Obama nominates U.S. aid chief, filling key vacancy

WASHINGTON, Nov 10 (Reuters) - Moving to fill a gap in its foreign policy lineup, the White House on Tuesday nominated a health economist to head the $20-billion U.S. overseas aid agency it views as a crucial tool for boosting the U.S. image.

President Barack Obama said Rajiv Shah -- a longtime development worker who now serves as chief scientist at the Department of Agriculture -- was the right person to lead the U.S. Agency for International Development (USAID), a job which has been unfilled for months.

"The mission of USAID is to advance America's interests by strengthening our relationships abroad," Obama said in a statement announcing the nomination, which must be approved by Congress.

"Rajiv brings fresh ideas and the dedication and impressive background necessary to help guide USAID as it works to achieve this important goal."

Formally part of the State Department, USAID expects to see its funds more than double to some $52 billion by 2015 even as other agencies, notably the Department of Defense, take bigger roles in overseas development.

While both Obama and Secretary of State Hillary Clinton have emphasized the importance of humanitarian assistance to U.S. policy goals, critics said the unfilled vacancy at the top of USAID had set back work in key places such as Afghanistan.

The agency has more than 6,800 people working in some 80 countries worldwide.

Clinton said Shah, 36, had a record of delivering results in both the public and private sectors. "He has led and worked with many of the initiatives that are defining best practice in the field of development," she said in a statement.

While at the Department of Agriculture Shah has spearheaded work on Obama's global food security initiative. Earlier, he worked for the Bill and Melinda Gates Foundation as its director for agricultural development.

J. Brian Atwood, who served as USAID administrator from 1993-1999, said Shah would face a major task in rebuilding both confidence and capacity at the agency while advocating a more holistic approach to overseas aid within the government.

"We need a development voice within the U.S. government, especially in economic circles," said Atwood, dean of the Hubert Humphrey Institute at the University of Minnesota.

"Finance policies and trade policies have as much to do with eradicating or mitigating poverty as development assistance."

Development group Oxfam said Shah had his work cut out for him because USAID itself has been underfunded.

"U.S. development efforts have become diffuse and USAID's development objectives unclear, with the Pentagon and more than 20 other federal agencies increasingly engaged in development activities," said Raymond Offenheiser, Oxfam's president, in a release.

"There is a need to reassert the leadership role of USAID in managing U.S. overseas development assistance, and strengthen its ability to deliver concrete results that will enhance USAID's standing and credibility," Offenheiser said. (Additional reporting by Roberta Rampton in Washington; editing by Anthony Boadle)