 1997, pension/annu- dard deduction of $2,500 butions from a government tion if over 65, or $1,500 ity income up to $41,110 if age 65 or over if you do pension plan are not taxed if Federal Adjusted Gross remains excludable for 2018. not itemize. Social Security in Hawaii. Social Security Income is less than $40,000. Social Security is excluded is excluded from taxable is excluded from taxable There is no pension exclu- from taxable income. Sales income. Delaware does not income. Hawaii charges a sion for survivor annuitants and use tax is 6 percent impose a sales tax. general excise tax of 4 per- of federal annuities. Social statewide, with no local sales cent instead of sales tax. Security is excluded from or use taxes. DISTRICT OF taxable income. Sales tax and COLUMBIA IDAHO use tax is 7 percent. LOUISIANA Pensions and annuities are If the individual is age 65 or Federal retirement ben- fully taxed for residents. Social older, or age 62 and disabled, IOWA efits are exempt from state Security is excluded from Civil Service Retirement Generally taxable. A married income tax. There is an taxable income. Sales and use System and Foreign Service couple with an income for exemption of $6,000 of other tax is 5.75 percent, with higher Retirement and Disability the year of less than $32,000 annual retirement income rates for some commodities System pensions qualify for a may file for an exemption, received by any person age (liquor, meals, etc.). deduction in 2018 of a maxi- if at least one spouse or the 65 or over. Married filing mum of $32,244 for a single head of household is 65 years jointly may exclude $12,000. FLORIDA return and up to $48,366 or older on Dec. 31, and single Social Security is excluded There is no personal income, for a joint return. Federal persons who are 65 years or from taxable income. State inheritance, gift tax or tax on Employees Retirement Sys- older on Dec. 31 may file for sales tax is 5 percent with intangible property. The state tem and Foreign Service Pen- an exemption if their income local additions up to a possi- sales and use tax is 6 percent. sion System pensions do not is $25,000 or less. Social ble total of 10.75 percent. Use There are additional county qualify for this deduction. The Security is excluded from tax is 8 percent regardless of sales taxes, which could make deduction is reduced dollar taxable income. Statewide the purchaser’s location. the combined rate as high as for dollar by Social Security sales tax is 6 percent; local 9.5 percent. benefits. Social Security itself taxes can add up to another 7 is not taxed. Idaho state sales percent. tax is 6 percent; some local jurisdictions add as much as another 3 percent.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 85 AFSA NEWS

MAINE MICHIGAN Income and $12,000 for MONTANA Recipients of a government- Federal and state/local gov- nontaxable Social Security. There is a $4,110 pension sponsored pension or ernment pensions may be Statewide sales and use tax income exclusion if Federal annuity who are filing singly partially exempt, based on is 6.875 percent; a few cities Adjusted Gross Income is may deduct up to $10,000 the year you were born and and counties also add a sales less than $34,260. Those ($20,000 for married filing the source of the pension. tax, which can be as high as over 65 can exempt an jointly) on income that is (a) If born before 1946, 8.375 percent. additional $800 of interest included in their Federal private pension or IRA income for single taxpayers Adjusted Gross Income, benefits included in AGI are MISSISSIPPI and $1,600 for married joint reduced by all Social Security partially exempt; public pen- Social Security, qualified filers. For taxpayers with an and railroad benefits. For sions are exempt. retirement income from fed- AGI income under $25,000 those aged 65 and over, there (b) If born after Jan. 1, eral, state and private retire- (single filers) or $32,000 is an additional standard 1946 and before Dec. 31, ment systems, and income (joint filers), all Social deduction of $1,600 (filing 1952, the exemption for from IRAs are exempt from Security retirement income singly) or $2,600 (married fil- public and private pensions Mississippi tax. There is is deductible. For taxpayers ing jointly). General sales tax is limited to $20,000 for an additional exemption of above those limits but below is now 5.5 percent; 8 percent singles and $40,000 for $1,500 on other income if $34,000 (single filers) or on meals and liquor. married filers. over 65. Statewide sales tax $44,000 (joint filers), half of (c) If born after 1952, not is 7 percent. Social Security retirement MARYLAND eligible for any exemption income is deductible. Above Those over 65 or perma- until reaching age 67. MISSOURI those second-level limits, 15 nently disabled, or who have Social Security is Up to 65 percent of pub- percent is deductible. Mon- a spouse who is permanently excluded from taxable lic pension income may tana has no general sales tax, disabled, may under certain income. Full details at: be deducted if Missouri but tax is levied on the sale of conditions be eligible for https://www.michigan. Adjusted Gross Income is various commodities. Maryland’s maximum pen- gov/taxes/0,4676,7-238-- less than $100,000 when sion exclusion of $30,600 459647--,00.html. married filing jointly or NEBRASKA in tax year 2018. Also, all Michigan’s state sales tax $85,000 for single filers, U.S. government pensions individuals 65 years or older rate is 6 percent. There are up to a limit of $36,442 for and annuities are fully are entitled to an extra no city, local or county sales each spouse. The maximum taxable. Social Security is $1,000 personal exemption taxes. private pension deduction is taxable. State sales tax is 5.5 in addition to the regular $6,000. You may also deduct percent, with local additions $3,200 personal exemption MINNESOTA 100 percent of Social Secu- of up to 2 percent. available to all taxpayers. Social Security income is rity income if over age 62 Social Security is excluded taxed by Minnesota to the and Federal Adjusted Gross NEVADA from taxable income. See the same extent it is on your Income is less than the limits No personal income tax. worksheet and instructions federal return. If your only above. Sales tax is 4.225 Sales and use tax varies from in the Maryland Resident Tax income is Social Security, percent; local sales and use 6.85 to 8.1 percent, depend- Booklet. General sales tax is 6 you are not required to file an tax additions may raise the ing on local jurisdiction. percent; 9 percent on liquor. income tax return. All federal total to 10.1 percent. pensions are taxable, but sin- NEW HAMPSHIRE MASSACHUSETTS gle taxpayers who are over No personal income tax and Federal pensions and Social 65 or disabled may exclude no inheritance tax. There is Security are excluded from some income if Federal a 5 percent tax on interest/ Massachusetts gross income. Adjusted Gross Income is dividend income over $2,400 Each taxpayer over age 65 is under $33,700 and nontax- for singles ($4,800 mar- allowed an additional $700 able Social Security is under ried filing jointly). A $1,200 exemption on other income. $9,600. For a couple who are exemption is available for Sales tax is 6.25 percent. both over 65, the limits are those 65 or over. No general $42,000 for Adjusted Gross sales tax.

86 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL NEW JERSEY NEW YORK NORTH DAKOTA OREGON Pensions and annuities from Social Security, U.S. govern- All pensions and annuities Generally, all retirement civilian government service ment pensions and annuities are fully taxed. Social Secu- income is subject to Oregon are subject to state income are not taxed. For those over rity is excluded from taxable tax when received by an tax, with exemptions for age 59½, up to $20,000 of income. General sales tax is 5 Oregon resident. However, those aged 62 or older or other annuity income (e.g., percent; 7 percent on liquor. federal retirees who retired totally and permanently dis- Thrift Savings Plan) may Local jurisdictions impose up on or before Oct. 1, 1991, may abled. However, see this link be excluded. See N.Y. Tax to 3 percent more. exempt their entire federal for the distinction between Publication 36 at https:// pension; those who worked the “Three-Year Method” and www.tax.ny.gov/pdf/publica- OHIO both before and after Oct. the “General Rule Method” tions/income/pub36.pdf for Retirement income is taxed. 1, 1991, must prorate their for contributory pension details. Sales tax is 4 percent Taxpayers 65 and over may exemption using the instruc- plans: http://www.state. statewide. Other local taxes take a $50 credit per return. tions in the tax booklet. If you nj.us/treasury/taxation/njit6. may add up to an additional In addition, Ohio gives a tax are over age 62, a tax credit shtml. For 2018, qualifying 5 percent. credit based on the amount of up to 9 percent of taxable singles and heads of house- of the retirement income pension income is available holds may be able to exclude NORTH CAROLINA included in Ohio Adjusted to recipients of pension up to $45,000 of retirement Pursuant to the “Bailey” deci- Gross Income, reaching a income, including most pri- income; those married filing sion (see http://dornc.com/ maximum of $200 for any vate pension income, whose jointly up to $60,000; those taxes/individual/benefits. retirement income over household income was less married filing separately html), government retire- $8,000. Social Security than $22,500 (single) and up to $30,000 each. These ment benefits received by is excluded from taxable $45,000 (joint), and who exclusions are eliminated for federal retirees who had five income. State sales tax is received less than $7,500 New Jersey gross incomes years of creditable service in 5.75 percent. Counties and (single)/$15,000 (joint) in over $100,000. Residents a federal retirement system regional transit authorities Social Security benefits. The over 65 may be eligible for an on Aug. 12, 1989, are exempt may add to this, but the total credit is the lesser of the tax additional $1,000 personal from North Carolina income may not exceed 8.75 percent. liability, or 9 percent of tax- exemption. Social Security tax. Those who do not have able pension income. Social is excluded from taxable five years of creditable OKLAHOMA Security is excluded from income. State sales tax is service on Aug. 12, 1989, Individuals receiving FERS/ taxable income. Oregon has 6.675 percent. must pay North Carolina tax FSPS or private pensions no sales tax. on their federal annuities. In may exempt up to $10,000, NEW MEXICO tax year 2014 and later, the but not to exceed the amount PENNSYLVANIA All pensions and annuities $4,000 deduction is no lon- included in the Federal Government pensions and are taxed as part of Federal ger available. For those over Adjusted Gross Income. Social Security are not sub- Adjusted Gross Income. 65, an extra $750 (single) Since 2011, 100 percent of ject to personal income tax. Taxpayers 65 and older may or $1,200 (couple) may be a federal pension paid in Pennsylvania sales tax is 6 exempt up to $8,000 (single) deducted. Social Security lieu of Social Security (i.e., percent. Other taxing entities or $16,000 (joint) from any is excluded from taxable CSRS and FSRDS—”old sys- may add up to 2 percent. income source if their income income. State sales tax is tem”—including the CSRS/ is under $28,500 (individual 4.75 percent; local taxes FSRDS portion of an annuity filers) or $51,000 (married fil- may increase this by up to 3 paid under both systems) ing jointly). The exemption is percent. is exempt. Social Security reduced as income increases, included in FAGI is exempt. disappearing altogether at State sales tax is 4.5 percent. $51,000. New Mexico has a Local and other additions gross receipts tax, instead of may bring the total up to 9.5 a sales tax, of 5.125 percent; percent. county and city taxes may add another 3.9375 percent.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 87 AFSA NEWS

PUERTO RICO SOUTH DAKOTA joint filers. This is reduced by WEST VIRGINIA The first $11,000 of income No personal income tax or 2.5 percent of income exceed- $2,000 of any civil or state received from a federal inheritance tax. State sales ing $25,000 for single filers pension is exempt. Social pension can be excluded for and use tax is 4.5 percent; and $32,000 for joint filers. Security income is taxable individuals under 60. For municipalities may add up to See the state website for only to the extent that the those over 60, the exclusion an additional 2.75 percent. details. State sales tax ranges income is includable in Fed- is $15,000. If the individual Residents who are age 66 and from 5.95 percent to 8.60 eral Adjusted Gross Income. receives more than one older and have a yearly income percent, depending on local Taxpayers 65 and older or federal pension, the exclu- of under $10,250 (single) or jurisdiction. surviving spouses of any age sion applies to each pension in a household where the total may exclude the first $8,000 or annuity separately. Social income was under $13,250 VERMONT (individual filers) or $16,000 Security is excluded from are eligible for a sales tax or a U.S. government pensions (married filing jointly) of any taxable income. property tax refund. and annuities are fully tax- retirement income. Out-of- able. Social Security is taxed state government pensions RHODE ISLAND TENNESSEE to the extent it is federally qualify for this exemption. U.S. government pensions Social Security, pension taxed. State general sales State sales tax is 6 percent, and annuities are fully tax- income and income from tax is 6 percent; local option with additions of between able. However, effective the IRAs and TSP are not subject taxes may raise the total to 7 0.5 and 1 percent in some 2017 tax year, taxpayers eli- to personal income tax. In percent (higher on some com- jurisdictions. gible for Social Security may 2018, most interest and modities). take a $15,000 exemption on dividend income is taxed at 3 WISCONSIN their retirement income. This percent if over $1,250 (single VIRGINIA Pensions and annuities are applies to single taxpayers filers) or $2,500 (married Individuals over age 65 can fully taxable. Social Security with FAGIs of up to $80,000 filing jointly). However, for tax take a $12,000 deduction. is excluded from taxable and to joint taxpayers up to year 2015 and subsequently, The maximum $12,000 income. Those age 65 or $100,000 that are otherwise those over 65 with total deduction is reduced by over may take two personal qualified. Social Security income from all sources of one dollar for each dollar by deductions totaling $950. is taxed to the extent it is less than $37,000 for a single which Adjusted Gross Income Benefits received from a federally taxed. Sales tax is 7 filer and $68,000 for joint exceeds $50,000 (for single) federal retirement system percent; meals and bever- filers are completely exempt and $75,000 (for married) account established before ages, 8 percent. from all taxes on income. taxpayers. All taxpayers over Dec. 31, 1963, are not taxable. State sales tax is 5 percent 65 receive an additional Those over 65 and with a SOUTH CAROLINA on food; 7 percent on other personal exemption of $800. FAGI of less than $15,000 Individuals under age 65 can goods, with between 1.5 and Social Security is excluded (single filers) or $30,000 claim a $3,000 deduction on 2.75 percent added, depend- from taxable income. The (joint filers) may exclude qualified retirement income; ing on jurisdiction. estate tax was repealed for all $5,000 of income from those age 65 or over may deaths after July 1, 2007. The federal retirement systems or claim a $15,000 deduc- TEXAS general sales tax rate is 5.3 IRAs. Those over 65 may take tion on qualified retirement No personal income tax or percent (4.3 percent state tax an additional personal deduc- income ($30,000 if both inheritance tax. State sales and 1 percent local tax, with an tion of $250. State sales tax spouses are over 65) but tax is 6.25 percent. Local extra 0.7 percent in Northern is 5 percent; most counties must reduce this figure by options can raise the rate to Virginia). charge an extra 1.5 percent. any other retirement deduc- 8.25 percent. tion claimed. Social Security WASHINGTON WYOMING is excluded from taxable UTAH No personal income tax. Retire- No personal income tax. income. Sales tax is Utah has a flat tax rate of 5 ment income is not taxed. State State sales tax is 4 percent. 6 percent plus up to 3 percent of all income. For sales tax is 6.5 percent; rates Local taxes may add up to percent in some counties. taxpayers over 65 there is a are updated quarterly. Local 2 percent on sales and 4 Residents age 85 and over retirement tax credit of $450 taxes may increase the total to percent on lodging. n pay 5 percent. for single filers and $900 for 10.4 percent.

88 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL IN MEMORY

n James L. (Jim) Culpepper III, 90, nar Winding and Mary Margaret, and his deputy public affairs officer in Pakistan a retired Foreign Service officer with the brother Henrik, settled in Metuchen, N.J., (1981-1984). U.S. Information Agency, died on Oct. 16, in 1931, where Mr. Hansen was active with Mr. Hansen took part in organizing 2018, in Berlin, Germany, from complica- the Boy Scouts. President Dwight Eisenhower’s visit to tions of pneumonia. At age 18, he joined the Navy during Spain, President Lyndon B. Johnson’s trip Mr. Culpepper was born in San Fran- World War II and served aboard the USS to and Vice President George cisco on Feb. 26, 1928, and grew up in Alsea, a sea-going tug that hauled targets H.W. Bush’s visit to Pakistan. He spent Ross, Marin County, California. He gradu- for destroyers to practice firing and towed a night at the piano as Duke Ellington ated in 1945 from Tamalpais High School, damaged U.S. warships through mine- played, joked with Danny Kaye, hung out where he was student body president. infested waters. with Lowell Thomas and organized Kirk He served as a paratrooper in the U.S. In 1946 he enrolled at Triple Cities Douglas’ visit to refugee camps in Pakistan. Army before enrolling at the University of College of Syracuse University in Endicott, He was a technical adviser on the first- California at Berkeley. He was awarded a N.Y., on the G.I. bill, graduating from Syra- ever USIA anti-narcotics film, “The Trip,” Fulbright scholarship to study in Denmark cuse University in 1950 with a bachelor’s about drug trafficking in Latin America. as a graduate student. degree in political science. Mr. Hansen also took his family on car Mr. Culpepper joined USIA in 1958. After graduation, Mr. Hansen covered trips across South America; his children He was posted to , Nigeria, Kenya, Metuchen as a reporter for The Perth say the trips gave them an appreciation for Vietnam, Brazil, India and Indonesia. Flu- Amboy Evening News. He was recalled to local cultures and the world around them. ent in Vietnamese, he served three times active duty in 1951 during the Korean War His Washington, D.C., assignments in South Vietnam and was among the last and served as a naval intelligence officer include: Caribbean desk officer for USIA to be evacuated by helicopter from the until 1954. during the Dominican crisis (1963-1966); roof of the U.S. embassy in Saigon in 1975. After working briefly in Spain, he USIA policy officer for Latin America During his Washington assignments, returned to the United States when (1972-1976); and chief of the Latin he travelled extensively as an inspector notified that his application for a job as American branch of the Office of Research and worked at the . a Foreign Service officer with the newly (1980-1981). A lifelong student of languages—he established United States Information After retiring from USIA in 1987, Mr. once studied Old Icelandic—Mr. Culpep- Agency was approved. Hansen kept busy writing his memoirs. He per studied and became fluent in German Mr. Hansen spent 32 years with USIA, was the originator of an internet site spon- and French after his retirement in 1988 at working in nine countries and Washing- sored by the USIA Alumni Association and the age of 60. ton, D.C. He experienced civil unrest in the the Public Diplomacy Foundation and Mr. Culpepper is survived by his wife, Dominican Republic, survived a terrorist served as its webmaster for several years. Christa Mayer; two daughters, Leigh kidnapping plot in Uruguay (only because For more than a decade, Mr. Hansen Culpepper and Nikki Culpepper of San he was away on vacation) and served in volunteered at the AAFSW Bookstore and Francisco; four grandchildren, Eli and Bolivia during the 1971 coup d’état. the annual book fair; his family believes Theo Socks and Maya and Makayla Fuges; In Venezuela in 1956, on his first that his volunteer position at the book- as well as his former wife, retired FSO assignment with USIA, he met and mar- store makes him the oldest person ever to Donna Millons Culpepper. ried Charmaine Rostant of Trinidad and work at the State Department. Memorial contributions may be made Tobago. They went on to serve in Mexico Mr. Hansen is survived by his wife of to Peace Trees Vietnam. (1956-1958), Guyana (formerly British Gui- 62 years, Charmaine, and five children: ana, 1958-1960) and Spain (1960-1962). Robert (and spouse Nancy); Annette; n Allen Clifford Hansen, 93, a retired In 1963 Mr. Hansen received a master’s Katherine Freeman (and spouse Daniel); Foreign Service officer with the U.S. Infor- degree in American studies from the Uni- Alicia Hatcher (and spouse Monte); Mark mation Agency, passed away on Sept. 16, versity of Pennsylvania. He then served as (and spouse Dahlia). He has 12 grandchil- 2018, after suffering a stroke. the press attaché in Uruguay (1967-1970), dren: Lindsay, Charlie, Kevin, Caroline, Mr. Hansen was born on Sept. 23, 1924, director of USIA operations in Bolivia Joseph, Nicole, Gwennie, Joshua, Jason, in Plainfield, N.J. He and his parents, Gun- (1970-1972) and Peru (1976-1980), and Chris, Savannah Rose and Zachary; and

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 89 four great-grandchildren, Christian, His greatest adventure, however, was Mason, Hudson and Layla. becoming a father to daughter Emma Donations in memory of Mr. Hansen Peggy in July 2010. Family and friends may be made in support of Dr. Hugh recall his infectious humor, professional- Calkin’s research on atrial fibrillation at ism and never-ending supply of snacks, The Johns Hopkins Heart and Vascular and say his philosophy was to always leave Institute Development Office, 600 N Wolfe a job better than he found it, whether Street, Blalock 536, Baltimore MD 21287. through improvements, mentoring or Please include “In memory of Allen C. morale. Hansen” on the memo line. Mr. Lau’s passions included gaming, photography, cooking and his family. n Raymond Wai-man Lau, 45, an Family members recall him as caring, active-duty information management kind, hilarious, intelligent and a devoted officer with the Department of State, died son, husband, father and friend. on May 4, 2018, after battling plasma cell Mr. Lau is survived by his wife, FSO leukemia. Maureen Yates; daughter Emma Peggy; Mr. Lau was born on June 1, 1972, to parents Allen and Shirley Lau; brother Allen and Shirley Lau in Alhambra, Calif., Edmond (and sister-in-law Linda); nieces where he attended Marguerita Elementary Cali and Clara; and his in-laws, Ambassa- School, Alhambra High School and Califor- dor John M. Yates and Ambassador Mary nia State Polytechnic University, Pomona. Carlin Yates; along with a host of friends Prior to joining the Department of worldwide. State, Mr. Lau served for six years in the U.S. Air Force as a medical laboratory n Robert J. Martens, 92, a retired For- specialist, during which he was awarded eign Service officer, died on Sept. 18, 2018, multiple certificates of achievement. After in Silver Spring, Md. leaving the Air Force, Mr. Lau returned to Born to John and Esther Martens on Los Angeles to work in the gaming indus- Nov. 24, 1925, Mr. Martens spent his child- try, his lifelong passion, rising to brand hood in Kansas City, Kan., with frequent manager and game designer at Alderac visits to Concordia, the family’s town of Entertainment Group in Ontario, Calif. origin. During the Depression he shined Mr. Lau met FSO Maureen Yates at shoes, delivered newspapers and joined AEG, and they were married. Soon there- his father as a house painter. after, Mr. Lau began his nomadic life in the At age 15, he enlisted in the army Foreign Service, first as a trailing spouse during World War II. A veteran of the and then as an officer in his own right, Field Artillery and the Infantry, Martens joining the State Department in 2013 as an marched through France and Germany information management specialist. with the Allied liberating forces. Later, he Mr. Lau was posted in Armenia, attended the National War College on the Angola, Niger, Singapore and Germany, G.I. Bill, followed by law school at the Uni- receiving numerous Superior and versity of Southern California, from which Meritorious Honor Awards in his all-too- he graduated in 1949. brief career. He and Maureen had many Mr. Martens entered the Foreign adventures crisscrossing the globe for Service in 1951, serving in Italy, occupied their assignments and exploring many Austria, the Soviet Union, Indonesia, countries in between. Burma (now ), Romania and

90 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Sweden, as well as on domestic tours as chargé d’affaires in Romania; in 1973 Game at the Naval War College. with the Department of State. He spoke he escorted dictator Nicolae Ceausescu Mr. Martens twice received the State Russian, German, Italian, Romanian and on a to the United States. He Department’s Superior Honor Award. He Indonesian. also served as office director of the State is the author of The Indonesian Turning In the late 1950s, Mr. Martens attended Department’s East Asia Bureau under Point 1965-66 (2012), a book about the the Russian Institute at Columbia Uni- Assistant Secretary of State . In 1965 failed coup attempt. versity. In New York City he met Patricia the late 1970s, he acted as deputy chief of Mr. Martens is survived by his children: Glavin, a Broadway dancer and member mission and chargé d’affaires in Sweden. Anne, John and Tom; and by his sister of the June Taylor Dancers, and they mar- Following several years as a Foreign Beverly. n ried in 1958. Service chief inspector, Mr. Martens While posted in Moscow during the retired in 1982, but soon returned to diplo- If you would like us to late 1950s, he led initial implementation matic work. He ran crisis management include an obituary in In Memory, please of the U.S.-Soviet Cultural Exchanges exercises at embassies in the Middle East send text to journal@ program. In the 1960s, his tours included until 2000, followed by other consulting afsa.org. Be sure to include the date, posts in communist Indonesia during the work for the State Department. place and cause of death, as well as Sukarno regime, and in Burma follow- In retirement, he served as vice presi- details of the individual’s Foreign ing General Ne Win’s establishment of a dent of an academic institute addressing Service career. Please place the name socialist state. European security issues, and as a regular of the AFSA member to be memorial- ized in the subject line of your email. In the early 1970s, Mr. Martens served participant in the annual Global War

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 91 BOOKS

Pursuing Peace with the Maine Democratic Party. tant but of manageable size, and that Proactive Diplomacy He began his international career in could achieve visible results in a year: 1990 as an election trainer and observer • Supporting the then-emerging Syr- Peace Works: America’s Unifying with the National Democratic Institute. ian opposition to Assad with nonlethal Role in a Turbulent World He then served as founding director of aid and government transition training; Rick Barton, Rowman & Littlefield USAID’s Office of Transition Initiatives, • Preventing widespread violence Publishers, 2018, $35/Hardcover; promoting democratic change in con- that seemed likely to accompany the $17.82/Kindle, 312 pages. flict-prone countries; deputy high com- 2013 national election in Kenya; Reviewed by J. R. Bullington missioner of the United Nations refugee • Reducing the sabotage and civil agency, UNHCR; co-director of a post- conflict plaguing the oil-rich Niger Delta Rick Barton is passionate about peace. conflict reconstruction project with the region of Nigeria; Yet he is no pacifist. His lengthy career Center for Strategic and International • Calming the longstanding ethnic has been focused on conflicts and Studies, where he led conflict-related conflict in the Kayah state of Burma; and how American diplomacy, economic studies on Iraq, Afghanistan, Sudan and • Countering gang violence in Hon- development and humanitarian aid can Pakistan; and U.S. Representative to the duras that was driving refugees to the be used to avoid them, if possible, or U.N. Economic and Social Council. United States. bring them to a successful end and build Barton brought this rich and relevant In addition to these top-priority long-term stability to preclude their recurrence. That’s what this book is about. It uses The Bureau of Conflict and stories, history and analysis to develop lessons and policy prescriptions for Stabilization Operations’ most enduring American involvement—or its avoid- and influential accomplishment, though, ance—in foreign conflicts. may be the development of sophisticated First, in the spirit of full disclosure, research and analysis on conflicts my Foreign Service career was also in and planning tools to address them. large measure focused on conflict— from my first overseas assignment, in wartime Vietnam from 1965 to 1968, to my post-retirement recall to active duty experience to his next job, as Secretary projects, Barton agreed that CSO could as a special in Senegal to help Hillary Clinton’s pick to head the newly also take on a few smaller projects else- end a 30-year secessionist insurgency created State Department Bureau of where—among them, my Casamance in the southern part of that country, the Conflict and Stabilization Operations project. Casamance, from 2012 to 2014. (CSO) in 2012. “The immensity of starting something In the latter assignment, Rick Barton The latest organizational result of new in a recalcitrant organization,” was my boss, as assistant secretary of a recurrent struggle within the State Barton writes, “showed up on a daily the Bureau of Conflict and Stabilization Department over the nature and basis.” Also, although he does not explic- Operations to which I reported. He was structure of the U.S. civilian response to itly address this issue in the book, the a good boss, both empowering and sup- foreign conflicts and unstable countries, departure at the end of 2012 of Secretary portive, and I hold him in high regard. CSO became operational in 2011. On of State Hillary Clinton, who had cham- Born in Buenos Aires, Rick accompa- taking office there, Barton writes, he pioned the concept of building a more nied his Foreign Service family on sev- “believed that the new structure could effective conflict response capacity and eral assignments. After graduating from gain traction and drive convergence of the creation of CSO, seemed to result in Harvard, he became a congressional policy and practice in conflict settings.” a loss of direction for the bureau. staffer, ran unsuccessfully for a Maine He decided to refocus the bureau on Despite these problems, CSO pro- congressional seat and was chairman of five engagements deemed to be impor- duced several small-scale successes.

92 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Perhaps the most publicly heralded was most conflict professionals, military as Roads: A Foreign Service Memoir (2017); the funding in Syria of the “White Hel- well as civilian, would likely agree. Expeditionary Diplomacy in Action: Sup- mets,” a volunteer rescue organization What is the future of CSO and, more porting the Casamance Peace Initiative that has saved thousands of civilians generally, American capacity to provide (2015); and Adventures in Service with injured in the fighting. leadership in addressing global con- Peace Corps in Niger (2007). CSO also helped reduce election flicts with diplomacy and development violence in Kenya and conflict in the assistance? A Pivotal Moment in Niger Delta, catalyze land-mine removal A joint State Department-USAID- U.S.-Philippine Relations in Burma and strengthen peacebuilding DoD Stabilization Assistance Review was organizations in Honduras. completed and released to Congress in Rampage: MacArthur, Yamashita Its most enduring and influential April 2018. Though not yet public, it is and the Battle of Manila accomplishment, though, may be the reportedly intended to be a guide for U.S. James M. Scott, W.W. Norton & Company, development of sophisticated research operations in conflict zones and fragile 2018, $32.95/hardcover; $16.86/Kindle, and analysis on conflicts and planning states. It remains unclear whether this 635 pages. tools to address them. plan will be implemented under Sec- Reviewed by Aloysius M. O’Neill III In Peace Works, Barton draws on his retary of State Mike Pompeo, or if such experience to analyze how many Ameri- operations will be funded by Congress. In his third book on World War II in the can conflict interventions have failed Does peace really work, in the sense Pacific, James Scott describes in arresting and how they could have succeeded. Rick Barton means, to enhance Ameri- detail the horrific 29-day battle to wrest He develops a number of guidelines for can security in a turbulent world? In this Manila from Japanese control in 1945. such interventions. Among them are the book he makes a good case that proactive Scott is a fluid writer who did a prodigious following: efforts to prevent or ameliorate conflicts, amount of research in U.S. and Japanese • Timely preparation for conflict along with post-conflict stabilization pro- records and in survivors’ accounts. He also response does not necessarily lead to grams to prevent recurrence, can work if interviewed many Filipino witnesses and intervention, but it provides a broader done selectively and skillfully. victims of the battle. range of potential responses. In practice, however, efforts to General Douglas MacArthur led the • The focus must always be on the enhance U.S. civilian conflict response U.S. invasion force. General Tomoyuki people we want to help, who should be capacity have been weak and faltering Yamashita, the “Tiger of Malaya” who engaged as partners in both planning for the past quarter century, and conflict had vanquished the British in Singapore and implementation. interventions have become increasingly in 1942, was his opponent, although • America should practice humility militarized. Prospects that this trend will Yamashita was in the northern in any interventions and always act as a be reversed under the Trump adminis- during the entire battle. catalyzing (not colonizing) force. tration appear dim. MacArthur’s connections to the Philip- • We have to recognize that opera- And yet, those who want increased pines were deep. His father had been the tions in conflict zones are inherently American security in a more peaceful military governor when the United States risky, and be prepared to accept those world must continue efforts to improve subdued the archipelago starting in 1899; risks if we undertake the operations. our peacebuilding and peacekeeping the son had not only served there as a lieu- • Before deciding to intervene in capabilities. Rick Barton’s book provides tenant, but his mother also died in Manila, foreign conflicts, we must consider these reasonable guidance for doing so. and his only child was born there. questions: Does it truly matter to the By 1937 Douglas MacArthur had United States? Is the timing right? Will Jim Bullington is a retired Foreign Service become field marshal of the fledgling Phil- delay clarify the choice, or worsen pros- officer and former ambassador who served ippine Army. In 1942 President Roosevelt pects for success? Can we make a differ- in Southeast Asia and sub-Saharan Africa ordered him to escape ahead of the invad- ence to the main drivers of the conflict? throughout his career. He resides in Wil- ing Japanese, and all during World War II, Are viable local partners available? liamsburg, Virginia and has written three MacArthur was obsessed with retaking the These are sound principles, on which books: Global Adventures on Less-Traveled islands.

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 93 For the Americans, Manila was a new for his forces’ kind of war. Suddenly, veterans of jungle war crimes in battles were confronted with the alien Malaya. environment of close combat in a major Although city. The population was crushed between there is an over- the Japanese, who went on a murderous view map of the rampage while also fighting to the death, city on page and American forces that had no choice 59, the book but to employ heavy artillery to end the would have slaughter. benefited Scott makes clear how devastating the from additional results were for the inhabitants, both Filipi- maps focused on individual districts like nos and the rest of the city’s cosmopolitan the Spanish walled city of Intramuros, the population. Probably 100,000 died in that scene of some of the bitterest combat and month, and 613 blocks containing about worst atrocities. 11,000 buildings were flattened. There is a Foreign Service connection One has to look back to Japan’s war in to this history. Embassy Manila’s present China to see a similar level of atrocities. In chancery opened in 1940 as the office and parts of China, the Japanese had pursued a residence of the newly installed U.S. High policy known as “Three Alls: Kill All, Burn Commissioner to the Philippine Islands All, Loot All.” In 1945 they brought that when the president of the new Philippine homicidal mindset to the streets of Manila. Commonwealth moved into the Mala- The combat photos in the book highlight canang Palace. the destructive power of the fighting and In September 1945, Yamashita surren- amplify the author’s descriptions. dered at what was the ’s Japanese rage at Filipinos was intense, summer residence in Baguio, later the not only because of the numerous guerrilla summer residence of the U.S. ambassador. groups that had plagued them all across In 1945 and 1946, his war crimes trial took the country, but also because ordinary place in the ballroom of the chancery. The Filipinos continued to put their faith in an building is close to the scenes of some eventual U.S. liberation to give them their of the worst combat, and its flagpole still promised independence. That infuriated bears scars from the fighting. the Japanese, who expected all Asians to I am happy to recommend Rampage to buy their “Asia for the Asians” propaganda. Foreign Service readers, especially those In 1946 Yamashita was hanged for who have served or will serve in Manila the war crimes his forces committed or, indeed, anywhere in Asia. It recounts in Manila. That controversial verdict— a pivotal moment in the U.S. relationship over how much blame should have with our oldest Asian ally on the verge of been apportioned to a commander its independence, and is a vivid account who was well north of Manila during of a relatively lesser known battle of World the bloodbath and who did not order War II. n those atrocities—went all the way to the U.S. Supreme Court. However, as Retired FSO Aloysius O’Neill served from 1976 Scott points out, had the United States to 2000. In addition to assignments in Seoul, not executed Yamashita, the British or Tokyo, Rangoon and Okinawa, he was politi- Australians would have condemned him cal counselor in Manila from 1997 to 2000.

94 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL CLASSIFIED ADVERTISEMENTS n LEGAL SERVICES n BOOKS

ATTORNEY WITH OVER 25 YEARS’ VEILS IN THE VANGUARD: Insights of an American Ambassador’s Wife in successful experience SPECIALIZING FULL-TIME Kuwait, by Catherine Raia Silliman, $9.99 on Amazon. IN FS GRIEVANCES will more than double your chance of winning: 30% of grievants win before HUNTING THE WIND. If you ever flew Pan Am or you just know the the Grievance Board; 85% of my clients win. Only glamorous legends, this anthology will entice and captivate. Journey a private attorney can adequately develop and back in time to the romantic, innovative era of Pan Am’s magnificent present your case, including necessary regs, arcane legal doctrines, flying boats (1929-1946). A treasury of stories from the people who precedents and rules. were there! A memorable holiday gift. Call Bridget R. Mugane at: Find it at Schiffer Publishing and Amazon. Tel: (301) 596-0175 or (202) 387-4383. Email: [email protected] WRITERS — KENTBURY.COM, a virtual community of serious writers. Website: foreignservicelawyer.com Showcase your work, unpublished, published, a work in progress. This user-friendly site is a meeting place for the literary world. The agents, n TAX & FINANCIAL SERVICES publishers, directors, anyone looking for a viable property will come to Kentbury and could find you! Simple, Straightforward, Unique, Affordable. DAVID L. MORTIMER, CPA: Income tax planning and preparation for 20 years in Alexandria, Va. Free consultation. Not knowing he was a Russian asset, Gavrilo Tel: (703) 743-0272. Princip fired his pistol, igniting a World War. Email: [email protected] Website: www.mytaxcpa.net Twelve American Wars by Eugene G. Windchy (author of Tonkin Gulf –“Superb investigative reporting,” N. Y. Times.) BUILD A FINANCIAL PLAN TO LIVE YOUR BEST LIFE AND SECURE 3rd edition at Amazon https://www.amazon.com/Twelve-American- YOUR FUTURE. Chris Cortese, former FSO and founder of Logbook Wars-Nine-Avoidable/dp/1491730536 Financial Planning provides independent, fiduciary, financial advice to the foreign affairs community. Logbook specializes in FSPS, FERS, n TEMPORARY HOUSING investment management, TSP, college funding, retirement, career change projections and more. CORPORATE APARTMENT SPECIALISTS. Abundant experience Email: [email protected] with Foreign Service professionals. We work with sliding scales. Website: www.logbookfp.com TDY per diems accepted. We have the locations to best serve you: Foggy Bottom (walking to Main State), Woodley Park, Chevy Chase IRVING CPA, PLLC. Scott Irving, CPA, has more than 18 years of and several Arlington locations convenient to NFATC. Wi-Fi and all experience and specializes in Foreign Service family tax preparation furnishings, houseware, utilities, telephone and cable included. and tax planning. Tel: (703) 979-2830 or (800) 914-2802. Tel: (202) 257-2318. Fax: (703) 979-2813. Email: [email protected] Email: [email protected] Website: www.irvingcom.com Website: www.corporateapartments.com

WE PROVIDE FREE TAX CONSULTATION. Specializing in DC GUEST APARTMENTS. Not your typical “corporate” apartments— Foreign Service and overseas tax returns for 30-plus years. we’re different! Located in Dupont Circle, we designed our apartments Income tax preparation and representation by Enrolled Agents. as places where we’d like to live and work—beautifully furnished and Electronic filing of tax returns for fast processing. Taxes can be fully equipped (including Internet & satellite TV). Most importantly, completed via: email, phone or in person. We handle all state filings. we understand that occasionally needs change, so we never penalize Custom comments provided on each return to help keep our clients you if you leave early. You only pay for the nights you stay, even if your heading in the right financial direction. TAX TRAX, a financial planning plans change at the last minute. We also don’t believe in minimum report card, is available. Tax notices and past due returns welcome. stays or extra charges like application or cleaning fees. And we always Office open year-round. Financial planning available, no product sales, work with you on per diem. hourly fee. Tel: (202) 536-2500. Send us your last 3 returns for a free review. Email: [email protected] Financial Forecasts, Inc. Website: www.dcguestapartments.com Barry B. DeMarr, CFP, EA & Bryan F. DeMarr, EA 3918 Prosperity Ave #318, Fairfax VA 22031 FURNISHED LUXURY APARTMENTS. Short/long-term. Best locations: Tel: (703) 289-1167. Dupont Circle, Georgetown. Utilities included. All price ranges/sizes. Fax: (703) 289-1178. Parking available. Email: [email protected] Tel: (202) 251-9482. Website: www.FFITAX.com Email: [email protected] n CAREER CHANGE DCLuxe Properties. Washington, D.C., corporate housing, offering large fully furnished and generously equipped one- and two-bedroom ServingTalent is the first recruiting agency for military and units in the heart of the popular Dupont Circle neighborhood. In-unit Foreign Service spouses. We work with employers to get you hired. washer/dryer, cable TV, high-speed internet and weekly housekeeping ServingTalent is EFM-owned. For more information, please contact: are standard amenities. Your privacy is important to us—no shared Tel: (208) 643-4591. spaces or large apartment buildings. The subway, grocery stores, drug Email: [email protected] stores, dry cleaners and restaurants are all within 3 blocks of your unit. Website: www.servingtalent.com We have more than 20 years of experience with USG sliding-scale per diem. See dcluxe.com for more information and photos; contact us at [email protected]. Live like a local!

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 95 CLASSIFIED ADVERTISEMENTS n TEMPORARY HOUSING ARE YOU TRANSFERRING TO THE D.C. METRO AREA? ARLINGTON FLATS. 1, 2, 3 and 4 BR flats/houses in 25 properties Let’s jump start your housing search now! I will provide you advance located in the Clarendon/Ballston corridor. Newly renovated, listings and help you identify the right property to buy or lease. completely furnished, all-inclusive (parking, maid, utilities). Rates start at $2,750/mo. We work with per diem. Check out DO YOU WANT TO INVEST IN REAL ESTATE? our listings. Welcoming Foreign Service for the last decade! Let me provide you commercial real estate options that require Tel: (703) 527-1614. Ask for Claire or Jonathan. minimal property management. Email: [email protected] Website: www.SunnysideProperty.net I can also suggest single and multi-unit residential investment opportunities with ongoing property management. FOR RENT: Gorgeous Townhouse in Arlington. 3 BR, huge basement, 3.5 bathrooms. 7-minute walk from FSI! Walking distance to Ballston, As a retired Foreign Service Officer who spent a career leasing Clarendon & VA Square metros. Short-term or long-term rentals overseas embassy housing and office space, I will exceed your accepted, willing to rent furnished or unfurnished! Photos and a descrip- expectations. tive walking-tour available at: http://bit.ly/SteveArlington The home is completely refurbished including: refinished wood floors; RUSSELL BAUM, REALTOR® new carpet, lights and paint; granite countertops; new HVAC system, Arlington Realty, Inc. walk-in closet; and off-street parking. Brand new, stainless steel appli- 764 23rd Street S ances are being added to the kitchen, renter will have first use! Arlington VA 22202 About me: I am an attorney with NASA, and a professor at Georgetown Tel: (703) 568-6967. Law. Please contact me with any questions. Email: [email protected] Tel: (202) 615-2127. Website: www.russbaum.com Email: [email protected] REMEMBER TOM? I remember Tom fondly. For 25 years, n PROFESSIONAL SERVICES Tom was my “go to” Realtor when buying and selling homes and investment properties in Virginia. Posted overseas, having access ENGLISH LANGUAGE WORKSHOPS for Locally-Employed staff. We to a professional who we could unconditionally trust, proved invalu- travel to your post! Go to www.englishforthejob.com for details on pack- able. He helped us purchase great properties and represent us and ages and rates. his attention to detail was impeccable. I provide my clients with this same level of service, full time support, and attention to detail. TWIGA TUTORS. Don’t let your child fall behind American peers while living overseas. Our certified American EFM teachers support K-12 Looking for such a Realtor, a former SFSO helping clients make students in English, Math, Science, U.S. History, American Literature and intelligent real estate choices throughout Northern Virginia, Coding and Robotics. Reimbursable for most FS families. Enroll Today! then contact me. Inquire about my client savings program where Email: [email protected] I give back to current/retired FSOs & spouses in recognition of Website: www.twigatutors.com their service. n REAL ESTATE ALAN DAVIS, REALTOR® Amanda Davidson Real Estate Group LOOKING to BUY, SELL or RENT REAL ESTATE in NORTHERN 6485 Old Beulah Street, Alexandria, VA 22315 VIRGINIA or MARYLAND? Former FSO and Peace Corps Country Direct: (571) 229-6821. Director living in NoVA understands your unique needs and can Email: [email protected] expertly guide you through your real estate experience and transition. Website: www.alandavisrealtor.com Professionalism is just a phone call away. Call Alex for solutions. Alex Boston, REALTOR, JD, MPA CARRIACOU, GRENADINES. Two-Ocean view house in Caribbean on Long & Foster four acres. Two bedrooms. $800/week. Check out link twooceans.net. 6299 Leesburg Pike, Falls Church VA 22044 Tel: (571) 533-9566. n PET TRANSPORTATION Email: [email protected] Website: alexboston.LnF.com PET SHIPPING WORLDWIDE: ACTION PET EXPRESS has over 48 years in business. Main State Bound? Tap into my 30+ years of providing exclusive repre- 24-hr. service, operated by a U.S. Army veteran, sentation to FSOs buying and selling real estate. You need unique and associate member AFSA. Contact: Jerry Mishler. special consideration to find the right property. Let me assist with your Tel: (681) 252-0266 or (844) 323-7742. next home, guiding you through the myriad details for a smooth transac- Email: [email protected] tion. Marilyn Cantrell, Associate Broker, Licensed in DC and VA Website: WWW.ACTIONPETEXPRESS.COM McEnearney Associates, McLean VA Cell: (703) 819-4801. Email: [email protected] PLACE A CLASSIFIED AD: $1.60/word (10-word min). Hyperlink $11 Website: MarilynCantrell.com in online edition. Bold text $1.00/word. Header or box-shading $11 each. Deadline: Five weeks ahead of publication. NORTHERN VIRGINIA RESIDENTIAL SPECIALIST. Tel: (202) 719-9712. This SFSO (retired USAID, Housing & Urban Programs) with 15+ years Fax: (202) 338-8244. of real estate experience can advise you on buying, selling or renting a Email: [email protected] home. David Olinger, GRI–Long & Foster, Realtors. Tel (direct): (703) 864-3196. Email: [email protected] Website: www.davidolinger.lnf.com

96 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL WJD REAL ESTATE & PROPERTY MANAGEMENT New in Dropbox

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 97 REAL ESTATE & PROPERTY MANAGEMENT

98 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL ADWhen contactin g oneINDEX of our advertisers, kindly mention you saw their advertisement in The Foreign Service Journal.

ANNOUNCEMENTS Apply for an AFSA Scholarship / 98 Foreign Service Day 2019 / 30

CLASSIFIED ADS Classifieds / 95, 96

EDUCATION Georgetown University, Walsh School of Foreign Service, Institute for the Study of Diplomacy/Case Studies in Global Affairs / 15

FINANCIAL, LEGAL AND TAX SERVICES Carrington Financial Planning / 71 Irving CPA, PLLC / 71 MCG Financial Planning / 73

HOUSING Corporate Apartment Specialists / 67 Residence Inn–Arlington/Rosslyn / 22

INSURANCE AFSPA–Ancillary Programs / 58 Clements Worldwide / 3 Federal Employee Defense Services / 19 The Hirshorn Company / Back Cover

MISCELLANEOUS Address Change / 69 DACOR / 94 Foreign Service Books / 90 FSJ Gift Subscription / 4 Fund for American Diplomacy / Inside Front Cover Inside a U.S. Embassy / Inside Back Cover Managing Editor, The Foreign Service Journal / 73 Senior Living Foundation / 91 United States Diplomacy Center / 13

REAL ESTATE & PROPERTY MANAGEMENT Alex Boston, Long & Foster Real Estate / 98 Chambers Theory / 97 McEnearney Associates / 99 Meyerson Group, Inc., The / 98 Property Specialists, Inc. / 22 Washington Management Services / 99 WJD Management / 97

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 99 REFLECTIONS

The Way We Were—State and the New Commercial Service

BY HARRISON SHERWOOD

ot long after I had taken up my sectors and identify potential German buy- duties as deputy senior com- ers and representatives. We then make this mercial officer in Bonn, West intelligence available to U.S. exporters.” NGermany, in 1981, the new U.S. Not a fan of political appointees, I ambassador, Arthur F. Burns, arrived. My mischievously added: “‘A well-informed boss was Walter Stadtler, an old friend, market is a more efficient market,’ I who had decided to remain in the State believe I read in some dusty economics Department rather than transfer into the textbook somewhere.” Foreign Commercial Service, which had Arthur Burns, a two-time chairman of there could be no question about the recently come into being. the Federal Reserve, was quite familiar intent of the agreement: The FCS was to Shortly before Walter left, he was with that maxim, of course. Though he have the same autonomous status within asked to brief the new ambassador on did not deign to reply, the dirty look he embassies and that defense the embassy’s commercial operation and gave me could only mean one thing: attaché offices have. invited me to join him. As Walter described “Smart ass!” Rick McElheny, Director General of the the organization and functions of the Foreign Commercial Service at the time, U.S. commercial section, then the largest Turf War had used a recent tour of Western Europe in the world, Ambassador Burns waited When Walter left in late 1981, I became to reinforce that message. Personally con- semi-patiently, sucking noisily on his ever- the acting commercial counselor in Bonn fronting Charles T. York, head of Embassy present pipe. As soon as Walter paused for and soon found myself at loggerheads with Bonn’s economic section, over his refusal breath, he pounced. Amb. Burns. But first, a little background. to stop presenting himself as “Minister “Do you people really think you make The basic document defining the role of for Economic and Commercial Affairs,” any difference to U.S. exports?” Burns the Foreign Commercial Service is a mem- Rick had threatened to remove the sign on asked. Walter’s answer was typical Foreign orandum of understanding between the York’s door himself if it weren’t gone the Service: “On the one hand, this, and on the under secretaries of State and Commerce next day. other hand, that…” I could see our proud dated Sept. 26, 1979. As it happened, while The sign disappeared, but the battle operation going up in smoke. on home leave in late 1978 and early 1979, was far from over. “Of course, we don’t make sales for I had assisted in drafting that MOU. On Feb. 8, 1982, Ambassador Burns American exporters,” I interjected. “U.S. I had done my best to eliminate issued a memorandum to Mr. York in businesses would never allow bureaucrats loopholes and ambiguities, an effort that which he referred to an arrangement made into their sales offices, but we do inform continued via two explanatory cables sent by his predecessor, Ambassador Walter J. the market. We study German industry jointly by State and Commerce. As a result, Stoessel Jr., to keep the commercial func- tion within the “supervision and control of Harrison Sherwood joined the State Department Foreign Service in 1960, the economic section.” He then sent a copy serving in Cali, Helsinki, Stockholm, Santiago, Madrid, Bonn and Washing- of that memo to yours truly, to ensure that ton, D.C. After transferring to the newly created Foreign Commercial Service “Mr. Sherwood is aware of my instruc- in 1983, he served as deputy assistant secretary for foreign operations at the tions.” Department of Commerce, commercial counselor to The Hague, minister coun- Well, Mr. Sherwood was certainly aware selor for commercial operations in and commercial counselor in Stockholm. Since of those instructions. He also knew that they were improper and illegal.

retiring from the Service in 1993, he has lived in Cambridge, England. ISTOCKPHOTO.COM/GIVAGA

100 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL Grievance Therapy sion in the country of its most extensive As we cleared the embassy parking lot, In an earlier life, I had been a griev- operations. Sec. Baldridge accosted me. “So what’s all ance counselor and chief steward of a The ambassador fixed me in his steely this dust-up between the economic and labor union in the State Department. gaze, relit his very smelly pipe and deliv- commercial sections in the embassy?” In that capacity, I initiated a number of ered this verdict: “You’re just trying to “Well, sir,” I began, anticipating his grievances based on the department’s gain turf, aren’t you?” wrath at my challenge to the ambassa- violations of its own written regula- I observed that the same logic applied dor’s authority, “it’s because of an MOU tions, procedures and policy state- to his argument for the status quo. between the departments of State and ments. (Among other cases I handled He sucked on the pipe again and said, Commerce…” I droned on, reciting the was the EEO complaint filed in 1968 by “Yes, but I’m ambassador.” text of my grievance. the women’s rights pioneer FSO Alison Just then Jean Balestrieri, his secretary Both Secretary Baldridge and Under Palmer, the first of its kind in the State (and a good friend of mine), put her head Secretary Lionel Olmer peppered me Department.) through the door, “Your phone call has with intelligent, searching questions on Institutionally, I believe the Foreign just come through.” the subject until we arrived at the airfield. Service generally tries to do the right “Please excuse me,” Burns said. I did “Mr. Secretary,” I asked just before we thing. But when the right thing runs more than that: I excused myself and stopped, “do you have any instructions as into the cost of compliance, informal trudged back to my office. to how I should proceed?” practices or other challenges to Foreign “Stick to your guns, Harrison,” he Service folkways, managers may resort to A Deus Ex Machina? replied. guerrilla warfare and outright stonewall- So things stood, until a curious and “Sir?” I gasped. ing to avoid it. wholly unanticipated event took place “Just stick to your guns,” he repeated. Having become well acquainted a few months later. The front office There was never any telegraphic traffic with these tactics during my 22 years in informed me that Malcolm Baldridge, the on the subject of my grievance between the Foreign Service, I was ready to take Secretary of Commerce, would be arriv- the embassy and Secretary Baldridge, on the front office. Conversations with ing in Bonn the next day. neither before nor after his visit. Yet I pals back in Washington confirmed my I was to fetch him in the ambassador’s found out later that it was the sole subject understanding that no one at FCS had car—accompanied by Charles York (who, of conversation between the ambassador any objection to my proceeding—as long awkwardly for me, was now acting DCM) and the secretary. as I did it on my own hook. and the acting economic counselor, Karl After about 18 months, the Foreign Following the dictates of the Foreign Jonietz—and bring him to the embassy. Service Grievance Board found in my Affairs Manual, I duly sent a memo- After meeting with the ambassador, favor. The next year I received my FCS randum of grievance to the embassy’s Secretary Baldridge and his party would commission, and several months after deputy chief of mission (DCM), request- be transported back to the airport in a that I was promoted to the rank of Career ing that the ambassador’s February 1982 two-car convoy. Counselor. memo to Economic Counselor York be On the trip to the embassy, Mr. York Although Amb. Burns lost, he did recalled and rendered null and void. took it upon himself to accompany the receive one concession. In comply- Three days later, I received a call from visitors in the ambassador’s car, and Karl ing with the Grievance Board verdict, the embassy’s front office summoning Jonietz and I were relegated to the chase the embassy administrative counselor me for a chat. Amb. Burns was initially car. For the return trip to the airfield, addressed the memorandum setting amicable, asking why I had gone to the however, Sec. Baldridge informed Mr. forth that decision to: “DCM, Econ, extraordinary length of filing a griev- York that I would be riding with him. FCS”— and “AMB/O: Mrs. Jean Bales- ance over such a trivial matter as internal Mr. York protested, sputtering about his trieri.” No one dared to beard the old embassy organization. I referred to higher rank. curmudgeon by name! the MOU and expressed concerns that “I want to have a talk with Harrison,” Much later Jean confided to me: “Of without autonomy, Commerce would be said the Secretary. “You (indicating me) course he knew, but didn’t feel it neces- handicapped in carrying out its mis- get in the front.” sary to talk about it.” n

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 101 LOCAL LENS BY JOHN WOYNICKI n UGANDA

iding my BMW F 650 GS motorcycle throughout Africa has become my passion. Accompanied often by my FSO spouse, Regional Refugee Coordinator Jean Woynicki, and Mission Kampala’s Nurse Practitioner RTerry Banen (on his BMW R 1200 GS), we take in Uganda’s beautiful scenery and colorful roadside villages as we dodge potholes and livestock. On our way to Fort Portal one day, we encountered these young boys when we stopped for a rest break. Fascinated by the bikes, they gathered around us with great curiosity. I pulled out my camera and snapped a photo, which to their great delight, I then showed them on the display. n

John Woynicki Jr. is a registered architect and has served in eligible family member positions in Abidjan, Oslo, Kigali, Berlin and Kampala. He took this photo with a Nikon D7000 with a 28-80mm Nikkor lens at f/5.6 at 66mm.

Please submit your favorite, recent photograph to be considered for Local Lens. Images must be high resolution (at least 300 dpi at 8” x 10”, or 1 MB or larger) and must not be in print elsewhere. Include a short description of the scene/event, as well as your name, brief biodata and the type of camera used. Send to [email protected].

102 JANUARY-FEBRUARY 2019 | THE FOREIGN SERVICE JOURNAL