    [Budget of the United States Government]
    [IV. Preparing For the 21st Century]
    [8. Advancing United States Leadership in the World]
    [From the U.S. Government Publishing Office, www.gpo.gov]

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               8.  ADVANCING UNITED STATES LEADERSHIP IN THE WORLD

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        Of course, international engagement costs money. But the costliest peace is far cheaper than the cheapest
    war.

                                          President Clinton
                                          August 1999

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      At the start of a new century, the United States has reached new
    heights of influence in the world. At the same time, the new challenges
    posed by rapid advances in technology and the opening of borders have
    increased our need to exercise this influence--more and more, what
    happens overseas affects our security, health, and prosperity at home.
      Our Nation now has the greatest opportunity in its history to advance
    American interests and values while building a better and more peaceful
    world. However, doing so requires leadership and engagement. We need to
    work with others to prevent war and defuse crises, combat terrorism and
    counter the spread of weapons of mass destruction, deepen democracy and
    the rule of law, strengthen free market economies, protect the global
    environment, and fight poverty and diseases. For if the United States
    can do this, using its resources effectively and wisely, our citizens
    will be safer, our economy stronger, our world more stable, and our
    freedoms more secure.
      In the past year, America's leadership was essential to the success of
    the NATO alliance in halting the ethnic cleansing of Kosovo's ethnic
    Albanians and containing the risk of wider war at the doorstep of our
    allies. Nearly a million Kosovars who fled in terror have returned to
    their homes and with our support, they have begun the difficult work of
    building a tolerant democratic society and a new economy. The United
    States has played a critical role in the strides made toward lasting
    peace in Northern Ireland and Sierra-Leone and ending the bloodshed in
    East Timor. Our support has also been crucial as Israelis, Palestinians,
    and others in the Middle East have taken brave steps toward forging a
    lasting peace there. The United States has worked to detect and counter
    terrorist threats, as well as to continue efforts with Russia and other
    former Soviet republics to halt the spread of dangerous weapons
    materials. We have also taken actions to advance global prosperity--
    bringing China into the global trading system and launching a new debt
    reduction initiative to help the world's most impoverished nations
    eliminate crushing debt burdens and reform their economies.
      As we seek to build on these efforts, the 2001 Budget proposes several
    initiatives to further America's leadership in the world and address
    these and other challenges. During the coming year, the Administration
    intends to seek 2000 emergency supplemental appropriations to provide
    critical assistance to the people and Government of Colombia in their
    fight against narcotics traffickers. The supplemental, which is included
    in this budget, will help finance a multi-year strategy known as Plan
    Colombia, developed by the democratically-elected Government of
    Colombia. With this budget, the Administration is also requesting 2000
    emergency supplemental appropriations for renewed initiatives to promote
    economic growth, stability, and democracy in Kosovo and across Southeast
    Europe.
      For 2001, the budget requests increased funding for several
    priorities. Funding for international family planning assistance will
    total $541 million, with added funding from several accounts amounting
    to an increase

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    of $169 million above 2000. Funding for U.S. Government efforts to
    contain the global spread of HIV/AIDS has been increased by $100
    million, more than double the amount spent in 1999. These initiatives
    will respond to pressing prevention, health infrastructure, and
    treatment needs, but will also be used to leverage increased funding
    from other donors, and from developing countries themselves, for these
    critical objectives. Increased funding for urgent humanitarian and
    refugee assistance programs is also proposed in the budget.
      Another 2001 priority is the $1.1 billion proposed for enhanced
    security in our diplomatic posts, which includes a $500 million increase
    over the 2000 level for initiatives that will further protect the men
    and women who serve America in our missions overseas. This request
    builds on last year's long-term proposal and is an essential step in the
    multi-year plan that is necessary to meet the Administration's
    commitment to the construction of secure diplomatic and consular
    facilities worldwide.
      The budget also proposes an increase of $241 million over the 2000
    level to support UN peacekeeping missions around the world. U.S. funding
    for these missions is critical to the success of diplomatic efforts to
    end destructive and costly conflicts in Africa and elsewhere.
      This chapter describes these and other initiatives in more detail,
    linking the budget resources of 2001 to our international policies and
    the Administration's commitment to protecting our national security,
    promoting prosperity, and advancing our values.

    Protecting American Security by Promoting Peace and Democracy Abroad

      The budget proposes a substantial increase for counter-narcotics
    efforts in Colombia. Colombia supplies an estimated 80 percent of the
    cocaine in the United States. Colombia's role in the world heroin and
    cocaine market is growing rapidly as the production of cocaine in
    Colombia has more than doubled between 1997 and 1999. The Colombian drug
    trade is controlled largely by paramilitary groups and insurgents who
    are engaged in a 30 year old civil war against the Government of
    Colombia.
      Colombia President Andres Pastrana has devised a comprehensive,
    integrated plan, Plan Colombia, to address Colombia's narcotics and
    related political and economic troubles. As noted earlier, the budget
    proposes to increase assistance programs through 2000 emergency
    supplemental appropriations of $954 million and 2001 new funding of $318
    million in the international affairs and other budget areas. Funds will
    be used for Colombia's counter-drug efforts and for other programs to
    help President Pastrana deepen democracy and promote prosperity. The
    proposal will enhance alternative development, strengthen civil justice
    and democratic institutions, and provide military assistance to the
    counter-narcotics effort. The Administration will also encourage U.S.
    allies and the international financial institutions to assist Colombia
    in implementing President Pastrana's Plan Colombia strategy.
    Strengthening stability and democracy in Colombia, and fighting the drug
    trade, is in America's national interest.

      Kosovo: The budget proposes $175 million to help the people of Kosovo
    build a democratic society and a stronger economy. The members of the
    European Union will bear the bulk of these costs, but the United States
    must also contribute. In May 1999, shortly after the conflict ended and
    peace was reestablished in Kosovo, the United States pledged $556
    million to address humanitarian needs, such as the provision of shelter,
    health care, and food aid for returnees and other urgent requirements.
    On November 17, 1999, the international community pledged a total of
    $1.056 billion towards peace implementation, reconstruction and
    recovery, budget support, and humanitarian assistance, of which the U.S.
    Government pledged $156.6 million, or 14.8 percent.
      In 2001, resources will be used to help rebuild Kosovo's economy and
    society. A growing economy, with new employment opportunities, is
    critical if Kosovo is to overcome problems of crime and ethnic violence.
    Such assistance will create jobs for former refugees and provide
    incentives for segments of the population to lay down their arms. To
    address these issues, this assistance will help create

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    jobs and build a more stable and peaceful society. In conjunction with
    other donors, U.S. resources will provide working capital to stimulate
    economic activity. The budget also proposes 2000 emergency supplemental
    appropriations of $624 million to address pressing requirements for
    Kosovo and Southeast Europe. The funds will be used for economic and
    democratic reform activities in Kosovo, Croatia, and Montenegro, as well
    as to provide additional assistance of the democratic opposition in
    Serbia. The additional funding will also be used to provide critical
    support needed in 2000 for the UN Mission in Kosovo (UNMIK), and to
    build secure U.S. diplomatic facilities in Kosovo, Bosnia, and Albania.

      Southeast Europe Initiative (SEI): Central to lasting peace in Europe
    is the political and economic integration of the Balkans into Europe and
    the global community. The budget requests $428 million for this
    important initiative. Also critical to a peaceful future for Europe is
    the replacement of the Milosevic regime. For that reason, about $96
    million will help promote the democratic opposition in Serbia and
    provide assistance to Montenegro.
      About $6 million of U.S. assistance is intended to accelerate the
    integration of Southeast Europe's countries into the global trading
    system by breaking down barriers to trade and investment. U.S.
    assistance will encourage economic reform, the rule of law, deepening of
    democracy, and adoption of international standards governing trade.

      UN Reform and Contributions to International Peacekeeping: Peace and
    security operations of the United Nations directly support U.S. national
    interests. Peacekeeping has the capacity to separate adversaries,
    maintain cease-fires, facilitate the delivery of humanitarian relief,
    enable refugees and displaced persons to return home, demobilize
    combatants, and create conditions under which political reconciliation
    may occur and free elections may be held. In so doing, it can help
    nurture new democracies, lower the global tide of refugees, and prevent
    small wars from growing into wider regional conflicts which would be far
    more costly in terms of lives and resources. The budget proposes an
    increase of $241 million above the 2000 level of $498 million for UN
    peacekeeping.
      In recent years, there have been significant improvements in the
    management, efficiency, and effectiveness of the UN and other
    international organizations. UN Secretary General Kofi Annan has carried
    out numerous restructuring and consolidation measures, many closely
    conforming to U.S. proposals, and there have been solid advances within
    major specialized agencies to improve management.
      The Administration is strongly committed to work with the Congress on
    a bipartisan basis to further advance the UN reform process. The
    Congress, with Administration support, has linked UN reform measures to
    U.S. payment of specific arrearage amounts in 2000. We will continue to
    use our influence to push for management improvements, organizational
    streamlining, and the necessary budget discipline to ensure zero nominal
    growth in UN and specialized agencies' budgets. We are also committed to
    working with other UN members to revise the scale of assessments--
    including a reduction in the rate at which the United States is charged
    for the UN regular budget, UN peacekeeping, and the large specialized
    agencies.

      Expanded Threat Reduction Initiative (ETRI): The effort launched seven
    years ago, spurred by the bipartisan Nunn-Lugar legislation, to contain
    the spread of weapons of mass destruction (WMD) from the former Soviet
    Union and promote stability, has produced important results, helping to:
    deactivate nearly 5,000 nuclear warheads; eliminate nuclear weapons from
    Ukraine, Belarus, and Kazakhstan; strengthen the security of nuclear
    weapons and materials at over 100 sites; tighten export controls and
    detect illicit trafficking; and, engage over 30,000 former Soviet
    weapons scientists in productive civilian research. The recent
    conclusion of agreements between Georgia and Russia and between Moldova
    and Russia for the withdrawal of Russian troops creates the opportunity
    to help these countries address some of the costs associated with
    Russian force reductions, thereby strengthening the sovereignty of
    Georgia and Moldova and the stability of the region.
      But more work needs to be done. The two major economies in the Newly
    Inde

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    pendent States--Russia and Ukraine--continue to require substantial
    external support to sustain the necessary infrastructure to protect
    against the diversion of WMD nuclear, biological, and chemical--and
    related technology. Scientists, facilities guards, customs officers, and
    technical experts are underpaid, vulnerable to temptations for illicit
    trafficking of WMD and related materials--clearly a threat to our
    interests.
      The $974 million 2001 request for ETRI programs includes $469 million
    in programs administered by the Department of Defense, $364 million in
    those administered by the Department of Energy (DOE), and $141 in those
    administered by the Department of State, a total that is $85 million
    above the 2000 level of $889 million. ETRI programs address nuclear
    security for existing weapons and delivery systems, protection and
    disposition of fissile materials, destruction of chemical weapons,
    military relocation and regional stabilization. Among the critical
    programs funded under ETRI are science centers and other programs to
    finance civilian research by former Soviet weapons experts, enhanced
    border control assistance to decrease the likelihood that critical
    weapons technologies or materials can be smuggled to other Nations, and
    programs to enhance regional security efforts in Georgia, Armenia,
    Azerbaijan, and Moldova. The proposed DOE request for ETRI includes a
    $100 million initiative in Russia to expand protection of fissile
    material; accelerate closure of nuclear weapons production facilities;
    and, provide an alternative to continued plutonium reprocessing in
    Russia.

      Middle East Peace: The 2001 requests for the Economic Support Fund
    (ESF) of $2.3 billion and Foreign Military Financing (FMF) grants of
    $3.5 billion will continue to support our efforts to promote progress
    and stability around the world, particularly the progress made recently
    in negotiations between Israel and its neighbors on a comprehensive
    peace for the Middle East. In emergency legislation, $1.9 billion was
    provided in 1999 and 2000 to Israel, Jordan, Egypt, and the West Bank to
    support the Wye River and Sharm-el-Sheikh interim accords between the
    Israelis and Palestinians. For 2001, ESF levels for Israel continue the
    declining path started last year and levels of FMF military assistance
    increase, as agreed to by the Administration and the Congress. The 2001
    request of $1.8 billion in ESF and $3.4 billion in FMF programs for the
    Middle East will provide a strong supporting base for the next phase of
    negotiations between Israel and its neighbors.
      Democracy Initiatives: In addition, the budget proposes increases for
    countries outside of the Middle East in both ESF and FMF. These funds
    will support the transitions to democracy that are emerging in Africa,
    including Nigeria, and in Indonesia, and will continue to support
    ongoing democratic reforms in Latin America. They will also support
    military modernization and increased civilian control over the military
    in eastern Europe, the states of the former Soviet Union, and Africa.
    Helping these nations build stable democracies will enhance America's
    own security and prosperity.
      Transnational Threats: The proliferation of weapons of mass
    destruction, the globalization of drug trafficking, and the spread of
    crime and terrorism on an international scale present a continuing
    threat to United States and global security. U.S. diplomacy and law
    enforcement play a key role in stemming the spread of weapons of mass
    destruction to countries such as Libya, Iraq, Iran, Syria, and North
    Korea.
      The Administration is strengthening its fight against terrorism by,
    among other things, increasing funding for the construction of new
    embassies overseas and continuing the ongoing worldwide program of
    physical security upgrades to our most at-risk posts. The budget also
    proposes a new initiative for the destruction of small arms abroad,
    which might otherwise be used by terrorists or others to foment local
    wars.
      America must continue to lead against the spread of weapons of mass
    destruction. The Comprehensive Nuclear Test Ban Treaty (CTBT) remains an
    important element of the global nuclear nonproliferation regime. The
    Administration is committed to working to create the conditions for a
    successful vote to approve the CTBT in the Senate at the earliest
    possible date. We will continue to adhere to our long-standing
    moratorium on nuclear tests and urge other Nations to do the same.

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      The budget proposes $194 million from the Congress to support multi-
    national efforts to combat the spread of weapons of mass destruction:
    the International Atomic Energy Agency's (IAEA's) safeguards regime, the
    Organization for the Prohibition of Chemical Weapons, and a global
    network of sensors to detect nuclear explosions. The budget includes
    funding for the Korean Peninsula Energy Development Organization, which
    has just signed contracts to construct two proliferation-resistant
    nuclear power reactors in North Korea. Before key components are
    shipped, North Korea will have to come into full compliance with its
    commitments to the IAEA and the Nuclear Non-Proliferation Treaty.

    Promoting Prosperity to Advance Stability

      Debt Forgiveness: The United States is committed to helping people in
    the world's poorest countries join the global economy and implement
    economic reform by expanding debt relief. At the Cologne Summit, the G-8
    expanded the Heavily Indebted Poor Country (HIPC) initiative to: include
    more countries; provide deeper debt relief (up to 90 percent of
    bilateral debt); increase participation by the international financial
    institutions; and, increase the focus of the resources freed by debt
    reduction on economic reform, health, education, and other human needs.
    The President led this effort with a proposal that was largely adopted
    and remains at the forefront on the issue with his commitment to forgive
    100 percent of debt owed to the United States by the poorest countries,
    a majority of them in sub-Saharan Africa. To fulfill the U.S.
    commitments, the Administration is requesting $600 million for the HIPC
    program in 2001, 2002, and 2003: $75 million to forgive about $450
    million in bilateral debt of the poorest countries; $150 million for the
    HIPC trust fund, which will allow for further debt relief through the
    multilateral organizations; and, $375 million in advance appropriations.
    The budget also includes $37 million for the Tropical Forest Initiative
    to use debt relief mechanisms in support of conservation. In order to
    fund HIPC trust fund requirements for the remainder of 2000, the
    Administration is also proposing a fully offset 2000 supplemental
    appropriation of $210 million.
      Multilateral Development Banks (MDBs): The MDBs play a prominent role
    in bringing developing and transition countries into the global economy
    through financial and technical assistance. Such a process not only
    helps lift people oversees from poverty and toward prosperity--it also
    creates new opportunities for U.S. businesses and workers and helps
    promote stability and enhance our security. As the largest shareholder
    in the World Bank and a significant shareholder in the other MDBs, the
    United States exercises considerable influence over the organizations'
    external lending policies and internal governance. The United States has
    been able to maintain this position despite lower levels of commitments,
    which have been reduced by forty percent since the mid-1990s. Beginning
    in 1998, the Administration and the Congress reached bipartisan
    agreement to reduce the level of MDB arrears. However, much of the
    progress in clearing MDB arrears was reversed by the 2000 appropriations
    process, with the overall arrears level rising from $335 million at the
    end of 1999 to an expected $451 million by the end of 2000. Increasing
    arrears limit the Administration's ability to engage other donors and
    gain agreement on important new policy measures and institutional
    reforms during new replenishment negotiations. The budget proposes to
    clear all MDB arrears by the end of 2003, with $167 million in 2001
    arrears payments. The budget also proposes $1.2 billion for scheduled
    payments to these institutions, meeting all current commitments.
      Trade Agreements: The Administration is committed to opening global
    markets and integrating the global economic system, which has become a
    key element of continuing economic prosperity here at home. The budget
    proposes significant increases for efforts by our trade negotiators to
    pursue open markets and fair, rules-based trading systems. The
    Administration will work within the World Trade Organization (WTO) to
    pursue the negotiating mandate for agriculture and services that were
    built into the Uruguay Round, develop consensus on the negotiating
    agenda for a new round of multilateral negotiations, work for China's
    membership in the WTO on the foundation of the historic bilateral
    agreement reached last November to open the Chinese market, and also
    pursue the accession to the

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    WTO of a number of other important trading partners. In doing so, the
    Administration will work to ensure that the benefits of trade are shared
    broadly across all sectors of society and do not come at the expense of
    core labor standards or the environment.
      A key priority of the Administration, in addition to securing passage
    of permanent Normal Trade Relations with China, is to assure the
    enactment of the trade legislation that passed in the House and Senate
    addressing trade benefits for Africa, extending the Generalized System
    of Preferences (GSP), and enhancing the Caribbean Basin Initiative
    (CBI). The Administration has also submitted legislation that would
    extend new benefits to the Balkan countries. The budget supports a 10-
    year initiative for Africa, five-year initiatives for the CBI and Balkan
    proposals, and for GSP, a 33-month extension is proposed to be added to
    the 27-month extension that passed in the first session of the 106th
    Congress.

      Trade and Investment Promotion: The budget proposes an increase of
    over $200 million in 2001 for the Export-Import Bank. To a large extent,
    this increase will enable the Bank to continue to increase the level of
    U.S. exports it supports given the upward revision in the cost of U.S.
    Government international lending in the wake of the recent global
    financial crisis. Some of this increase will also provide additional
    resources for the Export-Import Bank to finance the export of clean
    energy technologies. Finally, the budget proposes an increase in Export-
    Import Bank administrative expenses, part of which will finance a modern
    information system critically necessary to improve the delivery of the
    Export-Import Bank's insurance product to U.S. exporters.
      The budget also proposes increased resources for the Overseas Private
    Investment Corporation (OPIC) and the Trade and Development Agency
    (TDA). An additional $4 million in administrative resources for OPIC
    will help modernize critical information systems, and improve vital
    portfolio, environmental, and worker rights monitoring. An additional
    $10 million for TDA will expand its capacity to conduct feasibility
    studies on international projects that can lead to U.S. exports,
    including clean energy projects and increased feasibility studies in
    Africa.

    Providing Humanitarian Assistance

      The budget continues America's tradition of responding generously to
    address and mitigate human suffering caused by natural and man made
    crises. The budget increases funding for both the State Department's
    migration and refugee assistance programs and the U.S. Agency for
    International Development's (USAID's) international disaster assistance
    and food aid programs. The budget provides increases of $33 million for
    the migration and refugee assistance programs and $18 million for
    USAID's international disaster assistance programs over 2000 levels.
    These increases are justified given continued humanitarian needs as a
    result of crises in Sudan, Burundi, Angola, Afghanistan, the North
    Caucasus and elsewhere, and forecasting that indicates increasing
    numbers of natural disasters with devastating human consequences. The
    budget also funds bilateral demining efforts to reduce the dangers to
    civilians caused by land mines in areas of former conflict.

    Developing Global Programs that Help Us by Helping Others

      In our increasingly interconnected world, it has become clear that
    many of the problems faced by the developing world are actually global
    problems that threaten the health and well being of all people,
    including our own. That is why the budget includes a number of foreign
    assistance initiatives, under the auspices of USAID and other Federal
    agencies, that are aimed at problems that directly affect the United
    States.

      International Family Planning: It is estimated that 34,000 children
    under age five in developing countries die every day, and that over
    580,000 women die each year of causes related to pregnancy and
    childbirth. By helping women bear their children at the healthiest times
    for both mother and baby, family planning helps prevent the deaths of
    children and mothers; it also prevents unintended pregnancies and
    abortion. By helping countries improve the health and prosperity of
    their citizens and stabilize their population growth, U.S. international
    family planning assistance

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    also helps to ensure that we have increasingly stable and prosperous
    partners in the developing world. Therefore, the budget funds an
    increase of $169 million for international family planning assistance
    programs, bringing total resources for these programs to $541 million.
    It also removes unnecessary and harmful restrictions that were imposed
    on the implementers of this assistance during the 2000 appropriations
    process.
      HIV/AIDS: The budget provides a second consecutive $100 million
    Government-wide increase for programs that address the scourge of AIDS,
    which has become one of the most deadly diseases in the developing
    world. USAID will implement $54 million of this increase, almost
    doubling USAID's global AIDS effort since 1999. The bulk of this
    initiative will address the spread of HIV/AIDS in Africa, where AIDS has
    become the number one cause of death, and where infection rates in some
    countries exceed 30 percent. However, the initiative will also address
    AIDS in other countries where increasing infection rates are of
    particular concern. This significant increase in resources over the past
    two years should leverage additional resources from other donors and
    from the governments of developing countries. (See Chapter 3,
    ``Strengthening Health Care,'' for additional details on the Global HIV/
    AIDS Initiative.)
      Vaccines for Developing Countries: In his September 1999 address to
    the UN General Assembly, President Clinton called for a concerted effort
    to make vaccines more widely available in the developing world, where
    more than three million children die each year from vaccine-preventable
    diseases. As an important first step, the budget proposes a $50 million
    contribution to the newly-established Global Alliance for Vaccines and
    Immunizations (GAVI). These funds will be used to purchase existing
    vaccines for Hepatitis B, Haemophilus influenzae type B, and Yellow
    Fever, and to ensure their safe delivery. The U.S. contribution to GAVI
    is expected to leverage additional resources from other donors. This
    initiative will be complemented by increased funding for the National
    Institutes of Health to accelerate the development of vaccines for major
    infectious diseases. In addition, the budget proposes a new tax credit
    that will encourage the development of vaccines for diseases that occur
    primarily in the developing world. (See Chapter 3, ``Strengthening
    Health Care,'' for further details on this tax credit.)
      Clean Energy and Tropical Forests: The budget includes $50 million for
    international affairs agencies to promote the use of clean energy
    overseas. Of this total, USAID will use $30 million for technical
    assistance for legal and regulatory reform, and to expand training
    programs for energy sector policy makers and regulators. The Export-
    Import Bank intends to use $15 million to assist in the financing of
    clean energy technology exports, especially renewable energy exports,
    while TDA will use $5 million to fund feasibility studies and other
    project planning activities to promote U.S. exports of clean energy
    technology.
      The budget includes $45 million for international affairs agencies to
    increase U.S. support for the preservation of tropical forests and other
    biologically-significant areas. Of this amount, $33 million will be
    added to USAID biodiversity resources (for a total of $100 million),
    allowing USAID to increase the work it does with host countries. The
    other $12 million will be added to Treasury Department resources (for a
    total of $37 million) for the budget cost of debt swaps and debt
    reduction agreements that require beneficiary countries to devote a
    portion of their own resources to tropical forest conservation.

      Peace Corps: The volunteer programs of the Peace Corps promote mutual
    understanding between Americans and the people of developing nations,
    while providing technical assistance in education, health, the
    environment, agriculture, and small business development. The agency
    also responds to humanitarian crises and natural disasters through its
    Crisis Corps program. The budget proposes $275 million, a 12-percent
    increase over the 2000 Budget for the Peace Corps. This increase will
    provide opportunities for 4,200 Americans in 2001 to enter service as
    new volunteers. With these levels, the Peace Corps can continue toward
    its goal of placing a total of 10,000 volunteers early in the next
    century.
      Development Foundations: The African Development Foundation (ADF) and
    the Inter-American Foundation (IAF) fund indigenous grassroots
    development efforts. The ADF's as

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    sistance helps generate new jobs, protect Africa's environment, and
    strengthen basic democratic values and civil society. The budget
    proposes to increase funding for the ADF to support new initiatives for
    Nigeria and for AIDS/HIV awareness programs. The IAF provides social
    investment grants to local private sector partners, conducts joint
    ventures with Latin American corporate foundations, and promotes
    philanthropy and corporate social responsibility. The budget reverses
    the 2000 congressional appropriations action to phase out U.S.
    Government funding of the IAF by proposing to restore funding for the
    IAF to pre-2000 levels. This action is based on the significant reforms
    that have been adopted by the IAF, including: improved capabilities to
    effectively monitor projects and identify quality grant proposals; a
    greater emphasis on corporate and business involvement in the
    development process; and, increased involvement, including final
    approval authority, of U.S. embassies in grant making decisions.

    Rightsizing and Protecting our Representation Abroad

      Advisory Panel on Overseas Presence: In the aftermath of the embassy
    bombings in Nairobi and Dar Es Salaam in 1998, and in response to
    recommendations of Admiral Crowe's Accountability Review Boards, the
    Secretary of State established an expert panel, chaired by Lewis Kaden,
    to recommend improvements with respect to the U.S. presence abroad. The
    panel released its report in November 1999. Among other recommendations,
    the panel reiterated the need for a sustained, multi-year program of
    investment in overseas facilities and security measures. The
    Administration has initiated a thorough review of recommendations
    contained in the Kaden panel's report including an examination of the
    U.S. Government's overseas presence needs and the current structure of
    financing and management for overseas facilities. The Administration
    will continue to work with Congress in a bipartisan manner to address
    the continuing challenge of making our overseas posts secure.
      The budget supports a strong U.S. presence at over 250 embassies and
    other posts overseas, promoting U.S. interests abroad and protecting and
    serving Americans by providing consular services. This work will be
    aided by an Administration review of the overseas presence of all
    agencies as recommended in the report of the Advisory Panel on Overseas
    Presence.
      Effective diplomacy is the foundation of our ability to meet foreign
    policy goals. The work of the Department of State and U.S. missions
    supports the aims of American foreign policy, and anticipates and helps
    to prevent threats to our national security. Overseas posts serve as the
    administrative platform for more than 30 other U.S. agencies with
    personnel abroad, including USAID and the Departments of Defense,
    Justice, Commerce, Agriculture, and the Treasury.

      Facility Vulnerability: Protection of American and foreign national
    employees who work abroad in U.S. Government facilities remains a top
    priority in the 2001 Budget. The budget proposes a total of $1.1 billion
    for embassy security initiatives, including $500 million for new State
    Department and USAID diplomatic facility construction, $200 million for
    additional steps to protect existing buildings from terrorist attack,
    and $400 million for maintenance of security readiness, including
    construction of a new Center for Anti-terrorism and Security Training.
    In total, this represents an increase of over $500 million, nearly
    doubling the 2000 enacted level for enhanced security measures. The
    budget continues the Administration's commitment to a long-term program
    of overseas facility construction including additional resources in
    future years necessary to fulfill the Administration's strategy to
    effectively and efficiently meet America's security needs.
      State Department Operations: The budget proposes $3.2 billion in 2001
    for the State Department, including public diplomacy and arms control
    activities. This funding level will maintain the Department's worldwide
    operations, continue efforts to upgrade information technology and
    communications systems, and accommodate increased security and facility
    requirements at posts abroad. It will also provide for additional
    technology and training investments as recommended by the Overseas
    Presence Advisory Panel.

    [[Page 147]]

      USAID Operating Expenses: The budget proposes $520 million for USAID
    operating expenses. This is a $16 million increase over the 2000 level
    (excluding the $15 million for the new mission in Dar Es Salaam). The
    2001 increase is partly for information technology, including full
    implementation of the ``off-the-shelf'' financial management system.
    These remaining information technology improvements are critical to
    USAID's plan to fully comply with all Government-wide financial
    management requirements in 2001. This funding level will also help
    maintain work force levels necessary to effectively manage USAID's
    overseas programs.