[Senate Hearing 105-292]
[From the U.S. Government Publishing Office]
S. Hrg. 105-292
FOREIGN AFFAIRS REFORM AND RESTRUCTURING ACT OF 1997 AND FISCAL YEAR
1998 INTERNATIONAL AFFAIRS BUDGET REQUEST
=======================================================================
HEARINGS AND MARKUP
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC
POLICY, EXPORT AND TRADE PROMOTION
THE
SUBCOMMITTEE ON INTERNATIONAL OPERATIONS
AND THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
HEARINGS
FEBRUARY 26 AND 27, MARCH 6, 12 AND 13, AND APRIL 9, 1997
MARKUP
JUNE 12, 1997
__________
Printed for the use of the Committee on Foreign Relations
U.S. GOVERNMENT PRINTING OFFICE
38-492CC WASHINGTON : 1998
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
CRAIG THOMAS, Wyoming CHARLES S. ROBB, Virginia
ROD GRAMS, Minnesota RUSSELL D. FEINGOLD, Wisconsin
JOHN ASHCROFT, Missouri DIANNE FEINSTEIN, California
BILL FRIST, Tennessee PAUL D. WELLSTONE, Minnesota
SAM BROWNBACK, Kansas
James W. Nance, Staff Director
Edwin K. Hall, Minority Staff Director
------
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY,
EXPORT AND TRADE PROMOTION
CHUCK HAGEL, Nebraska, Chairman
CRAIG THOMAS, Wyoming PAUL S. SARBANES, Maryland
BILL FRIST, Tennessee JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia PAUL D. WELLSTONE, Minnesota
------
SUBCOMMITTEE ON INTERNATIONAL OPERATIONS
ROD GRAMS, Minnesota, Chairman
JESSE HELMS, North Carolina DIANNE FEINSTEIN, California
SAM BROWNBACK, Kansas CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
(ii)
C O N T E N T S
----------
Hearing of February 26, 1997
Page
Agency for International Development (AID): Budget Request and
Oversight...................................................... 1
Atwood, Hon. J. Brian, Administrator, Agency for
International Development.................................. 8
Prepared statement....................................... 14
Hearing of February 27, 1997
The State Departments Administration of Foreign Affairs Fiscal
Year 1998 Budget............................................... 57
Kennedy, Patrick F., Acting Under Secretary for Management,
U.S. Department of State................................... 61
Prepared statement....................................... 65
Hearing of March 6, 1997
The President's Fiscal Year 1998 Budget Request for the USIA and
International Broadcasting..................................... 95
Duffey, Joseph, Director, accompanied by Stanley Silverman,
Comptroller, Jack Loiello, Associate Director for
Educational and Cultural Affairs, and David Lowe, National
Endowment for Democracy, United States Information Agency.. 98
Prepared statement....................................... 104
Klose, Kevin, Associate Director for Broadcasting, U.S.
Information Agency......................................... 111
Prepared statement....................................... 114
Hearing of March 12, 1997
Security Assistance Request for Fiscal Year 1998................. 145
McNamara, Thomas E., Assistant Secretary, Department of State 152
Prepared Statement....................................... 157
Rhame, Thomas G., Lt. Gen., USA, Director, Defense Security
Assistance Agency.......................................... 146
Prepared Statement....................................... 148
Hearing of March 13, 1997
The FY98 Budget Requests for International Organizations and
Conferences and Arms Control and Disarmament Agency............ 191
Holum, John D., Director, U.S. Arms Control and Disarmament
Agency..................................................... 193
Prepared statement....................................... 196
Lyman, Ambassador Princeton N., Acting Assistant Secretary of
State For International Organization Affairs............... 215
Prepared statement....................................... 218
Hearing of April 9, 1997
Multilateral Development Bank Funding Request for Fiscal Year
1998........................................................... 237
Summers, Hon. Lawrence H., Deputy Secretary of the Treasury.. 239
Prepared statement....................................... 243
Hearing of June 12, 1997
Markup: The Foreign Affairs Reform and Restructuring Act of 1997. 265
Proceedings.................................................. 265
APPENDICES
Appendix 1
Hearing of February 26, 1997
U.S. Agency for International Development, Congressional
Presentation, Summary Tables, Fiscal Year 1998................. 317
Veronia T. Young, USAID, letter to committee..................... 382
Responses of Mr. Atwood to Questions asked by Senator Grams...... 382
Responses of Mr. Atwood to Questions asked by Senator Helms...... 383
Responses of Mr. Atwood to Questions asked by Senator Helms and
Senator Brownback.............................................. 392
Responses of Mr. Atwood to Questions asked by Senator Feingold... 393
Responses of Mr. Atwood to Questions asked by Senator Biden...... 396
Veronia T. Young, USAID, letter to committee..................... 399
Responses of Mr. Atwood to Question asked by Senator Biden....... 399
Appendix 2
Hearing of February 27, 1997
Responses of Mr. Kennedy to Questions asked by Senator Lugar..... 400
Responses of Mr. Kennedy to Questions asked by Senator Biden..... 403
Responses of Mr. Kennedy to Questions asked by Senator Feinstein. 408
Improving the Security of U.S. Diplomatic Facilities and
Increasing the Protection of Personnel Overseas................ 413
Responses of Mr. Kennedy to Questions asked by Chairman Helms.... 417
Responses of Mr. Kennedy to Questions asked by Senator Grams..... 417
Appendix 3
Hearing of March 6, 1997
Caroline Isacco, USIA, letter to committee....................... 437
Responses of Mr. Duffy to Questions asked by Senator Grams....... 437
Responses of Mr. Duffy to Questions asked by Senator Feinstein... 444
Broadcasting Questions for the Record, SFRC Hearing, Drafted by
Broadcasting Board of Directors................................ 449
Responses of Mr. Duffy to Question asked by Senator Helms........ 453
Appendix 4
Hearing of March 12, 1997
Responses of Mr. McNamara to Questions asked by Senator Sarbanes. 454
Responses of Mr. McNamara to Question asked by Senator Wellstone. 457
Responses of Mr. McNamara to Questions asked by Senator Biden.... 457
Responses of Mr. McNamara to Questions asked by Senator Feingold. 465
Responses of General Rhame to Questions asked by Senator Feingold 467
Responses of General Rhame to Questions asked by Senator
Wellstone...................................................... 472
Appendix 5
Hearing of March 13, 1997
Responses of Mr. Holum to Questions asked by Senator Grams....... 473
Responses of Mr. Holum to Questions asked by Senator Feinstein... 475
Appendix 6
Hearing of April 9, 1997
Responses of Mr. Summers to Questions asked by Senator Lugar..... 476
Responses of Mr. Summers to Questions asked by Senator Biden..... 478
Responses of Mr. Summers to Questions asked by Senator Wellstone. 479
Appendix 7
Markup Hearing of June 12, 1997
Prepared Statement of Senator Rod Grams.......................... 482
AGENCY FOR INTERNATIONAL DEVELOPMENT (AID): BUDGET REQUEST AND
OVERSIGHT
----------
WEDNESDAY, FEBRUARY 26, 1997
U.S. Senate,
Subcommittee on International Economic
Policy, Export and Trade Promotion,
of the Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel,
(chairman of the subcommittee), presiding.
Present: Senators Hagel, Thomas, Grams, Biden, Sarbanes,
and Wellstone.
Senator Hagel. The subcommittee will come to order.
Today the subcommittee meets to consider the President's
budget request for Fiscal Year 1998 programs under the
jurisdiction of the Agency for International Development. The
Hon. Brian Atwood, Administrator of AID, will testify.
Mr. Administrator, welcome.
Mr. Atwood. Thank you.
Senator Hagel. The Ranking Minority Member is on his way.
Senator Sarbanes will be here. His counsel has suggested that
we go ahead and get started. But he will be here at any moment
and we will get through some of this in the meantime.
Here he is. It's magic.
Welcome, Senator.
Senator Sarbanes. Right on cue?
Senator Hagel. Right on cue. It is the way we planned it,
of course.
The President's Fiscal Year 1998 budget requests $7.14
billion for AID managed programs, an increase of more than 6
percent over the Fiscal Year 1997 appropriated level.
Significant among the funding levels requested is a large
increase over last year's level for population programs and a
$45 million cut in child survival programs. The President is
also seeking new authorities in this year's budget, a highlight
of which is the proposed Partnership for Freedom for Russia.
There have been few details about how this program will
operate. So, we look forward to your views, Mr. Administrator,
about this program.
The President's budget is also seeking the creation of a
new AID administered loan program and several new regional
democracy programs.
Mr. Administrator, as you know, I am new to this
subcommittee and to this body. I surely do not claim to be an
expert on development issues nor foreign aid. I want to let you
and your organization know that I will look at everything
closely, but that I come to this with certainly no ax to grind
against your programs or any Federal Agency. I think that we
all want to insure that the taxpayers' money is being used
wisely, efficiently, and effectively, and I know that, too, is
your objective and your goal.
But I also must say that AID does have a track record. For
more than 35 years, AID has been providing billions of dollars
annually to assist in the development of countries.
Regrettably, many countries have not benefited from foreign
aid, and AID has too often found excuses, primarily cold war
considerations, for the lack of success in its programs. I
might add that this was during both Republican and Democratic
administrations.
But the cold war is over, and this Congress, in tandem with
the President, must make some fundamental decisions about where
to dedicate scarce resources in the next century. Recommending
cuts in AID's budget should not make one an isolationist,
especially since, according to AID's own self-assessment,
``Despite decades of foreign assistance, most of Africa and
parts of Latin America, Asia, and the Middle East are
economically worse off today than they were 20 years ago.''
That is a rather dramatic statement. While it is correct
that the international affairs budget represents just more than
1 percent of the entire U.S. budget, it represents about 8
percent of our Government's discretionary budget. Further,
about 5 percent of the DOD budget, more than $12 billion, is
dedicated in support of U.S. humanitarian and development goals
worldwide.
But America's support for these programs should not be
driven by ledger sheets. Rather, it must be determined by how
they directly contribute to our national security, our national
interests, and whether they perform as advertised.
Supporters of a larger international affairs budget operate
on one key assumption: That all the funds currently dedicated
to international programs are being used effectively and
efficiently. I am not convinced that this is accurate. I
recommend Majority Leader Trent Lott's recent op-ed piece in
the ``Washington Times'' which makes an excellent argument that
the Clinton administration must further prioritize its budget
resources rather than simply demand more money from taxpayers.
As I stated previously, AID has a well established track
record. If U.S. assistance has not shown benefits in a
particular country in 3 decades or more, perhaps the aid should
be discontinued.
Finally, and this goes directly to the point of
prioritization, let me state that I know that Secretary of
State Albright has pledged to work with this committee to
achieve a fundamental reorganization of our foreign policy
apparatus. I support this consolidation effort. Many of these
agencies were born to meet the challenges of the cold war and
have outlived their usefulness; and, to the extent that savings
can be achieved from restructuring, that will benefit all of
us.
Mr. Administrator, I want to thank you again for appearing
before this subcommittee. I look forward to your testimony and
I am anxious to discuss with you the details of the President's
Fiscal Year 1998 budget request for AID programs.
I might say before I recognize my distinguished colleague,
Senator Sarbanes, you and I, Mr. Administrator, had what I
thought was a good opportunity to spend some time together
looking at some of these programs in more general ways. We
talked philosophically, and I think you know from that meeting
that I certainly am a supporter of foreign aid and foreign
assistance. Where we can make the most use of that aid, as I
said at the opening of my statement, is what we are all about
and what we all certainly want to focus on.
So, I, again, appreciate very much you coming before the
subcommittee today.
At this point, I would like to recognize my distinguished
colleague and Ranking Minority Member, Senator Sarbanes.
Senator Sarbanes. Thank you very much, Mr. Chairman. I am
pleased to join with you this afternoon in welcoming USAID
Administrator Brian Atwood before the subcommittee. I have
known and worked with Brian Atwood for many years now, and I
have a great respect for all he is trying to do in a very
difficult environment. Despite those difficulties, I think he
has achieved an impressive degree of success.
In fact, only yesterday, over on the House side Chairman
Gilman of the House International Relations Committee said, and
I quote him, ``Brian, you've revived an Agency that was in
critical condition. Today AID is smaller, leaner, and on the
brink of real reform in the way it does business.''
I share that view, that Brian Atwood has really turned the
Agency around. Now I know a lot of tough questions remain and
many will be asked. But I think we ought not to lose sight of
the accomplishments of this very able administrator in the
course of his tenure over the last few years at AID. I assume
we will have some chance to go into that in some detail in the
course of this hearing.
I also want to note that this is our subcommittee's first
hearing in the 105th Congress. I am pleased to serve with our
new chairman and wish him well as he undertakes these
responsibilities. We have had an opportunity to discuss amongst
ourselves the prospective work agenda for the subcommittee, and
I look forward to working with you, Mr. Chairman, in the months
ahead as we address our responsibilities.
Let me just say at the outset by way of just a couple of
comments on the substance of what we are going to be dealing
with today that it is my strong view that the United States has
a clear national interest in promoting sustainable development
around the world. I start with that as a basic premise. I do
not think it is a luxury, I do not think it is an add-on, I do
not think it is a supplement. It clearly serves our moral and
humanitarian instincts, which is quite important when you try
to develop a foreign policy in a democracy that will be
supported by the populace. But it also clearly serves our
political and economic interests as well.
Foreign assistance spent at the right time is critical to
heading off violent upheaval, famine, epidemics, the spiral of
poverty, rapid population growth and environmental degradation.
All of those are problems that are much easier either to
prevent or to control in the early stages than they are to
reverse or to stop after the fact. Therefore, much of the work
that is put within the charge of Administrator Atwood is of a
preventive nature or ought to be of a preventive nature. I
think it should be perceived in that way by our Nation's
policymakers.
I am interested in hearing you expound on the budget. I,
for one, think that the administration needed to respond to the
successive decreases in resources committed to these important
objectives over the years, and my perception of this budget is
that it at least tries in part to do that. I hope that it will
find support here in the Congress.
AID under Brian Atwood's leadership has taken a number of
initiatives, many of which have proven quite successful. He has
tried to reorganize his Agency, make it more effective, more
streamlined. It has commanded general respect and approval from
many observers. In fact, I know people who headed commissions
examining AID only a few years ago who recommended that it be
done away with who now take the position that such significant
advances have been made in the course of this administration by
Brian Atwood that the Agency is really picking up and needs to
be supported and urged on to do its work.
So, Mr. Chairman, I look forward to an interesting hearing
here today as we launch the examination of the foreign
assistance budget. Thank you very much.
Senator Hagel. Senator Sarbanes, thank you.
I note that our distinguished Ranking Minority Member of
the full committee is with us, Senator Biden. Welcome.
Senator Biden. Thank you, Mr. Chairman.
Senator Sarbanes said he knows people who have spent years
examining this. I have known people who have been here 10 years
and never got to chair a committee. What the heck is going on
here.
Senator Hagel. When you live right, Senator, that is what
happens.
Senator Biden. I will say this publicly, Senator. I think
there must be something in the water in your State. You and
Kerrey are both war heroes, both are here, both have been paid
attention to from the time they got here. I don't know. It must
be something in the water.
Senator Hagel. I just do whatever Bob Kerrey does.
Senator Biden. Oh, don't do that.
At any rate, Mr. Chairman, I have a brief opening statement
because this kind of tolls the gong for what is going to be, as
we all know, a major piece of what will be a big debate here, a
continuation of the debate on the reorganization of the State
Department.
Like it or not, you are in the mix and you know that,
Brian, from your years of being here and your years of doing
the fine job you have done at AID.
This week the committee begins a dialog, a dialog about
both the organizational structure and the resources required
for American foreign policy. On its face, the discussion may
appear to be only about organizational charts and budget
submissions--in other words, the ordinary business of
government. But the central question that I think is facing us
is far more profound, and that is how do we equip our
Government to advance its foreign policy interests in the post-
cold war era?
Two years ago, the chairman of the Foreign Relations
Committee challenged the existing order in proposing the
reorganization of the foreign affairs agencies of the U.S.
Government by consolidating them into the Department of State,
including your organization, Brian, as you are painfully aware.
Offered in the midst of a Presidential election cycle, it
was perhaps inevitable that the Congress and the President were
not able to reach any agreement on this reorganization effort.
But continued stalemate seems to me not to be inevitable. So, I
join the Secretary of State in stating unequivocally that I
have an open mind about any reorganization proposals. In fact,
I plan to work closely with Chairman Helms and the President to
try to reach common ground.
I have had some discussions already with Chairman Helms to
indicate to him I sincerely am interested in seeing if we can
work out some kind of reasonable reorganization proposal. My
willingness to consider reorganization does not, however, imply
a willingness to accept any proposal merely because it carries
the label of reform. I do not think that is Senator Helms'
intention. But I want to make it clear at the outset. We are
going to hear about the details of your budget, but you are
going to be talking about a lot more after your budget is
discussed with us here--not you personally, but the Agency.
After several years of retrenching, both militarily and
diplomatically, in the wake of the collapse of the Soviet
Union, our reform efforts should be driven not by the
imperative of budgetary savings, as important as they are, but
by the need to ensure that we have a robust diplomatic presence
around the world, an aid program, and a foreign policy program
overall to protect the gains of our cold war victories.
For 4 decades, all energy was focused on the super power
struggle. Today we have a much broader agenda: Establishing a
new security relationship in Europe and Asia, controlling the
proliferation of dangerous weapons, combating global threats of
terrorism, narcotics, and crime, promoting democracy and
advancing our economic interests and the economic interests of
Third World nations.
As we move forward in the coming weeks and months, I will
pose the following questions, my own benchmarks, if you will,
for reforming the State Department. First and foremost, are we
organizing our foreign policy infrastructure to meet the
challenges of the post-cold war era? In answering this
question, we should look not only at the organizational
structure but also at the personnel structure.
For example, during the cold war, the State Department
emphasized expertise on the inter-German border, and on the
science of Sovietology. We talked about criminologists, we
talked about all those things that do not now seem very
relevant and are not, in most cases, relevant anymore. But we
have some very brilliant people who are still around who are
experts in those areas, and we placed a very high premium on
these professionals.
Today it seems to me we must have a high premium on
professionals skilled in counter terrorism, counter narcotics,
economic growth, and in areas that we had not focused on in the
past nec-
essarily. Unfortunately, when it comes to supporting diplomatic
readiness, we barely, in my view, act like a super power.
Second, are we providing adequate resources to the
challenges we face? We speak, sometimes with excessive
triumphalism, of our role as the world's only remaining super
power. But, again, when it comes to supporting our diplomatic
readiness, are we really such a super power?
Resources for international affairs have declined
significantly in recent years. Funding in Fiscal Year 1997 is
25 percent below the average of the last 20 years, and some 30
percent below the spending levels of a decade ago.
It is a delusion, in my view, to believe that America can
remain actively engaged in the world if we deny the President
and the Secretary of State the resources necessary for the
conduct of American foreign policy.
The President's request should be regarded, in my view, as
the minimum needed to protect our interests abroad, around the
globe. Our discussions should be focused on how best to deploy
those resources.
Third, have we prevented the bureaucratic burial of
important elements of our diplomatic arsenal? It is one thing,
Brian, for me to merge AID and the State Department. I have an
open mind about that. I have an open mind, and you know that I
have been a defender of your Agency in not wishing to see that
happen, along with ACDA. But I have an open mind to it being
merged in the State Department depending on how it is merged--
if it is merged where you are a co-equal with every other
geographically distributed source of authority in the State
Department, if ACDA is merged in a way that it receives and has
direct access to the President of the United States and does
not have to go through three under secretaries to be known.
That is how you all got outside the Agency, outside of State,
in the first place.
So, it depends for me, in this third criteria, on at what
place, if you are going to be re-merged, in effect, you will
be. Where will you sit?
One of the earlier consolidation plans, for example, would
have placed the functions now performed by ACDA deep within the
State Department, an unwise and unnecessary diminution of a
critical function. I am deliberately not speaking about your
Department at this moment.
As envisioned by President Kennedy, ACDA was created to
insure a strong and independent voice for arms control, a
mission that is no less urgent today. As a matter of fact, I
would argue that it is more urgent today. It is more likely to
be ongoing.
So, I am open to proposals to reorganize ACDA and USAID and
other agencies, but only if the key missions retain positions
of prominence and power in any restructuring that would take
place.
So, Mr. Chairman, I thank you for the time. Let me conclude
by saying the reelection of the President and the commencement
of a new Congress with a stronger Republican majority in the
Senate provides a new opportunity for all of us to work
together to achieve our common objective--that is, to maintain
and strengthen America's leadership in the world.
I know the committee will conduct subsequent hearings on
these issues of reorganization, and I look forward to working
with you, Mr. Chairman, and with the chairman of the full
committee toward that end. But for today, I recognize that we
are focusing solely on the AID budget, and I will have a number
of questions regarding the AID budget request at the
appropriate time. But I think at this first hearing it would be
a bit of a fiction to ignore the issue underlying all of this
is a major question of reorganization.
I thank you for your time, and I thank you, Mr. Atwood, for
being here. I look forward to hearing what you have to say.
Senator Hagel. Senator Biden, thank you.
Let me now ask our distinguished colleague from Wyoming,
Senator Craig Thomas, who also as many of you know is the
chairman of the Foreign Relations Subcommittee on Asia and the
Pacific Rim, if he has a statement.
Senator Thomas?
Senator Thomas. Thank you, Mr. Chairman. I do not have an
opening statement. I am interested, however, in what is done
here and in much that you've talked about, Senator.
I notice that the first sentence of sort of an overview
says, ``USAID is the largest and principal U.S. Government
Agency implementing American economic assistance programs
overseas.'' I hope it also is implementing foreign policy
overseas. I think those two things go pretty closely together.
So, I will look forward to the administrator's remarks.
Senator Hagel. Thank you.
Senator Wellstone is here. Let me, before I ask you, sir,
to offer your remarks and opening statement, announce that I
understand we are going to have a vote shortly. So, if it is
all right, Senator Sarbanes, what we will do is I will ask
Senator Wellstone for his remarks and will ask my colleague,
Senator Thomas, to preside while we kind of tag team this. In
that way we will just keep it going.
Administrator Atwood, is that OK with you ?
Mr. Atwood. Yes, sir. Certainly.
Senator Biden. Good answer.
Senator Hagel. Is that the way it is supposed to go around
here? Then thank you.
Senator Hagel. Let me recognize our distinguished colleague
from Minnesota, Senator Wellstone.
Senator Wellstone. Thank you, Mr. Chairman. I will be very
brief.
Let me associate myself--I was going to say ``in part''--
almost all the way with the remarks of my colleague from
Delaware. The one area that I want to focus in on, and these
are questions that I want to pursue along with some written
questions, is that I, Brian, have a particular focus on Russia
and the former Republics of the Soviet Union.
My father fled Russia. I visited his home and have spent
some time there. I wish I could sample the whole world. I am
interested in the whole world. But I would like to focus in on
two questions. One is whether the Partnership for Freedom
Program can, in fact, connect and make a difference in terms of
the enormous economic and political problems that Russia and
some of the other republics are faced with.
The other thing I am interested in is this. I note that you
are deemphasizing the technical assistance and emphasizing
something called ``grassroots civil society programs.'' I am
going to be interested, to use a fancy term, in your
operational definition of that to learn specifically what you
have in mind concerning reordering of priorities.
Again, it seems to me that this really goes to the heart of
the critical mission of AID, and I would like to have some
discussion with you on that.
Thank you, Mr. Chairman--wherever you are.
Senator Thomas (presiding): I am right here.
Mr. Administrator, welcome. If you would like to proceed
with your statement, we would be happy to hear it.
STATEMENT OF HON. J. BRIAN ATWOOD, ADMINISTRATOR, AGENCY FOR
INTERNATIONAL DEVELOPMENT
Mr. Atwood. Thank you very much, Mr. Chairman. I want to
thank the Senators for their kind remarks and tell this
committee that I really look forward to working with this
committee. I want the committee to pass an authorization bill
that the President can sign. I certainly understand, Senator
Biden, the importance of the issues you raise. I know that our
Secretary of State indicated when she came here for her
confirmation hearings that she is going to keep an open mind on
these issues as well. I want you to be assured that I certainly
keep an open mind on these matters. I believe very strongly
that these reorganization questions are a lot more complex than
meets the eye and, therefore, it seems to me important, as
Senator Helms indicated in his discussion about these issues
with Secretary Albright, that we be given some time downtown to
come up with our own proposals.
Sometimes the law of unintended consequences does come into
play when you move boxes around. I think that, given the fact
that the President has responsibility, along with the Secretary
of State, for carrying out foreign policy, it is important for
us to make sure that we are proposing something which would
enhance our coordination, enhance our efficiency, enhance our
capacity to do work in the post-cold war world, which does
present different challenges to us, and I have confidence that
the administration will come up with a proposal.
For my part, for example, looking at where USAID is today
in the structure, theoretically--not just theoretically--under
the law I am the Acting Director of the International
Development Cooperation Agency. It is interesting. It was
enacted back in 1979, under the Carter administration. For 2
years, or actually a little less, there was actually a director
who was confirmed by the Senate who served in that capacity.
The person who serves there as acting director, the
Administrator of USAID, has fairly broad powers within the
executive branch to coordinate development activities.
I think, frankly, the idea was a good one. But it has
become moribund. The position has not been filled for 14 years.
So, therefore, obviously something needs to be done.
I have said publicly that this question of who the
Administrator of USAID reports to is something that should be
discussed. I mean, theoretically I report to the President
under the IDCA law, and I obviously work under the foreign
policy guidance of the Secretary of State.
Again, in the years that I have been in this position I
have never sought to go to the President without telling the
Secretary of State. I do not think I would be here today if I
did that. Therefore, I certainly do not have any objections to
reporting to the Secretary of State.
I do think that with respect to Development Assistance, it
is important to recognize that we do support the foreign policy
of the United States in a programmatic way, that we are a
specialized agency and that the person responsible, whomever it
is, if it is me or whomever, needs the management tools
necessary to get the job done.
As you indicated, Senator Biden, there is a need for
specialties in our foreign policy. We need experts nowadays on
terrorism, something that we might not have thought much about
before, and on narcotics. We also still need experts on
agriculture and education and the kinds of work that we do,
micro enterprise lending and the like, at USAID. I think one of
those management tools has to be the personnel structure that
would enable us to reward people for achieving results and who
have the technical capacity to undertake the projects.
I also think it is important, in light of the pressures of
the every day conduct of our foreign policy, that we make a
decision that we are going to make a long-term strategic
investment in development assistance and that under the current
law we protect that development assistance so that it is spent
in ways that the Congress wishes it to be spent; so that, all
of a sudden, because you have a crisis you do not pull money
away from this strategic investment and put it into something
that is of more short-term nature--another crucial issue, it
seems to me.
A third issue is we have succeeded in leading the
international community to the point where, in 1960, we were
providing 60 percent of all of the development assistance
provided in the world. Today, it is only 17 percent because of
our success in leading the donor community. So, I think,
especially given the kinds of development challenges that are
out there today, it is important to continue that leadership
role and we should not in any way inadvertently undermine it.
That is all I would say about this issue.
I ask the committee on behalf of the administration, to
give us time since you are talking about something that will
influence the next century. I know you have a legislative
timetable to get an authorization bill passed. If we cannot
meet the requirement of getting our suggestions in before your
legislative timetable is up, at least you understand when we
are consulting with you that we are indeed working with you
assiduously on these issues. We plan to come up with something,
I certainly would hope that we are not pressured. This is
because we have tried it the other way. We have tried it with a
proposal coming from up here and going downtown. Normally,
legislation is proposed by the administration and considered
very carefully.
This is not the only way it can be done. I know that you
can propose as well. But I think in terms of reorganizing the
executive branch to make it more efficient, which I concede
needs to be done and is long overdue--I agree with that--it is
important for the executive branch to propose and for the
Congress to dispose.
That is all I want to say about that issue. I realize there
may be other questions which I will be happy to answer. I
really came here today to defend the President's request.
I think it is extremely important that the Congress give
adequate consideration, and I know you will, to the request for
an increase in the 150 account, to $19.4 billion.
I was looking at some statistics and I realized there is
some controversy about the extent to which the 150 account has
been diminished over the years. The fact of the matter is there
was a big increase for the Middle East in 1985 and that it is
probably unfair to use 1985 as the high water mark. But if you
use 1986 and eliminate that increase, we have still seen about
a 32 percent decrease in the 150 account.
I must say that I think it is a legitimate question as to
whether or not we are serving our interests.
I happened to attend a briefing for freshman Members of the
House yesterday with General Nash, who was the U.S. commanding
general in Bosnia. What General Nash said at the beginning of
his briefing was: Mr. Atwood, I want to thank the Agency for
International Development for what you did in Bosnia to help
our soldiers.
The fact of the matter is that we help our soldiers in more
ways than simply working on a reconstruction program in a place
like Bosnia. But increasingly we are doing that kind of work
and we are the only Agency in town that has the capacity to do
that work. But in addition, hopefully we are contributing to
crisis prevention and preventing our soldiers from being
introduced into other parts of the world where--if we cannot do
something about it--nations are on the verge of failure.
This budget request on the part of the President helps our
Agency, I think, achieve equilibrium. We have gone through an
awful lot in the last few years, as you know well. The Fiscal
Year 1996 cuts in our budget were particularly severe. We have
had to have a reduction in force and there were some questions
as to whether or not we were ever going to reach that period,
that point of stability wherein we could say now it is time to
begin rebuilding in a sensible way.
This request calls for an increase in USAID--managed
programs of $476 million, including $292 million for the
Eastern European and NIS programs--and I would be happy to get
into more detail about the new NIS program; $135 million for
the Economic Support Fund, which includes a lot of resources
for transitions in the Middle East and Latin America, and the
like; and about $66 million for Development Assistance, a big
part of which is for food security, an issue which everyone--
State, USAID, and the Defense Department--is focusing on. This
is because we recognize more than ever before that food
security issues, in Africa in particular, are causing tensions
that could lead to conflict, that could lead, then, to our
troops being introduced into warfare.
This is why the Defense Intelligence Agency looks into
issues such as the impact of the water hyacinth on Lake
Victoria, which is choking the fish of Lake Victoria. It is
making the lives of the people, about 30 million people, who
live in that area and depend on that lake, much more tenuous.
If they move and become refugees or displaced people, the
military may have to go in as they did next door in Rwanda to
handle that problem.
That is why increasingly our national security
establishment is looking at these kinds of important issues.
I feel very proud of some of the things that we have been
able to accomplish despite the fact that we have had these
kinds of budget cuts. This year, the OECD's Development
Assistance Committee adopted a report 21 nations negotiated for
over a year, a report called, ``Shaping the 21st Century: The
Contribution of Development Cooperation.'' It sets goals for
the next 20 years. It talks about reducing by one-half extreme
poverty.
There are 1.3 billion people living in the world today on
less than $1 a day, or about $365 a year. It talks about
providing universal education to everyone. Girls are certainly
excluded from that in most of the developing world. It talks
about providing family planning services to all who want them.
It talks about every nation having a national environmental
policy. It goes on to set other goals.
This is the way we have now reformed USAID to work. We
establish the strategic objectives and goals of the Agency. We
expect to hold our people accountable for results, and that is
basically what the entire donor community has done. Most of
these objectives are objectives that we have devised, we, the
United States of America.
Why are we, in this particular field, the development
field, the indispensable nation? We are the indispensable
nation not only because we have the best university minds in
the world, we have the best private voluntary organizations in
the world, we have a rich vein of experience and development in
our own right here in this country; but most importantly
because we are the world's optimists, we think things can get
done.
We do not think that we are the victims of our history. We
think we shape our history. This is unique, and this is why I
think we are indispensable.
I am also proud about the fact that we can come here and
ask you for the first time in 4 years for a decrease in our
operating expense budget. We have done that by overhauling the
Agency. A lot of this has been mentioned before, but let me be
specific about facts.
We have reduced our staff since 1993 by 2,700 people. We
have cut senior management by 38 percent. We have reduced the
time it takes to design a project by 75 percent. We have
reduced our regulations by 55 percent. We have closed 26
overseas missions and we will close approximately 6 by the end
of the next fiscal year.
We are one of the pioneering agencies in implementing the
Government Performance and Results Act. I feel very proud that
all of these changes have given us the reputation of being a
well man-
aged Agency and, more importantly, have saved money for the
taxpayer and enabled me to come up here and ask for less money
this year than we did before.
Senator Biden. Excuse me.
Mr. Chairman, we are about out of time.
Senator Thomas. Yes, we are about out of time.
Senator Biden. Brian, this is a heck of a thing to do to
you, but you have sat back here and know how it is.
Mr. Atwood. I have a written statement, Mr. Chairman, that
I can submit.
Senator Biden. No. I would like to hear all of your
statement.
Senator Thomas. If we could, we will just recess for a few
minutes.
Senator Biden. If you don't mind, we will recess for just a
few minutes so that we do not miss the vote.
Senator Thomas. Let's do that, then. It's a management
decision. [Recess]
Senator Hagel (presiding): Are you ready to continue?
Mr. Atwood. Yes, indeed.
Senator Hagel. I guess that question should be put to me.
I understand my colleagues have had a chance to make
opening statements and you have not--or you have?
Mr. Atwood. I have not quite completed my statement, Mr.
Chairman. I neglected to say at the outset of this summary of
my written statement that I would ask that my written statement
be included in the record as if read. Often those written
statements are a lot more judicious than the ones that you
speak off the top of your head.
I did have just a few more comments, if I could, and, in
particular, since you are back I would like to comment on some
of the things that you said. I want to tell you that I also
enjoyed the meeting that we had.
I have to tell you that, while you plead too much ignorance
of these programs, what I was impressed with was the extent to
which you do understand these programs and, more importantly,
the extent to which you understand the international situation
that we face, having been in international business. I am
delighted that you are assigned to this committee, Senator, and
I will just say that as a personal statement first.
Senator Hagel. Thank you.
Mr. Atwood. You made the point that many countries have not
benefited from our foreign aid programs over the years. I could
not dispute that. I think that we have made some major mistakes
in a lot of countries and some of it is attributable, as you
suggest, to cold war considerations. But others are
attributable to the fact that we have been involved in a long-
term learning process here. We started doing this business 50
years ago with the Marshall Plan. It was a success. But working
in countries unlike Europe, countries that have serious human
capacity problems, education, health care, and the like, is
very different.
Too often, very frankly, we have been supporting statist
regimes, countries that believed that the State ought to
control the economy and that the State was the most important
aspect of the society. We found ourselves in that predicament
for a whole variety of reasons. There is no sense going over it
now.
Nonetheless, today we insist on working with countries--
there may be some grey areas here, but for the most part--
countries that agree that they should reform their economic
system to become a market economy and agree that they should be
democratic.
We have gotten out of 26 countries already, as I've
mentioned, and many of them were countries that were not good,
quality partners of the United States because they refused to
take this pledge to reform.
But over the years, frankly, Mr. Chairman, despite the fact
that we have had our failures, the combined effort of the
international community to be involved in this business has had
us achieving many, many results, including cutting the infant
mortality rate around the world by half; increasing the average
age of citizens in the developing world from 42 to 62;
providing 1 billion more people with clean drinking water;
increasing the literacy rates by three-quarters in the
developing world, providing enough food for people to eat
through the Green Revolution, which has also helped our own
farmers; eradicating smallpox, which has saved us something
like $280 million a year that we were spending on immunizing
our own children; and we are on the verge of eradicating polio,
which will save us $230 million a year in immunizations that we
will not have to carry out.
I think that is a significant record of achievement. I
think we can do better. I think that we can do better for less
of a contribution. But I believe that the criteria that we use
to decide with whom we will work nowadays is something that
everyone should agree with. We want to look at that quality of
the partnership. We want to look at need. We want to look at
our foreign policy and our economic interests. Most
importantly--and this is required by the Government Performance
and Results Act that you passed here in the Congress--we need
to look at the performance of our programs, and our budget
should reflect performance more than ever before.
I was very pleased that this year OMB told us that we had,
in fact, submitted the best budget that they had seen because
it was more tied to performance than anyone else's budget.
I think we make a major contribution to American foreign
policy by working in crisis situations to mitigate crises
through our humanitarian relief programs, by working in
transition situations such as Bosnia, Haiti, South Africa, and
Cambodia, to help transit those crises, and by working in long-
term development to help prevent crises. I think we make a
major contribution to U.S. economic policy, international
economic policy, by creating new markets for American goods. We
have done this traditionally.
I will make a final appeal, Mr. Chairman, on behalf of this
budget request for a balanced approach to this development
assistance, in particular an appeal for agriculture. Yesterday,
I was testifying before the House International Relations
Committee and Mr. Bereuter from your State was very, very
pleased that the agriculture industry, which includes
agribusiness, farmers, and associations of various types, has
finally come together, indeed, to ask for an increase of $2
billion in our foreign aid program in hopes that we can
continue to develop those new markets for our agricultural
products.
Some 43 of the top 50 importers of American agricultural
products were former aid recipients, countries who saw an
increase in economic growth as a result of our working with
them in the agriculture sector.
So, it is not simply a question of providing humanitarian
emergency food relief, which we do to the tune of $800 million.
It is helping them improve their agricultural productive
capacity.
That is my appeal. We obviously are concerned about other
parts of the budget. But we have seen over the years the
agriculture sector of our program diminish from 16 percent to 9
percent. I think we are not serving our interests to see that
happen. We clearly need to fund our population, environment and
democracy programs. But our economic growth programs need to be
funded as well, and I make that appeal, an appeal, really, for
balance within the budget request that we have made.
Thank you, Mr. Chairman. I do have a written statement. I
am sorry to have gone on for so long. But I have had two
audiences and it has been a real pleasure.
[The prepared statement of Mr. Atwood follows:]
Prepared Statement of Mr. Atwood
Mr. Chairman and members of the committee, it is a pleasure to
appear here today to defend the President's budget request for
development and humanitarian assistance. I look forward to working
closely with the committee during the second Clinton administration. It
is my belief that we are entering a new and positive era in our
international relations, and that our policies and approaches will be
guided by the stabilizing hand of bipartisanship.
Recently, Secretary Albright noted, ``In our democracy, we cannot
pursue policies abroad that are not understood and supported here at
home.'' I could not agree more. In that vein, I would particularly like
to welcome this committee's new members. I look forward to sharing with
you today the reasons why the U.S. Agency for International
Development's (USAID's) programs directly advance America's interests.
President Clinton's budget request for fiscal year 1998 includes
$19.4 billion for programs in international affairs. This is a modest
increase from the previous year, and represents just slightly over 1
percent of the federal budget. More importantly, this budget reverses
the dangerous downward trend in funding for foreign affairs. USAID will
manage $7.158 billion, or 37.5 percent, of those funds, including both
USAID programs and programs administered by USAID in cooperation with
other agencies. USAID's request for discretionary funding in the
Foreign Operations appropriations bill includes $998 million for
Development Assistance, $700 million for the Development Fund for
Africa, $190 million for International Disaster Assistance, $11 million
for credit programs, $473 million for operating expenses, $29 million
for Inspector General operating expenses, $2.498 billion for the
Economic Support Fund, $492 million for programs in Central and Eastern
Europe and $900 million for programs in the New Independent States.
USAID also requests $44.2 million for the fiscal year 1998 mandatory
contribution to the Foreign Service Retirement and Disability Fund. In
addition, USAID will administer $867 million in P.L. 480 funds.
The total request for fiscal year 1998 USAID-managed programs
represents an increase of $476 million over fiscal year 1997. This
increase includes:
An additional $292 million for programs in Central and
Eastern Europe and the New Independent States. These
transitional programs are designed to aid Central and Eastern
European countries and the New Independent States through their
difficult passage to democracy and market economies. Helping to
secure free societies in this region remains one of America's
highest foreign policy and national security priorities. This
increased funding demonstrates the administration's commitment
to helping these nations move through this turbulent time and
reflects a realization that such sweeping change has also been
characterized by uneven political and economic progress. In
Central and Eastern Europe support for Bosnian reconstruction
and reform and efforts in the Southern Tier countries will be
given special emphasis. In the New Independent States, the
Partnership for Freedom effort will build on our achievements
to date and reorient our assistance program--beginning with
Russia and then in the other New Independent States--toward
longer-term and more cooperative activities to spur economic
growth and develop lasting links between our peoples.
$135 million more for the Economic Support Fund. Economic
Support Funds (ESF) advance key economic and political foreign
policy interests of the United States by providing economic
assistance to countries in transition to democracy, supporting
the Middle East peace process and financing economic
stabilization programs. The largest share of ESF will continue
to go to supporting the Middle East peace process, including
$52.5 million to be transferred to the Middle East Development
Bank. The Latin America region will receive ESF funding vital
to support the democratic transition in Haiti and the
breakthrough peace accords in Guatemala. ESF will also support
programs in ``fledgling democracies'' such as Cambodia and
Mongolia. Finally, ESF will he used for assistance in sub-
Saharan Africa for elections, political party building and
legislative training for countries in transition such as
Angola.
An increase of $65.5 million in Sustainable Development
Assistance. These funds will support USAID's development goals
by encouraging broad-based economic growth, protecting human
health, slowing population growth, encouraging environmental
protection and advancing democracy. By fostering free markets
and open political systems, USAID's development programs are
helping to shape a world that is more stable and open to U.S.
trade and leadership. Specifically, the ``Promoting Food
Security'' pilot initiative, aimed at improving food security
in Africa, will in its first year target $30 million to five
nations: Ethiopia, Uganda, Mali, Malawi and Mozambique. This
initiative will support policy reform and a range of
agricultural research that will benefit not only Africa, but
other developing nations as well. Modernizing agriculture, the
cornerstone of the economy in most developing nations,
increases incomes of rural people, lowers the cost of food for
the urban poor and conserves the environment. By furthering
agricultural and, thus, economic growth in these countries, the
initiative has the potential to both spark U.S. exports and
save this country significant emergency relief food costs.
In sum, these modest increases in spending are all vital to helping
secure a more prosperous and stable world during the next century. I
would also note that this year's request includes a decrease of over
$15 million in the Agency's operating expenses. This decrease is due to
a reduction in starting levels combined with economies achieved by
reengineering and the restructuring of our overseas operations.
Recognizing the importance of our unique mission, we have
dramatically improved the management of USAID to make it the most
effective foreign assistance Agency in the world. We have overhauled
the Agency from top to bottom--its strategic approach, organization and
management. We have demanded that our programs produce demonstrable
results. Since 1993, we have reduced staff by over 2,700. We have cut
senior management by 38 percent. We have reduced project design time by
75 percent. We have reduced our regulations by 55 percent. We have
closed 26 overseas missions and will close six more by the end of
fiscal year 1998. Further, USAID is one of the pioneering agencies in
implementing the Government Performance and Results Act. All of these
actions are designed to ensure that every dollar appropriated to the
Agency can bring taxpayers the best possible return on their
investment.
We know you have questions about our new management systems. Let me
try to give you my perspective on what we are doing. You must first
understand that our new management systems are not just designed to
replace existing financial and procurement systems. We will indeed
replace those systems but NMS is much more than computers or software.
Our new management systems are a new way of doing business. As you
know, we have redesigned our old project design system to make it
faster, simpler and more customer-oriented. We have also redesigned our
overseas missions to empower employees, to create strategic objective
teams and to make our programs more results-driven. The new computer
system will facilitate these improvements. It is a management tool
created to allow us to manage more effectively the other reforms we
have adopted.
As we implement the computer portion of NMS, we are bringing the
Agency's technology to the forefront of any used in Government. We are
in the process of deploying a management system that fully integrates
project planning, budgeting, a single-entry financial system, a
simplified procurement system, and our evaluation system. In the next
few years, we will add workforce planning, personnel management and a
training module to our current capabilities. All of this will be
available to every USAID office worldwide. Deploying such a system in a
worldwide operation is not easy, but we have made great progress.
Let me give you a brief status report.
As you know, we activated NMS computer system worldwide on October
1, 1996. Since then we have been using a combination of NMS and the old
legacy systems to process transactions. To date we have processed 142
contracts and grants in NMS totaling $252 million and have paid
approximately $15 million in invoices plus the $1.2 billion cash
transfer to Israel.
Since bringing the system up worldwide, we have been addressing two
major challenges. One relates to the need to migrate consistent and
accurate data from the old systems into the new. The NMS will not allow
us to process any inconsistent or inaccurate data. This forces us to
clean up and reconcile data and incorporate it into the new system. We
have found this to be a more labor-intensive process than we imagined
because the level of inaccuracy in the old systems was even greater
than anticipated. Nonetheless, we have made great progress. We have
migrated all 8,000 records from the old Financial Accounting Control
System (FACS) and the 6,500 records from the Contract Information
Management System (CIMS). We still have to reconcile this data and
reconcile it with the data from the field Mission Accounting System
(MACS), but we expect to finish that process by this summer.
Could we have waited until all this data was reconciled before we
activated NMS? Could we have phased in the new system one module at a
time? We considered both of these options. We rejected them because the
integration process would have taken years, and we would still be using
the old legacy systems and accumulating additional data of questionable
accuracy that would have to be migrated later in a reconciled form.
Activating NMS has forced us to migrate the data more expeditiously
and, in the long run, it will save us time and tax dollars.
The second challenge has been the need to create a worldwide, high-
speed communications system. We have encountered problems with the two
separate telecommunications systems we have been using, but we are
making real progress in overcoming these problems. The time needed for
transactions has been reduced, and we have several actions we are
taking to further reduce this timeframe.
Mr. Chairman, when I came to USAID in 1993, the need for an
integrated management system had already been identified. A plan
developed in 1992 called for a fully integrated financial management,
procurement and budget system but one that did not integrate operations
or allow us to integrate field and headquarters capabilities. This much
less ambitious system was estimated to cost approximately $100 million.
Our judgment was that that plan would not have given the Agency what it
needed in a reasonable timeframe and that the cost estimate would most
likely have been
What we have created is the full-fledged integrated management
system I have described. We have consciously sought to deploy this
system using state-of-the-art approaches. Each step of the way we have
consulted with systems experts at OMB, GAO and the private sector, and
we have been encouraged to move forward. My own Inspector General has
offered superb advice on which we have acted to correct problems. He
has also pointed out that our systems development approach is an
unconventional one. That is his job.
I want you to know that I understand the risks, and I believe that
our approach will pay off. It reflects the latest thinking in systems
development. I also understand there are risks in adopting conventional
approaches as well. As business executive Hank Delevati of Quantum
Corporation said recently, ``The phased approach is longer--and I
contend riskier--because you won't get everyone involved and
coordinated.'' Quantum Corporation was one of many large organizations
that has successfully deployed a new integrated management system using
the ``all at once'' approach.
Last week we had our systems coordinators into Washington from
around the world. We want them to know we understand the problems they
are having and the solutions we are devising. They now have a better
appreciation of the effort we are making. They and we are confident
that we will accomplish what other Government agencies have not.
Mr. Chairman, we do not seek to mask the difficulties we face in
making NMS fully operational, but we are on the right track. This
system will not only revolutionize the way we do business at USAID, it
will lead the way for the development of similar systems in the U.S.
Government. We have been pleased that so many Congressional staff have
sat through detailed briefings on NMS. We welcome your vig-
orous oversight. We welcome it because we know that together we can
vastly improve our capacity to fulfill our mission.
In short, we are doing everything possible on the management side
to make America's international programs cost-effective. We want to
achieve results that serve America's interests. Let me describe how we
believe we serve those interests in today's world.
America's Stake in the World
The United States has a vital interest in maintaining a leadership
role in the international community, and in seeing that the
international community cooperates on the basis of shared values.
Nowhere is this more true than in promoting development in poor nations
and countries emerging from the long shadows of communism and
totalitarianism. Why is this important to Americans?
It is important because we live in a world where trends toward
globalization and increased interdependence are powerful and
accelerating. This means international cooperation is increasingly
important--in areas as diverse as promoting trade, protecting the
environment, fostering democratic governments, reducing rapid
population growth rates, establishing market-based economies, stemming
the flow of narcotics, slowing the spread of infectious diseases,
coping with migration and protecting human rights. In all of these
areas, the benefits of fruitful cooperation are significant and
lasting, while the failure to work together will he increasingly costly
and immediate.
During the cold war, U.S. leadership was central and unmistakable
as the protector of the free world against the threat of communist
expansion. U.S. military power and economic dynamism were seen as
essential to resisting that threat. But America's leadership then, as
now, had a foundation stronger than our Army or our economy. The U.S.
projected a compelling, and widely shared, vision of a world order
where democracy and open systems were respected. Our vision of
political and economic freedom, of social justice and respect for the
individual was as powerful as any missile or any defense system. The
U.S. offered the world not only security, but a better alternative to
the Communist vision.
The cold war is over. We still have the strongest military and the
strongest economy in the world. But strength alone is not a substitute
for leadership. America's position in the 21st century will depend more
and more on the quality of our leadership; on the perception that we
understand and appreciate the broad interests of the international
community, and that we act with these interests in mind; and on the
perception that we still have the best, most compelling vision of a
global world order. Equally important, America's domestic interests are
now, more than ever before, inexorably linked to events that take place
far from our own shores.
Our modest and well-targeted foreign assistance programs directly
advance America's interests--your constituents' interests--in three
direct ways: By helping to prevent crises; by generating dynamic
opportunities for expanded trade; and by providing protection from
specific global health and environmental threats.
A Diplomacy of Crisis Prevention
One of the most profound areas of concern for the United States and
its allies is the growing phenomena of failed states. One need only
open a newspaper on any given day to see the perilous state in which
many nations now find themselves. Whether it is rebels fighting in
eastern Zaire, hostage-taking in Tajikistan, street protests in
Belgrade, Bulgaria and Albania or the constitutional crisis in Ecuador,
we are confronted by potentially explosive situations with the
potential to trigger conflict or economic collapse.
Since the mid-1980s, the number of man-made emergencies requiring a
U.S. Government response has doubled. The staggering human, financial
and political cost of these conflicts is reflected in the increasing
scope and complexity of peacekeeping operations, the loss of human life
and the exploding numbers of refugees around the globe. Since the Gulf
War, the United States has mounted 27 military operations as a result
of ethnic conflicts and failed states. Up to 1 million people lost
their lives through genocide in one year in Rwanda. In the former
Yugoslavia, the loss of human life in less than four years was the
greatest in Europe's post-World War II history. The number of refugees
and displaced persons in the world now numbers close to 50 million.
As a Nation, we know that we ignore the warning signs of crises
only at our own peril. When potential crises erupt into genuine
emergencies, it is the U.S. military most likely to be put in harm's
way, it is U.S. economic interests that suffer and it is this nation
that ends up providing the lion's share of humanitarian assistance to
the victims of war and social collapse. It is abundantly clear: The
United States has a compelling national interest in preventing and
averting crises before they occur. Practicing a diplomacy of crisis
prevention is one of our greatest challenges in this new era, and
development programs have a lead role to play in these efforts.
As we know from our own daily experience, every country is subject
to the internal pressures to some degree of stress from ethnic,
religious, economic and other deep-seated conflicts among their own
citizens. What distinguishes a country that can endure these internal
tensions from one that cannot is the relative strength of its domestic
institutions. By institutions, I mean not just government and political
organizations, but also tradition, culture, social practices, religion
and the depth of human capital. In many cases, conflict is a result of
a failure to give people a stake in their own society.
The reality is that most nations in conflict simply lacked the
institutional capacity to avoid escalating violence. We see prime
examples of this in the former communist world. When communist
institutions collapsed, and no strong institutions replaced them,
conflict became commonplace. We obviously do not wish to see a return
to totalitarian methods, so it is essential that we help these
countries put democratic institutions and social conditions in place.
A second category of countries that fall into crisis include
nations such as Rwanda, Somalia, Sudan, Zaire, Afghanistan and Liberia.
What these countries have in common is that they are among the least
developed countries in the world. By ``least developed'' we mean they
have the weakest institutions and least developed human resources.
The findings of a recent administration study of failed states
confirm the role of under development in crises. The study attempted to
find the indicators most commonly associated with a vulnerability to
crisis. The three leading factors shared among nations that have
succumbed to crisis were high infant mortality rates, a lack of
openness to trade, and weak democratic institutions. Does this mean
that if we simply promote trade, strengthen democracy and provide child
health programs that crises would disappear? The study doesn't say
that. What it does say is that these variables are reasonable proxies
for a nation's relative level of overall development, including a
country's willingness to invest in its own people, to concern itself
with lower consumer prices and to create institutions to enable the
people to participate in the development of their own society.
The implications of this analysis for our foreign policy are
profound. Development programs are aimed at enriching human resources,
strengthening open institutions, and supporting political and economic
reform. By fostering stronger institutions, a richer human resource
base and economic and social progress, countries are better able to
manage conflict and avoid the dangerous descent into war. Development
programs give us the tools we need to deal with the uncertain world
around us. I am not here today to say that development programs are an
ironclad guarantee against crisis and collapse. But it is entirely fair
to say that successful development and transitions out of closed
systems vastly improve the capabilities of a country to manage division
and conflict. This is clearly in the best interests of the United
States.
The challenge of crisis prevention is, in many respects, the
logical successor to the paradigm of the cold war. Through our
democracy and governance programs, USAID seeks to strengthen the
political, social and economic institutions on which management of
conflict directly depends. Our efforts at promoting economic growth
also encourage economic freedom. Our efforts at human resource
development--in education and health--ensure that an increasing
percentage of the population can take advantage of economic
opportunity, social progress and political freedom. Our efforts to
protect the environment and to give families the capacity to space
their children help ensure that development progress is sustainable.
And there is strong evidence that U.S. foreign assistance programs
have successfully helped develop functioning stable democracies.
Political freedoms have increased significantly in the countries where
development activities have been most focused. Between 1982 and 1996,
Freedom House data demonstrates that political freedom improved in 48
countries and grew worse in 30. Of the 29 countries showing the most
dramatic improvements in political freedoms, most were significant
recipients of U.S. aid over the period. U.S. efforts helped nations
such as the Philippines, South Africa, Jordan, Haiti, Bangladesh,
Guatemala, Mozambique, Nicaragua, Uruguay and Malawi realize the dream
of more open societies.
We have also adopted the policy that nations that do not embrace
democracy, and that turn their backs on their citizens, will not
receive U.S. assistance. We cannot achieve development results if we
have poor partners. We will not work with governments that exclude
their people from the development process.
International development cooperation works. In developing
countries during the past 35 years, infant mortality has fallen from
162 to 69 per thousand; life expectancy has risen from 50 to 65 years;
and literacy has climbed from 35 to 67 percent.
We cannot prevent every crisis, but we can avert many. Investing in
these efforts is a small price to pay for a foreign policy that
advances our interests in a more stable world.
Advancing U.S. Economic Interests
Let me turn now to the role development programs play in directly
supporting U.S. economic interests. For both trade and investment,
developing countries provide the most dynamic and rapidly expanding
markets for U.S. goods and services. U.S. exports to developing
countries in the 1990s have expanded at 12 percent annually, more than
double the export growth to industrial countries. This is not just a
short-term phenomenon, but reflects a trend that began emerging in the
mid-l980s.
U.S. exports to countries that receive U.S. assistance have
boomed--rising by 76 percent in the last five years alone. Between 1990
and 1995, American exports to transition and developing countries
increased by $98.7 billion. This growth supported roughly 1.9 million
jobs in the United States. Work in agriculture has a particularly high
return. Forty-three of the 50 largest importers of American
agricultural goods formerly received food aid from the United States--
that's over $40 billion a year of U.S. agricultural exports. A recent
study by the International Food Policy Research Institute found that
for every dollar invested in agricultural research for developing
countries, the export market available for donor countries expands by
more than four dollars, of which more than one dollar is for
agricultural commodities.
The bottom line is that by the year 2000--three short years from
now--four out of five consumers will live in the developing world.
USAID's programs are helping these people become America's next
generation of customers.
As Latin American economies have prospered, so have U.S. exports
and jobs. The region is the fastest-growing market for U.S. exports of
goods and services, and also one of the largest. In 1995, the Latin
American and Caribbean region accounted for more than 70 percent of all
U.S. exports to USAID-assisted countries. Exports of goods to all
countries in the region reached $95 billion in 1995, more than three
times the level 10 years ago.
Creating the enabling environment for markets is a principal focus
of USAID's programs. The connection with development programs, and
USAID in particular, is quite significant. U.S. exports are growing
much more rapidly to some developing countries than to others. What
accounts for these differences? The major portion of the variation is
explained by progress in terms of improved policies and institutions--
i.e., the enabling environment for markets.
USAID-assisted countries have been among those that have made the
greatest progress in policy and institutional reform over the past
decade, including Thailand, Jamaica, Bolivia, El Salvador, Guatemala,
Peru, Ghana, Costa Rica, the Philippines, Morocco, Sri Lanka, Belize,
Panama, Tanzania, Tunisia, Indonesia, Mali, Botswana, and Uganda.
Because of our field presence, technical expertise and experience,
USAID can have significant influence in encouraging economic policy
reform.
The international financial institutions have also played a vital
role in supporting economic reform and restructuring weak economies,
especially in countries in transition from authoritarian regimes or
from conflict. In response to effective U.S. leadership within the
donor community, they have increasingly put their weight behind
governance reform, investment in social capital, and environmental
sustainability--significantly complementing U.S. bilateral efforts.
U.S. investments in both bilateral and multilateral assistance programs
are fundamental to maintaining U.S. leadership within the donor
community and to strengthening this complementarity.
There are some who have argued that private capital flows can
simply replace the need for foreign assistance programs. However, it is
important to remember that foreign assistance and private investments
are complements--not alternatives. By and large, private investment is
flowing today into the emerged markets of the developing world, not
into countries where there is no rule of law, no financial
institutions, no private sector and no predictability. It is only when
the enabling environment for markets has been well established--by
recipient self-help efforts often supported by foreign aid--that
private flows begin to accelerate. Eventually private investment and
trade will replace foreign aid, and this is what a development program
should strive to achieve. But the issue for most of the developing
world countries is not best captured by the phrase ``trade, not aid.''
The phrase ``aid, then trade'' is closer to their reality.
Our development efforts have contributed to economic freedom
worldwide. Of the 27 countries with large improvements in economic
freedom between 1975 and 1995 (as measured by an index from the Fraser
Institute), 22 have been major recipients of U.S. foreign aid.
Continued Clinton administration efforts to promote U.S. job cre-
ation through trade and investment abroad must focus on emerging
markets in Asia, Latin America, Eastern Europe, the New Independent
States and Africa. Hastening the fuller emergence of these dynamic new
markets is an essential element of a long-term U.S. economic and
foreign policy strategy for the United States. Private capital will
play the largest role in bringing the markets of developing nations
into the mainstream of trade and investment, but some of the most
promising developing markets are still hampered by trade barriers,
other policy distortions and human capacity constraints that discourage
trade and private capital flows.
U.S. development assistance is useful in removing these structural
and policy barriers. By reducing barriers that keep out foreign trade,
by fostering fair and transparent regulatory and legal regimes, and by
building capital markets, USAID has been at the cutting-edge of the
continued steady growth of America's economy.
Protecting America Against Global Threats
Foreign assistance programs are also vital in protecting the United
States against dangers that are global in scope. By treating infectious
diseases like AIDS, polio, and emerging viruses like Ebola before they
reach our shores, USAID lowers health costs here at home. Our
environmental programs help protect the air and water that Americans
share with the rest of the world. Our family planning programs help
slow rapid population growth and make for healthier and better-cared-
for families around the globe, ultimately reducing instability,
migration and refugee flows.
Let me give you several specific examples of how all Americans can
benefit from our development efforts abroad. USAID has long been the
leader in the battle to eradicate polio around the globe. Working with
our neighbors, the Pan American Health Organization, American
organizations like Rotary International and many others, we
successfully wiped out polio in the Americas. But did you know that
U.S. taxpayers still spend $230 million a year to immunize our children
against the threat of polio reoccurring on this continent?
USAID, working with a rich variety of partners, is helping to lead
the effort to eradicate polio globally by the year 2000. This is an
ambitious goal, but an achievable one. So, by making modest resources
available for foreign assistance, the U.S. stands to save $230 million
a year in domestic immunization costs. This is clearly a case where
foreign assistance is an investment in our own self-interest.
Or consider that USAID has reached more than 3.2 million people
with HIV prevention education and trained more than 58,000 people to
serve as counselors and health providers in the developing world.
Recent computer modeling shows that USAID helped Kenya avert over
110,000 HIV infections in just three years. Ultimately, our HIV/AIDS
programs result in fewer Americans exposed to the virus, and lower
health care costs for American families.
By preventing crises, by boosting America's economy, and by
protecting the United States from truly global threats, we are working
abroad to keep America strong at home and abroad.
Building the Institutions that Serve Us Well
In closing, I would say to this committee that today we have the
chance to shape the international institutions and programs that will
protect America's prosperity, security and stability for years to come.
This includes not only bilateral institutions such as USAID, but
equally vital multilateral mechanisms such as the United Nations, the
World Bank and other international financial institutions.
It is fitting that this year we will celebrate the 50th anniversary
of the commencement of the Marshall Plan. All now agree that the
Marshall Plan was a stunning, unprecedented example of enlightened
leadership. The United States understood the benefits to the United
States of economic recovery in Europe and Japan, and the threats in
terms of crisis and instability that would result from economic
stagnation in these regions.
During the Marshall Plan, foreign economic aid amounted to
more.than 1.5 percent of U.S. gross national product. Now, foreign aid
is about \1/10\ of 1 percent of our gross national product, and well
below \1/2\ of 1 percent of federal expenditures. Fortunately, and
precisely because the Marshall Plan was such a success, there are many
other nations to help us carry the mutual burden of international
leadership. But we should still do better if we want to maintain our
leadership role and defend our interests.
Development cooperation, including support for countries making the
transition from communism, and humanitarian assistance for countries in
crisis, remains an essential part of a credible and compelling vision
of how the international community should function. A lead role for the
United States in development cooperation is a vital part of American
leadership in the post-cold war era, arguably more important now than
ever.
I urge your support for the President's budget request, and I look
forward to working with you to strengthen our Nation's foreign policy
capacity.
Thank you.
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[See Appendix for ``Summary Tables, Fiscal Year 1998,'' submitted
by Mr. Atwood.]
Senator Hagel. Thank you, Mr. Atwood. I am grateful and, again, I
apologize for the disruption. But I do not sense it has detracted from
your articulate presentation and what we have to do today.
You know the drill here. The drill is to get you on the record on a
number of questions. I have a number of questions, as do my colleagues.
But let me just generally respond to a couple of things that you said
as well as Senator Sarbanes.
I agree very much with Senator Sarbanes' point about foreign aid
being an investment. It is an investment. It is an investment in
stability. America and our people are far better off, as we all
understand, with a stable world. This means stable economics. This
means more markets, more trade. In some of the conversations I have had
with Secretary Albright we covered that ground.
I think the crafting of a new foreign policy for this country is
going to have to include very much what you do and what your
organization is about because that foreign policy, at least in my
opinion, should include trade and commerce and breaking down barriers
through much of what you do.
So, I have always believed that American foreign aid is truly, used
wisely, an investment in our future, an investment for a more stable
and better world. So, I want you to know that that is how I come at
this and agree with the general sense of what you have devoted some of
your life to and what my colleagues here have said today.
Let me ask a couple of questions as I am waiting for my colleagues
to return. Then we will allow them some time with you as well, Mr.
Administrator.
This year, AID plans to complete its move into its new building
that is going up in the Federal Triangle area of Washington, DC, which
will be, I understand, the most expensive Federal building in the
Nation's Capital. Your own comptroller, it is my understanding, has
estimated that, in addition to the over $40 million cost of the move,
it will increase your Agency's annual operating expenses at a minimum
of $4.5 million a year. At a time when AID has undergone down sizing,
can you tell me, first of all, if those numbers are accurate? Then
maybe give this committee some assessment as to why it was important
for you to move into that building.
Mr. Atwood. Yes, sir, Mr. Chairman. I would be happy to.
Let me just say that I believe that this building, which I am
pleased to say to you, as a Republican, is called the Ronald Reagan
Building----
Senator Hagel. That bothers some people, I know, on my side. But go
ahead.
Mr. Atwood. It was built with an appropriation given by the
Congress and obviously approved of by the executive branch. It is a
Government building, and this is significant because Government
Agencies have to go into that building. We happened to have the luck of
the draw because there has been a long-standing effort on the part of
both the State Department and USAID to consolidate operations which
each of us has scattered throughout several buildings in the metro
area.
This is not only going to save USAID money. It is going to save the
State Department money, and it is important, it seems to me, to be seen
in that light.
This is something, this consolidation effort, that started many
years ago. It started in the Bush administration for that matter.
We have 11 different buildings. The State Department has something
like 16 or 17 different buildings that we operate out of. We are going
to be able to put all of our people in the same space, and I think
there are tremendous efficiencies that we will realize in not having
people have to go back and forth by bus across the river to Rosslyn and
whatever.
We will be giving our people a lot less space than they have now,
actually, Mr. Chairman. A lot of our people are in commercial office
space and this is the most significant point. We are going to be
assuring that over time, since this is Government space, that we are
not going to be left to the fortunes of the commercial market here and
to inflation. We are going to be able to protect ourselves in the long-
term against those kinds of increases in our rental costs.
So, I believe that this is to the advantage of the U.S. Government,
to the advantage of my Agency. We will be saving, we estimate on
average, between $1 million and $3 million a year as a result of this,
and this does not count the efficiencies that would flow from being all
together in one place.
The cost of the move is actually $43.6 million. It includes the
need to purchase some modular partitions and furniture because of the
way we are going to occupy this space, using some of the more modern
equipment that is used for this type of office space. We have had
questions of concern about security and the like. We are examining
those questions now.
I can tell you, however, that the security that will be provided to
us in this office space will be greater than in the 11 buildings that
we now occupy because I think 10 out of those 11 buildings are in
commercial office space where there is no protection for our people.
Senator Hagel. Following on to that, I have heard a little bit
about the infamous new computer system. You might want to address that.
I know that is not a question that you did not anticipate.
Mr. Atwood. Yes, that's right. I would like to address it.
There has been an awful lot of information that has not been
accurate that has come up here to the Hill and elsewhere.
I would simply point out in starting to discuss this that, as you
know, new computer systems are being built, integrated management
systems, by the private sector and by other Government agencies. You
don't hear any complaints about these computer systems until you
actually begin to activate them and deploy them. That is when employees
who are used to the old systems and are befuddled by the new systems
begin to complain that this is not working properly, and you hear a lot
of flack about it.
I think we have to stick with this. We are adopting, in deploying
this system, state-of-the-art techniques in system development that
have been used, tried and true, by the private sector. We are doing
this all at once. We are doing it to try to clean up a situation that
has existed at the Agency for International Development for a long
time. We have 11 different accounting systems and a worldwide
operation.
As we have put our new system in place--which is a single entry
financial system attached to a procurement system, and attached to a
budget system, and eventually to a personnel and training module, and
an evaluation module--what we are finding is that our system, which is
a single entry system, does not accept bad data.
One of the reasons that we have been slow in getting this going is
because we have had to clean up all the data that we've put into the
new system.
We have data in our contracting office, data in our missions
overseas, and data in our regional bureaus that is not consistent. That
is what we have been criticized for for years.
Now, finally, we are getting it all together, and we have migrated
thousands of records into the new system. The new system is operating.
It is actually fulfilling transactions. Millions of dollars have gone
through the new system.
We have that problem, the data migration problem, which we are
working on and expect to have completed by the summer, and we have a
communications problem because we are a worldwide operation. We use two
different communications systems. We have had some problems with the
bandwidth of our communications capacity and we have been discussing
this with the State Department. We use one system from State and one
from the Navy. We have reduced the time of communication considerably
since we have been working on the problem.
I think we have to stick with it. The Bush administration made an
estimate of what it would cost to do a system like this. We had their
plans. We decided that we needed to take a different approach. But
their costs were estimated to be $100 million.
Our estimate is that we can complete the system for about $72
million if you leave out some of the other ancillary costs that we
would have had to undergo anyway.
There are all sorts of ways to look at cost. But I can tell you
what someone told me once, that if you make the system work and it is a
success, no one is going to be asking you questions about the cost. But
we are not throwing money at this problem. We have a very exciting
opportunity to change the way we do business at USAID to give us the
capacity to do what people can do in the private sector. It is going to
make us more efficient. It is going to save us money in the long run,
and I am very pleased by where we stand at this juncture.
Senator Hagel. Let me ask a follow up question. Then I would ask
Senator Biden if he would like to join in this dialog because it is
something that Senator Biden talked about in his opening statement. It
is something that I am interested in as is Chairman Helms, and it kind
of starts to tie together with this new computer system.
If we are to move forward with some reorganization, what kind of
plans are you building into this system, into your network, in allowing
for that to happen if that should happen? What other Departments, State
Department agencies, are built into this system?
Mr. Atwood. USIA has been asked by the OMB to look at our system
and to adapt it for their use. That study is going on right now.
It is clearly a system that has been built for us. We did business
area analyses using our people and our programs so that we could
develop the kind of system that would be responsive to their needs--
procurement needs and their ability to design projects, their need to
measure results, for example, in our programs and to use the system to
report those results. But it can be adapted.
I think the approach we have taken can be used. The State
Department has been working on its own system for a good time now. We
have been sharing information with them. I think that we can work
together with State and the other foreign affairs agencies to use a
good part of this, although most of the detailed software has been
prepared to do a development mission.
Senator Hagel. Thank you.
Senator Biden, did you vote right?
Senator Biden. I did. I voted for the Torricelli amendment, which I
predict to you, if we are going to end up with a Constitutional
amendment to balance the budget, will be the only one we will get if we
don't get this one.
At any rate, let me ask you this, Mr. Atwood. One of the things
that you mentioned in your opening statement as an example of the
increased importance of your Agency is this. With the collapse of the
Soviet Union and the super power conflict and all of these emerging
conflicts, we are looked to to play an increasing role. You made the
larger point that, whether or not there is control of what amounts to a
pest in a lake may have as much impact on whether American forces get
sent off somewhere as what somebody did in 1962 relative to a communist
coup. I think you are right about that.
Then you gave us an example that our commanding general in Bosnia,
in speaking to Republican freshmen--or House freshmen, I forget which
it was----
Mr. Atwood. House freshmen.
Senator Biden. [continuing]. in speaking to House freshmen
indicated a thank you for the assistance you provided as a consequence
of your Agency's activities which enhanced the capability of the
American military to perform their function.
Let me ask you this question. As you look down the road, how much
of what you decide to do is predicated on those kind of judgments and
do you have the Defense Department, for example, in this case making
input? Do any of your staff behind you sit down with the Joint Chiefs
or their counterparts there and say OK, this is an extension of our
responsibility, where should we be looking?
My impression to date--and ``to date'' means the last 24 years--is
this. Actually, I have two impressions. One is that no one has handled
it better than you have, and I am not being solicitous when I say that.
No one has administered it as well as you have. Second, that kind of
thing is never done.
So, I know you are citing it as an illustration of the importance
of aid. But I would like you to tell me in realistic, every day terms,
how much actual coordination there is along those lines.
Mr. Atwood. Well, there is a great amount of coordination, really.
I will give you a couple of examples.
Obviously, I attend all of the meetings of the National Security
Council and discuss these kinds of issues. We clearly cannot, for
example, close down a USAID mission in a country without the
concurrence of the Secretary of State. We clearly do not open new
missions in countries without the concurrence of the Secretary of
State. So, there is a lot of discussion about those kinds of issues.
For example, while we are closing a lot of missions, we are going
to put a USAID representative in and increase our program in Lebanon. A
lot of that resulted from our Secretary of State's negotiations over
the southern Lebanon problem.
We have had a lot of discussion about what causes states to fail.
The CIA actually did a study using a lot of academics on the outside.
But to talk about the vulnerabilities of nation-states and what causes
them to fail, they looked at a whole series of factors. They found
three factors that really were better correlations to state failures
than anything else.
One was the infant mortality rate. Now why? Why is that important?
It is an indication of a Government's attitude toward its own people.
Do they care enough to provide health care? Do they care enough to
provide enough food? So infant mortality was one factor.
The extent of trade liberalization was another. Many of these
countries have highly protected economies and do not encourage in any
way exports. Certainly their imports are at high prices. So, they are
serving the needs of their elites in these countries. In many of these
countries 10 percent of the people have 90 percent of the resources.
So, the elites can afford to buy the imports but the poor people
cannot. So, the attitude toward their consumers was important.
The third factor was new democracies that are in very poor
countries. They are considered to be very fragile. Do we move in and
help them or do we not?
We certainly encourage democracy. We promote democracy. But the
point this study was making is that these countries are highly
vulnerable and if you do not help them, they are going to fail. There
is a great deal higher risk of failure in those kinds of situations
than in other places.
So, I think we understand these kinds of issues. We certainly are
trying to help support foreign policy goals of bringing a resolution to
crises such as in Zaire and the like. We are putting money into the
election process, if a decision is made that this is the way to resolve
that crisis.
We have undertaken under the Greater Horn Initiative in East Africa
a need to look at all phases of the continuum, the relief phase, where
they are using a lot of emergency food and how does that impact on the
recovery phase. How can we help soldiers demobilize from war-torn
situations, for example.
Senator Biden. When you were working up here, Brian, it was an
article of faith that the Foreign Assistance Act and, by extension,
AID, was laden with too many objectives and missions. Under this
administration and your leadership, there has been an attempt to
channel your efforts in four major areas. You have referenced several--
democracy, the environment, population health, and economic growth.
Now in a preface, Mr. Chairman, to this question AID has had its
detractors. They come from, in my time here, sort of three areas. One
is those who just think we should not be spending money abroad, charity
begins at home, what are we doing with this ``foreign aid,'' and, why
are we doing this. There is that general proposition.
The second quarter where criticism has come when it has come is
that it is wasteful, disorganized, lacking specific objectives,
redundant, and so on.
The third criticism in a generic sense has been that it is off on
its own, and implied by the comments of the Senator from Wyoming was
that I hope you do our foreign policy as well, or something--and I am
paraphrasing. It's that it is off there on its own and there is no
coordination with other elements of our foreign policy establishment.
The reason I ask these questions--and, Mr. Chairman, you tell me
when to stop; you jump in; obviously you are running the show and I do
not mean to monopolize this--to follow this down to what I think you
are going to have to answer in order for us to get an authorization
bill is this. By the way, I support your submission. I think it is
pretty lean. I think you have done it well.
I think you need to answer each of those criticisms. The second you
have answered pretty well, in my view, over the last 4 years by the way
you have streamlined the Agency, by the way you have cut staff, by the
way you have made savings, by the way you have increased its
efficiency, and so on.
The one you are never going to be able to answer, I don't think,
you alone, is why not Wilmington, Delaware instead of Zaire, or
wherever.
The third one is what I want to focus on with you a little bit now,
and that is not just rhetorically but practically how does this
coordination occur? You obviously have these four broad objectives--
democracy, environment, population and health, and economic growth. But
one of the compelling arguments I think at least intellectually, I
believe, is that as our military presence in the world and as our need
for massive military establishments are growing and continue to grow as
they did during the decades of the 1970's and 1980's, as they taper off
and diminish some, it seems to me that the other element of our
projecting our strength, which is our foreign policy--and this is an
essential element of our foreign policy--becomes more important. But
how do you deal with the judgments you make?
It's like when I am at home. I get questions like you remember. You
used to have to answer a lot of these questions. You still do, I guess.
I mean questions such as how did you pick that country, why that place,
why that amount. Is it a totally internal judgment you make or run by
OMB? I think I know the answer but I think it is important that the
answer be on the record. Or, is it something that you actually sit down
and say look, we have been talking to the folks at State in the
Politico-Military Bureau over there, and we talked to them over at
Defense, and they are telling us that the situation is so unstable in--
and I won't pick a country because it will make news just picking a
country; someone will think I mean it--in the country of Xandu, if we
do not get in there and help them stabilize their grain crop, and if we
don't get in there and give them some additional assistance, then it is
going to deteriorate pretty quickly.
We cannot determine the outcome but we can tip the balance.
I will end by saying that you say you should propose and we should
dispose. I do not disagree with that theoretically. But you may recall
that John Ritch and I started the SEED Act. Remember that old deal? We
talked about it. That was a proposal that was ultimately picked up by
President Bush and the Freedom Support Act. But the purpose was
unabashed.
We sat there and said: Hey, look, we don't want our kids reading
about another Weimar Republic. As all these nations become independent
nations, we do not want to read about people carrying the equivalent of
wheelbarrows of deutschemarks to the bakery to get a half loaf of
bread. Democracies do not flourish where economies do not grow.
So, this was supposed to be a little bit of impact. It was not
going to determine the outcome but would have a little bit of impact.
That is a long, long preface to the question that sits in the
middle there. How do you make those judgments? How do you coordinate?
Make the case. Convince us that you actually do something other than
sitting down with your competent staff behind us and say I have an idea
today, so let's go to Zaire.
Mr. Atwood. Senator, I would be the last person to suggest that
Congress does not often inspire the executive branch to do what is
right. I must say that I am not disputing the fact that Congress on the
reorganization question has inspired the executive branch to look at
this issue, if you will, to keep an open mind but to do something about
it as well. Certainly in the case you talked about, the SEED Act
legislation, that has been the case. I think it was a good cooperative
relationship that finally worked.
We have to make it work and I think that is a good example of it.
But how do we make these judgments?
There are two ways to think about the resources that are available
for foreign affairs. Every one of us, no matter what we believe about
the President's request, thinks that there are too few resources. But
we are going to look at it very closely.
You could take those resources and spread them everywhere so that
every U.S. Ambassador, for example, has a little bit of resources to
try to fulfill American objectives in that particular country. You are
not going to accomplish a lot. You are going to make a lot of people
feel good, particularly, I suppose, our Ambassadors. But the question
is how do you concentrate those resources so they really do produce
results.
Senator Biden. With all due respect, that is not the question I am
asking. I am asking how you decide where to concentrate, not whether.
Who makes that decision? How do you arrive at that decision?
Mr. Atwood. What I am saying is that that second approach is the
approach we do take, which means there is a premium on deciding where.
The perspectives that are brought to bear on it are the security
perspective, the diplomatic perspective and the development perspective
with respect to our resources. We ask if this is where we have a
quality of partnership that will enable us to achieve results. We ask
if there is a need in the country. We ask if our programs are
performing in the country, and the State Department weighs in and says
we have a foreign policy interest in this country or we do not.
In terms of putting the actual program together, it comes from the
U.S. country itself, from the country team. The Ambassador signs off on
every strategy that is sent to Washington to implement our development
program in that country. It then goes to a regional bureau at State and
USAID and they work together, then upwards all the way to the
Secretary, with whom I work very closely.
I attend morning staff meetings with the Secretary of State. There
is a lot of coordination. Meetings occur at the USC, when things get to
be really hot, when we have to decide whether or not to cut off a
country, occur. We operate under law, so there are such countries.
I was just having a meeting in my office on the country of Niger,
which has basically fallen on the wrong side of our law with respect to
democracy since the recent election, which we did not consider free and
fair. What can we do there? Do we have to leave entirely or what does
the law allow us to do? That is another consideration that is brought
into play.
But there is a lot of coordination. Do we have arguments? Yes. Is
it important to have these three perspectives and maybe more--the
security perspective, the diplomacy perspective, and the development
perspective? I think it is extremely important before decisions are
finally made by the Secretary of State and/or the President.
Senator Biden. Thank you, Mr. Chairman.
Senator Hagel. Senator Biden, thank you.
Now the other distinguished Senator from the State of Minnesota,
Senator Grams.
Senator Grams. Thank you very much, Mr. Chairman.
Mt. Atwood, welcome.
Mr. Atwood. Thank you.
Senator Grams. I had a couple of questions I wanted to talk about
regarding AID and what is called economic growth and the investment in
that in other countries.
For Fiscal Year 1998, the budget for AID for Development
Assistance, and that is funding for what AID defines as economic growth
activities, totals about $508 million. But it represents about a 5
percent cut in real terms and continues a recent decline in funding for
these types of programs.
My question would be could you detail for me what economic growth
programs are being cut in this budget and how much funding will be
available specifically for activities that directly promote a strong
private sector in these developing countries.
Mr. Atwood. Yes, Senator. I am happy you asked because, very
frankly, over the last several years it is our economic growth budget
that seems to elicit too little interest up here or in the executive
branch and it gets squeezed. It gets squeezed by other priorities. It
has been squeezed by the commitment of this administration to increase
the population budget and the environment budget, and I would certainly
defend those kinds of judgments. But it gets squeezed by Congress when
they put in a large earmark for child survival programs and the like.
I think economic growth is an extremely important part of our
program.
I had a meeting with well known Harvard economist Jeff Sachs, who
says his view is that economic growth is the whole ball game, that if
you can get countries to straighten out their economic systems,
convince them to adopt market techniques and privatize their country,
you are going to see very strong economic growth. We have seen that in
a number of countries as a result of the work we have done along with
the World Bank and other development agencies as well.
We have seen the economic growth budget squeezed to the detriment
of our agriculture sector, as I said earlier, and certainly the State
of Minnesota is concerned about that, too. I attended a meeting
yesterday with many agribusinesses present, including Cargill. They are
asking for a $2 billion increase in our foreign aid budget to do this
kind of work.
The problem is that we are all trying to operate, both the
executive branch and the Congress, Democrats and Republicans, under a
new regime that is called balancing the budget by the year 2002.
Something has to go. Something gets squeezed.
I am making a special appeal this year that we be given what we
have been asking for for economic growth so that you do not once again
see us canceling out a part of our budget that really has a major
impact on our ability as Americans to export. We have seen an increase
in the last 5 years of close to $100 billion of exports to the
developing world. That is the result of previous investments that have
begun to pay off.
I think we have to continue to make those investments.
I believe very strongly, as do many conservatives up here, in
economic freedom. I believe that we should be helping these countries.
However, that does not mean just hearing their declaration that they
believe in the teachings of Adam Smith, but it is trying to help them
put in place a system that works. It is trying to put in place a rule
of law and a society that sustains economic growth, helping them to
privatize, helping their privatized companies to learn what it is like
to be an entrepreneur, and creating all of that environment that will
eventually have us getting out of the country and trade and investment
taking over.
Senator Grams. I know I might be putting you on the spot when I
asked you for the details of what programs were actually being cut and
you might not have them at your fingertips.
Mr. Atwood. Actually, we have asked for an increase in economic
growth this year.
Senator Grams. But I was wondering if you can give me kind of a
budget or a line item on the programs and where the cuts are being
made. Maybe you could submit those to us in writing.
Mr. Atwood. I will be happy to, Senator. Yes.
[The following material was subsequently supplied for the hearing
record by Mr. Atwood.]
ECONOMIC GROWTH
The proposed reduction, albeit a marginal one, in funding for
economic growth programs is the result of a difficult choice about the
best way to restore needed balance in USAID's overall sustainable
development program.
The combination of cuts, directives and earmarks in the FY 1997
Development Assistance appropriation caused a significant reduction in
funds available for other sustainable development programs, especially
those which support environmental efforts, support for democracy, and
expanded family planning. As a result, the Administration made a
judgment that despite only a modest proposed increase in DA, funding
for key programs cut in FY 1997 should be restored in FY 1998, while at
the same time maintaining adequate support for priority social programs
such as child survival and health. The result was a small reduction in
funding for economic growth.
Compared to the request of $508 million for economic growth in FY
1998, a level of $520 million is budgeted in FY 1997. Thus, the FY 1998
request for economic growth represents less than a 3 percent cut from
the current level. The small reduction affects primarily funds
available for strengthening of markets in developing countries and a
slightly lower level of support for children's basic education.
However, we have not reduced support for microenterprise programs,
aimed at expanding economic access and opportunity for the poor, and we
have significantly expanded economic growth-oriented assistance to
Africa (up 13 percent from FY 1997), in part to help enhance food
security and reduce the threat of famine in that region. Moreover, we
believe that achieving equitable and sustainable economic growth also
requires maintaining adequate levels of support for environmentally
sustainable use of resources, helping countries gain better control of
population growth and assisting with the creation of participatory
civil societies. We are convinced that the request we have presented
strikes the best balance among these various means of achieving
economic growth.
Senator Grams. Also, last September I did hold a hearing on
exactly what you were talking about with your economist from
Harvard. I believe you mentioned how he said we could make more
of these investments in certain areas of privatization.
We had a panel of experts also from across the political
spectrum of whom we asked the questions and all agreed
basically with what you have stated here, that the deciding
factor in propelling these developing countries toward long-
term, sustainable growth is economic growth activities.
Why, then, do we see a continuing decline, going back to
what you said, in funding for economic growth activities in
this latest budget but an increase in other areas of
Development Assistance which has not been proven, I would say,
to lead directly to increased prosperity? So, in other words,
we are cutting off the very stem that is going to provide long-
term growth and economic activity for the countries in
relationship to short-term needs.
Mr. Atwood. The other parts of our budget are also
important, I think.
Senator Grams. You mentioned environmental issues and child
care, and those are all important. But they really take away
from the ability for long-term.
Mr. Atwood. But if you look at economics as a human system
rather than just as sort of the institutional structures
necessary to achieve economic growth, if you have a society
that does not have a productive work force because it has
serious health problems or education problems, then you have a
society that cannot sustain economic growth.
If you have a natural resource base that is being ruined by
environmental decay, slash and burn techniques for agriculture
and the like, people being forced into cities where
infrastructure problems abound, and if you have a society that
cannot sustain the population growth, you can achieve a 4
percent economic growth in a country and see 3 percent
population growth, and all of that money is going into social
sector spending to try to take care of the new people who are
coming along. So, it all does relate. It is all interconnected.
The point that I think I would make to you, Senator, and I
am delighted you have raised this, is that we need balance if
we are going to approach this. This is not simply because we do
it all but because where we work, other countries follow. It is
when the United States does development work, other countries
look at the way we do it. If we deemphasize economic growth
activities, we are going to find that we will have the kind of
negative impact on what other people do that we do not want.
Senator Grams. Just finally, I have one more question, Mr.
Chairman.
When we talk about economic growth, I think there is a
broad definition, probably, of what economic growth is and what
programs would be helpful.
Using stricter criteria, the Congressional Research Service
reported last year--and this is in their report--they said only
13 percent of AID's Development Assistance funding was going
directly to promote economic growth.
I also was working last year with Senator Connie Mack to
include a provision in the Fiscal Year 1996 Foreign Operations
Appropriations bill that required AID to issue at that time, or
to issue an annual report on the prospects for economic growth
in countries that are receiving development aid. But the report
that has been released by AID was disappointing because it
simply was a compilation of statistics rather than what we
would consider an analysis of supporting your decisions or
AID's decisions to continue investing foreign aid in the
developing country.
So, the question, again, is if AID is truly committed to
the promotion of economic freedom, why is that not reflected in
its budget priorities and how could you assure Congress and the
American taxpayers that the foreign aid is going to countries
with real potential for economic growth? I mean, there is a
need out there that we cannot match--but the investments that
we do make that have the real potential for economic growth,
rather than ones whose governments insist on staying mired in
socialist economies and refuse to undertake the tough reforms
necessary to reach self-sufficiency.
When I go back home, one question people always ask is if
you would only cut foreign aid, we could balance the budget.
They know there is a lot of good foreign aid, but really they
want us to target that and make those dollars count.
Mr. Atwood. I believe that a very strong case could be made
that the increase in our export sector has really saved our
economy as compared to other economies. So, I could not agree
with you more.
The 13 percent figure that you cite for our Development
Assistance programs does not reflect the 32 percent of
development as-
sistance we record as economic growth. For FY 1997, this is
$520 million of a DA total of $1.63 billion and covers such
activities as basic and vocational education, agriculture and
private sector development in trade and investment, policy
reform, construction, transportation and energy, and power
development. Most of the money that we are spending in Eastern
Europe and the former Soviet Union is going for economic growth
activities--privatization and related kinds of activities.
I am not disagreeing with you. I think we should give you a
better report if you are not satisfied. I would be happy to
work with you on this to give you more information about what
it is we do and how we do it, and how, more importantly, we
leverage others to do what we think needs to be done.
Because of the size of our budget, we are not going to be
successful in going into a country and telling that country
they have to reform their economic system. We might be able to
take a sector, the agricultural sector, for example, and work
with the country on that. But we do work with the World Bank
and the IMF--which require, as you know, structural adjustment
programs of countries--to try to achieve some degree of synergy
in the approach that we take with that country, focusing on it
and trying to bring all of the weight of the international
community to bear.
To the extent that we do not have sufficient funds for
economic growth activities, we are going to be less successful
in that leveraging process.
So, I do agree with you. All I am saying to you is that
within the overall context of executive branch priorities, and
balancing the budget, we cannot ask for more. And Congressional
priorities, as is manifested in earmarks, has squeezed the
economic growth portion of our budget.
Senator Grams. That is why I would like to see the report.
Finally, when you talk about priorities, a lot of people
again will go back to the testimony that we had in our hearing
last year and others, that economic growth activities are some
of the most important you can invest in. Just to quote from
some of the numbers from the economic growth programs from the
AID budget, where the priorities have gone is, in 1995 it was
$725 million, it dropped to $561 million, in 1997 it dropped to
$520 million, and now we are down to $508 million. It seems
like the priorities are going into other programs and not into
these programs. That is why we would like to see some of those
numbers.
Mr. Atwood. I would just say one thing. Our budget has
dropped by about the same amount, too. But I appreciate your
interest in this and I could not agree with you more.
Senator Grams. Thank you, Mr. Atwood.
Thank you, Mr. Chairman.
Senator Hagel. Senator Grams, thank you.
Senator Biden.
Senator Biden. Thank you, Mr. Chairman. I do have some more
questions if the chairman will permit me.
One of the largest programs slated for an increase in the
foreign aid budget is the aid program for Russia and the New
Independent States. It increases from $625 million to $900
million. It also gets a new focus. The administration proposes
to shift the primary em-
phasis from technical assistance to a new program dubbed
Partnership for Freedom.
From the initial budget documents I have looked at through
my staff that we have received, it is, quite frankly, difficult
for me to determine whether this is a new wrapping on an
existing program or it's a new program. As of a staff briefing
a few days ago, it had not been determined, to the best of my
knowledge, relayed by staff, whether this was going to be AID
or State, which has been the lead coordinator on aid to Russia,
while AID has managed the programs.
Who will be managing the program? I have some questions,
specific questions, but I will not go to them yet. Just talk to
me about that a little bit, Brian. Is this really something
new? I mean, it looks like it's just a new wrap to me, and who
is in charge?
Mr. Atwood. I appreciate your asking the question. I have
been anticipating I would get the question. I think it is an
extremely important initiative on the part of the
administration.
What we have understood all along here is that our
timeframe for working in the former Soviet Union was going to
be limited. We don't need to be there for 30 years because the
human capacity already exists. The people are well educated. We
need to transform those societies, not simply develop them as
we do in the traditional sense.
Senator Biden. That has basically happened with the SEED
and the Freedom Support Acts in Estonia and it looks like the
Czech Republic and Slovenia.
Mr. Atwood. That's right.
Senator Biden. Those are actually working.
Mr. Atwood. Those are places that we are actually leaving.
I might say that it won't be long before we are able to leave
the Central European countries. They are actively talking to
the European Union about joining the European Union, and we
believe that those economies have stabilized and that they can
be sustained.
So, what we are talking about in the former Soviet Union is
the need to get to that point. What the Partnership for Freedom
underscores more than anything else is our intention to create
a partnership that will endure after our aid program is
complete.
The technical assistance aspect of it continues to be
important because aspects of creating institutions that will
survive still haven't been complete. We are not talking about a
budget category. Phrases like Partnership for Freedom are as
much political and diplomatic as they are a budget category. We
are trying to send a message to the people of Russia and to the
people of other states in the former Soviet Union that we
believe that this relationship is going to evolve into a real
partnership that is founded on trade and investment, cultural
exchanges, and the things that normal countries can do.
Senator Biden. Kind of like Supplemental Social Security.
It's easier to swallow.
Mr. Atwood. I don't know the analogy.
Senator Biden. That is what I meant by a new wrapping.
Supplemental Social Security is welfare. But to provide dignity
for people who are on it, we don't call it welfare. We call it
Supplemental Social Security or SSI. It's welfare. It's nothing
that anybody paid into. I think we should do it.
Is that a State Department way, coming from an AID guy,
telling me in ``State Departmentese'' that this is a new
wrapping? What I want to know is, is this a new wrapping.
Now I have no problem with a new wrapping. I am just trying
to figure it out. I am trying to figure out what it is.
Mr. Atwood. I think that you cannot obviously give us the
money on the basis of the wrapping. I understand that.
Senator Biden. Oh, sure we can, by the way, because I think
the existing program is a pretty good program. I mean that
sincerely.
I think the program is working well. I think the evidence
is the fact the skeptics, who when I drafted the first SEED
legislation, said that this would go on forever, for 30 years.
Here we are, with the Czech Republic and Slovenia and the last
year with Estonia. Actually it did a job. It is not the only
reason these countries are beginning to make it, but it helped,
and we are getting out.
So, I guess the problem I have, Brian, is I think there is
so much hocus pocus--no, wrong phrase. There is not enough
straight talk about these programs. So, when many people,
particularly people without institutional memories, or many of
us with institutional memories hear about new programs with
different names, and we look at them, examine them, and cannot
see any substantive difference other than more money, I would
rather somebody come and say hey, look, here is the deal. This
is an evolving relationship. We are changing the name because
it is softer to the ears of our Russian friends and we are
going to put more money into it because we have made this much
progress so far and we think more is needed now.
But that is talking like a Judiciary chairman or ranking
member and not a foreign policy type. But we get up here. With
all due respect, but no wonder Senator Grams and I get
questions like hey, why don't we just cut foreign aid. If we
cut foreign aid, we cut 1 percent of our budget. It would not
balance anything. But no one believes that because they do not
understand all of this.
So, what I am trying to get you to do is to take off your
academic/foreign policy type hat and be a plain, old staffer
answering the question of a constituent who, when he writes to
me, says Biden, why did you vote for another $300 million for a
thing called--what is it called----
Mr. Atwood. Partnership for Freedom.
Senator Biden. [continuing]. yes, Partnership for Freedom.
Answer that plain, old question.
As I said, I'm with you. I think you are right. But tell me
why. Tell our colleagues why. Put into the record why.
Mr. Atwood. Let me try again.
When we get involved in any country around the world, our
ultimate goal is to leave because we want to be able to say
that we helped them sustain an economic and political system
that will last. What we are doing here with Partnership for
Freedom is being very explicit about what our intention is. In
this case we are going, in the next few years, to complete the
task of providing technical assistance so that the institutions
can be created to support a functioning market and democracy.
We are starting now, if you give us the resources, to promote
business trade and investment, and to mobilize capital so that
those kinds of relationships take over.
Senator Biden. Can you give me an example of how? In other
words, what you have said to me, as I understand it, translated
into my simple jargon, is that you take part of the money that
you are going to get and you're going to continue the existing
initiatives that were underway, which are basically technical
assistance, which range across everything from helping them to
set up a stock exchange to determining whether or not a certain
industry is going to get a boost, help in terms of
administrative know-how.
Now you are going to do something else. What are some of
the ``something else'' you are going to do in terms of this
additional $500 million total? You may not be prepared to do
this now.
Mr. Atwood. No, I would like to do it.
Senator Biden. Good.
Mr. Atwood. Part of it is to create an Export Import Bank
credit facility that will help facilitate relationships between
small businesses in our country and small businesses in Russia,
for example, or other parts of the former Soviet Union.
Senator Biden. Because, because they do not know how to do
that very well--right?
Mr. Atwood. Because their companies that have been
privatized need to be restructured and we feel that a
partnership with U.S. business, if we can facilitate that
through the Eximbank, would accomplish that purpose.
Senator Biden. To put it another way, if they do not
partner up with somebody, they are not going to be able to do
it because they don't know how to do it.
Mr. Atwood. Absolutely. That is exactly right.
We are going to be endowing some of the NGO's that we have
been working with in the past--the Eurasia Foundation and the
Inter-News, for example, which has done so much work with us in
that region--so that they can continue to work after our aid
program is over.
We are going to try to help create those kinds of linkages
between ordinary American institutions and ordinary Russian
institutions.
I think that the word ``partnership'' is meant to mean
something. It isn't just a diplomatic phrase. It is designed to
establish the linkages that we will need to feel confidence in
the relationship at the non-governmental level well into the
future.
Senator Biden. My time is up. But one of the things I find
when I get asked why, because it became a big issue, why I
authored the SEED legislation which is giving away all of this
money that should have gone to Seaford, which should have
spilled over into Selbyville and over into Salisbury, the
Senator from Maryland's home town, was this. I said hey, look,
they don't know how to set up a stock exchange. So, we are
spending money to teach them how to trade, how to actually
generate capital. They say what do you mean, do you mean
actually teach?
Yes. Here is what we are doing. We are actually teaching.
With all due respect, I think in order to win this debate--
and you have a really good person behind you in Jill Buckley,
whom I know from another life--you have a campaign on your
hands. I respectfully suggest that you had better start
translating this stuff from NGO's, whatever that means to most
people's minds--I know what it means, but whatever it means to
them--into hey, look, this is common sense. What we are doing
is these small businesses are going to go under unless they
partner with us.
They understand. They understand in my State that the small
boutique in Laurel, Delaware goes under unless the Chamber of
Commerce has a little group out here. They have people come.
They teach them how to keep their books.
Anyway, thank you.
Mr. Atwood. I could not agree more, Senator. We will try.
Senator Biden. Give it a shot.
Mr. Atwood. Yes.
Senator Hagel. Senator, thank you.
Senator Sarbanes.
Senator Sarbanes. I thank you very much, Mr. Chairman.
I'd like to draw you out first on this move into the new
Ronald Reagan office building. I take it that will enable AID
to consolidate bringing all of its activities into one
location, is that right?
Mr. Atwood. That's right, Senator.
Senator Sarbanes. How many locations have you now?
Mr. Atwood. We have 11 locations now.
Senator Sarbanes. How many?
Mr. Atwood. It's 11. They're scattered everywhere--Rosslyn,
Virginia, Washington, DC. I don't think we have any in
Maryland, but maybe. It is a tremendous saving to bring
everybody together in one place--with less space, by the way,
than they have now, and they are complaining about that. But
that is what we have to do.
Senator Sarbanes. Will that then enable the State
Department to consolidate into the State Department building?
How does that work?
Mr. Atwood. About a third of our people are in the old
State Department building and some parts of the new State
Department building. We will have to vacate that space anyway
because the old building is 59 years old and has not had any
repair work done on it for 25 years. So, we would have had to
leave for 6 months to a year, which would have cost us a lot of
money anyway, which is why we have been working with State over
the last 5 or 6 years on a consolidation plan that would enable
State Department to close some of its annexes, which it has
about 15 or 16 of, and move into the State Department building.
Senator Sarbanes. Let me get this straight. They were going
to have to redo the building at the State Department in any
event, is that correct?
Mr. Atwood. That's right, Senator.
Senator Sarbanes. If you weren't going into the new
building, you would have had to move out of the State
Department building and lease space somewhere? Is that correct?
Mr. Atwood. That's right--at considerable cost. That's
right.
Senator Sarbanes. Now you're going into the Ronald Reagan
building and bringing in all of your outlying activity. Will
everything be there then or will you still have outlying
activity?
Mr. Atwood. Everything will be there, Senator.
Senator Sarbanes. OK. Now once the State Department
remodels or refurbishes the old building, they will then
consolidate into it their activities that they now have out in
annexes, is that correct? Is that leased space in the annexes?
Mr. Atwood. It's leased space from commercial firms, as
opposed to being in a Government building where your rental
arrangements are more predictable over a long period of time.
Senator Sarbanes. Well, shouldn't the cost comparison, the
money comparisons that are made about your move into the Ronald
Reagan building also then encompass the savings which the State
Department will realize by being able to consolidate into the
State Department building their activities that are in leased
space which will be made possible by the fact that you are
moving out and going into the Ronald Reagan building?
Mr. Atwood. Yes, they should, and we do have charts to show
you those figures. If you'd like, we can submit those for the
record.
Senator Sarbanes. I think it would be helpful if you did
that.
[The following material was subsequently supplied for the
hearing record by Mr. Atwood.]
MOVE TO RONALD REAGAN FEDERAL BUILDING
The decision to consolidate USAID in the Ronald Reagan Federal
Building will free up about 390,000 square feet of office space for the
Department's use. It will also provide the Department of State with
other considerable benefits, including the elimination of the need for
a large amount of swing space, reduction in the number of multiple
moves by Department offices and bureaus, the reduction in the number of
State, USAID, and ACDA annexes from 43 to 28, and lower communications,
transportation and security costs due to consolidation of personnel.
There will also be improvements in productivity as a result of the
Departments' consolidation. The Department estimates that they will
save at least $15 million in one time costs associated with leases for
swing space and double moves. In addition, they anticipate significant
reductions in the roughly $6 million annual cost of shuttle bus service
and lost productivity caused by employees being bussed from one
building to another for meetings.
Estimates prepared last summer showed that the cost to the taxpayer
of canceling USAID's move would be about $151.8 million. This was made
up of $96.2 million in General Services Administration costs, $12.3
million in Department of State costs, and $43.3 million in USAID costs.
The Department estimates that if the decision to move USAID to the
Ronald Reagan Federal Building were reversed at this time, USAID to
remain in Department of State space, it would cost them about $38
million - more than triple the estimate provided last summer. The prior
cost estimates for GSA and USAID would also be much higher if the
decision were reversed at this late date.
Senator Sarbanes. I take it, then, if you calculate all of
those costs, both the costs that you save by moving into one
location, the costs the State Department saves by bringing its
activities into the State Department building, the costs that
AID saves by not going out into a leased space while the
building is being refurbished, all of that added up together
ends up, just from a dollar point of view, representing a
saving--is that correct?
Mr. Atwood. It represents a significant saving to the
American taxpayer. That's right, Senator.
Senator Sarbanes. Well, I think it is important to get all
of that on the record because I don't think it is very clear. I
expect at the time that you move in there will be some kind of
story in the paper sort of making the point that AID is going
into this new Ronald Reagan building without analyzing all of
these cost factors which, in fact, just simply from a dollar
point of view, let alone from, I take it, the efficiencies you
think you will achieve by having everybody in the same place,
but just from a dollar point of view makes it a wise move.
Mr. Atwood. I think so, Senator. We have had a bit of a
problem. We have had the GAO looking at all of our figures.
They understand, of course, that when you are talking about
speculation--in other words, if we didn't move into the new
building and we had to move out of the State Department
building and into new space, or if we took everybody and tried
to find space that was cheaper than the new building, what
would that space cost, the problem is that it is all at
commercial rates and we would have to negotiate those rates. We
would get ourselves into a difficult negotiating position if we
made public what we thought those costs were going to be.
But I think, even despite all of that, GAO has come down on
our side and said this is going to save the taxpayers a great
deal of money to do this.
Senator Biden. Senator, I don't think they will spend much
time on it. They will be amused by the fact that an AID
building is called the Ronald Reagan building. That's a little
bit like having an annex to the Pentagon named the George
McGovern annex.
Mr. Atwood. I would like to have the USAID budget that
Ronald Reagan had when he was President. I can tell you.
Senator Sarbanes. Actually, he had a pretty good budget.
Mr. Atwood. Yes, he did.
Senator Sarbanes. And the State Department also had a
pretty good budget, because I remember Secretary Shultz, when
he finally left, expressed some appreciation, at least
privately, to the Members of the Congress for the support that
we gave him in the budget so that he could meet his
responsibilities.
Let me just turn to the Mideast for a moment. The peace
process continues to move forward, albeit with some
difficulties. But I take it that within the administration
there is a commitment to the notion that the U.S. assistance in
that area is important in helping the peace process along.
Would that be correct?
Mr. Atwood. Absolutely, Senator. We have expanded our
activities. As you know, we are working in the West Bank and
Gaza. I want to say one thing.
I feel very, very proud of the contribution that USAID made
to the resolution of the problem in Hebron. It was a USAID
engineer who went in and offered some suggestions as to how to
build the road that goes through the center of Hebron. It was a
crucial aspect of that agreement in the last minutes. We
offered some proposals for changing that road that we're
working on now that I think was crucial in reaching the
agreement.
Senator Sarbanes. Do you think we are sufficiently
addressing Jordan's needs given their importance in the peace
process?
Mr. Atwood. Well, I think it is an extremely important
country. We have had a program there for some years, in Jordan.
Whether we are adequately addressing their needs I guess I
would not want to speculate about. I think that our request for
resources for Jordan is an adequate one and I would prefer not
to speculate about whether or not King Hussein agrees.
Senator Sarbanes. The one other thing I wanted to touch on
is this. We have certain programs, international development
programs where we have been cooperating with Israel and they
have been active I think both in developing countries and in
the newly developing states in Eastern Europe. There is some
view that their own experience in development plus the fact
that, at least with Eastern Europe and the former states of the
Soviet Union, they have a number of recent immigrants who can
handle the languages or who are experts on the country and so
forth, helps them here. How are we doing on those shared
programs?
In fact, I guess the real thrust of my question is this.
The Congress indicated that we wanted those funded at a certain
level and I think they got funded at a somewhat lesser level in
the past fiscal year.
Mr. Atwood. We work very closely with the Israelis on these
programs. They have some of the best agricultural development
specialists and water specialists in the world. You are right.
They do have the facility to actually communicate in the former
Soviet Union. So, that is also very useful.
I do not think that the Israeli Government would suggest to
you that some of the minor cutbacks were all that significant.
There was a slight problem with the pipeline. So, we are
working with them to make sure that they are efficiently
getting all of the resources we provide out. But I think it has
been a good relationship and we will continue to work with them
in the Middle East and in the former Soviet Union.
I think our 1997 money was $8 million for that program. We
believe it helps us achieve results.
Senator Sarbanes. I take it you are going to do in the ASHA
program?
Mr. Atwood. Not if what I hear up here is accurate. I think
the ASHA program continues to be well supported by Members of
Congress, Senator.
We have asked for $5 million this year for FY 1998. We are
fulfilling our commitment to the Congress that we made last
year to combine that with $9.6 million that we still have
available from 1997 funds and do a major competition for ASHA
grants as soon as the fiscal year begins.
Senator Sarbanes. Well, there is a perception that we have
gotten a lot of benefit out of that program. I know you have
difficulties on occasion because I guess you are put to the
test amongst many, many institutions who are seeking
assistance. But I do think, as you well know, there is
generally the perception that it has worked pretty well.
My time is up. I have a couple of additional questions, but
I will defer now to my colleagues.
Senator Hagel. Mr. Atwood, especially in light of having
both Senators Biden and Sarbanes here, I would like to talk a
little bit about your thoughts on reorganization of AID.
Obviously, I have very limited institutional history of this
organization. But I do know a little bit just in reading and
trying to bring myself up to date and it appears that over the
last couple of years you have been, maybe ``strident'' is too
over-stated, but at least from what I have read, a critic of
reorganization, folding AID into State.
I have before me various quotes that are attributed to you
when you were advising then-Governor Bill Clinton on what we
should do on AID, not particularly flattering to AID
management. But in light of Senator Biden's and Chairman Helms'
conversations with Secretary Albright and some of my
conversations with her, I would be very interested in knowing
where are we with you on reorganization. What are your
thoughts?
Mr. Atwood. The obvious answer is to say I have an open
mind, I guess, Senator. But I believe very strongly that there
are areas that need to be dealt with in terms of overlap and
duplication, not as many as one would think. I believe very
strongly that we should continue to pursue rationalizing our
administrative support functions.
Again, I think that there is not as much saving as some
people have suggested in doing that. I believe that we should
find ways to improve coordination and efficiency, and if that
means, in the case of USAID, putting USAID into the State
Department more explicitly than it already is, then I certainly
think that there are some creative ways in which that could be
done, I have actually had some discussions with Senator Helms'
staff about that.
I am trying to be as forthcoming as possible because I do
believe that we can create a more efficient operation. But I do
believe that every one of the foreign affairs agencies has to
continue to reform itself from within so that we can find the
cost savings that are necessary there and stop doing some of
the things that were necessary during the cold war.
I certainly am not qualified to talk about the other
agencies, USIA and ACDA. I know they perform important
functions.
On USAID, from my perspective, as I have said before and
I've said it to the Secretary of State--and I say this not from
the point of view of trying to protect turf by any means--I
think there are three factors that are important if we are
going to have a development program that works. One is that we
need to protect our long-term strategic investments. You come
from business, Senator, and you know that when there are tough
times, the research budget of a business is the first to go. It
is very important for us to be able to maintain our investments
in the future for all of the reasons we have been discussing
here today.
So, I think the way the law is written on the books now, to
assure that development assistance is handled the way the
Congress wants it handled and the way we have agreed since the
Marshall Plan it should be handled, in a separate but supported
way, I think those laws should be maintained.
The second is management tools. The most modern thinking in
the corporate world today is if you have a unique function and
a unique mission that requires special management tools, then
the idea is not to merge into bigger and better things, but it
is to spin off and make sure that there is a close coordination
and relationship with the mother company, if you will.
That is the way it has been. But I believe that you can
preserve those management tools by having an even tighter
relationship between USAID and State. I mention one suggestion
is having a solid line relationship with the Secretary of
State. The Secretary of State is today not theoretically
directly responsible for USAID programs. I am, although she is
responsible for offering me all of the foreign policy guidance
that should exist.
I personally believe that I have always worked for the
Secretary of State. But I think we need to formalize that. I
have no objections to doing that.
The third point is if we are going to be successful in
working with other donor organizations around the world, the 21
bilateral donors, the World Bank, UNDP, and others, we need to
have a development Agency that talks to those people in
development terms. We need not downgrade. We already have a
harder time now going into international meetings in light of
the fact that we have fallen to the number 4 place in the
overall amount of resources we offer to development assistance.
I deal for the most part with ministers for development and
cooperation overseas. I am an ``administrator.'' Nobody knows
what that is overseas, but they accept the fact that USAID has
been in this business for so long that we are respected and
they ignore my title. But I don't think we should downgrade the
mission. We should find ways to see if we can enhance it in
order to make us more effective in leveraging.
Those are the three issues I have discussed with the
Secretary. I have discussed it with the President and with the
Vice President. Beyond that, I am not going to fall on my sword
over changes in the relationships that we have within the
executive branch.
Senator Hagel. Do you believe that your title might be more
meaningful if you were addressed as ``Mr. Secretary,'' or, for
example, ``Under Secretary of State'' for something?
Mr. Atwood. No. I have had two occasions when I was an
under secretary and an assistant secretary, and I guess that is
the way people address me. But when you come from a poor blue
collar family in a small town, it doesn't make a lot of
difference what you're called. I've been called a lot of
things.
Senator Biden. When they say ``Secretary,'' they think it
means you work for the boss.
Mr. Atwood. That's right. Exactly.
Senator Hagel. Well, let me see if I can get a little
closer to this.
Your thoughts are not particularly positive about rolling
AID into State, reporting directly to the Secretary of State as
an under secretary? Yes? No? Maybe?
Mr. Atwood. I think, Senator, beyond what I have said, I am
already on dangerous ground. I think that my role in this whole
process is to provide information to the President, to the
Secretary of State, to provide my advice, I should say, as to
how this could best be done. If I start getting into those
kinds of specifics, I am really going to be in trouble, if you
don't mind, Senator.
Senator Hagel. Well, you just blame it on me, Mr. Atwood. I
know my colleagues won't mind.
Why don't I at this point, if it is all right with my
colleagues, let you all pick up if you want to pursue this at
all.
Senator Biden. There is an old joke, Mr. Chairman, about
the two brothers. One brother had not gone on vacation for 15
years. He leaves. He goes to Hawaii and leaves his cat with his
other brother. He loves his cat.
He gets into the hotel room in Hawaii and the brother calls
and says John, your cat is dead. John says my cat's dead? Why
wouldn't you call me and tell me your cat got out of the house,
and I couldn't find him, and then the next day call me and say
we think the neighbors saw it, and the next day call me and say
the cat's on the roof, and the next day say the fire department
is here to get it, and when they went up and got it the cat
fell and broke its neck? He said why wouldn't you do that
instead of ruining my whole vacation.
So, about 5 years later he goes on a second vacation.
John's brother calls and says John, mom's on the roof.
Well, I'm here to tell you, Brian, AID is on the roof. AID
is on that roof. I think it is pretty important to figure out
sooner than later how you all figure is the best way to make it
work rather than for us to come to you and tell you. Unless I
am mistaken, and I very well may be, as I kind of read the tea
leaves around here, this is a different body, a little bit
different than before, and I think there may be enough votes.
Also, as you well know, former Secretaries of State have not
been averse or opposed to the notion of you coming within their
gambit more directly.
I mean it sincerely when I say this. No one knows it better
than you. No one knows AID better than you. I really would
respectfully suggest that, as quickly as you can, privately,
you lay out the best organizational plan you think that can
maintain the functions, the prominence, and the standing and
stature of AID so that you are not subsumed.
My colleagues' guess is probably better than mind. But my
guess is that that is the direction in which this thing is
moving.
Now I have one specific question. There is a new program, a
new budget request providing for a new loan program to be
administered by AID which is designed to provide capital in
countries which have problems getting access to capital. This
is as I understand it. The idea is to use $10 million in credit
to leverage up to $67 million in loans and guarantees.
Now I will be blunt with you. My first reaction is this is
a bad idea. If a country is credit worthy, then, given the
great explosion and availability of credit out there in the
world markets, it is going to be able to get access to that
capital. If it is not credit worthy, then we may be taking an
undue risk, and the subsidy cost of the loan will rise. This is
because under the 1990 Credit Reform Act, the cost of risks of
a loan must be honestly scored, which was not the practice
before 1990.
Moreover, in my view--and, again, I am prepared to have my
mind changed on this--in my view, this ought to be a function
of international financial institutions, particularly IDA,
which is the soft loan or concessional loan window of the World
Bank.
Finally, I think AID has had enough problems that it does
not need to take on the burden of managing another loan
portfolio.
That is a long background for a short question. Why do you
think this new authority is necessary and why would you want
it, given the down sides?
Mr. Atwood. Well, we have asked for a small amount of
money, Senator, $10 million, which we think we can leverage
into $67 million of capital. I agree with you we should not be
doing this in poor countries that do not have, for example, the
banking infrastructure that we can work with to make this work.
But there are some countries we work in, like South Africa,
where we have a first world economy and a Third World society
as well, where the banking structure is adequate. Here we can
go in and work with the banks to leverage with our backing the
money necessary to do things that are important, that are
developmentally sound, and that are credit worthy.
Senator Biden. But, Brian, why isn't this able to be done
in--is there some unique role that this credit window will fill
that existing institutional windows do not fill? Or is it just
immediacy of access, decisionmaking, able to be facilitated?
Why?
Mr. Atwood. The fact of the matter is that our USAID
missions abroad are there, and in larger numbers, I might add,
than any other development Agency, because we have been able to
take advantage of targets of opportunity.
We can see what needs to be done, and if we have the
flexibility of being able to work this so that we can develop a
public/private partnership in a country to get the job done,
then I think we are going to be enhancing our capacity to
achieve results in our own development program.
We would use this for developmentally sound and credit
worthy projects. For example, this enhanced credit authority
may be an appropriate tool to finance a municipal bond guaranty
program for infrastructure projects such as the one I saw in
Indonesia, where we are trying to help clean up neighborhoods,
and in urban environmental kinds of programs. Really, if you
can leverage $1 million and turn it into $10 million, you are
going to be able to achieve that much more by working off of
the local economy to the extent it exists.
We would like to ask you to give us a shot at trying this.
The previous criticism was that we couldn't manage credit
programs adequately. The Credit Reform Act was subsequently
passed by the Congress and we fully comply with the Credit
Reform Act. We are a lot more conservative about how we would
use this kind of thing. We would use it in countries that are
credit worthy, like the Indonesians and the South Africans. We
would not use it in the poorest countries.
But given the cutback in our own budget, we think it is
important for us to have this additional capacity so that we
can get more done with the fewer dollars that we have.
Senator Biden. Well, as I said, I have an open mind. I find
it almost counter intuitive in that, as we are trying to, or at
least as I think we should be trying to streamline, to limit
duplication in functions, this kind of goes in the wrong
direction. But I am not a slave to symmetry here, that it has
to balance. But I find it difficult.
I will not pursue my last question except in writing, Mr.
Chairman, because I have kept everybody too long. But I would
like to have a chance to discuss something with you. I will
submit it in writing, just so your staff has something to do. I
know they have nothing to do except answer these questions and
that they would be disappointed if they got out of here without
having to answer anything.
I think one of the things that we have done is we have
tended to micro manage projects. There is the ability of
staffers and individuals to put holds on initiative you have
and so on. I have a series of questions in which I would like
you to estimate--and I would like you to make a very serious
attempt to do this; I'm sure you will--how many man-hours are
consumed when you find yourself having to deal with the
notification process and the responses to it. It seems to me as
we are trying to clean up--``clean up'' is the wrong word--
trying to consolidate functions of our foreign policy
establishment that we should play a little piece of that, too.
With permission of the chairman, I would like to submit to
you several questions in writing. That is what we are about and
I will not take the time to go through this here.
Thank you.
Mr. Atwood. Thank you, Senator.
Senator Hagel. Thank you, Senator.
Senator Sarbanes.
Senator Sarbanes. I think before this hearing ends I just
ought to register this observation.
I think if we are going to be committed to a goal of
providing sustainable development and perceive that as in our
interest, we have to be very careful about what the
institutional arrangements are that we establish within our
foreign policy structure in order to do that.
I, for one, feel quite strongly that simply to merge AID
into the State Department would be to lose sight of that
objective. I think it would be downgraded. That is one of the
reasons why AID is separate. That is why most previous studies
have recommended that.
Now the fact of the matter is, my perception is that AID
has come much further in terms of improving its administration
and effecting its bureaucracy than the State Department has.
Senator Biden. Yes, it has.
Senator Sarbanes. I hardly can sit here and sort of see the
State Department as a paragon of how the bureaucracy ought to
work and, therefore, AID ought to be consolidated into it. That
is not my perception. All these former Secretaries of State,
after they are no longer Secretary of State, say this is how it
ought to be structured. But they never said it when they were
Secretary of State I have to take that kind of advice with a
couple of aspirin.
You wonder if it was such a good thing, why didn't they do
it when they were there in the position to do it. In fact, not
only did they not do it, a lot of them had statements directly
to the contrary on the record.
Now I think this is an important issue. I think so for two
reasons. One, I think that there are a lot of people who say we
agree with that substantive goal and that's what we want to
achieve. But then they fall into sort of doing institutional
arrangements which would run counter to the substantive goal.
Second, I am not for spending a lot of time on
institutional arrangements. I am willing to do things that
appear to be obvious on their face that ought to be done. But
if there is some kind of close call to it, we ought to get on
about the substantive work.
I mean, there are health programs out there that need to be
done. There are agricultural programs that need to be done.
There is micro-enterprise that needs to be done. There is small
business and democracy building that needs to be done. This is
a real challenge right now, and we have a real opportunity.
One of the things that I have the greatest concern about is
that history will look back on this period and say hey, you had
a real opportunity back then when the Soviet Union imploded and
the cold war came to an end to take the whole world to a
different level in terms of its commitment to peace and
prosperity, and that opportunity was lost. You failed to take
advantage of it.
I think to take advantage of it we have to come to grips
with some of these substantive problems.
My own view is that you might have been up on the roof 4
years ago, but, in reality, you have gotten down off the roof
if someone would just stop and look at what has been done in
AID. Now if they continue to operate under the old perceptions,
then there is a problem, obviously. There was a problem. I
think you faced a very tough task when you took over at AID, a
real challenge. As I quoted earlier from Chairman Gilman over
on the House side, I think you have revived an Agency that was
in critical condition, and that is no small achievement. It
speaks well for what is being accomplished and I think offers a
lot of hope for what can be accomplished.
So, I hope, as we deal with the Agency and address some of
these problems, that we will be sensitive to what has been
done, to what your mission is, to the importance of your
mission and the need to keep that, I think, uppermost in our
minds as we address some of these organizational questions.
Mr. Atwood. Senator, I appreciate those sentiments. All I
can say to you is that I have absolute confidence that what we
propose along these lines is going to make sense--so long as we
do not have a rush to judgment on all of this.
I realize the pressures, Senator Biden. But we are talking
about something that is going to have to survive well into the
next century, something that is going to have to respond to the
kinds of threats that face our Nation. These are very large
questions. These are not simply organizational box questions.
I feel that I could stand here today and justify the
current relationship. I have tried to describe it. I think
there is a great deal of coordination. I certainly would not do
anything that was contrary to the foreign policy of the United
States, nor would our Agency.
But the fact of the matter is that there are some pieces of
legislation on the books that have grown moribund. The IDCA law
is one.
I do think that in the long run--and I have said this
publicly--we have a Secretary of State who really does
appreciate the development mission. She understands, having
been U.N. Ambassador, that development is a large part of the
international dialog between us and those four out of five
people who live in the developing world. It is a huge part of
our foreign policy agenda.
So, I have absolute confidence that this is going to come
out right, that it should be subjected to a rational process
inside the executive branch and certainly to consultations with
Capital Hill to make it come out right.
Senator Sarbanes. Well, the reorganization within the
military which finally took form in the Goldwater-Nunn
legislation, took an extended period of time, was thoroughly
vetted within the executive branch, with a lot of interaction
with the Congress and in the end represented the considered
judgment of both branches of the Government. I am frank to tell
you that I do not think in the foreign policy/national security
field the Congress should seek to impose on the executive
branch what the structure ought to be. The effort should be to
work with them to evolve a structure in which both branches
agree.
Obviously the executive has a heavy investment in it. The
powers given to the President under our Constitution in the
foreign policy field have significantly greater discretion to
them than in the domestic field. It would be my hope that we
would be able to work with the administration in a way that we
can evolve something that everyone looks at and sort of says
yes, that makes sense.
Senator Biden. Will the Senator yield on that point?
I hope he did not misunderstand the point I was making--not
whether the cat should be on the roof or not. I am suggesting
to you that the sense of urgency within the administration of
the need to generate a position as to how, in what form, any
reorganization of the foreign policy establishment should take
should be heightened. This is because there is a bit of a
problem up here. There is a bit of a problem.
Now Senator Sarbanes and I are willing to have the State
Department merge into AID. But we are among the few who are
going to do that.
I may be wrong about this, but I just think until these
last 2 months, I have not gotten a sense that the
administration has felt a sense of urgency to undertake a
serious study and recommendation relative to how to deal with
this.
For example, were the administration to say--and I am not
suggesting this--that we put together a commission of leading
people from around the country and over the next 8 months we
are going to be looking at this subject, and we will have a
tentative draft on what approaches we think we should take by
the end of this year, that would calm a lot of people down. The
feeling--I think wrongly, but the feeling is--that there is no
intention on the part of the administration to move in any way
toward reorganization on the one hand and, on the other hand,
that Senator Helms has a single view of slash and burn, just
eliminate. That is the competing dialog right now.
All I am suggesting to you is the way to get ahead of that
curve is for the administration to start to lay out the four
corners of the debate, at least; at least set out the
parameters in which they think reorganization should take
place--if it should.
I am fearful that if you do not, we will find a lot of
other things hinging on whether or not reorganization is a
serious undertaking. I know others would maybe reject this
notion. But I think everything from the Chemical Weapons
Convention to your budget will be impacted upon by this larger
debate--or smaller, depending on your perspective.
That is all I was suggesting to you. I am not being
critical because I think everything the Senator said about your
leadership of this Agency is absolutely accurate. I think it is
universally recognized. But it is almost ironically--well, you
understand what I mean.
I'm not asking you to agree with me, but I just want you to
understand what I am saying.
Mr. Atwood. I understand. I do believe that we are in a new
era of cooperation and consultation on these issues. I don't
believe, based on my discussions with Senator Helms' staff and
with Senator Hagel, that we want to get ourselves into the kind
of confrontation that we got into before.
I said at the outset that I hope this committee can pass an
authorization bill because it is important for this committee
to be in the game on foreign policy issues with a bill that the
President won't have to veto. I think this is an area for
cooperation.
I do not believe we should do anything foolish, obviously.
I know you believe that and so does Senator Helms. But
everybody has a different perspective and to debate these
issues in a legislative forum is different from debating them
within an executive branch forum where you are thinking about
organization, how to get the job done, and what missions are
important for you to do.
So, all I have asked is that people here do not rush to
judgment, that you give us a little time to work these issues
through.
Senator Hagel. Senator, thank you.
Let me make one overview kind of statement, Mr. Atwood, on
this and then we will move on to a couple of other areas and
get this thing tied up.
I think what Senator Biden is saying is exactly right. I
think Senator Sarbanes' point about a unique opportunity, of
which you and I spoke when we met initially, is exactly right.
I think this country has a great opportunity to move into the
next century. Foreign policy is going to play a tremendous role
in that, crafting a sense of purpose, and that should lead, if
we do this right, if we are bold and we take the initiative, to
a really genuine lasting peace and prosperity for many corners
of the world. What you have been about, what your Agency has
been about over the years is just about that, and we are aware
of it.
One last point on that. You heard what Senator Grams said,
and I think Senator Grams is rather typical in his
representation of what he gets from his people back home. I get
a certain amount of that and I suspect every Senator does: What
are you doing, spending this money on foreign policy? It is a
confusing issue. It is an issue that does not link directly
with most people, although it should. It is probably the
easiest, most inter-related thing we can do. My farmers in
Nebraska, my ranchers and small businessmen, their future
depends on foreign policy, on opening markets, as do all of my
colleagues' states.
So, what we need to do is a better job of what Senator
Biden and Senator Sarbanes are saying, and I think Chairman
Helms, which is talking plainly, directly, straightly, making
sure people understand why AID, or whatever is going to be AID,
is critically important to the future of our world, for a more
stable world.
But I do say again that I think Senator Biden's point is
exactly right. I will not be a Senator who rushes you or anyone
else into something where if it looks better in a different
box, let's just do it. That does not make any sense and I will
not do that. But we do have to get a more efficient, effective
use of our taxpayers' dollars and I think that guides us all up
here.
Now, moving on to other things, I wanted to ask, Mr.
Atwood, a couple of other questions.
I was made aware a couple of days ago of a practice, as I
understand, in some foreign countries, governments, regarding
the taxation of U.S. foreign aid. It appears that many nations
or some nations view foreign aid in exactly the same way they
view their imports. For example, I have been told that the
Government of Haiti has now imposed what it calls a 4 percent
``verification fee'' on U.S. aid. I understand that is also the
case or that there is a similar case in Ethiopia, Peru,
Bangladesh, and other countries.
You are probably aware of this. Could you give us some
clarification, first of all, as to if it is accurate, and then
what is this all about?
Mr. Atwood. Well, we have had some problems, confusion.
International standards are such that we do not pay taxes on
humanitarian assistance that is provided to countries. One of
the problems we have had that we have tried to work out with
the International Monetary Fund is this. They have gone into
countries and they put so much emphasis on making sure that a
country is collecting all of its taxes that some of these
countries have misinterpreted that message and have, indeed,
placed taxes on these kinds of assistance.
In the case of Haiti, for example, when they were
attempting to do that at the port, we communicated with the IMF
so that they would clarify their position vis-a-vis the Haitian
Government, and we have now resolved that problem. As each of
these problems comes up--and, by the way, they have been coming
up for years; this is not the first time--we have managed to
resolve it and to preserve the international standard, which is
that humanitarian assistance is not taxed.
I can give you more details about the specific countries
that you mentioned and give you some information about how we
have resolved those problems if you like for the record.
Senator Hagel. Thank you. I appreciate that.
[The following material was subsequently supplied for the
hearing record by Mr. Atwood.]
TAXATION OF U.S. FOREIGN AID
In the case of Peru, decrees, issued in April of 1996, made it
difficult for NGOs to receive international donor assistance on a tax-
free basis. The ambiguities in the decrees raised tax treatment
questions for USAID-financed programs to NGOs and the government of
Peru (GoP). Our mission in Lima, has been actively engaged in
negotiations with the GoP to resolve the issues. These negotiations
have taken two tracks: an annual Memorandum of Understanding (MOU) with
the GoP to provide the necessary tax exemptions for NGO programs that
may not be covered under our bilateral agreement; and the insertion of
appropriate standard provisions in our bilateral grant agreements for
those programs operating through the public sector. Negotiations on
both fronts have progressed very well. We have signed an MOU for the
Title II food aid program, and are using the precedent to negotiate an
MOU for NGOs operating in the health and family planning sectors.
Simultaneously, we are negotiating final language on the tax clauses of
our bilateral agreements. We expect that these negotiations will
conclude successfully and return us to the situation that existed prior
to the April 1996 decrees--non-taxation of humanitarian assistance.
In Bangladesh, we have periodically experienced problems with
demands for the payment of customs duties and the like on vehicles
imported into the country by some of our NGO partners. Under our
overall Bilateral Agreement with the government of Bangladesh, and
under several specific project agreements, such vehicles are supposed
to be allowed into the country free of any duties. To date we have been
rather successful in resolving these problems as they occur.
Also in Ethiopia, government decisions to begin to tax
humanitarian assistance created implementation issues with our program.
As a result, there were considerable delays in the importation of goods
into Ethiopia, long storage periods at ports and customs holding areas
and a rise in associated costs as well as interruption in project
implementation. Call forwards for Title II Regular food aid were
suspended. Since that time, the health and education ministries have
assumed the duty on our assistance in these sectors. In February, the
government agreed to let the Disaster Prevention and Preparedness
Commission (DPPC) cover the duty of Title II Regular food aid until the
end of the Ethiopian fiscal year (June 30, 1997).
Senator Hagel. There is another issue I want to bring up. I
understand that we have something called the pipeline in this
business, like in other businesses, and that there appears to
be, at least I am told, a considerable amount of money that is
in that AID pipeline.
I understand Chairman Helms and Majority Leader Lott
sponsored an amendment last year about that, that after 2
fiscal years if that money was not used it be returned to the
Treasury.
Could you give us an accounting--give us what you can now,
Mr. Atwood, but maybe provide the rest for the record--of where
we are on the pipeline?
Mr. Atwood. I thank my staff very much.
Senator Hagel. They just happen to have it.
Mr. Atwood. As for specifics here, we have a chart that
shows that our ability to manage the pipeline has improved
considerably over the last 4 years. We are down $1 billion in
our pipeline. In Fiscal Year 1996, in the developmental
assistance accounts, it was only $3.2 billion versus $3.6
billion in 1994.
The point is, obviously, that managing the pipeline is a
good indication of how well you are managing the Agency. We
have reduced this pipeline, as I mentioned before, over time.
That, by the way, was just development assistance. The total
pipeline has been reduced by $1 billion since the beginning of
Fiscal Year 1995.
Whenever you sign a contract, for example, with AT&T, to
build a telecommunications system in the city of Cairo, you
create a pipeline. It might take them 5 years to build that
telecommunications system, but you create a pipeline right off
the bat. I think you, having been in business, understand how
this goes. If you don't sign a multi-year contract with some
institutions, they are not going to be interested in working
with you. They need to be somewhat assured that they are going
to have some business before they begin hiring people to do the
job.
So, I agree that you should continue to pressure us on how
we are managing the pipeline. We have developed, as part of our
new management system, a capacity to look at a pipeline with a
graph just like this (indicating) for any country in the world
and tell you exactly which account is available and how old the
money is within that account. That gives USAID a management
capacity that it has never had before. The Administrator, even,
if someone trusts him to look at these kinds of issues, can
turn around and punch a button on his computer and actually
bring up the pipeline for any given country nowadays. That is
especially useful today because we have to reprogram resources
because we do not have enough to get by. If there is a project
that is not working and it is old money, it causes you to raise
the question right off the bat: Why is that old money hanging
around? It is obviously not working for our interests.
So, I think we have really managed this a lot better than
it has been managed in the past.
Senator Sarbanes. Wouldn't you say, though, I understand
that a 2 year limit on your pipeline might not give you enough
latitude to handle some of these projects which take much
longer than that to do? Wouldn't that be correct?
Mr. Atwood. That is absolutely right. We are already
getting into an area here where some institutions may not wish
to work with us because they don't have the confidence that the
program is going to go on long enough. It is bad enough having
an annual appropriation and not being sure. But once we get
that appropriation, we would like to create projects that do
take that much time to get done with institutions that are sure
of the relationship they have with us.
Senator Sarbanes. If I could continue, Mr. Chairman----
Senator Hagel. Sure.
Senator Sarbanes. [continuing]. the other point is, aside
from getting the institutions to work with you, some projects
to be done--for instance, you are going to do the water and
sewer system for Cairo, let's say. Well, the way to do the
water and sewer system is to do the system. That is the best
way to do it. That is the way you bring in the best
institutions. That is the most efficient way to do it.
But to do the water and sewer system of Cairo is not a 2
year project.
Mr. Atwood. No. Absolutely right.
Senator Sarbanes. And to do part of the water and sewer
system of Cairo is not the way to do the job, correct?
Mr. Atwood. That is absolutely right. The other aspect of
it is making sure the Egyptians are involved so they can
maintain the system after we leave it behind. These things do
take time and require the training of local contractors and the
like.
Senator Hagel. You are not now living under that 2 year
notice?
Senator Sarbanes. I believe it's 4 years.
Senator Hagel. Is it 4 years or is there nothing stated?
Mr. Atwood. I am told there is no statutory limitation. But
I can give you statistics on this in terms of the amount of
money that is over 4 years old. There is very little money that
is over 4 years old.
Of our total pipeline, which is $7.5 billion, only $500
million is older than 3 years.
Senator Hagel. OK. Thank you.
Senator Sarbanes or Senator Biden?
Senator Sarbanes. I have some questions from Senator
Feingold for the Administrator and will submit them. They can
be answered for the record.
Senator Biden. I have no further questions, thank you, Mr.
Chairman.
Senator Hagel. Senator Sarbanes, do you have anything
further?
Senator Sarbanes. Nothing.
Senator Hagel. I, too, will ask, Mr. Administrator, for you
to respond to some additional questions. I will ask for
unanimous consent to keep the record open till close of
business Friday--without objection.
That is the way we will give our colleagues here--and you
know the drill, Mr. Administrator--additional time to ask any
questions for the record.
I just want to say that I am grateful that you would be
forthcoming. I look forward to working with you on this issue
and others. What you are involved in and your reach is
considerable. It is important and we all have a responsibility,
as I said, and my colleagues, who have been at this,
shouldering the wheel, much longer than I have, a
responsibility to speak plainly and directly to the American
public to help explain why what we are doing is in their best
interest.
If there are no other comments, we are adjourned. Thank
you.
Mr. Atwood. Thank you.
[Whereupon, at 4:30 p.m., the hearing was adjourned, to
reconvene at 11:02 a.m., February 27, 1997.]
THE STATE DEPARTMENTS ADMINISTRATION OF FOREIGN AFFAIRS FISCAL YEAR
1998 BUDGET
----------
THURSDAY, FEBRUARY 27, 1997
U.S. Senate,
Subcommittee on International Operations
of the committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 11:02 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Rod Grams
(chairman of the subcommittee), presiding.
Present: Senators Grams, Feinstein, Robb, and Biden.
Senator Grams. I would like to welcome all of you to this
hearing. I do have a brief opening statement. We do expect
Senator Biden to be here shortly. Also Mr. Robb is here, and
any others that might join us between now and then. Then we
will also take time to listen to your opening statements, as
well.
I will just say, if we go more than 6 or 7 hours, we will
take one break in between. So, just to let you know.
Mr. Kennedy. That is much appreciated, sir.
Senator Grams. But, again, I want to welcome all of you to
this first hearing of the Subcommittee on International
Operations in the 105th Congress, and of course, I look forward
to a very busy and also a very productive work schedule for the
subcommittee in the weeks ahead. I also want to thank Mr.
Patrick Kennedy, the Acting Under Secretary for Management at
the State Department, for coming along today to testify before
us on the President's fiscal year 1998 request for the
``Administration of Foreign Affairs'' budget.
Mr. Kennedy, at the outset, I would like to make it clear
that I am proceeding with this hearing on the assumption that
the administration is developing and will present to Congress a
proposal for the reorganization of the State Department and
also related foreign affairs agencies. While the subcommittee
will not be questioning you today about the specifics of any
State Department reorganization plan, I certainly intend to
work on this issue with Chairman Helms, Senators Joe Biden and
Dianne Feinstein, our distinguished ranking members
respectively for the Foreign Relations Committee, and also for
this subcommittee, along with Senator Chuck Hagel, who is the
Chairman of the Subcommittee on International Economic Policy.
It also should be noted that both Senator Sam Brownback and
Senator Gordon Smith, who also will serve on this subcommittee,
have also expressed considerable interest in this matter as
well.
In recent months, Secretary of State Madeleine Albright,
and her predecessor, Warren Christopher, have expressed their
concern that America's ``diplomatic readiness'' had been
undercut by inadequate resources. Now, given these statements,
I think it is useful to put the President's request for the
State Department's ``Administration of Foreign Affairs'' budget
into some kind of a context. A comparison of the fiscal year
1998 budget request to the estimated funding for fiscal year
1997 yield an increase of only about 2 percent. That is just
under the rate of inflation.
Now, while I certainly intend to review the increased
request of $60 million in the ``Administration of Foreign
Affairs'' budget very carefully, it is a rate of increase that
seems relatively modest, in light of the administration's
somewhat alarmist rhetoric on our foreign affairs funding. The
purpose of making this point is not to argue that the President
should have submitted a higher budget request in this
particular area, of course. Instead, it is to suggest that
despite some of the finger pointing in the direction of Capitol
Hill, the decision to curtail certain elements of foreign
affairs spending has been driven by stark budgetary realities
that both the administration and Congress realize.
Moreover, these are the same realities that the Foreign
Relations Committee recognized 2 years ago when it passed a
State Department reorganization plan that would have yielded
substantial savings. Now, obviously, as the Congress and the
administration work toward a balanced budget, both branches are
learning to live within new limitations. As a result, tough
decisions in setting budget priorities must be made, and both
branches should be prepared to take full responsibility for
them.
Now, having said that, I want to make it absolutely clear
that there is not a single member of this subcommittee or the
Foreign Relations Committee who wants to see America's ability
to conduct foreign policy undermined by vastly outmoded
technology, by crumbling overseas facilities, or inadequate
security for our U.S. diplomats. The challenge facing the
administration is to demonstrate that not only have the
fundamental needs been neglected, but also that the State
Department has proposed the most effective and efficient
solutions to meet these needs. If this is done, I believe you
will find strong bipartisan support for these key areas of your
budget.
However, past experience should motivate Congress also to
exercise thorough oversight regarding budget plans. Of course
one notable example is the construction of the new American
embassy in Moscow. Hundreds of millions of dollars have been
wasted in a seemingly futile effort to address security
problems, and the embassy is still not complete.
I believe it is also reasonable for Congress to ask how
some of the budgetary constraints for the State Department's
fundamental needs have been compounded. For instance, let us
look at the effort currently underway to modernize information
technology. It is easy to poke fun at the Wang computers that
still sit on so many desks at the State Department, but these
monuments to 1970's technology did not just arrive there last
year. In fact, this type of computer technology has been
outdated for more than a decade.
I understand that continued reliance on the State
Department's Wang computers now presents an additional dilemma
as the Agency tries to address the year 2000 problem in a cost-
effective manner. The essential question is whether this
administration, and possibly previous administrations, have
given sufficient priority in the past to maintain adequate
information technology within the context of the entire 150
account.
In some ways, this obviously goes beyond the scope of this
hearing, but the administrative costs cannot be considered in a
vacuum. It is more than a little puzzling that the
administration has continued to request millions of dollars for
certain development assistance programs which have not been
proven effective, while the technology infrastructure that is
necessary to carry out U.S. diplomacy has become woefully
outdated.
But in any case, this hearing is really the Senate's first
opportunity this year to examine the State Department's
operations and programs in depth.
So, again, Mr. Kennedy, we want to welcome you here to
present the Department of State's Administration of Foreign
Affairs budget for fiscal year 1998, and also to outline the
Department's priorities. I hope that this hearing will be the
first step in getting down to business to craft the
legislation, within the context of a balanced budget, that
adequately funds the infrastructure the United States needs to
advance its foreign policy objectives.
So, again, I want to welcome you. I see Senator Feinstein
is here as well this morning, and I would like to turn it to
you for your opening statement.
Senator Feinstein. Thank you very much, Mr. Chairman. Let
me begin by offering my congratulations on your chairmanship of
this committee.
Senator Grams. Thank you.
Senator Feinstein. I was particularly impressed to learn
you were in fact a delegate to the United Nations, and I look
forward to your expertise as we try to restructure a much
better and more positive relationship, bring reform to the
United Nations, and, eventually, pay our dues.
This hearing may not make front-page news, but I believe
that the discussion that we start today is at least as
important to the future of the world community as anything else
that is happening in the world today. For well over a decade,
the United States has been steadily reducing the amount of
money it devotes to international affairs, its Agencies, and
its programs. When current figures are adjusted for inflation,
these cuts in recent years have been significant -- 50 percent
since 1984. Fifty percent.
As we move toward a new millennium and the creation of a
new international system, the United States must have the
resources to ensure that strong and proactive diplomacy secures
American prosperity and security in the years to come.
In 1991, the Soviet Union collapsed. By many measures of
power, the United States is stronger today than at any time in
the 20th century. Yet we are consuming our National security
capital and diminishing our future influence by refusing to
make necessary investments today. We put at risk our ability to
continue to safeguard our future at precisely the time when we
need to be able to act decisively to define the post-cold war
world that is coming into being.
There are many who believe the world is a safer place
because of the Soviet Union's collapse. I am not one of them.
With 30 wars now raging across the globe, with the growth of
regional and ethnic conflict, with the ability to smuggle
nuclear technology the world, in my view, is not at all a safer
place.
Now, I do not suggest that we indiscriminately throw money
at the Department of State or at any other Department. But I do
believe that we must work together to create a more effective
and efficient Department of State, and one that is really
better able to handle the problems I have just enumerated --
the outbreak of regional and ethnic conflicts, the spawning of
nuclear technology illegally around the world, the renegade
states that potentially offer great threat to our own
prosperity and our own security.
So I was pleased to see that the administration has
requested an increase in funds for international affairs in the
1998 budget request. I have a number of questions.
I must tell you I was delighted to hear, Mr. Chairman, when
you mentioned crumbling facilities and outmoded technology,
because I have been in many of our crumbling facilities and
outmoded technological missions abroad, particularly, I must
tell you, in Asia. In China, the most populous nation in the
world, our embassy is in great disrepair. I have been there
many, many times. I have never seen a single frill. I have seen
leaking roofs. I have seen broken and outmoded facilities. I
have seen very little modern technology.
So the needs are there. I think our ability to respond to
them, particularly at this time, when the world is once again
going through a transition of leadership in the largest country
in the world, is extraordinarily important.
I look forward to working with you. I welcome Mr. Greene
and Mr. Kennedy, and look forward to their comments.
Senator Grams. Thank you very much, Senator.
Senator Smith, did you have an opening statement that you
would like to make?
Senator Smith. Just, Mr. Chairman, congratulations on your
chairmanship.
Senator Grams. Thank you.
Senator Smith. I look forward to serving on your committee,
and I welcome the witnesses.
Senator Grams. Thank you very much. Senator Robb.
Senator Robb. Thank you, Mr. Chairman.
I am not a member of the subcommittee, but as a member of
the full committee, I recognize the importance of the
jurisdiction that this committee has, particularly at this
important period. Your statement and Senator Feinstein's
statement reflect the gravity of the kinds of choices that we
are going to have to make. Although I will not be able to
remain for the full hearing, I wanted to at least hear part of
the presentation that our principal witness is going to make
today, because we are all going to have to grapple with the
ultimate conclusions of the subcommittee.
I thank you.
Senator Grams. I thank you for being here. Thank you very
much.
Mr. Kennedy, I would like to open it up for you to have
your opening statement. I would just request you try to keep it
to about 10 minutes, and a reminder that your full statement
will be entered into the record as if read.
STATEMENT OF PATRICK F. KENNEDY, ACTING UNDER SECRETARY FOR
MANAGEMENT, U.S. DEPARTMENT OF STATE
Mr. Kennedy. Thank you very much, Mr. Chairman. I am
pleased to appear before the committee today, and I definitely
appreciate your opening remarks about the need for appropriate
diplomatic readiness.
The Senate Foreign Relations Committee has a long history
of assisting the State Department in its efforts to advance the
foreign policy interests of the American people. Your efforts
have been invaluable in the past, and I am seeking it again
today as I testify in support of the Department of State's
fiscal year 1998 budget request for those accounts which fund
State Department operations.
At your request, I will not read my entire statement today.
I appreciate your entering the full statement in the record,
and I will then summarize the major points.
Secretary Albright spoke eloquently before this committee
during her confirmation hearings about the foreign policy
requirements that underpin this budget request. She outlined
the principal foreign policy challenges before us today, and
pointed to the challenges that lie ahead of us in what remains
of the century.
In order to meet these challenges, there is a real need for
diplomatic readiness -- maintaining, or in many cases
restoring, the human and material infrastructure that allows
the Secretary and others, whether they work for the State
Department or other Agencies of the U.S. Government, to advance
the national policy agenda overseas.
This is not an easy burden. To support and advance American
interests around the world, the State Department maintains some
250 diplomatic and consular posts in 164 countries. These
platforms are the home bases not only for the Department of
State, but also for more than 200 other U.S. Government
entities that help support and advance American interests.
The operation of these platforms clearly supports the
Department's request for the amount specified in the
President's budget, both for our own operations as well as for
those we carry out as a provider of support services to all
Agencies with an overseas presence.
In order to help improve our ability to manage such a
worldwide operation, and ensure that every tax dollar is wisely
utilized, the Department has made significant progress on a
number of important management issues. I will speak about them
later in my presentation.
Finally, we are making increasingly greater use of
strategic planning -- in compliance with the Government
Performance and Results Act -- to ensure that we allocate our
scarce resources to the highest priorities. Let me begin by
highlighting the major elements of our budget request.
We need to fund mandatory pay raises -- and overseas as
well as domestic inflation. We must continue to improve our
information technology infrastructure. Our budget request seeks
$40 million additional for funding in this area. We need
additional funding for other initiatives as well -- hosting
important international conferences, upgrading our entire
infrastructure in China, and complying with legislated arms
control mandates.
We must continue to support an aggressive Border Security
Program, particularly by upgrading consular systems, employing
new technologies, and adequately funding worldwide consular
operations. We must maintain our overseas inventory of
facilities to promote operational efficiency, employee health
and safety, and an extended useful life for our buildings.
In her confirmation hearings before this committee,
Secretary Albright noted that American leadership in the world
derives from having the full range of foreign policy tools,
including military force and vigorous diplomacy. We need to
approach diplomacy with the same commitment that has made our
Armed Forces what Secretary Albright referred to as the best-
led, best-trained, best-equipped, and most respected in the
world.
Diplomatic readiness is the basic foundation of a vigorous,
constant, creative, and effective diplomacy. There are three
principal components of diplomatic readiness:
The first is human resources. We need a work force that
reflects the vigor and diversity of the Nation it represents.
We also need the right number of skilled employees -- with
foreign language, functional, and technical expertise -- who
are well prepared to represent the varied interests of the
United States overseas, build effective relationships with
their international counterparts, exercise foreign policy
leadership, protect American citizens, and provide operational
support for the conduct of foreign affairs.
The second is information. We need highly qualified
personnel and the information technology capability to gather,
analyze, and communicate information efficiently.
Infrastructure and Operations is the third component. We
need well maintained office and overseas residential
facilities, supported by efficient administrative, financial,
logistical, and security systems, which enable employees to
conduct business properly at home and abroad.
Diplomatic readiness helps achieve real foreign policy
goals. For example, how can we maintain constructive relations
with the great powers without the right people with the right
skills in our most important diplomatic missions?
How can we advance the Nation's economic and commercial
interests abroad without properly trained and equipped
personnel in the right places to help break down trade
barriers, support U.S. business, and negotiate mutually
beneficial investment and tax agreements?
How can we effectively promote consular services to
American citizens traveling and living abroad if we
successively reduce budgets that cause us to close more
overseas posts or reduce staffing at the posts that we are able
to keep open?
There has been a cumulative, negative impact on our
diplomatic readiness produced in recent years by the flat
budgets the Department has had since 1993. Information systems
have, as you have noted, fallen behind in technology,
interconnectivity, and reliability. Buildings, as Senator
Feinstein has noted, require substantial renovation.
For well over a decade, we have not been able to maintain
realistic replacement cycles for critical equipment that
support overseas operations, such as computers, telephone
systems, vehicles, and office and residential equipment.
Staffing gaps, even at key embassies, are now the rule, rather
than the exception.
Language training, arguably the most important training
done at the National Foreign Affairs Training Center, has been
cut back. Other training has been reduced even further. Without
adequate security resources, the risks to our personnel,
facilities, and information will soon exceed what is prudent.
The Department has recently undertaken a number of
management initiatives, which are designed to make the optimal
use of the human and material resources that you provide us.
The first is called ICASS, the International Cooperative
Administrative Support Services system, which is a new way to
manage and fund administrative support for all U.S. Government
Agencies operating abroad. ICASS will fund and provide detailed
information for senior managers so that for the first time they
will have information on the full costs of overseas support,
with the objective of obtaining quality services at the lowest
possible cost.
At the mission level, these costs will be distributed
equitably and transparently under the guidance of a local ICASS
council, composed of representatives of all U.S. Government
Agencies.
Logistics Re-engineering: The Department's logistics re-
engineering project is redesigning worldwide logistics support
operations. Work will be organized around the total logistics
process to provide materiel and services faster, better and
cheaper. We hope to achieve greater efficiency in operations,
move work from complex and expensive channels to simpler and
more economical processes, and reduce inventory carrying costs,
as well as transportation and internal processing costs.
Our Overseas Staffing Model calculates staffing
requirements for overseas posts based on their workload --
consular and administrative staffing -- or derivatively as a
function of the post's global, regional, and bilateral foreign
policy priorities, primarily political and economic staffing.
Based on the relational assessment of the post staffing
requirements worldwide, the model provides Department
management with an analytical tool for allocating personnel
resources consistent with foreign policy objectives and
priorities, adjusting staffing levels proportionately to deal
with any funding level for personnel, and determining staffing
levels for any new posts. This staffing model will be
revalidated on a regular basis.
Border Security: The Department has an ambitious border
security program that includes deploying advanced technology to
all consular posts within 3 years. State and other agencies are
actively sharing data to enhance the U.S. Government's ability
to screen out terrorists, narco-traffickers, and other
criminals.
Every visa-issuing post now has a sophisticated, automated
name-checking system to help prevent the issuance of visas to
people who should not receive them. Every post now also
utilizes the Machine Readable Visa System, which offers
numerous security features to help strengthen border security.
In recent years, the infrastructure deficit has had a
dramatic impact on many elements of the Department's
information handling systems, as has been noted. For example,
over 40 percent of the Department's overseas telephone switch
gear is obsolete, 82 percent of all our radio equipment
overseas is obsolete, and 55 percent of our overseas computer
equipment is also obsolete.
Like all organizations in the public and private sector,
the Department must also accelerate planning for and
implementation of measures to solve the year 2000 dilemma, as
the chair has noted.
A key strategy that we will actively pursue beginning in
fiscal year 1998 is the retention of revenues generated by all
fees. In the past, we have retained only those fees for the
Machine Readable Visas and for expedited passport processing.
In fiscal year 1998, we expect to retain the fees sufficient
to: Support the delivery of high-quality standardized consular
services that the American citizens expect from their
Government, implement an effective immigration policy, improve
the Nation's border security, and contribute to the delivery of
other critical services.
The Department is responsible for the acquisition,
operation, and maintenance of some 12,000 office, residential,
and other properties abroad, which support some 200 U.S.
Government entities at over 250 posts. The Real Estate Asset
Management Program disposes of unneeded properties and uses the
proceeds to meet higher priority real property needs. This
program generated $59 million in the past two fiscal years, and
with these funds and other appropriated balances, new
facilities were purchased which now save the U.S. Government
over $12 million every year in avoided lease costs.
Diplomatic Security: The most important security issue that
we face now is the need to combat the threat of terrorism
worldwide, particularly in the Middle East. To meet this
threat, the Counterterrorism Budget Amendment provided an
additional $38 million in no-year funding for the Department,
of which $23.7 million will be used for improving and
emphasizing security upgrades.
While producing an immediate response on the terrorist
threat, the Bureau of Diplomatic Security must also develop a
longer-term strategy for a more stable budget level to address
security requirements worldwide. We rigorously apply a risk
management strategy to the implementation of our security
standards at all overseas posts. We calibrate the established
generic standards and countermeasures to meet specific posts,
specific threats, and specific times. This technique avoids the
waste inherent in using a one-size-fits-all approach to meeting
security standards, and allows the Department to husband scarce
security resources.
The Department has also expanded its outreach to the U.S.
business community overseas through the Overseas Security
Advisory Council, which helps protect life and facilities
through information-sharing activities, involving over 1,500
American businesses having overseas operations.
The State Department has also actively engaged in a
strategic management process that includes meeting the
requirements of the Government Performance and Results Act.
Under the leadership of an advisory group of nine assistant
secretaries, strategic planning teams are developing an
overarching International Affairs Strategic Plan, covering all
U.S. Government activities abroad and, based upon that plan, a
Department of State Strategic Plan.
Once reviewed by senior leadership, the plans will be the
subject of consultations with our stake holders and customers,
including other Agencies, OMB, and the Congress, in the coming
months.
Finally, the Department already requires overseas missions
and bureaus in Washington to prepare annual performance plans,
which will now be derivative of the Department's strategic
plan.
In conclusion, Mr. Chairman, when Secretary Albright
testified on the President's budget request before the House
International Relations Committee, she observed that there will
be many occasions, in many places, where we will rely on
diplomacy to protect our interests, and we will expect our
diplomats to defend those interests with skill, knowledge, and
spine. But she also noted that we cannot have world-class
diplomacy on the cheap. We must invest the resources required
for American leadership.
Mr. Chairman, that last sentence is the essence of my
message today. To carry out a reasonable, forward-looking U.S.
foreign policy -- one that advances the national interest
everywhere in the world -- requires the level of diplomatic
readiness that the President's fiscal year 1998 budget request
supports. Give us the tools we need, and together we will do
the job -- and do it well.
Thank you very much.
[The prepared statement of Mr. Kennedy follows:]
Prepared Statement of Mr. Kennedy
Introductory Remarks
I am delighted to be here to testify in support of the Department
of State's FY 1998 budget request for those accounts which fund
Departmental operations. The opportunity to appear before you today is
extremely important; the effort to secure the funding that will allow
American diplomacy to do its job is one in which I believe and to which
I am fully committed.
Secretary Albright has already spoken eloquently before this
Committee, and on other occasions in other fora, about the substantive
foreign policy requirements that underpin this budget request. She has
outlined the principal foreign policy challenges before us today, and
pointed to the challenges that lie ahead of us in what remains of the
century and beyond. In order to meet these challenges, there is a need
for ``diplomatic readiness'' -- maintaining, or in many cases
restoring, the human and material infrastructure that allows the
Secretary and others, whether they work for the State Department or
other agencies of the US Government, to advance the national policy
agenda overseas.
This is not an easy burden. To support and advance American
interests around the world, the Department of State maintains some 250
diplomatic and consular posts in 164 countries. These ``platforms'' are
the home bases for not only the Department of State but also for more
than 200 other US Government entities who help support and advance
American interests. These platforms involve operating in 150 different
foreign currencies, developing local compensation plans for every
country where we have diplomatic and consular posts, maintaining 12,000
buildings, and supporting 23,000 State Department employees -- American
and foreign nationals, overseas and here at home -- and another 20,000
employees of other US Government agencies overseas. Our
telecommunications facilities handle over 4 million telegrams per year,
our Passport Agency issues over 6 million passports annually, our
overseas posts issue over 8 million visas each year, and our consular
officers overseas annually respond to over 2 million requests for
American citizen services.
The operation of these platforms clearly supports the Department's
request for the amount specified in the President's budget, both for
our own operations as well as for those we carry out in our role as a
provider of support services to all agencies with an overseas presence.
In order to help improve our ability to manage such a world-wide
operation, and insure that every tax dollar is wisely utilized, the
Department has made significant progress on a number of management
initiatives that deserve both your attention and your continuing
support. I will speak about them later in my presentation.
Finally, we are making increasingly greater use of strategic
planning -- in compliance with the Government Performance and Results
Act of 1993 -- to insure that we allocate our scarce resources to the
highest priorities. We are doing this at the broad, international
affairs level, and at the overall Department level and within our
organization at the bureau and program levels. However, strategic
planning -- while focusing resources on high-priority goals -- does not
allow us to fund all of the foreign policy objectives that make up our
national security agenda.
Budget Summary Comments
Let me begin by highlighting the major elements of our budget
request, before I discuss the programs and activities that contribute
to ``diplomatic readiness'' and the management initiatives which we are
implementing to manage our resources more effectively.
1. We need to fund mandatory pay raises and overseas as well as
domestic inflation.
2. We must continue to improve our information technology
infrastructure -- installing telecommunications systems, local area
networks, personal computers, and software; modernizing our
corporate information systems. Our budget request seeks $40 million
additional funding in this area.
3. We need additional funding for other initiatives as well -- hosting
the International Telecommunications Union Plenipotentiary
Conference and an international environmental cooperation
conference, upgrading our entire infrastructure in China, and
complying with legislated arms export control mandates.
4. We must continue to support an aggressive Border Security Program,
particularly by upgrading consular systems, employing new
technologies, and adequately funding worldwide consular operations.
5. We must maintain our overseas inventory of facilities to promote
operational efficiency, employee health and safety, and an extended
useful life for our buildings. We will continue to use the proceeds
of sales to make cost-effective real property purchases where there
is both a demonstrated need and documented cost benefits.
Diplomatic Readiness
Secretary Albright, in the statement submitted to this Committee
for her confirmation hearing last month, noted that American leadership
in the world derives from having the full range of foreign policy
tools, including military force and vigorous diplomacy. The Secretary
also cited the direct contribution to sustained American leadership
over the past half-century made by a constant and creative diplomacy.
Noting that one of her principal tasks will be to work with the
Congress to ensure that we have the diplomatic representation that our
people deserve and our interests demand, she pointed out that ``first-
class diplomacy'' requires a serious investment of resources.
We need to approach diplomacy with the same commitment that has
made our Armed Forces what Secretary Albright referred to as the
``...best-led, best-trained, best-equipped, and most respected in the
world.'' Diplomatic readiness is the human and material infrastructure
that allows us to advance our national policy agenda overseas. It is
the basic foundation of a vigorous, constant, creative, and effective
diplomacy. Diplomacy can prevent many crises, but it must also be
poised to devote its resources to those crises which cannot be
prevented.
There are three principal components of diplomatic readiness:
1. Human Resources: We need a workforce that reflects the vigor and
diversity of the nation it represents. We also need the right
number of skilled employees -- with foreign language, functional,
and technical expertise -- who are well prepared to represent the
varied interests of the United States overseas, build effective
relationships with their international counterparts, exercise
foreign policy leadership in embassies abroad and in Washington,
protect American citizens, and provide operational support for the
conduct of foreign affairs
2. Information: We need highly qualified personnel and the information
technology capability to gather, analyze, and communicate
information efficiently.
3. Infrastructure and Operations: We need well maintained office and
overseas residential facilities, supported by efficient
administrative, financial, logistical, and security systems which
enable employees to conduct business properly at home and abroad.
But ``diplomatic readiness'' is also much more than words like
human resources, infrastructure, and information normally evoke.
``Diplomatic readiness'' has a much more direct link to achieving real
foreign policy goals than is apparent from those words. For example:
How can we maintain constructive relations with great powers
if we do not have the right people with the right skills
present in our most important diplomatic missions? Think of
Russia, and the critically important transformation it is
currently undergoing. And reflect on how important it is for
our future that we have good information about and good
communications with our former global adversary.
How can we advance the nation's economic and commercial
interests abroad without properly trained and equipped people
in the right places at the right time to help break down trade
barriers, support US business efforts in foreign markets, and
negotiate mutually beneficial investment and tax agreements
with foreign governments?
How could we have made meaningful contributions to
preventing the spread of weapons of mass destruction and
promoting peaceful solutions to regional conflict if we had not
been able to establish and staff properly embassies in the new
countries that emerged from the collapse of world Communism?
And how can we effectively provide consular services to
American citizens traveling or living abroad if successively
reduced budgets cause us to close more overseas posts or reduce
staffing at the posts we are able to keep open?
``Diplomatic readiness'' is sustained, primarily but not
exclusively, by the Administration of Foreign Affairs title of our
appropriations. The increase above the estimated FY 1997 level we are
requesting -- just under $60 million -- is a genuinely modest increment
when you consider the return in terms of advancing our national
interests that this investment can achieve. And it appears even more
modest if one considers the cumulative, negative effects on our
``diplomatic readiness'' produced in recent years by the flat budgets
the Department has had since 1993.
Let me review some of those negative effects.
Information systems have fallen behind in technology,
interconnectivity, and reliability.
Buildings require substantial renovation.
For well over a decade, we have not been able to maintain
realistic replacement cycles for critical equipment that
supports overseas operations like computers, telephone systems,
vehicles, and office and residential equipment. And the
situation gets worse every year.
Staffing gaps, even at key embassies, are now the rule, not
the exception.
Language training, arguably the most important training done
at the National Foreign Affairs Training Center, has been cut
back. Other training -- the professional development, area
studies, and functional/technical courses -- has been reduced
even further.
We must continue to address a security infrastructure gap.
Without adequate resources, the risks to our personnel,
facilities, and information will soon exceed what is prudent.
Management Initiatives
The Department has undertaken a number of management initiatives
over the past year which I would like to review for you today. They are
all worthy of your attention, and are designed to help us make optimal
use of the human and material resources you provide us.
ICASS
The International Cooperative Administrative Support Services
(ICASS) system is a new way to manage and fund administrative
support for all US Government agencies operating at diplomatic
missions abroad. ICASS is a customer-driven system that depends
upon the active involvement of all users. It will also capture
direct and indirect costs.
Additionally, under ICASS, several categories of overseas costs
previously paid by the Department from its own base funding
(such as building operating expenses for government-owned and
long-term leased properties, and non-residential local guards),
-- which total about $100 million -- will be shared by all
users.
ICASS will provide senior managers for the first time with
information on the full costs of overseas support, with the
objective of obtaining quality services at the lowest possible
cost. At the mission level, these costs will be distributed
equitably and transparently under the guidance of a local ICASS
council composed of representatives of all US Government
agencies.
The financial underpinning of ICASS is the Department's Working
Capital Fund (WCF). Using the WCF will capture various costs
that comprise overseas administration and make reimbursement
more transparent and more equitable than under the old process.
During FY 1997, the Department is operating under ``virtual''
ICASS, i.e., using ICASS methodology and the WCF, although
still billing other agencies under the old reimbursement
process (FAAS). In FY 1998, ICASS will go ``live.'' The
Administration will be submitting a budget amendment shortly to
reflect those shared administrative costs that will now be
borne by other agencies. We ask your support for that
amendment.
Logistics Re-engineering
Antiquated and costly logistics operations have historically
impaired overall performance and reduced diplomatic readiness
for all US Government agencies operating overseas.
Additionally, funds for replacement systems and equipment have
been reduced over recent years, thus increasing maintenance
costs and rendering most operations significantly less
efficient.
The Department's logistics re-engineering project is
redesigning worldwide logistics support operations. Work will
be organized around the total logistics process to provide
materiel and services better, faster, and cheaper.
Implementation of this project has begun, and it is expected to
take approximately two years. Affecting about 600 employees in
different organizations, 200 of whom are contractors, the
establishment of the new logistics management organization will
be started following a reprogramming notification to the
Congress.
We anticipate savings will accrue from greater efficiency in
operations, and from the movement of work from complex and
expensive channels to simpler and more economical processes.
Other savings will come from reduced inventory carrying costs,
transportation and internal processing costs, and from less
dependence on contractors. Also, replacing about 30 old
computer applications with just a handful of new ones will
avoid the cost of upgrading and conversion, and reduce out year
maintenance and operating expenses. More efficient service
delivery and increased satisfaction on the part of internal
customers are also principal goals of this re-engineering
effort.
Overseas Staffing Model (OSM)
After an intensive development project, we have produced the
Overseas Staffing Model (OSM). The OSM calculates staffing
requirements for overseas posts based on workload -- either as
objective data (consular and administrative staffing) or
derivatively as a function of the post's global, regional, and
bilateral foreign policy priorities (primarily political and
economic staffing). Based on the relational assessment of post
staffing requirements worldwide, the Model provides Department
management with an analytical tool for: (1) allocating
personnel resources consistent with foreign policy objectives
and priorities; (2) adjusting staffing levels proportionately
to deal with any funding level for personnel; and (3)
determining appropriate staffing levels for new posts.
The OSM, which will be revalidated on a regular basis, provides
staffing guidelines not rigid templates to be applied
universally. There will always be special circumstances
produced by shifting policy priorities, the way in which
diplomatic relations are or must be conducted in certain
countries, and the ability to get work done in certain
environments. We have begun the validation process for the
staffing levels proposed by the OSM. We asked overseas
diplomatic missions to evaluate in this year's Mission Program
Plan submission how they would carry out their responsibilities
under the Model's proposed staffing levels.
The Overseas Staffing Board (OSB) will review these findings
later this spring, and make whatever adjustments to post
categories are required. The OSB is expected to meet twice a
year to provide the Under Secretary for Management with
recommendations for staffing changes
Border Security
The Department has an ambitious border security program that
includes deploying advanced technology to all consular posts
within three years. State and other agencies are actively
sharing data to enhance the US Government's ability to screen
out terrorists, narco-traffickers, and other criminals. For
example, the Department -- in cooperation with the Immigration
and Naturalization Service (INS) -- is developing a prototype
system to capture fingerprint information on non-immigrants
from high-crime areas.
Every visa-issuing post now has a sophisticated, automated
name-checking system to help prevent visa issuance to persons
whose presence in the US would constitute either a security
concern or be contrary to our immigration law. Every post now
also utilizes the Machine Readable Visa (MRV) system, which
offers numerous security features which strengthen US border
security.
The Department's Bureau of Diplomatic Security (DS) has frilly
trained law enforcement agents in many US embassies abroad, and
works closely with our domestic passport agencies to
investigate the whole range of passport and visa offenses. DS
agents have doubled their number of passport and visa fraud
related arrests from 256 in 1992 to 567 last year.
Since 1994, the Department has been authorized to collect and
retain fees from the issuance of MRVs for consular operations
and to enhance border security activities. Projected FY 1997
collections in MRV fees, which also help fund investments in
information management and communications networks, total $137
million.
Information Technology
In recent years, the infrastructure deficit has had a dramatic
impact on many elements of the Department's information
handling systems. For example: About 40% of overseas telephone
switch gear is obsolete; 82% of all radio equipment overseas is
obsolete; and 55% of overseas computer equipment is obsolete.
The Department has submitted its Strategic Plan for Information
Resource Management, as well as an associated tactical plan, to
the Congress. As part of the strategic planning process, the
Department has created a cost model for needed improvements to
meet the infrastructure and communications needs by the year
2001. Although the Department has not yet initiated a formal
Workforce study, our initial review already indicates
significant weaknesses in both total staffing and skill levels
needed to meet existing and expanded responsibilities by the
year 2001.
Like all organizations in the public and private sector, the
Department must accelerate planning for and implement measures
to ``solve'' the problems posed by the Year 2000 dilemma -- the
fact that almost all current software and some hardware
recognize only two digits in a date, and thus will register the
year 2000 as 1900. This alone is expected to cost $135.2
million. To the extent that the Department will be required to
reprogram funds to cover such costs, such reprogramming could
divert resources that would otherwise go towards modernizing
our antiquated information technology capabilities.
Fee Retention
A key budget strategy that we will actively pursue beginning in
FY 1998 is the retention of revenues generated by all fees. In
the past, we have retained only fees for Machine Readable Visas
(MRVs) and for expedited passport processing. In FY 1998 we
expect to retain fees sufficient to:
1. support the delivery of standardized, high-quality consular
services that American citizens expect from their
government;
2. implement an effective US immigration policy;
3. improve the nation's border security; and
4. contribute to the delivery of other critical services.
In the long run, we expect to see gains in operational
efficiency and improvements in the way we manage our resources.
A user-charge system will enable us to gauge public demand for
services and to shift our resources to meet these needs. The
schedule of fees for consular services is also being revised,
with an eye toward updating the services provided overseas.
Services originally established in the days of sailing ships
are being streamlined and modernized.
Asset Management
The Department is responsible for the acquisition, operation,
and maintenance of over 12,000 office, residential, and other
properties abroad which support some 200 US Government entities
at over 250 embassies, consulates, and other posts abroad. The
Department continually reviews its real property inventory to
determine which properties are no longer needed, which are too
big or too small, which are too expensive to maintain, and
which need improvements. The real estate asset management
program disposes of unneeded properties and uses the proceeds
to meet higher priority real property needs.
This program generated $59 million in the last two fiscal
years, and with these funds and other appropriation balances
new facilities were purchased which are now saving over $12
million annually in avoided lease costs -- a saving which will
recur every year. Keeping leasehold costs under control is
critical to preserving funding for even a modest maintenance
and rehabilitation program, which is critical to the protection
of life and property, and to preserving the value of our real
estate.
Diplomatic Security
The most important current security issue is the need to combat
the threat of terrorism worldwide, especially in the Middle
East. To meet this threat, the Counterterrorism Budget
Amendment provided an additional $38 million in no- year
funding for the Department, of which $23.7 million will be used
for improvements emphasizing security upgrades (both physical
and technical security) and the deployment of additional
security personnel to the Middle East region.
While producing an immediate response on the terrorist threat,
the Bureau of Diplomatic Security (DS) must also develop a
longer term strategy for a more stable budget level to address
the full scope of security requirements worldwide. After five
years of security infrastructure erosion, DS will begin to
address its highest needs both in terms of national security
information as well as personnel security. DS is also working
with other elements of the Department to develop cost-sharing
procedures for overseas security and for domestic criminal
investigations, using fees generated by the Machine Readable
Visa program to fund operational and systems support for the
``border security'' initiative.
DS has rigorously applied a risk management strategy to the
implementation of its security standards at all overseas posts.
We calibrate the established generic security standards and
counter-measures to meet specific threats at specific posts at
specific times. This technique avoids the waste inherent in
using a ``one-size-fits-all'' approach to meeting security
standards and allows the Department to husband scarce security
resources.
DS has also expanded its outreach to the US business community
overseas through the Overseas Security Advisory Council (OSAC).
Begun in 1994, OSAC has focused its efforts on the protection
of life and facilities, and accomplishes this through various
information-sharing activities involving over 1,500 American
businesses having overseas operations. In recent years OSAC has
also begun to focus on the protection of information with the
increase in international industrial espionage.
Strategic Planning
The Department's is actively making progress in strategic
management, including meeting the requirements of the
Government Performance and Results Act (GPRA) of 1993. Under
the leadership of an Advisory Group of nine Assistant
Secretaries, a Strategic Planning Team is developing an
overarching International Affairs Strategic Plan covering all
US Government activities abroad and, based on that plan, a
Department of State Strategic Plan. Once reviewed by senior
leadership, the plans will be the subject of consultations with
our ``stake holders and customers'' (including other agencies,
OMB, and the Congress) in the coming months.
Critical to our success is the development of meaningful
performance indicators, by which we can track our progress in
achieving goals and objectives. This task has been relatively
easy in the management area (such as consular operations,
administration, and diplomatic security). Policy areas in the
political and economic fields have proven to be more difficult.
Finally, the Department already requires overseas missions, and
bureaus in Washington, to prepare annual performance plans
which will now be derivative of the Department's strategic
plan. The process in place now involves the development of
Mission Program Plans (MPPs) in the fall and Bureau Program
Plans (BPPs) in the spring. Efforts are underway to streamline
the process and to frilly integrate planning and other aspects
of resource management.
Conclusion
Secretary Albright testified earlier this month before the House
International Relations Committee to support the President's budget
request for foreign policy resources. In addressing the variety of
perils that have replaced the single, overriding threat of the Cold War
era, she observed that ``there will be many occasions, in many places,
where we will rely on diplomacy to protect our interests, and we will
expect our diplomats to defend those interests with skill, knowledge,
and spine.'' But she also noted that ``...we cannot have world-class
diplomacy of the cheap. We must invest the resources required for
American leadership.''
Mr. Chairman, that last sentence is the essence of my appeal to you
today. To carry out a reasonable, forward looking US foreign policy --
one which advances the national interest everywhere in the world --
requires the level of ``diplomatic readiness'' that the President's FY
1998 budget request supports. Give us the tools we need, and we will do
the job and do it well.
Senator Grams. Thank you very much, Mr. Kennedy.
We have been joined by Senator Biden. I would like to open
it up for an opening statement if you would like to.
Senator Biden. I will be very brief. Thank you, Mr.
Chairman. I would ask unanimous consent that my entire
statement be placed in the record as if read.
Senator Grams. Without objection.
Senator Biden. And I will just make two very brief points.
One, I agree with Mr. Kennedy and Secretary Albright that it
seems to me that the total number being requested is, from my
view, a minimum number. I do not know how we can do less.
Clearly, we can find savings. The committee has to work to
eliminate wasteful or duplicate spending.
But even if we were able to find considerable savings,
assuming we agreed -- which we obviously would not, because you
have submitted your best budget to us -- there are places where
we should be spending more money. There are places we should be
spending more money that I suspect you would like to have the
money to spend, but you have not put it in your budget because
you are realistic about what you think you can get.
But, for example, if we find any savings -- and this is
what one of the functions of this committee is -- I would not
seek to use those savings to reduce the overall budget of the
Department, but instead shift some of the resources. For
example, the Department seeks $40 million to improve its
information technology.
Translated into non-State Department speak, that means
telephones, that means computers, that means this State
Department of ours is operating in a way, in terms of your
technology base, like some companies were in 1980 or in 1978 in
some case places. You need these kinds of upgrades. You need
them badly. You need more than you have asked for, in my
opinion.
A second point I would make, and then I will cease, Mr.
Chairman, is that I would also, if we were able to find these
savings here, I would caution my colleagues to look at whether
or not we should really reduce the total number that some are
talking about reducing. Because I would also redeploy some
resources to ensure a much more robust diplomatic presence in
Russia and the New Independent States, where our interests are
in ensuring the success of the transformation from communism to
democracy, from planned economies to market economies.
This is a big, big deal. We are going to be judged, in my
view, all of us, not just this committee, but everyone in
Government -- my kids, who are just starting their careers,
when their children are writing their graduate theses about the
development of American foreign policy in the 20th century,
they are going to look at this period and say we either hit a
home run or we struck out. I mean this is a big deal.
This is one of those rare instances in American diplomatic
history where we are going to set the stage for what happens
for the next 25 years. We do not get to do that very often.
Usually, all we get to do is bend the curve a little bit, bend
the curve of history slightly. Here we may be able to change
the trajectory. We may not, but we have a chance, like we did
in 1946, 1947, and 1948.
So I think that redeployment of some of these assets are
also something we should be considering. So, I am thankful that
the administration and the witnesses are here to move, and the
interest of the chairman and committee in this. But, again, I
hope we are not looking at this in terms of -- we cannot afford
-- I have heard the mantra -- we cannot afford to cut defense
anymore, and I have shared that view. We cannot afford to cut
the international budget anymore. We cannot afford to do it.
At any rate, I thank you, Mr. Chairman, and thank you for
allowing me to enter a more full statement in the record.
[The prepared statement of Senator Biden follows:]
Prepared Statement of Senator Biden
Mr. Chairman, today the committee begins a review of the budget of
the Department of State.
Of course, this review does not begin in a vacuum. We are all aware
that a larger question looms: Whether to reorganize our foreign affairs
infrastructure.
As I stated yesterday, I have an open mind about the question of
reorganization. The stalemate of the last two years -- the result, in
large part, of the paralysis of the election cycle -- need not
continue.
But everyone should understand that willingness to consider
reorganization does not equate with a willingness to further reduce our
budget for international affairs.
Rather, the President's request of $19.5 billion for international
affairs should be regarded as the bare minimum needed to assure that we
can protect our interests around the globe.
By any measure, spending on international affairs has dropped
dramatically in the last several years. The $18.3 billion allocated to
international affairs in fiscal 1997, if adjusted for inflation, is 25
percent less than the average over the previous twenty years, and
nearly one-third below the spending levels of a decade ago.
As a bipartisan, blue ribbon panel recently stated: ``The cuts
already made in international affairs [spending] have adversely
affected, to a significant degree, the ability of the United States to
protect and promote its economic, diplomatic and strategic agendas
abroad. Unless this trend is reversed, American vital interests will be
jeopardized.''
It is commonly asserted that Americans have grown weary of
international involvement and will not support adequate spending for
international affairs. It is said that they are tempted by a so called
``Neo-isolationism.''
I believe this view underestimates the American people. The slogan
``America first'' no doubt holds appeal. But as most Americans
understand, we could not hide from the world if we tried.
Instead, they understand that, even with the cold war over, our
international responsibilities have not diminished. We face new
security challenges in Europe and Asia, new narcotics threats in Latin
America, and new proliferation challenges around the world -- to name
just a few issues on the agenda.
We cannot meet these responsibilities without adequate resources.
In that regard, I am today sending a letter to the Senate Budget
Committee in which I urge that the committee consider the President's
budget request for foreign affairs -- the so called ``Function 150
account'' -- as a floor for international affairs spending.
Anything less should be regarded as a retreat from international
engagement.
To be sure, the committee must seek to eliminate wasteful or
duplicative spending. We should be rigorous in our oversight role -- in
searching to reduce funding in areas that are no longer needed.
But once we find those savings, I would not seek to reduce the
overall budget for the Department -- but instead seek to shift those
resources to areas of higher priority.
For example, the Department seeks a $40 million increase to improve
its information technology -- its computers and phones. This program is
essential for the Department to carry out it basic mission.
I would also redeploy resources to ensure that we have a robust
diplomatic presence in Russia and the new independent states -- where
our interests in ensuring the success of the transition from communism
to Democratic capitalism are of critical importance.
Mr. Chairman, I look forward to working with you and the Chairman
of the Full Committee as we move forward in this process in the coming
weeks.
Senator Grams. Thank you very much, Senator.
Beginning on the questioning, Mr. Kennedy, as I said in my
opening statement -- by the way, I think we will set a time of
about 8 minutes in these rounds of questioning, which will give
the Senators time, and time for you to respond adequately and
not try to hurry it along, but to give a little bit of an
opportunity. So, we will set the timer at 8 minutes, if that
would be fine.
Mr. Kennedy, again as I said in my opening statement, the
subcommittee will not be engaging you today on the specifics of
a State Department reorganization plan. However, I did want to
mention that this issue did come up yesterday in Senator
Hagel's subcommittee hearing on the budget for the Agency for
International Development. My understanding is that, at that
hearing, again, the distinguished ranking member of the Foreign
Relations Committee, Senator Biden, made it very clear that he
had an open mind on this issue. I want to express my
appreciation to the Senator for his comments yesterday and to
let him know as well that I want to work with him to craft a
State Department reorganization plan which the committee as a
whole can support.
In that regard, Mr. Kennedy, let me just ask you if it is
your understanding that the administration is developing a
reorganization plan for the State Department and related
foreign affairs agencies as well?
Mr. Kennedy. Mr. Chairman, as Secretary Albright testified
before this committee during her confirmation hearing, everyone
at the State Department believes that it is very important to
us to have an effective and efficient means to implement U.S.
foreign policy. She and everyone have an open mind on this
issue, and we look forward to continuing this dialog, because
we do approach it with an open mind.
Senator Grams. Can you tell us approximately maybe when
this plan would be ready to come forward to this committee?
Mr. Kennedy. The Secretary is personally addressing this
Mr. Chairman.
Senator Grams. But no timetable or -- --
Senator Feinstein. Is personally -- I am sorry, is
personally what?
Mr. Kennedy. The Secretary has said she has an open mind on
this and, as she indicated to this committee, she has an open
mind on the subject.
Senator Biden. Mr. Chairman, that is State Department-speak
for he has no idea, and the Secretary has not begun to look at
it yet.
Senator Grams. I will make a note of that. I am learning
the dialog.
Senator Biden. But I promise you she will.
Senator Grams. If I could just bring up one other
housekeeping issue this morning, Mr. Kennedy. I have talked to
Chairman Helms, and both of us have agreed that we want to move
expeditiously to mark up the State Department authorization
bill. Now, given that it is almost March, can you tell me how
soon the State Department will be able to send us its
legislative language for the basic authorizing or authorities
that it is requesting for our fiscal year 1998?
Mr. Kennedy. We are currently and actively working on our
legislative package that would authorize not only the
President's budget request, but update a number of State
Department administrative procedures along the lines of good
Government. I have every reason to believe and we hope that we
are going to be able to submit this to you fairly soon.
Senator Grams. Well, it would be for the committee's
advantage and also for everyone else involved that it would be
helpful if we could have the legislation from the State
Department maybe by as early as next week. Would that be in the
realm of possibilities?
Mr. Kennedy. It is in the realm of possibility. We want to
work with this committee and other key committees to make sure
that we have the resources and the legislative authorities
necessary to implement U.S. foreign policy in absolutely the
best way possibility.
Senator Grams. We appreciate the cooperation.
The State Department's budget request includes a $40-
million increase in the capital investment fund, as Senator
Biden mentioned, for the modernization of information
technology infrastructure. Again, we can go back to phones and
computers, and I know how they can be outdated. I bought a
computer in 1990; in 1994 it was outdated. Everything had
surpassed it as far as technology.
In addition, you have sent Congress an extremely detailed
tactical plan, describing the Department's ongoing investment
in information resources management. I believe this is the
binder of the plan that is involved with that?
Mr. Kennedy. Yes, sir.
Senator Grams. It is currently estimated to cost $2.7
billion over 5 years. Could you describe for the subcommittee
the nature of the crisis in information technology
infrastructure that the State Department is facing?
Mr. Kennedy. Certainly. As I mentioned earlier, 40 percent
of our telephone switchboards overseas are now obsolete; 80
percent of the radio equipment we use, both for emergency
purposes and for management purposes abroad, is obsolete; and
55 percent of the computer equipment at our posts abroad is
obsolete. We arrived at this point because, over the last
decade, the State Department's budget has declined in real
purchasing power by about 17 percent. I am talking about now
the State Department operating accounts for which I am
responsible.
Over the last 5 years, the State Department's budget has
been flat. During the last 5 years, we have also opened some
score of new embassies in the former Soviet Union, in the
Baltics, in the Balkans, and in South Asia. In order to open
those new posts, which are very important for the
implementation of U.S. foreign policy, the control of
narcotics, the control of the spread of arms, to protect
American citizens, to promote American business, to get the
funds necessary to open those new posts with a static budget,
we have essentially diverted funds from our replacement cycle,
from our capital investment accounts--to open and establish
those new posts, to obtain facilities for them, to buy them
computer equipment, telephones, and to pay the salaries of the
personnel at those installations. Many of those installations
are exceedingly more expensive to operate in a relative sense
because of their remote locations in Third and Fourth Worlds.
So, over the past 5 years, the equipment replacement cycles
that we should have been maintaining, especially in the
information technology arena, have been essentially thrown out,
and we have lived off the assets we now have. We have kept our
current stock of computer equipment, our current stock of
telephones, our current stock of radios, and simply used the
funds that we should have used to replace that equipment to
open these new posts. Now, we have reached the end of our rope.
The equipment is literally dying. We have the year 2000
problem that you have referred to, and therefore we need to
move ahead. The $2.7 billion figure that is used in the
tactical plan is for all costs, including the operation, the
maintenance, the equipment replacement, the training, the
applications. We currently spend now about $420 million a year
on all the personnel costs that are related to information
technology and information management on ongoing operations, on
the important circuitry that links our far-flung network to
Washington. But what we do not have is the replacement cycle.
Senator Grams. What are the major initiatives or priorities
that the State Department is proposing in the IRM plan to
address what would be the most severe technology needs,
especially those facing the immediate deadlines as you just
mentioned--again, the 2000 problem?
Mr. Kennedy. We have put together what is essentially an
eight-point package, and let me just quickly run through that.
First of all, to make sure we spend the money wisely, we need a
coordinated standards and planning operation. We are
implementing that through the aegis of the newly established
chief information officer. On the year 2000 problem, we were
given a grade of ``B'' by a recent Government Operations
Committee, which I am not happy with; I much would prefer an
``A,'' but I will settle for the ``B'' because I think it shows
a significant degree of progress.
Senator Grams. You did pretty good. Some got an ``F.''
Mr. Kennedy. I understand that.
One of the few advantages of having such antiquated
equipment is that with the technology program we are putting
into place, we can throw out all the old equipment, and we do
not need to spend any money replacing that equipment. We have
an infrastructure program that will put into effect the network
that needs to be done. The $40 million will help bring the
equipment to the desk top. We have an applications and software
development group that is working to integrate the new
equipment and the year 2000 issue and the far-flung network.
We are going to spend just the minimum amount necessary on
our legacy equipment, just to carry that limping forward until
we get the new equipment in place. We have a training schedule
in place for our human resources. Last, we have a configuration
management committee that makes sure that everything we do fits
together seamlessly, so that there is no waste.
Senator Grams. And just to follow up quickly--I know my
time is up, but what steps have you done to make sure that the
new equipment that you buy and the technology you install will
not become so obsolete so readily? Or how do you maintain the
cutting edge, so to speak, of that technology? So what steps
are you taking and how are we going to be assured that we do
not invest today in something that is obsolete by the year
2000?
Mr. Kennedy. The combination of our chief information
officer and our deputy assistant secretary for information
management in the Bureau of Administration have formed a
committee which has oversight from senior Department-level
personnel. They are the ones what have put together the
strategic plan and the tactical plan that has been submitted to
the Congress.
This plan builds in a 4-year replacement cycle, which is
the current industry standard. That is part of the funding we
seek. So, that everything does become obsolete, but it is not
going to become obsolete faster than is rational and faster
than industry standards would dictate. That is part of the
strategic and tactical plan that is before you.
We do not necessarily need to be cutting edge on
everything. We just simply need to have a plan, which we
believe we have submitted, that is rational and realistic.
Senator Grams. And that it does the job?
Mr. Kennedy. And that it does the job, yes.
Senator Grams. Very good. All right. Thank you very much,
Mr. Kennedy.
Senator Feinstein.
Senator Feinstein. Thank you very much, Mr. Chairman.
Mr. Kennedy, I am just trying to understand some of this in
the facility rehabilitation. You have a total request of $48.3
million. That represents a $4.7 million increase. You are
selling property. You hope to get, of those sales, as I
understand it, $108 million from what is called major
unbudgeted facility requirements. Is that a correct reading?
Mr. Kennedy. We have split our efforts into two parts. We
are seeking appropriated funds, as we have outlined in our
budget, in order to carry a 5-year program. The General
Accounting Office has identified some $250 million in deferred
maintenance that must be caught up on. So, we are requesting
facilities maintenance money on a 5-year schedule, in order to
repair and rehabilitate our existing facilities. We know, in
some locations, that we need new facilities.
Senator Feinstein. But I think you are missing my point.
These are unbudgeted facility--are these sales of things the
Department would sell?
Mr. Kennedy. That is the second part of our program.
Senator Feinstein. That is what I am interested in.
Mr. Kennedy. Yes.
Senator Feinstein. What are they?
Mr. Kennedy. OK. There are a number of locations where we
know we do not have adequate facilities now. It is not that we
can rehabilitate what we have; we simply do not have enough
facilities. Examples might be Berlin. The German Government, by
the year 2000 or 2002, is going to shift their capital of
Germany from Bonn to Berlin. The Government of Nigeria is
planning on moving their capital from Lagos to Abuja. We have
never had an adequate embassy. We are now literally operating
out of trailers in Luanda, Angola. So, we have these unbudgeted
requirements. There is no capital program money submitted here.
China, which you referred to earlier in your opening
remarks, is another example where we have facilities that need
to be rehabilitated. But even after we rehabilitate them, they
will not be adequate. So, the State Department, under what we
call our asset management program, has identified U.S.
Government facilities around the world which we believe we can
make excess to our needs. We will put those facilities on the
market, generate proceeds of sale, and under the Foreign
Buildings Act, we have the authority to receive those funds
back into the Foreign Buildings Act, and then we will turn
around and build or buy new facilities in other locations in
order to meet the second part of the infrastructure deficit.
Senator Feinstein. All right. I understand what you are
doing. I am looking at the committee staff analysis here. It is
listed. I guess I am not understanding it. It has listed $14
million in housing and office space in Bangkok and China; $30
million in new diplomatic facilities in Abidjan, Kampala; and
$10 million in asset management initiatives in India; 18
million in relocation of diplomatic facilities from Bonn to
Berlin and Frankfurt; then $108 million in major unbudgeted
facility requirements. That is what is puzzling me.
Mr. Kennedy. All right. Those are facilities such as new
facilities in Guanzhou.
Senator Feinstein. But are not these things you are
selling?
Mr. Kennedy. No.
Senator Feinstein. Oh, all right. I thought these were----
Mr. Kennedy. These are our needs.
Senator Feinstein. OK.
Mr. Kennedy. These are new facilities, new office
buildings, new support structures, new housing that we do not
have, and I do not have room within----
Senator Feinstein. Is that Guanzhou?
Mr. Kennedy. Guanzhou.
Senator Feinstein. OK.
Mr. Kennedy. Guanzhou.
Senator Feinstein. Canton, in other words?
Mr. Kennedy. Canton.
Senator Feinstein. Right.
Mr. Kennedy. Those are new facilities that we need. I have
nothing there to rehabilitate, so it is additive. But since I
do not have room in my budget to request new capital money, I
will sell other State Department facilities in other locations
and take that money and apply it to the building or the
purchase in these unbudgeted areas.
Senator Feinstein. OK. All right. I think I understand now,
and I thank you for that.
It is also my understanding that a large part of the funds
needed to upgrade the embassy facilities in Beijing are
dependent on the sale of the old embassy building in Bangkok. I
gather that building has been sitting for some time, looking
for a buyer. Is this going to take a year or 2 years?
I am very impressed with the China 2000 Plan that
Ambassador Sasser has prepared. I would like to see it move
ahead. I believe it is necessary and that our embassy in
Beijing can be a much bigger help to America than it is today
if it just has some adequacy.
How long is it going to take, and will its sale hold up the
remodeling of the embassy in Beijing or its replacement?
Mr. Kennedy. The answer, Senator Feinstein, it
unfortunately is. The work in Beijing is dependent upon the
sale of our properties in Bangkok or elsewhere in the world.
One of the compounds in Bangkok which formerly housed part of
our embassy is on the market right now. We thought we had a
buyer for it, and that buyer was the high bidder in an auction
process we ran. That buyer has now defaulted on the contract,
and we have now remarketed the project. But we are actively
engaged in this effort.
Since I have no money for capital programs, and as you
rightly note, we have desperate needs in Beijing, I have the
maximum incentive on me every day to move those properties in
Bangkok or elsewhere in the world. In fact, we are trying to
market three properties in Bangkok as we speak. I am doing
everything I can with my colleagues every day to move those to
sale at the right price so I can put that money into China as
fast as I can.
Senator Feinstein. Let me ask you, do your auction
procedures say that if the high bidder defaults you go to the
next bid, or do you have to re-bid the whole thing?
Mr. Kennedy. We can go to the second bidder if there was a
second bidder who has bid a reasonable amount of money.
Senator Feinstein. Was there in this case?
Mr. Kennedy. There was not a second bidder in Bangkok that
bid anywhere close to the appraised value.
Senator Feinstein. So the answer, really, bottom line, to
the question is, nobody knows how long it will be?
Mr. Kennedy. That is correct, but----
Senator Feinstein. That is unfortunate.
Mr. Kennedy. But we intend to move ahead as expeditiously
as we can. I will be meeting with Ambassador Sasser next week.
This is literally our highest priority.
Senator Feinstein. Thank you.
Mr. Chairman, I have a number of questions. Could I submit
my questions to you and perhaps they could be submitted to the
Department for their response?
Senator Grams. Sure. You could take a couple of extra
minutes, too, if you would like, before we move on.
Mr. Kennedy. Senator, may I add one thing?
Senator Feinstein. Certainly.
Mr. Kennedy. While we are working on the building issues,
which is certainly a major issue, we have already funded a new
telephone system for Bangkok. We diverted other funds to that.
The installation will begin shortly. The installation is taking
place----
Senator Feinstein. You said Bangkok, did you mean----
Mr. Kennedy. I am sorry, Beijing.
Senator Feinstein. Right.
Mr. Kennedy. My apology. Beijing. Right now, as we are
meeting, the new computer equipment, the desktop computer
equipment for our personnel in Beijing, is now being installed
by a State Department team. So, while we are seeking the large
capital sums that a building requires, we, at the same time,
are moving ahead on those smaller components that we can
immediately get our hands on.
Senator Feinstein. May I ask one more question?
Senator Grams. Sure.
Senator Feinstein. I realize this is an open hearing, but I
was wondering if you could provide us with any informational
detail about the measures that are being taken by State to
protect itself and its information against unauthorized access
to its computer system or the decipherment of encrypted
messages containing classified information? Are there
additional security measures incorporated in this budget
request?
Mr. Kennedy. We have interleaved the protection of national
security information into every single aspect of our
information technology program. The State Department rigorously
adheres to the standards promulgated by the National Security
Agency. So, everything we do in the information technology
field, in the transmission of information, and in the handling
of that information adheres to the national security standard
procedures.
That is part of our plan here. The $260 million of the $2.7
billion, which is part of the strategic and tactical plan for
our 5-year program, is an information security portion.
Senator Feinstein. And this is a very high priority to me.
Mr. Kennedy. It is.
Senator Feinstein. Do you feel you have adequate resources
to be able to move vigorously, on a high-priority basis, to do
what has to be done?
Mr. Kennedy. If the President's budget is passed, the
answer to that question is yes.
Senator Feinstein. Thank you.
Thank you very much, Mr. Chairman.
Senator Grams. Also, Senator Feinstein, if there is a need
or if the opportunity arises, we could maybe have plans to,
maybe in a closed hearing, go into more detail on the security
aspects and any questions that we might want to add to that.
So, we are going to leave that as an open possibility, again,
if the opportunity or needs arise, where we can get this
information.
Senator Feinstein. All right. I am glad you share that
interest, Mr. Chairman, because I think today our Ambassadors
are more in physical jeopardy, as are the facilities and the
embassy staff. We all recall what happened in Pakistan and
other areas. I really think we need to beef up our security.
Mr. Kennedy. I could not agree with that more. Security,
both physical and technical, is literally one of our highest
priorities.
Senator Feinstein. Thank you.
Thank you, Mr. Chairman.
Senator Grams. Thank you, Senator. We will submit the rest
of your questions in writing, and hope that we can get these
back within a week. I know we will have others that will want
to submit questions in writing as well. We will probably follow
up with some other questions in detail.
Mr. Kennedy. Certainly, Mr. Chairman.
Senator Grams. Again, trying to work together and as
quickly as possible, if we could get you to respond within a
week, we would very much appreciate it.
Mr. Kennedy. We will certainly do that, Mr. Chairman.
Senator Grams. Thank you very much.
I would like to follow up on some of the questions that the
Senator had dealing with real estate. Of course the most
important thing is always location, location, location. Bangkok
probably is not the most prime location right now. But, as you
know, the General Accounting Office released a report on
overseas real estate, which I have a copy of here, in April of
last year. This report concluded that the State Department
holds numerous excess properties that could generate, according
to this report, about $467 million in revenue if sold--excess
real estate.
Given that the State Department's Budget-in-Brief, states
that expected revenues from property sales for fiscal year 1997
and fiscal year 1998 will total $316 million, can I safely
assume that you agree with the GAO report? And since your
current plans would still bring you up $152 million short
compared to the GAO estimate, what efforts have been made to
plan additional property sales?
Mr. Kennedy. We agree with the principle that the GAO
elucidated, which is our principle, which is to have a rigorous
professional asset management program which identifies any
excess U.S. Government diplomatic properties overseas, and
immediately moves to sell those properties in order to generate
the revenue needed to make the capital investments in
properties we have talked about. We do not agree, however, with
every single one of the properties that the General Accounting
Office has identified for sale.
There are some of the properties that they identified--and
one, for example, they said we should sell a piece of property
which was alongside one of our embassies. We informed the GAO
that that vacant land--in their mind--was actually part of the
security setback of our embassy, so that we could have an
adequate set-off against the potential for truck bombs. We do
not believe that we should sell that property and endanger our
personnel.
They identified in their study other properties which they
attached a value to based upon something that is called highest
and best value. They just assume that there were no local
zoning restrictions, no host country restrictions on the sale
of properties, and that we could sell it to any bidder and
generate the highest amount of money. That is not always the
case. Just as the State Department and the Office of Foreign
Missions rigorously enforces zoning rules in Washington and in
surrounding areas so an embassy cannot do anything it wants, we
have those same restrictions on us overseas.
In one city, for example, the GAO suggested that we sell a
property and we could make tens of millions of dollars because
the builder would build a high-rise building on it. So, we said
fine. We went and talked to the local government official who
said, wait a minute now, that area is zoned for residential
properties; we would not permit you to build a high-rise.
So while we agree with the GAO and we are seeking, as is
noted in our budget submission, to get every single possible
dollar--because I am incentivized to do that--I do not agree
with every single one of the examples they use.
Senator Grams. But agreeing or not, there are plans to look
at getting rid of additional excess property?
Mr. Kennedy. Yes, Mr. Chairman. We have a committee that we
are forming, composed of senior State Department officials who
have no vested interest in the regional areas and three experts
from outside the State Department, but who are other U.S.
Government real estate experts, to sit down and review these
issues, to make sure that we have the best possible advice.
Senator Grams. Given the fact that in 1996, fiscal year
1996, you had $18 million in sales, is it realistic to assume
that there could be $180 million in fiscal year 1997?
Mr. Kennedy. Sales are lumpy, Mr. Chairman. For example, we
are already less than two quarters into this fiscal year and we
have already sold $32 million worth of property already this
fiscal year. We are only 5 months into it. We market properties
as soon as they become available.
For example, we have just finished constructing a new
compound in Singapore. We have some very, very valuable
property in the center of downtown Singapore that we will be
able to put on the market. That property was not available last
year, because we were moving into the new embassy. That
property is being marketed right now.
So as these properties come available, because of new
construction or whatever, we immediately move to marketing
them. So, I believe it is possible, although, with the vagaries
of the real estate market, there is no guarantee that something
we plan for fiscal year 1998 would not appear in the first
quarter of fiscal year 1999.
Senator Grams. I would ask you to detail the sales that are
going to yield this estimated $180 million this year and the
actions taken so far, but maybe I would ask you to do that in
writing rather than going through them piece by piece. But if
you could give us a report on what are some of the immediate
plans and maybe detail what the properties are and the expected
prices, that would be helpful.
Mr. Kennedy. We would be pleased to do that, sir.
[The following material was subsequently supplied for the
hearing record by Mr. Kennedy.]
Asset Management: FY 1997 Projected Sales
The $180 million figure projected in the Security and Maintenance
of US Missions FY 1998 Budget document is based on the total dollar
amount to be realized if all properties projected for sale in FY 1997
are in fact sold and if sales take place at or near estimated values.
To date, 15 sales have been completed and approximately $38.5
million in sale proceeds will be realized. In addition, offers have
been accepted for another 19 properties, but sales have yet to be
completed. The dollar value of these latter transactions is
approximately $69.3 million.
The ability to realize the full $180 million is dependent on
multiple factors, many of which are beyond the Department's control.
Changes in local real estate market conditions, delayed receipt of host
government approval for sale and/or USG tax exempt status, unexpected
financial difficulties encountered by purchasers, political upheavals
and/or catastrophic events, unanticipated legal issues requiring
resolution, and the like, frequently intervene and disrupt a sale time
line.
The Department intends to use FY 1997 proceeds of sale for
residential housing acquisition to buy down the lease hold account, and
to acquire new office and other diplomatic facilities.
Senator Grams. The April 1996 GAO report also determined
that there was no systematic process for identifying and
selling State Department excess property. In the report it
recommended that the Secretary of State create an independent
panel to make recommendations. Now, I do not know if this is
what you were just referring to, of putting this panel together
for the sale of excess property and the reducing of the current
inventory. It also recommended that the Secretary require
foreign building operations, FBO, to report annually to the
Under Secretary for Management on all properties identified as
excess.
Again, is this what you were talking about in updating this
committee?
Mr. Kennedy. Yes, it is, Mr. Chairman. We have established
the panel. I did disagree, in my discussions with the GAO, on
the use of the words ``systematic process.'' I believe that we
do have a systematic process in place now. Every post files an
annual report of their property holdings. The Office of Foreign
Buildings regularly dispatches personnel to review all of these
property holdings onsite. So, while I believe we have a
systematic process, we also went ahead and established this
independent panel. Because I believe that anything that
contributes to my ability to generate revenues to meet my unmet
needs is something worth doing.
Senator Grams. There have been a lot of statements from
administration officials about, quote, dire conditions of many
of the State Department's facilities overseas. We have heard
that one Ambassador had to wash dishes in one of the embassy's
bathtubs, that there are heating systems that do not work, and
that some of the oldest buildings are literally falling apart.
Would you give the subcommittee a picture of the overall
state of U.S. facilities overseas and where the buildings in
the worst shape are located, and again, how you are targeting
your plans and priorities?
Mr. Kennedy. Certainly, Mr. Chairman.
Every building has a life cycle. The average life cycle, if
you use the engineering standards that are published, says a
building has a life cycle of about 40 years. At the end of 40
years, you must replace the electrical systems, replace the
heating, venting and air conditioning systems, replace the
roofs.
The General Accounting Office, using figures that they have
generated plus figures from the Office of Foreign Buildings,
estimated that there is about a $250 million shortfall in
deferred maintenance of buildings abroad. We use that data to
identify the facilities that have the greatest need, and then
we target the rehabilitation money, the $46 million to $48
million, that we have put into our budget, for the
rehabilitation of properties. We target those to the greatest
need.
When you have a program where the average age of our owned
properties is 38 years, we are at that life cycle point. So,
using what we call the Global Maintenance Surveys, every post,
in conjunction with the professional people from the Office of
Foreign Buildings that we dispatch periodically, go out and we
survey these buildings, and we survey the major life systems in
each one of those buildings. We identify the worst cases, and
then we target the fund to meet the facilities that need the
most up-to-date work.
Senator Grams. Can you describe the trend in funding levels
for the account covering security and maintenance of U.S.
missions in recent years? Has that account been cut
dramatically?
Mr. Kennedy. The account has been----
Senator Grams. Not only cut, but I know you said you have
transferred some funds for other Agencies. But I mean the
account itself, has it been cut dramatically?
Mr. Kennedy. For example, in fiscal year 1996, which is two
fiscal years ago, we had $386 million in the account. In fiscal
year 1997, the current year, it is $364 million. So, that was a
cut of almost $25 million. Two years ago, about $50 million of
balances were rescinded by the Congress. For this fiscal year,
we are trying to work the appropriations request back up. For
fiscal year 1997, it is about $364 million; for fiscal year
1998, it is $373 million.
If you go back, say, 5 years, it was a lot higher. It was
$560 million in fiscal year 1993. It dropped to $400 million in
fiscal year 1994, $410 million in fiscal year 1995, to $385
million in fiscal year 1996, and then $389 million in fiscal
year 1997, which included some supplemental funding. So, there
has been a downward progression. We basically have not
requested funds because of the need to balance the budget and
make comparative tradeoffs.
We have requested no capital money, no money for major
rehabilitations, or no money for new construction. So, we have
cut that off the top, and we are requesting this bare-bones
budget for basically maintenance and rehabilitation.
Senator Grams. You mentioned there was $50 million
rescinded by Congress. Has there been any other requests from
the State Department for which it has not received funding from
Congress?
Mr. Kennedy. The question, for example, in fiscal year
1997, our request was $400 million, and the enacted level was
about $389 million this year. So, that was $11 million less in
enacted.
Senator Grams. We will submit a lot of these details for
you in writing, and then hopefully get back a lot of the
number-crunching sort of aspects.
Mr. Kennedy. We would be pleased to, yes, sir.
Senator Grams. On diplomatic security, one of the most
important responsibilities, as I think Senator Feinstein was
pointing out in her final question, is to provide thorough
oversight for the Department's efforts to ensure that all U.S.
diplomatic personnel are operating in a very safe and secure
environment. Certainly the recent deadly attacks on our
military personnel in Saudi Arabia have only gone on to magnify
the concerns of all members of the Foreign Relations Committee.
Are you confident--I am going to ask this again--that the
system that the State Department uses to assess the level of
security, the security threat to U.S. personnel in each
country, is providing an accurate picture of the security
needs? And maybe elaborate on why you have those feelings.
Mr. Kennedy. Certainly, Mr. Chairman.
We run a very, very extensive and rigorous threat
assessment. We divide the threat assessment question up in
essentially three groups. We assess the criminal threat against
our personnel, we assess the technical threats, and then we
assess the terrorist threats. To each one of those levels we
assign four gradations--low, medium, high, and critical threat
levels. This is an interagency process.
We draw information from the State Department's
professional regional security officers, assigned at a large
number of our missions overseas, and there is a regional
security officer who has jurisdiction responsibility for each
mission. We marry that up with our political analysis, and
then, with an extensive interagency process to draw on the
threat information from every possible Agency of the U.S.
Government. Then we assign those threat levels.
Once we have assigned a threat level for a post, we then
tailor our deployment of resources to meet those threat levels.
If you have a critical threat post, we certainly deploy
significantly more resources than we do at a low-threat post.
We analyze some 30,000 security incident reports a year on
behalf of the Diplomatic Security Service, to see what the
threat potential is, and then we tailor it that amount.
The Congress has been generous to us in the last 2 years in
providing supplemental funding which we have specifically
devoted to that security threat. We have increased the number
of local guards. We have increased the hiring and the
deployment of Diplomatic Security agents. We have bought new
armored cars, and we have begun to replace security equipment--
metal detectors, cameras, motion detectors, ultrasonic
detectors--that are very, very much a part of our security
package and our security profile.
Built into the President's budget request is what we call
annualization, bringing the funds along for fiscal year 1998,
so that the equipment and the personnel that that supplemental
made available to us, we can continue that, to meet those needs
in the out years. Therefore, on the basis of the President's
budget request, I think, with those fundings, we can feel that
we have met the threat levels.
On the other hand, as you well know, Mr. Chairman,
incidents can occur tragically around the world in places where
our threat level was low, where there was no information
derived from any U.S. Government Agency that would have
suspected an incident in that location. So, we engage in
rigorous risk management, and putting the resources against the
posts which are most threatened. But an individual threat can
pop up almost anywhere.
Senator Grams. But right now you feel comfortable that
fiscal year 1998 requests provide the resources to meet
adequately the needs forsecurity?
Mr. Kennedy. Yes, Mr. Chairman, I do.
Senator Grams. Could you also detail all the sources of
funding in the State Department's budget that contribute to the
security of overseas personnel? And I ask as well for any
funding from other budgets, such as the Marine security guards,
which is now being funded by the Department of Defense. Are
there any other outside budgets or sources that are combining
to add to the security budget?
Mr. Kennedy. In addition to our basic operating account
that provides for personnel, security officers and equipment
overseas, that is one source. The Office of Foreign Buildings
account, when they construct and maintain buildings, builds in
security features into those buildings. The Defense Department
has assumed the burden of paying for Marine security guards.
However, it should be noted, whether the DOD assumed that
burden, that same amount of money, $24 million, was reduced
from the State Department's budget. So, there was no plus-up.
This was essentially a transfer of responsibility.
Also, the local guard forces that we deploy around
facilities overseas, both office and residential, we do receive
some reimbursements from other Government Agencies. For
example, if another Government Agency other than the State
Department is the exclusive occupier of an embassy annex, that
Government Agency will reimburse the State Department for the
cost of the local guards who patrol the perimeter of that
facility.
I would be glad to go into certain other matters in a
closed session or briefly, after this, if you wish, sir.
Senator Grams. I was just going to bring that up again. I
would appreciate your cooperation if, again, the need or
opportunity arises, to come and meet with this subcommittee in
a closed session, again, so we could discuss some of the
specifics of the security and the needs.
Mr. Kennedy. Certainly, I am available at your call.
Senator Grams. And also, Mr. Kennedy, I have a final
message on this issue and I would appreciate you taking it back
to the State Department. That is, if there is ever a point in
the future when you feel Congress needs to do more to help
protect the diplomats overseas, that again I hope you do not
hesitate to call me directly. I feel confident that if you ever
found the need to be there, that you would get a receptive
response from me and any other members of this committee. So,
again, to leave that door open. Because security has got to be
first and foremost, of course.
Mr. Kennedy. Mr. Chairman, I know where your door is. I
promise to find you.
Senator Grams. Thank you. The President's budget proposes--
I am going to be talking about user fees. In his budget
proposal, it includes a government wide proposal to place
greater reliance now on user fees rather than direct
appropriations. The State Department's fiscal year 1998 request
includes an indefinite appropriation of $595 million from such
fees. What authorities will the administration be requesting to
implement this user fee program?
Mr. Kennedy. We will be seeking authorizing and
appropriations language that would permit the State Department
to retain fees that we currently collect for the provision of
services. Our belief is that if we are able to tailor the work
we do to certain fees that we receive, we will be able to be
more responsive to the public and engage in a more rigorous and
rational process.
For example, over the last 5 years, the number of passports
that we have issued annually to American citizens has increased
by 60 percent; the number of visas that we have issued to
foreigners to visit the United States is up by 12 percent; and
immigrant visas are up as well. When you have this increasing
demand for certain services--we also have increasing demand for
authentication services in the United States, increasing demand
from American businesses, under the Defense Trade Control Act,
for licenses and processing--this constant growth in demand for
these specified types of services, we are simply unable to keep
pace with those for appropriated funds.
If we have the ability to collect the fees that are related
to the provision of those services, we feel we are going to be
able to then increase the personnel, the equipment and the
facilities to match those. Therefore fee retention will allow
us to provide the American public, American business, the
foreign traveling public which wishes to visit the United
States, either for business or tourism, we will be better able
to serve those multiple constituencies by taking those fees and
turning them around and applying them to the resources
necessary to deliver those services.
Senator Grams. If Congress does not give you the authority,
is the administration going to request additional moneys in
authorization?
Mr. Kennedy. If we do not----
Senator Grams. Or direct appropriations?
Mr. Kennedy. We would have to come back to you to request
additional direct appropriations, or we would have to simply
cease doing other activities and shift those funds to keep pace
with this workload. It is a Hobson's choice that I do not
relish making. But that is why we are convinced that since the
fee proposals we have laid before you are derivative of
services that are directly provided to some elements of the
public, but yet not the entire public--not every person
requests a passport--why not take those passport revenues and
apply them to getting that requester his or her passport, and,
in effect, not tax the American public as a whole to provide
that passport service?
So that direct relationship between the fee and the
passport, the fee and the visa, the fee and some other service,
we believe is a good government proposal that we are very, very
confident is in the best interest of everyone, including and
specifically the American taxpayer.
Mr. Greene. Mr. Chairman, I might add to that.
Senator Grams. Sure.
Mr. Greene. We have had lots of internal discussions about
this proposal, and we cannot afford for this proposal to fail.
We have got 25 percent of our worldwide operating budget at
play here. For all the reasons that Under Secretary Kennedy
laid out, we hope it gets passed. It makes a lot of good sense.
But the ramifications for it not getting passed are huge for
us.
Senator Grams. How so if the other appropriations--if there
was direct appropriations to replace that, would that still
have the negative effects that you are talking about?
Mr. Greene. It would not be as bad as what I am talking
about, but some of the reasons why we want to do this--the
ability to capture the cost of inflation and constantly
investing in these systems would be lost.
Senator Grams. How does the State Department's fee proposal
fit into the government wide proposal for greater reliance on
user fees?
Mr. Kennedy. It is one of, I believe, a dozen proposals
that the administration is making to the Congress, that
includes, I think, 11 other Agencies.
Senator Grams. Now, Mr. Greene, you just mentioned
something about inflation and other things, but what are the
parameters for setting the fees on passports and visas and
immigration? And the question is, will these parameters be
included in the administration's requested authorization?
Mr. Kennedy. Mr. Chairman, under OMB Circular A-25, there
is a rigorous procedure in place that does not permit any
Government Agency to collect a fee that exceeds the cost of
providing the service. That is part of our proposal, that we
will continue to adhere to OMB Circular A-25. To ensure and
give confidence to you and the American public that we are not
cooking the books on the fees, we turn to an outside entity--
Mitre Tech could be an example, the Mitre Corporation--to
conduct a fee study to make sure that the fee-for-service
figure that is set, what is called the cost of service, is
specifically related to the actual cost of providing that
service.
Senator Grams. So you could assure us, then, that the cost
associated with these services could not be increased in the
future, so that it could not only fund the passports, visas, et
cetera, but be used to go on and support other expanding
programs or new programs?
Mr. Kennedy. The fees are related to the cost of providing
the service. But what we need to do is ensure that those fees
cover what we call the fully loaded cost of providing that
service, including the utilities of the building. I mean
obviously there is the cost of the passport book and the person
who processes it, but then there is the other costs that are in
there. Now, those are built into the fee proposal and would be
part of the fee package as well--what is known as fully loaded
costs, the actual and true cost to the American people of
providing that full service.
Senator Grams. OK. Moving on to another topic. This is very
relevant to my home State of Minnesota, and Minneapolis. The
International Telecommunications Union, which helps further
global cooperation on telecommunications, is going to be
holding its 1998 conference in my home State of Minnesota. The
city of Minneapolis, of course, is going to be very delighted
to be hosting this important conference, which is held only
once every 4 years.
Now, the State Department's Budget-in-Brief, mentions that
the U.S. Government is trying to seek ways to let the private
sector help reduce the expected costs or the estimated costs of
the conference to the U.S. taxpayer. Now, I know that many
companies in Minnesota and from across the country have shown
substantial interest in the ITU conference, so could you
elaborate on these cost-share plans and whether they are
reflected or not in this budget request?
Mr. Kennedy. Mr. Chairman, we believe that the host-ship
costs of holding the quadrennial ITU, as you noted, will be
approximately $14 million. The proposal by the administration
is that that cost be evenly divided, $7 million from the
Department of State and $7 million from the Department of
Commerce. It has been suggested that the administration enter
into discussions, which we have been entering into, with
various business and aspects of the private sector, to see if
they would wish to bear some portion of that cost.
The private sector is already bearing a large number of
those costs. I mean, thanks to the goodwill of the people of
Minnesota, the conference site itself in Minneapolis is being
made available at no cost. A large number of the transportation
and other hospitality aspects of the conference are already
being borne by the private sector. There is a parallel trade
exposition that will take place and run concurrently with the
conference itself. That entire cost is being borne by the
private sector.
We are and will continue to speak with representatives of
the private sector in any and all opportunities. However, to
date, while they have been very, very generous in making some
sums available, the private sector also believes that there are
certain inherently governmental aspects of the conference which
should be borne by the host nation--in this case, the United
States--and which is why we are seeking $7 million, and my
colleagues at the Department of Commerce are also seeking $7
million, in order that the inherently governmental host-ship
aspects will be borne by the United States.
Senator Grams. These shared costs among public and private
is going well. Would this be used as a model for future
conferences, the experiences that you----
Mr. Kennedy. We actively seek private sector participation
in any and all conferences which are of the nature of something
like the International Telecommunications Union, which has a
very, very high private sector interest. There are certain
other conferences, such as arms control conferences, which
would have no true private sector interest.
But yes, the State Department has the authority to receive
gifts, and we use that authority and actively seek the private
sector's assistance and cooperation. We did that for the Summit
of the Americas, which took place several years ago in Miami.
The U.S., in Denver, Colorado, this year, will be host of the
G-7 economic summit, and we are seeking private sector
contributions to that as well.
Senator Grams. I want to move on to another subject that
you mentioned in your opening statement, and that was ICASS. As
you know, the administration plans to fully implement the
International Cooperative Administrative Support Services
program in fiscal year 1998, a new system for cost-sharing
among Federal Agencies. ICASS will provide for cost-sharing by
Agencies operating overseas, relative to their total overseas
presence. Can you detail or give us more information on how
that program is going to operate?
Mr. Kennedy. Certainly, Mr. Chairman.
Two years ago, at the initiative partially of the Congress,
partially of the State Department, and partially of the Vice
President's National Performance Review, the State Department
asked and the President's Management Council convened, an
interagency group to look at the support model overseas. The
State Department currently has about 30 percent of the U.S.
Government personnel overseas and is paying approximately 70
percent of the cost. So, in effect, we are subsidizing other
Agency presence overseas.
This is a significant burden on the Department of State, on
the order of at least $100 million.
The other Agencies were not very pleased with the level of
service they were receiving, because in these tight budget
times, the State Department constricted, they felt they were
not receiving adequate support. Other Agencies felt that they
needed to expand their overseas presence--law enforcement is a
good example. The State Department could not take on the
additional burden of carrying another 70 percent of an
increased cost.
So this interagency working group engaged in an extensive
study and came up with the ICASS model. The ICASS model is
essentially a transparent, equitable way of allocating the full
cost of doing business overseas. A local council, composed of
all Agencies of the post, sits down and negotiates levels of
service and who is the provider of that service--the State
Department, maybe the Agency for International Development in
some other post, maybe the United States Information Agency has
surplus printing capacity in that country and so it would do
all the printing.
We have identified some two dozen factors--motor pool
maintenance, communications--an Agency will take
responsibility, and in most cases, it will be the State
Department--for providing those identified services, and will
work out a level of service that the Agencies want, and then
develop a cost of service. That will then be divided up, and
each Agency will then pay its fair share for the actual
services it consumes.
Senator Grams. Is there a particular Agency that will have
ultimate authority over activities funded by ICASS?
Mr. Kennedy. The State Department is the coordinating
organization for ICASS. We have a small staff that share in the
ICASS Service Center, the interagency group that will provide
the coordinating mechanism and provide the rules and
regulations. But it is truly an interagency group, with
participation from every U.S. Government Agency abroad.
Senator Grams. Any estimates on savings? I know you want to
provide the better service, but sometimes you can provide
better service and at less cost. Are you accomplishing both or
do you think you are achieving both goals, and what is the
estimate on the savings?
Mr. Kennedy. I do not--I regret I do not have a cost
savings estimate yet, but I believe I will. It is for this
reason. Right now no Agency really knows what its cost of doing
business overseas is. There is no aggregation of that figure.
Once we get ICASS into place, once Agencies all of a sudden
have to pay their full cost of doing business, we are going to
be incentivizing everyone to look for the absolutely lowest-
cost means of providing a minimally adequate level of service.
We are going to be fully implementing ICASS this October 1.
I believe that, within a year or two, we will see savings.
Because this incentivization of seeking the lowest adequate
service provider will be something that is very new, very
radical, and very necessary.
Senator Grams. But the initial stage of it, you feel
confident or pleased?
Mr. Kennedy. Yes, sir. Yes, Mr. Chairman. We have had--this
fiscal year, we have been doing what is called virtual ICASS.
We have established the working groups at every posts. We have
set service standards. We have continued to fund the entire
operation out of the State Department's operating account. But
5 months into this fiscal year, we are seeing greater
cooperation, greater teamwork, and a greater incentivization to
look for the best and the lowest-cost way of doing business.
We have provided the other Agencies with mock bills for
this fiscal year, telling them what they would have had to pay
under the system and actually what they will have to pay come
October 1, and therefore the incentives are flowing.
Senator Grams. OK. Next year, we will come back and follow
up on this and see how this year has gone.
Mr. Kennedy. I look forward to it.
Senator Grams. Mr. Kennedy, the fiscal year 1998 budget
request lists a conference on international environmental
cooperation as a high-priority foreign policy initiative. Now,
already the United States is participating in numerous
environmental organizations, including the United Nations
Global Climate Change Convention, which will be having a major
conference, by the way, in 1998 in Japan.
In addition, last year's omnibus appropriation bill placed
a moratorium on U.S. participation in global conferences. Now,
given the level of resources already devoted to high-level
international environmental meetings and congressional calls to
limit global conferences, how does the administration justify
this particular budget request?
Mr. Kennedy. Mr. Chairman, there are a number of new
emerging issues that have come to the fore since the end of the
cold war--narcotics, human rights, and the environment are
three, just to name a few. Environmental issues have an impact
on the American citizenry.
Bad air and bad water can have a deleterious impact on the
United States, as well as on any other country in the world. We
believe that Secretary Christopher made the correct decision
when he identified this as one of his priorities. That $1.7
million is truly a significant sum of money in the State
Department's constrained budget environment. However, given the
importance of these issues, we need to find solutions to
environmental problems before they begin to lap over our shores
or blow through our atmosphere.
We believe that it is important for the State Department to
address these issues, as the practitioner of international
diplomacy, and to get countries together to address these
issues before they have a deleterious effect on us. The $1.7
million then represents an important initiative, in our minds,
to protect the American public through our diplomatic outreach.
Senator Grams. Some of the concern is, with already all the
resources going there, to add on another $1.7 million--I know
it is an important area, but when you put it in the list of
priorities, and especially, again, going back to a
congressional call to limit global conferences, that this $1.7
million could be spent better maybe elsewhere--communications,
capital improvements, security, et cetera. That is the question
that we have. It is not like we are not spending money already
in these areas that concern us, but to really up the ante, so
to speak, at the expense of other programs.
Mr. Kennedy. I agree, Mr. Chairman, that we have to make
sure that we rigorously apply any expenditure, but this kind of
environmental conference would literally be the first one of
its kind. We have other conferences that have addressed pieces
of the puzzle. But when you look at the environment, the pieces
of the puzzle come together and present a very, very specific
picture. In order to protect life, property, and the health of
the American people, we believe that the U.S., as the global
leader, ought to take this first step, ought to take this
initiative in the environmental area as well, in effect, in a
case of enlightened self-interest.
Senator Grams. Moving on to another topic--and I have a few
more questions here that I would like to get through yet--but,
again, the November 1996 GAO report found that the present
cable writing and review process--this is talking about what is
considered the antiquated cable system that we have--and the
review process for cable writing may be too cumbersome,
especially given the widespread use of electronic mail and the
possibilities of the Defense Messaging System for transmitting
classified communications. In addition, the report found that
the need for face-to-face diplomatic meetings might be reduced
by using other communication methods, again, such as video
conferencing. What efforts are being made to readapt these
systems and achieve savings, given the modernization of State
Department technology and infrastructure?
Mr. Kennedy. We have been working very, very closely with
the Department of Defense, ever since they announced their
Defense Messaging System initiative. I have personally met with
Lieutenant General Al Edmonds, who is the head of the Defense
Information Systems Agency, to make sure that our respective
teams are fully interrelated. We are working with DMS. We are
following this.
We have spoken to DOD, and they have assured us, for
example, that under the contracts that DOD is letting, there is
a significant portion of each one of those contracts that may
be ridden by other national security Agencies to ensure that we
can buy compatible equipment and take advantage of the research
and development that they have been engaged in. So, we are
monitoring DMS. We will have a system that is fully compatible
and uses DMS-like pieces.
At the same time, we realize that while we are using
electronic mail extensively--and one of the easiest measures of
that is, up until several years ago, the average number of
cables that the State Department would send out every year,
formal messages, was in the range of, I think, about 325,000--
the number in the last 2 years has dropped below 300,000,
because more and more administrative and other business can be
done effectively and more cheaply through the electronic mail
means--at the same time, we also need to see that we still have
a formal message traffic potential of communicating to an
ambassador an official set of instructions, so that he or she
knows exactly what they want to do. So, we want to retain that.
That is a feature of the Defense Message System and its
State Department parallel as well. But we are not going to
stint on electronic mail. Our estimates, and it is hard to
count electronic mail, but using the traffic figures, we
believe that we are generating at least 40 million electronic
e-mail messages every year. So, we are following this.
We are also testing video conferencing. The Diplomatic
Telecommunications Service pilot test that was recently
completed tested video teleconferencing with both one post in
Europe and one post in the Far East, to find out what are the
technologies and what are the best ways to do it.
My only concern about video conferencing, which we intend
to rigorously pursue, is that there is no industry-wide
standard yet for video conferencing, and we do not want to get
too far ahead of the leading edge and buy a technology that is
not going to become the industry standard. So, we are pursuing
that, but we want to make sure that we do not get ahead of the
curve.
Senator Grams. How much do you use private industry
consultants in knowing what is available, what to purchase,
when, how to integrate it? Rather than inside sources, are you
using also private-sector sources?
Mr. Kennedy. We use outside consultants extensively. We
want to take advantage of the outside expertise. There is no
reason for an Agency that is as small as the State Department
to ever reinvent the wheel. It is simply too expensive to us.
That is why we will be riding the Defense Message System
contract. That is why we use contractors all the time. The
Gartner Group, which is a very, very distinguished outside
consulting group, works with the State Department extensively,
as do any number of other companies and private individuals.
Senator Grams. I see we have a vote on, but I want to just
close up with a couple of quick questions on personnel. As we
prepare the authorization bill, I believe it is very important,
very essential for this subcommittee to have accurate figures
about the number of people employed by the State Department.
Can you tell us what is the total number of people who are
currently employed worldwide by the State Department in any
capacity--that includes our Foreign Service, Civil Service,
foreign nationals, part time, temporary employees and
contractors--to get a handle not only on authorized positions,
but really how many people do we have on the payroll?
Mr. Kennedy. Active people around the world? Well, this is
a moving snapshot you realize, but on any given day, there are
deletions and accessions, but----
Senator Grams. If you can get within 100,000, that would be
OK.
Mr. Kennedy. I believe, on September 30th, of 1996, at the
end of fiscal year 1996, we had in all the categories you
listed, 23,022 personnel on board. That is down some 2,700
people, 10 percent, since the end of fiscal year 1993. We had
almost 26,000 people on board at the end of fiscal year 1993,
and we were down to just a hair over 23,000 personnel, all the
categories you listed, at the end of fiscal year 1996.
Senator Grams. Great. We will ask you to provide some
information in categories for us in a written question, as
well.
Mr. Kennedy. Certainly, Mr. Chairman.
Senator Grams. We appreciate that. Well, that is all the
questions I had. Would you like to make a closing statement of
any kind, Mr. Kennedy?
Mr. Kennedy. Mr. Chairman, only that we have worked with
the Senate Foreign Relations Committee for many, many years. We
actively seek to continue to work with you. This committee has
been a great supporter of the State Department, and we hope to
be able to continue that relationship. We are always at your
disposal. You, your staff, anyone should always feel free to
contact us at any moment. If there is any question or any issue
that we can clarify, we are here.
Senator Grams. Mr. Greene, you have been awfully quiet.
Mr. Greene. We really appreciate the comments you said
throughout this in terms of supporting our operations
worldwide. It does not get a lot of attention. It genuinely
helps us a lot.
Senator Grams. And I think we share the same goals. I think
it is to the benefit of the American taxpayer and American
society as a whole to provide the best foreign services that we
can through the State Department, and to update technology to
make sure the facilities, and also the security, are the best
in the world. I think what Secretary Albright said, that we
should be and that we are the leader in the world, and that
should be reflected in our foreign services as well. So, I
really appreciate that.
Of course, while we will be asking you for this
information, we leave the door open for cooperation from our
end, too, in any upcoming questions or concerns as well.
So, finally in this hearing, I would ask unanimous consent
that this hearing's record be kept open for 3 business days for
the submission of written questions by any member of the
Foreign Relations Committee.
Mr. Kennedy, I do not believe these written questions will
be unreasonable. Again, in view of the fact that the Foreign
Relations Committee is preparing the State Department
authorization bill, I hope that you can assure us that you will
be able to respond within a week to any of these questions that
are presented to you so we can move ahead as judiciously as
possible.
[The answers to Members written questions was subsequently
received and appear in the appendix.]
Senator Grams. So, again, I want to thank you both for your
time and for your very candid answers. Thank you very much.
This committee is now in recess. Thank you.
Mr. Kennedy. Thank you, Mr. Chairman.
[Whereupon, at 12:39 p.m., the hearing adjourned, to
reconvene at 10:05 a.m., March 6, 1997.]
THE PRESIDENT'S FISCAL YEAR 1998 BUDGET REQUEST FOR THE USIA AND
INTERNATIONAL BROADCASTING
----------
THURSDAY, MARCH 6, 1997
U.S. Senate,
Subcommittee on International Operations
of the Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Rod Grams,
(chairman of the subcommittee), presiding.
Present: Senators Grams, Biden, Feingold, and Feinstein.
Senator Grams. I would like to call this hearing to order.
I would like to welcome, Mr. Duffey, Mr. Klose and also Mr.
Silverman, and thank you for your time to be here.
I want to welcome all of you for the second in a series of
budget oversight hearings being held by the Subcommittee on
International Operations. Today's hearing will focus on the
fiscal year 1998 budget request for the United States
Information Agency.
Now, again, let me thank the two officials who have agreed
to testify before the subcommittee today. Again, they are Dr.
Joseph Duffey, who is the Director of USIA; and Mr. Kevin
Klose, President of Radio Free Europe Radio Liberty, and
Associate Director-designate of the International Broadcasting
Bureau.
At the outset, I would like to make the same statement to
both of you that I made to Acting Under Secretary of State
Patrick Kennedy when he testified before the subcommittee last
week on the State Department's ``Administration of Foreign
Affairs'' budget. I am proceeding with this hearing on the
assumption that the administration is developing and will
present to Congress a proposal for the reorganization of the
State Department and also related foreign affairs Agencies,
including USIA.
While the subcommittee will not question you about the
specifics of any Agency reorganization plan, there is
considerable bipartisan interest in this issue. I look forward
to receiving the administration's reorganization proposal, and
also truly hope that we can reach agreement on a plan that the
Foreign Relations Committee as a whole can support.
Today, however, this subcommittee will focus on the
programs and activities included in USIA's fiscal year 1998
budget. As you know, there is broad support in this
subcommittee for strong and effective American public
diplomacy. As a former broadcaster and journalist, I certainly
understand the powerful impact of using var-
ious media to get the American message out to the people around
the globe. The importance of having an effective organization
to advance America's democratic principles increases
substantially in countries where the freedoms of speech and the
press are subverted.
During the height of the cold war, the U.S. relied heavily
on public diplomacy as an essential foreign policy tool for
reaching out to peoples living behind the Iron Curtain and
under oppressive regimes elsewhere in the world. Although
closed societies still exist, USIA must restructure its
programs to meet the new and the diverse challenges of the 21st
century and the information age.
I recognize that USIA has made some tough choices to
downsize and streamline its operations. However, I believe that
a more focused commitment by the Federal Government in this
area can actually strengthen those programs essential to U.S.
public diplomacy.
In recent months, administration officials have announced
that America's diplomatic readiness has been undercut by
inadequate resources. Well, frankly, I have been disappointed
by the tone of some of the more heated comments which have been
made. In his farewell address, former Secretary of State Warren
Christopher faulted Congress for what he termed as the slashing
of international affairs spending. Moreover, he claimed that:
``The amazing thing is that these cuts have not been
accompanied by any serious congressional debate. They have not
been motivated by any reassessment of our interests in the
world. As a result, we are endangered by a new form of
isolationism that demands American leadership, but deprives
America of the capacity to lead.''
Well, first, I feel compelled to rebut some of Mr.
Christopher's patently false assertions. In fact, there was
extensive debate in the 104th Congress on legislation to
restructure U.S. foreign Affairs Agencies, and to make them
better prepared to address American interests in the 21st
century.
Second, as the President's past and present budget requests
reflect, the Congress and the administration have worked
together to downsize and reorganize USIA. Now, given Mr.
Christopher's questionable premise that, ``the biggest crisis
facing our foreign policy today is whether we will spend what
we must,'' I think it is important to put USIA's budget in some
context, as I did last week with the State Department's budget.
In fiscal year 1998, USIA is requesting a budget of $1.08
billion. Compared to the President's budget request for USIA in
fiscal year 1993, this represents a decline of 28 percent in
actual dollars over the 5 years. Moreover, a comparison of the
administration's fiscal year 1998 budget request for USIA to
the Agency's estimated funding for fiscal year 1997 yields an
increase of only about 1.7 percent--a figure which is under the
rate of inflation and hardly matches the administration's
alarmist rhetoric.
The point of spelling out these numbers is not to argue
that the President should have asked for more money or that
Congress will not review his request for increased USIA funding
very carefully. Instead, it is to demonstrate that both
Congress and the administration have recognized stark budgetary
constraints, while setting funding priorities for international
affairs. Both branches should be prepared to take full
responsibility for their actions.
Now, having said that, I would emphasize that there is firm
bipartisan support for USIA's major endeavors, including
international exchange programs and international broadcasting.
Every Member of the Senate knows someone who has participated
in a USIA exchange program, and some may have experienced one
themselves.
Yet budgetary limitations and oversight responsibilities
demand a constant review of exchange programs to determine
which are most effectively meeting U.S. foreign policy
objectives. One problem that continues to raise questions is
how to eliminate duplication among exchange programs in various
U.S. Agencies and with the private sector.
In the area of international broadcasting, questions
persist regarding duplication of functions within USIA itself.
I hope today to begin an examination of the intent and also the
implementation of the International Broadcasting Act of 1994,
which consolidated all activities under a newly established
Broadcast Board of Governors.
So, I wrap up by again saying I look forward to a very
constructive discussion on these issues and many others during
the hearing. I hope that it will produce information that will
help us and assist us in shaping the State Department
Authorization Bill.
So, Dr. Duffey and Mr. Klose, I welcome both of you, again,
here today to explain USIA's fiscal year 1998 budget request,
and also to outline some of the Agency's priorities. So, again,
thank you very much for being here.
I would now like to ask the Ranking Member, Senator
Feinstein, for an opening statement.
Senator Feinstein. Thank you very much, Mr. Chairman.
I am pleased also to be here today to examine the budget
request of the USIA. I am in agreement with much of what you
said. I think it is clear to most of the people, perhaps in
this room and maybe in many other rooms, that in a world which
is increasingly determined through satellite television
broadcasts, where revolution is sometimes fostered by
videocassettes, and where information can be transmitted
instantaneously over the Internet, public diplomacy and
information disseminated in support of American foreign policy
goals occupies an ever more central place in foreign policy. I
believe it will in the future as well.
We need only to look at the violence in Rwanda and Bosnia
to appreciate the power of the media in shaping and moving
international events. In both cases, government authorities
used mass media propaganda to incite violence and bloodshed. In
fact, several prominent analysts have contended that both of
these tragic civil wars were only made possible because of the
use of mass media by people we now consider war criminals. In
both cases, the ability of the international community to
provide unbiased information and news is vital to establishing
stability and peace.
USIA programs, such as the International CIVITAS Consortium
in Bosnia and Voice of America's work with international radio
broadcasters in Africa, are important elements of a U.S. policy
intended to build a stronger and more durable civil society
around the globe.
USIA is all too often ignored or given short shrift in the
debate about how best to secure America's security and
prosperity. But I think the record is clear. For over 40 years,
USIA has played a vital role in promoting American national
interests through its overseas information dissemination,
through international broadcasting, and through education and
exchange programs. I do not think anyone on this committee
doubts the importance of the substance of the work carried out
by USIA.
What has been questioned--and I think it is a valid
question--is whether USIA has been structured to do this work
in the most effective and efficient way possible. Although for
the last 2 years the USIA budget has been relatively stable,
the earlier part of this decade saw drastic reductions in
USIA's budget and operations. I believe Dr. Duffey has made
many changes as well, which hopefully he will outline today.
I must say that from my perspective, not all of these
reductions were unwarranted. I think that the management
overhaul, the program consolidation and the reinvention that
USIA has undergone, while at times painful, have helped create
what in 1997 is a more effective and efficient Agency.
So, I look forward to today's testimony and to the
opportunity to discuss USIA's operations.
Thank you, Mr. Chairman.
Senator Grams. Thank you, Senator Feinstein.
We would like the opening statements now from our members
of the panel. I would just like to request that you keep the
opening statements to within 10 minutes if possible. Also a
reminder that your entire statement will be entered into the
record. So, Dr. Duffey.
STATEMENT OF JOSEPH DUFFEY, DIRECTOR; ACCOMPANIED BY STANLEY
SILVERMAN, COMPTROLLER; JACK LOIELLO, ASSOCIATE DIRECTOR FOR
EDUCATIONAL AND CULTURAL AFFAIRS; AND DAVID LOWE, NATIONAL
ENDOWMENT FOR DEMOCRACY, UNITED STATES INFORMATION AGENCY
Dr. Duffey. Thank you, Senator Grams, Senator Feinstein.
Let me introduce, first, some of my associates who are with
me today, the Associate Directors of USIA--for Management,
Henry Howard; Educational and Cultural Affairs, Jack Loiello;
the still new Information Bureau, Barry Fulton; our Counselor,
Anne Sigmund; and someone who has just taken up her duties this
week, the new Director of the Voice of America, Evelyn
Lieberman. We also have a member of the Broadcasting Board of
Governors, Alberto Mora.
I appreciate the opportunity to come before this committee
and to express my views about the mission and work of USIA and
to respond to your questions.
It is no secret that I began 4 years ago to lead this
Agency in a process of change. I believe that change has been
more dramatic than any change in the foreign affairs area of
our Government. The path I chose involved a thoughtful
examination of how the world has changed, along with the
national interests of the United States. But I have had
guidelines from the past, and I want to refer to some of those
as I go through this testimony.
One of the early directors of USIA was a journalist, Edward
R. Murrow, and widely respected. We sometimes think of Mr.
Murrow as standing on the other side of some kind of a wall of
isolation from U.S. foreign policy, and his name is sometimes
evoked in that regard. I would like to quote what he said,
coming before the Congress in March 1963. He referred to a
committee--this all perhaps puts the present in some history--
he told the Jackson committee, which 10 years before, had
stated that any program supported by Government funds can only
be justified to the extent that it assists in the achievement
of national objectives. Mr. Murrow said, it is the sole purpose
of USIA today to further the achievement of U.S. foreign policy
objectives.
I quote that as one source for the analysis I have begun.
The second is perhaps a little less precise, but it has to do
with the conversations that all of us have every week with our
colleagues and others about increasing cynicism in America and
among the America voters--perhaps as great a threat to the
future of our democracy as any other.
As I listen to conversations about this, I remember, first
of all, that Americans have always been skeptical about their
Government. That is a tradition particularly the English and
the Irish brought to contribute. That is not always unhealthy.
But there is a sense that today there is something deeper.
Generally, those conversations frustrate me, because they end
with the suggestion that this is some condition out there and
we deplore it, and that is about all we feel we can do.
To some extent, we have created that condition in
Government, I believe. We are all unacknowledged conspirators
in creating a Government that has made the American people more
skeptical. I believe that one of the things we can do is look
inside to our own accountability, to our ability to explain
what we do and our ability to account for how we use public
funds.
We have examined the mission of USIA in the context of the
end of the cold war, the new threats we face, the new global
technologies, and the current goals and needs of this Nation.
In our various incarnations over the past decades, we have had
a long and honorable tradition of serving the interests of the
United States. But it is also clear from reading history that
from time to time our mission has been redefined by changing
conditions and new technologies, and the demands and priorities
of the time.
For example, in 1945, one of the predecessors of USIA as an
Agency was called upon by President Truman to see--and I
quote--``that other peoples have a full and fair picture of
American life and of the aims and policies of the U.S.
Government, supplementing the work of private organizations and
individuals.''
Only 5 years later, the times had changed. President Truman
called for a ``campaign of truth.'' These were the words he
used: ``We must wage a struggle for the hearts and minds of
men--I am sure he would say men and women today--to counter
deceit, distortion and lies, used in a deliberate campaign by
our adversaries. We must make ourselves heard around the world
in a great campaign of truth.''
In a milder tone 3 years later, President Eisenhower called
upon USIA to make more effective all activities of the
Government relat-
ed to international information and to seek to present overseas
a full exposition of U.S. actions and policies.
So, over time, with these changing missions, USIA became at
one stage the largest official information organization in the
world, the largest radio system in the scope of its languages
and range of transmitter sites around the world, the largest
library system in the world in terms of branches and
distributions of books and magazines, the largest noncommercial
news distribution system in the world in terms of language and
global reach, the largest noncommercial film distributor in the
world, and a major source of programs for the movement and
exchange of students and scholars around the world.
None of that is true today. Because in every one of those
areas, there are now global organizations and partnerships with
the private sector. The times have changed. The demands are
different. The resources are more restrained. The mission is
far more subtle and far more sophisticated. But, for that, it
is no less important nor less critical in terms of very
practical, direct U.S. national interests that are not being
served by any other Agency of the Government or in the foreign
affairs community or any organization in the private sector.
The great threat to U.S. interests today is not that we not
be loved and admired in some far corner of the world; it is
that we be misunderstood, that misjudgments be made by other
nations about our interests, our motives, and our willingness
to defend those interests when they are threatened.
America is a very puzzling Nation for many who seek to
understand how our system works. The contradictions and the
ironies that go into our way of making policy and defining our
national aspirations befuddle even our most friendly inquirers
around the world. We cannot take for granted that even those
who seek, in sympathy, to understand our behavior can do so
without our being more forthcoming.
Two forces of historical significance are shaping the world
we live in--the information/communications revolution and the
shift of power away from central Government authority to
individuals and publics. These forces require us to reexamine
the way in which we engage the world.
I believe that for American leadership to be successful,
traditional diplomacy today must be complemented by an open and
creative public diplomacy which focuses on the values and
beliefs and attitudes and opinions of foreign publics. These
new challenges also highlight the need to engage to a much
greater extent the talents and resources of our own citizens.
Just 10 years ago, President Reagan foresaw this in a
comment he made on the 40th anniversary of USIA. He talked then
about what was happening to traditional diplomacy. He referred
to how far we have come from the Congress of Vienna--as he put
it, when relations between countries had less to do with the
people of those countries than with their governments, and when
small numbers of diplomats often settled matters of world
importance among themselves.
He immediately talked about the appreciation and support of
trained diplomats, and made it clear that his remarks were not
meant to be some kind of cheap shot with respect to traditional
diplomacy. But then he said: This is the information age, the
age of mass media and the microchip, telecommunications and
satellites above the planet, and fiber optic cables
underground. In this age, traditional diplomacy is not enough.
He referred to the fact that Castlereagh, as he said, spoke to
Metternich, but leaders today must speak to the peoples of the
world.
In the 10 years since that statement, this revolution has
been far more dramatic than perhaps even President Reagan
foresaw. Even 4 years ago, when USIA ventured out, the first
institution in foreign affairs, into the Internet, we were the
subject of some derision in this city. Even today, many State
Department computers and the computers we have at the U.N. are
not hooked up to the Internet.
We started that process. When I think of what has happened
in 4 years, it is astonishing. The exchange of information, the
bringing together of nongovernment organizations across
international borders. Last year, in Canada, I understand more
computers were sold than television sets. I am not sure what
the figures were for the United States, but it has been an
absolutely dramatic change. While I am far from a total
believer in cyberinformation, it is clear that it is changing
the whole context. It is eroding national sovereignty, for one
thing, and changing the whole context both of communication and
of the mobilization of peoples and resources.
The United States has newer goals today, newer priorities.
What are they?
Greater deregulation of trade and investment, the
protection of intellectual property rights, the enactment of
laws and agreements regarding transnational investment, and the
spread of fundamental freedoms and human rights--an issue that
we address in our civic education initiative, called Education
for Democracy.
USIA is today ready for a new century. For 4 years, we have
worked to become practiced in the art of pursuing these new
national interests in an era of frugal diplomacy. We have a new
and clear understanding of a more limited but crucial mission
in the service of the American people. President Clinton has
affirmed our new definition of our mission, and it is this: To
promote the national interest and national security of the
United States through understanding, informing and influencing
foreign publics, and broadening dialog between American
citizens and institutions and their counterparts abroad.
This clear and brief statement is much less heroic and
ambitious than statements that have been made in the past. But
it is the first step toward this Agency's effort to implement
the Government Performance and Results Act. Around our place,
we have been talking now for some months about GPRA. We have
tried to make our presentation in the ``Budget in Brief'' to
you structured around these new requirements set by the
Congress, which will be in effect next year.
Each of the objectives that we have outlined directly
supports the foreign policy priorities of the Department of
State and the White House. The process of arriving at those
goals is closely integrated with the Department of State's own
planning process. This is more true today than at any time in
the history of the USIA.
Our activities cannot always be measured by standard
indicators, nor can our customer and stake holder satisfaction
be gauged in the usual way. Our mission supports U.S. national
interests and advances national security. This means we try to
build international support for American policies even when
they are unpopular. We base our public diplomacy on the
principles of American democracy, even when the target audience
is hostile to them. We respond to crises that cannot be
foreseen by any planning process, and we operate programs that
are longer-term investments in stability, political security
and open markets, though they may show fewer immediate results.
We are fully committed, however, to the implementation of
the letter and the spirit of the Results Act. We have begun to
much more precisely try to measure some of the outcomes. You
have some examples; let me just add a few others.
We are prepared and beginning actively to provide support
for an open and democratic Europe and for the expansion of
NATO. We have already organized programs for this purpose. A
week from today, USIA will be the central convener of
representatives from the National Security Council, the State
Department and others to look at the public strategies
necessary to pursue our objectives with respect to NATO
expansion.
Recently we brought six key Hungarian parliamentarians on a
program that ultimately contributed to the decision of the
Hungarian Parliament to authorize the transit and stationing in
Hungary of IFOR forces involved in the implementation of the
Dayton Accords. Hungary became the first country with a
specific budget line item for the Partnership for Peace
Program, and the first Partnership for Peace country to sign
the NATO Status of Forces agreement.
There are countries today, though relatively few, that work
to prevent their citizens from having access to accurate
independent news and information. The Voice of America, other
broadcasters, Radio Free Europe, Radio Liberty, Radio Free
Asia, play a part, an important part, around the world in
providing a free flow of information. When Serbian leader
Milosevic closed down the independent radio station B-92, RFE/
RL responded immediately with expanded hours, and also with
facilitating continuation of those broadcasts. Within 24 hours
the Milosevic Government relented, and they were back on the
air, and the Voice of America carried programs with B-92
correspondents reports immediately.
An exchange visitor from Italy, a government official, who
came to the United States for a program on intellectual
property rights, was the chief organizer of a raid on local
centers of software piracy in that country shortly after
participating in our program. Our Information Resource Center
in Budapest fostered contacts between American and Hungarian
business communities that have resulted demonstrably in
business partnerships in the food industry and other sectors.
There are other examples I could use. We are prepared in this
budget and in future budgets to show that we are bringing those
measures of outcomes to direct relationship to our programs. We
are prepared to adjust, rethink, and revise them in light of
the estimate of those outcomes.
We are one-third smaller than we were 4 years ago, but the
goal has not been simply to downsize, it has been to
selectively reorganize and reexamine our work. We have invested
more of our resources in the last 4 years relative to our total
budget in training and retraining our employees and into new
technology than in any other period in our history. We are
retooling for future service in a changed and changing world.
What we do, we do more creatively and more efficiently. We are
trying to present ourselves not as an organization with a bag
of tools and a list of programs, as we may have been tempted to
do in the past, but as a team of experienced experts in
communicating these important policies, facts, opinions,
nuances, and corrections that most often do not make the
headlines or even the body of the story on CNN or Reuters or
any other commercial news service.
We have already begun to build on this, and request this
year a $1.078 billion budget, significantly down from what the
budget of this Agency was in the 1980's. But this Agency's
budget for 45 years grew practically ever year. With this
budget, however, we will have further program and staff
reductions. USIA is making reductions deliberately and
strategically as a part of our extensive reinvention project.
But this has been disrupted in the last few years by even
deeper cuts than we had planned for. I believe in view of the
challenges that this country confronts and the importance of
the work USIA has undertaken in a new spirit, in a new way, in
a new organization, that we must resist the temptation to make
deeper cuts and instead stabilize at this point as we continue
to plan for the future.
What I have tried to say today is that USIA understands the
changes and the nature of this time, that we have heard what
the American people are saying about their Government, that we
understand the changes that have taken place in our interests
and objectives, and that we are changing to meet the demands of
the times. But we remain unabashed advocates for the interests
of the American Nation and a team of strategists with an
understanding of the publics that we need to reach and reform.
Let me just close by referring to an article in the Wall
Street Journal a week ago by two prominent members of the
congressional majority leadership, Representative Gerald
Solomon of the House Rules Committee and Representative
Christopher Cox of the House Republican Policy Committee. They
discussed the elements necessary for U.S. global leadership.
They discussed issues that are going to be the central item of
debate about the foreign policy and foreign affairs requests
you have before you. I refer to one sentence in that article
that the two Congressmen wrote: American leadership, they said,
derives, one, from our powerful ideas and values, our global
military presence, and the economic benefits of the free
enterprise system.
Whatever differences may emerge in this session of Congress
about our foreign affairs budget, I believe that those words do
express a minimum consensus. One third of the three elements
the Congressmen cite, our powerful ideas and values, represents
the central focus of every program that the USIA is engaged in.
I suggest to you that, however the world has changed in terms
of technology, these are not the main objectives of CNN or
Reuters or global technology. Our ideas and values must be
pursued in a concentrated and deliberative and as wise an
effort as we can muster. Compared to the costs of our other
activities overseas, this one-third of the agenda represents a
very modest but powerful investment that directly relates to
the future of U.S. leadership.
I have provided, for the members of the committee, lists of
the changes that have taken place; a CD ROM which shows some of
the application of new technologies to a specific national
interest; and some graphs demonstrating the changes that we
have made in our administration.
Thank you.
[The prepared statement of Mr. Duffey follows:]
Prepared Statement of Mr. Duffey
Chairman Grams, Senator Feinstein, Members of the Subcommittee: I
appreciate this opportunity to appear before the Subcommittee today to
express my views on the mission and the work of the United States
Information Agency and to respond to your questions.
It is no secret that I began four years ago to lead this Agency in
a process of change. The path I chose involved a thoughtful examination
of how the world has changed along with the national interest of the
United States.
We have examined the mission of USIA in the context of the end of
the Cold War, the new global technologies and the current goals and
needs of our nation.
The USIA--in its various incarnations over the past several
decades--has a long and honorable tradition of serving the interests of
the citizens of the United States.
It is also clear from a reading of history that, from time to time,
our mission has been redefined by changing conditions, new
technologies, the demands of the time and the priorities of the day:
In 1945, President Truman called upon one of our predecessor
organizations to work to see that ``other peoples receive a
full and fair picture of American life and of the aims and
policies of the United States government . . . supplementing
the work of private organizations and individuals''
Five years later, in 1950, the times had changed and
President Truman called for a ``campaign of truth,'' waging a
struggle for ``the hearts and minds of men''-``to counter
deceit, distortion and lies used in a deliberate campaign by
our adversaries . . . We must make ourselves heard around the
world,'' he said, in ``a great campaign of truth.''
In a milder tone, three years later, President Eisenhower
called upon the USIA to ``make more effective all activities of
the Government related to international information'' and to
seek to present overseas ``a full exposition of U.S. actions
and policies.''
And so, over time, the USIA and the U.S. Government's international
broadcasting, the major part of which has been administered by USIA,
became during several points in the history of the Agency:
one of the largest official information organizations in the
world;
the largest radio system in the scope of its languages and
range of transmitter sites in the world;
the largest library system in the world in terms of branches
and distribution of books and magazines;
the largest noncommercial news distribution system in the
world in terms of languages and global reach;
the largest noncommercial film distributor in the world; and
a major source of programs for the movement and exchange of
students and scholars around the world.
None of this is true today. The times have changed; the demands are
different; resources are more restrained; the mission far more subtle
and sophisticated--but for that, no less important nor less critical in
terms of very practical U.S. national interests that are not being
directly served by any other agency of the government or any
organization in the private sector.
Today, the great threat to U.S. interests is not that we not be
loved and admired in some corner of the world--but that we be
misunderstood--that misjudgments might be made by other nations about
our interests and our willingness to defend those interests when they
are threatened.
America is indeed a puzzling nation to many who seek to understand
how our system works--and the contradictions and ironies that go into
our way of making policies and defining our national aspirations. And
we cannot take for granted that even those who seek in sympathy to
understand our behavior can do so without our being more forthcoming.
Two forces of historic significance are shaping the world we live
in--the information--communications revolution and the shift of power
away from central government authority to individuals and publics.
These forces require all of us to reexamine the way in which we engage
the world. believe that for American leadership to be successful,
traditional diplomacy must be complemented by an open and creative
public diplomacy which focuses on the values and beliefs, attitudes and
opinions of foreign publics. These new challenges also highlight the
need to engage to a much greater extent the talents and resources of
our own citizens. These are tasks to which USIA is well-suited.
We have, in addition, newer goals in the world--quite practical
objectives:
greater deregulation of trade and investment;
protection of intellectual property rights;
the enactment of laws and agreements regarding transnational
investment; and
the spread of fundamental freedoms and human rights. An
example of this is our civic education initiative, called
``Education for Democracy,'' which emphasizes the rights and
roles of citizens as full participants in the political and
economic life of their societies.
Today the USIA is ready for the new century.
For the last four years we have worked to become practiced in the
art of pursuing these new national interests in an era of frugal
diplomacy.
We have a new and clear understanding of a more limited but crucial
mission in our service to the American people and American interests
abroad.
President Clinton has affirmed our updated definition of USIA's
mission:
It is this:
to promote the national interest and national security of
the United States of America through understanding, informing
and influencing foreign publics, and broadening dialogue
between American citizens and institutions and their
counterparts abroad.
This clear and brief statement of our mission is also the first
step in the Agency's implementation of the Government Performance and
Results Act. We have broken down this mission into three broad
strategic goals and, under those objectives, we have established more
specific target outcomes for our worldwide activities. Each of our
objectives directly supports the foreign policy priorities of the
Department of State and the White House. The process of arriving at
these goals, moreover, is closely integrated with the Department of
State's own planning process. This is more true today than at any time
in the history of the USIA.
As a foreign affairs agency of the United States Government, our
activities cannot always be measured by standard indicators, nor can
our customer and stake holder satisfaction be gauged in the usual way.
Our mission supports the U.S. national interest and advances American
national security. This means:
we build international support for American policies, even
when they are unpopular;
we base our public diplomacy on the principles of American
democracy, even when our target audience is hostile to them;
we respond to crises that cannot be foreseen by any planning
process; and
we operate programs that are long-term investments in
stability, political security and open markets and may show few
immediate results.
Nonetheless, we are fully committed to implementation of the letter
and the spirit of the Results Act throughout USA Let me give you some
specific examples of how we judge ``outcome'' and not just ``output'':
As part of our support for an open and democratic Europe and
for the expansion of NATO, USIA organized a program for six key
Hungarian parliamentarians. this program contributed to the
decision of the Hungarian Parliament to authorize the transit
and stationing in Hungary of IFOR forces involved in the
implementation of the Dayton Accord. Hungary also became the
first country with a specific budget line item for Partnership
for Peace and the first PFP country to sign the NATO Status of
Forces Agreement.
Many countries try to prevent their citizens from having
access to accurate, independent news and information. The Voice
of America and other broadcasters play an important role around
the world in providing a free flow of in-
formation. When Serbian leader Slobodan Mliosevic closed down the
independent radio station B-92, VOA and RFE/RL responded with expanded
hours of both medium and shortwave broadcasts in Serbian. VOA and RFE/
RL also carried B-92 correspondent reports. After one such day of media
exposure, Mllosevic relented and B-92 was back on the air.
An exchange visitor from Italy who came to the United States
for a program on intellectual property rights later organized a
major raid on local centers of software piracy.
The USIA Information Resource Center in Budapest fostered
contacts between the American and Hungarian.business
communities that resulted in business partnerships in the food
industry and other business sectors.
Members of the first Palestinian Legislative Council were
brought to the United States by USIA to experience firsthand
how the U.S. Congress and state legislatures function. This
knowledge will assist them in establishing the basic governing
institutions of the Palestinian Authority.
A USIA grant to Southern Illinois University led to FCC
collaboration with the newly created South Africa Independent
Broadcasting Authority to establish the regulatory framework
for South Africa's first electronic media.
We are not only adapting our programs to meet new challenges, we
also are preparing our work force for the twenty-first century. It is
already one third smaller than it was four years ago. But just resizing
our work force is not the point We are far more focused and more
flexible than we were four years ago.
Over the past four years, the new USIA has invested of its
resources, relative to the total annual budget, in training and
retraining its employees and into new technology each year than
in any other period in its history. We are retooling for future
service in a changed and changing world.
Our work force is reduced by one third, but what we do, we
do more creatively and efficiently.
We seek to present ourselves today not as an organization
with a bag of tools and a list of programs, but rather as a
team of experienced experts in communicating those important
policies, facts, opinions, nuances and corrections that most
often fail to make the headlines and, too often even the body
of the story on CNN or Reuters or any other commercial news
source.
This is indeed a new time.
To continue our support for American leadership in the world and to
build on the work that has already been done, we are requesting $1.078
billion for FY 1998. This will cover most of the costs of the Agency's
current service requirements and enable the Agency to stabilize core
programs and operations.
With this budget, however, further program and staff reductions
will be necessary in FY 1998. While USIA is making reductions
deliberately and strategically as part of its extensive reinvention
efforts, the Agency has been forced over the past several years to make
faster and deeper cuts than I believe are wise in view of the
challenges which confront America around the world.
With FY 1998 program reductions of $13.9 million, USIA's
appropriations under this request will be 33% below the 1993 level in
constant dollars. Staff reductions of 128 in FY 1998 will bring total
workforce reductions to 29% in the same time frame.
Although we project further reductions, we propose $3.4 million to
allow innovative expansion of technology for Agency programs,
strengthen broadcasting audience research and establish a new office to
increase cooperation and eliminate duplication among agencies
conducting international exchanges and training.
This Agency also continues to streamline its operations and to work
with other agencies to integrate administrative functions.
We have also proposed draft authorizing legislation together with
several changes to existing statutes for the Committee's consideration
as the budget is prepared for 1998.
What I have tried to say to you today is that USIA understands the
changes and the nature of this new time. We have changed and will
continue to change with the times and the demands of the time.
We remain, however, unabashed advocates for the interests of the
American nation--a team of strategists and tacticians with an
understanding of the publics we need to reach and inform and convince
if our national policies are to be successful.
Mr. Chairman, Members of the Subcommittee, I believe that the
public diplomacy programs of USIA remain an important strategic
investment that America must support to protect and sustain its vital
interests in the future.
Last week, The Wall Street Journal carried on its editorial page an
article by two prominent members of the Congressional majority
leadership. Representative Ger-
ald Solomon, Chairman of the House Rules Committee, and Representative
Christopher Cox, Chairman of the. House Republican Policy Committee,
wrote about the elements necessary for U.S. global leadership. Their
discussion of a number of established programs will contribute to the
debate we are having about how to pursue our national interests as we
look to a new century.
At one point the two Congressmen wrote the following: ``American
leadership derive . . . from our powerful ideals and values, our global
military presence and the economic benefits of our free enterprise
system.''
Whatever differences may emerge in this session of the Congress
about our foreign affairs budget and strategies, I believe that these
words do express a consensus. Now one third of the three elements the
Congressmen cite, ``our powerful ideals and values'' represent the
central focus of every program that USIA is engaged in. Compared to the
costs of other activities overseas this one third of the agenda
represents a modest investment, but a powerful one, an investment
directly related to the future of US leadership in the world.
Thank you, Mr. Chairman. I would be happy to address any questions
you or your colleagues may have.
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Senator Grams. Thank you very much, Mr. Duffey. Mr. Klose,
your opening statement.
STATEMENT OF KEVIN KLOSE, ASSOCIATE DIRECTOR FOR BROADCASTING,
U.S. INFORMATION AGENCY
Mr. Klose. Mr. Chairman and members of the committee, I am
very pleased to appear before you today as the representative
of David W. Burke, Chairman of the Broadcasting Board of
Governors. I am Director designate of the International
Broadcasting Bureau, and have served as President of Radio Free
Europe/Radio Liberty for the past 2\1/2\ years.
We in international broadcasting owe a special debt to the
Senate Foreign Relations Committee and your subcommittee for
continuing support of our activities and missions in
furtherance of America's foreign policy goals. I would like to
add a personal note of thanks to Senator Biden for his
steadfast dedication to the principle of the independence and
integrity of all our broadcasters, as is enshrined in the
Broadcasting Act. I would also like to thank Senator Feingold,
because by insisting that Radio Free Europe/Radio Liberty must
economize, you helped us take a good, hard look at ourselves
and come up with a more cost-effective way of achieving our
goals.
Mr. Chairman, I have a prepared statement. I ask the
committee's permission to submit it for the record.
Senator Grams. It will be so submitted.
Mr. Klose. Thank you.
I would like to briefly mention that the 1998 request for
international broadcasting is a total of $399.5 million. The
question for all of us is what does that money buy in terms of
U.S. foreign policy goals, in terms of the national security
interests of the United States. Mr. Chairman, I need only look
at the headlines in recent days and in recent weeks to see the
interplay of the international broadcasting entities of the
United States and foreign policy goals of the United States and
major national issues that stand before us.
I would mention Albania, which is now in a state of crisis.
That crisis in part focuses on demands that are sweeping the
country for freedom of expression, for new politics, for
democracy to express itself. In this crisis situation the Voice
of America has been a principal actor bringing voices of
democracy forward, and the regime has responded in kind. Five
in-country affiliates of the Voice of America, radio stations
on Albania, have been silenced.
There is now widespread state censorship of all the media.
VOA's dedicated and resourceful stringers in-country are in
hiding, fearing further measures of repression from the
government. There is one Voice of America affiliate still
functioning in the capital of Tirana. We are now broadcasting
into Albania using short-wave transmitters that are out-
country, that are from elsewhere in Western Europe, and we are
reaching listeners as well by several medium-wave transmitters
into Albania.
This crisis, and the earlier crisis that we saw centered on
Radio B-92 in Belgrade, and the broader crisis in Serbia, are
distinctive in my mind because they focus on rights of free
information and they focus on the mass media. The 6-month
crisis in Serbia which ultimately focused American interest on
the role of independent media in places where independent media
struggles to exist at all became for us a focal point and an
object lesson about how international broadcasting, led by the
U.S. international broadcasting entities, in this case the
Voice of America and Radio Free Europe/Radio Liberty, combined
to in effect force the Milosevic Government to put B-92 back on
the air, and in fact by that solidarity of the international
broadcasters showed the reach and the relevance of our
broadcasters and our broadcasting effort every day.
These two countries--Albania, Serbia--are, of course,
located in what has been a historic human seismic zone where
issues of government repression and the aspirations of
individuals and whole societies to break out of entrapment to
find their own way to take on for themselves self government
and to emulate and then become functioning civil societies
under rule of law. This seismic zone is, in effect, in my view,
analogous to the situation that U.S. international broadcasters
face in many other parts of the world, in China, in parts of
Africa, elsewhere in Asia.
The international broadcasting community, fueled by
American taxpayer dollars, is leading in bringing ideas, in
bringing American values, American perspective, and American
explanations of how you achieve democracy, to those people in
the surrogate grantee operations of Radio Free Europe, Radio
Liberty, and Radio Free Asia. There, the broadcasting is
focused much more in the region, and allows people in the
region to have access to balanced, accurate objective
information that is relevant in a specific way to their own
lives and their own concerns on a daily basis, while the Voice
of America conveys America's ideas and American perspectives to
people.
These organizations in these countries, and I have traveled
in many of them personally, the organizations, Voice of
America, Radio Free Europe, Radio Liberty, and Radio Free Asia,
and Radio Mari--I have not been able to travel to Cuba--but
these radio voices, and now increasingly television and our use
of Internet, stand as not just symbols, but reality of American
presence in the effort to transform struggling societies and to
bring them into the democratic era.
Many people have said that the 21st century may be the
century of democracies, and we see the trends gathering. We
know that the developments in Central Europe and elsewhere in
the last quarter of this century have set the stage for what is
to happen in the 21st century. The international broadcasting
community of the United States is a front-line player in that
activity, in that effort to transform those societies and bring
stable civil societies forward.
Other places we could think of are, for example, in Iran.
The Voice of America is now simulcast, television and radio
service in the Farsi language. We know it is having an effect,
because we have reports, credible reports, of Iranian
authorities going literally from house to house taking down the
satellite dishes, removing them, and people have found ways
themselves to remove them in the daytime and put them up again
at night. The responses that we have seen, both anecdotally and
in fact to this kind of co-broadcasting or simulcasting into
Iran, sets the stage for what we are looking at going forward
in the 21st century with the international broadcasting
community.
The cooperation and coordination which came out of the 1994
International Broadcasting Act which Voice of America, RFE/RL,
and all the entities have engaged in has shown that although
there are differences, and distinctly so, and in my view those
differences are a rich mix of American contact in different
ways with many different audiences and for different reasons,
these entities have also cooperated in new ways. There was
overlap prior to 1994 in such things as Russian broadcasting by
the Russian Service of Voice of America and Radio Liberty's
Russian service. That has ended. Significant economies have
been made in the transmission schedules, and cooperation
continues amongst these broadcast entities.
The interactive nature of the 21st century beckons to us in
a very strong way. Most of these radio or broadcast entities
have home pages on the Internet, and are receiving thousands
and thousands of inquiries or hits a day. They are putting
their own news in real audio on the Internet, and we are
beginning experiments, I believe, with real video. Soon that is
going to be available to us, as well.
Most of us are aware of the views of people such as Michael
Bloomberg and our own board members on the Broadcasting Board
of Governors, Mark Nathanson, who is a very successful
television entrepreneur in Southern California and worldwide;
Carl Spielvogel; Chairman Burke, himself, who comes out of
American television and knows the broadcast business, are very
eager to help us shape a future which is interactive, in which
the visionary notions that people are having now about the
interactivity of the 21st century will be part and parcel of
what we do as we go forward.
I would like to end my comments in this part of my
testimony simply by citing several, in effect, eyewitnesses, or
ear-witnesses, in this case. These are anecdotal examples of
the power of these broadcasting services even now, today.
Here is a letter which the Voice of America received from
Hopei Province in China: I am a loyal listener of VOA. So long
as there is time, I cannot pass up the chance to listen to your
station's broadcast. I think that VOA is the world's most
impartial, most objective, speediest news station. You could
say that no station can rival VOA. That is from VOA's China
branch.
In Russia, I would like to quote to you from the Financial
Times of London, in its editions of January 4-5 of this year.
This was from a piece written by Chrystia Freeland, who is a
correspondent, bureau chief for Financial Times of London in
Moscow. She writes: This decline in the credibility of Russian
journalism has had one bitterly ironic result. According to
Andre Pyontikovski, a Russian political scientist, 5 years
after the collapse of the Soviet Union, the country is again
tuning into the foreign radio broadcasts originally created to
upset the communist regime. Quote: Radio Liberty has again
become Russia's best source of objective information.
We have seen this phenomenon at Radio Free Europe across
our region. When the countries that we are broadcasting to in
that part of the world encounter political difficulties,
turmoil, upheaval, scandal, there is an instinctive interest on
the part of people who have been listening to their indigenous
radio and television, watching television and reading the local
media. Two things happen. There is a rise in the polemics
inside the country, and there is instinctively a wish to find
objective, reliable sources of information which have been out
there for many, many years, and people turn to these radios,
both Radio Free Europe/Radio Liberty, and to Voice of America.
In my view, those are the kinds of lively examples that prove
both the relevance of the enterprise and sets the stage for us
to further evolve and accept and make use of the revolutionary
new technology which is coming on line soon.
Mr. Chairman, thank you very much.
[The prepared statement of Mr. Klose follows:]
Prepared Statement of Mr. Klose
Mr. Chairman and Members of the Committee, I am pleased to appear
before you today as a representative of David Burke, Chairman of the
Broadcasting Board of Governors. I am also the Director-designate of
the International Broadcasting Bureau, a position I will assume after
4\1/2\ years with Radio Free Europe/Radio Liberty, Inc., the last 2\1/
2\ as RFE/RL President. I am honored to have been asked to help meet
the challenges for change that face U.S. international broadcasting in
the 21st Century and would like to share with you my perspectives as
you preview our Fiscal Year 1998 and 1999 budget request.
U.S. international broadcasting has consistently served as an
inexpensive, effective tool for encouraging peaceful change and
democracy. It is an essential element in defending and promoting the
freedom and security of the United States abroad while encouraging the
evolution of a more stable and peaceful world. What excites me about
our broadcast entities is that, despite budget reductions of over 30%
in the past four years, U.S. international broadcasting today is
engaged with its audience. It is interactive, it is shortwave, it is AM
and FM, it is satellites, it is television, it is the Internet and
``real audio,'' available via home computer worldwide in over 17
languages. It has evolved to meet the challenges of today, to meet the
needs of its listeners and to serve U.S. foreign policy interests
globally.
The broadcast elements under the new Broadcasting Board of
Governors include the Voice of America, WORLDNET television, Radio and
TV Marti, and the grantee organizations Radio Free Europe/Radio liberty
and Radio Free Asia. Each of these entities is engaged in the daily
struggle to encourage the free flow of information and ideas and to
promote human rights from China to Cuba, from Zaire to Serbia.
The world to which we broadcast has changed. There is greater
truthfulness and candor in the media of a number of former communist
countries than there was eight years ago. But the role of RFE/RL, VOA,
RFA and the Martis remains critical. We need only to look at the past
six months in Serbia as an example. Coverage of pro-democracy
demonstrations in Belgrade was forbidden and absent on state-controlled
media. In December, Serbian President Slobodan Milosevic silenced the
Belgrade independent station Radio B-92. Both RFE/RL and VOA responded
immediately to the need for accurate, fair reporting on the scope of
the opposition forces and government reaction to their activities. The
expansion of shortwave, medium wave and television broadcasting to the
region, as well as Internet access, provided audiences with in-depth
coverage and analysis of events as well as U.S. and world reaction to
developments there. Veran Matic, senior editor at Belgrade's B-92
station, has confirmed the significant role both RFE/RL and VOA played
in returning that station to the airwaves. The pro-democracy movement
was supported and strengthened by U.S. international broadcasters in a
dramatic example of fulfilling U.S. foreign policy goals in a troubled
and volatile part of the world.
In the U.S., freedom of the press and access to multiple sources of
news is guaranteed by our Constitution. But the world to which we
broadcast knows the reality of powerful governments controlling radio
and television, intimidating or shutting down independent media that
criticize or speak truthfully of shortcomings and political repression.
The internationally recognized Committee to Protect Journalists is
scheduled to release its annual survey on press freedom violations
around the world on March 14. It will report that in 1996, 26
journalists were murdered and 185 imprisoned in 24 countries. This grim
toll - murder and imprisonment of journalists outside our borders - is
powerful testimony to the need for the work we do.
A keen example of meeting today's challenges with innovative
programming is our expansion of interactive programming with listeners.
Last Fall, the Voice of America launched five of its regular radio
shows on television, in Farsi, Russian, Serbian, Mandarin and Arabic.
This type of radio/TV simulcast is cost efficient and feedback from the
listeners is impressive. The Iranian government's response to the one-
hour issue-oriented call-in show ``Roundtable With You'' was an
accelerated confiscation of private citizen's satellite dishes. People
still watch at great risk and call-in to the program, at great expense.
Dedicated viewers install their dishes at night to tune-in and then
remove and hide them in the morning, often taping the simulcast to
share with those who do not have dishes.
From its new, highly efficient broadcast center in Prague (rent,
$12 a year for the entire former Federal Parliament Building in
Wenceslas Square), Radio Free Europe/Radio Liberty has strengthened its
surrogate ``home radio'' presence throughout Central Europe and the
former Soviet Union. Interactive call-in segments in which listeners
speak with experts on international relations, economic reform, family
health, ethnic diversity, and similar issues are featured in the
Russian, Slovak, South Slavic, Ukrainian and other RFE/RL services.
The Marti's demonstrated their critical role in providing news and
information to Cuba following the shootdown of Brothers to the Rescue
last February, and more recently with its balanced coverage on the
licensing of news organizations in Cuba and the plan for a democratic
transition there.
Feedback from China on Radio Free Asia is received via RFA's Hong
Kong mailbox where letters arrive from throughout China expressing
overwhelming support. A loyal listener in Tianjin says, ``. . . our
television reports and papers are filled with false stories, which has
seriously limited fur understanding of domestic and international
politics . . . But Radio Free Asia's news reports and interviews with
activists in the democracy movement feel very warm and honest...''
The thread which links all of our broadcast-entities is the
commitment to fair and balanced reporting. Each U.S. international
broadcasting entity adheres to these standards while fulfilling
American foreign policy objectives, providing viewers and listeners
with information they cannot get from commercial sources. For example,
VOA's recent broadcast of the President's State of the Union Address,
including the Republican response by Representative J.C. Watts, is
consistent with our commitment to fairly project American policy and
perspective.
Technology is evolving rapidly for international broadcasters. In
parts of the world where TV and the Internet are accessible, we are
delivering. But in many parts of the world, shortwave radio remains the
most valid means for delivering programs. Radio remains the predominant
vehicle for information in much of Africa, for example. Although the
number of radio stations in Africa has increased, most are still
government controlled, a circumstance that actually increases the need
for accurate, balanced information from and about the United States and
the world.
Mr. Chairman, a word about our 1998 budget. We are requesting
$399.5 million--$366.8 million for International Broadcasting
Operations and $32.7 million for Radio Construction. This represents a
current service level for the most part--with one enhancement for
additional audience research to increase the availability of valid, up-
to-date information on our audiences.
A quick review of broadcasting's recent budget history may provide
a useful perspective on this modest request. During the period 1994 to
1997:
international broadcasting's budget has decreased 31%;
the staff of international broadcasting has been reduced by
over 1450 positions;
over 490 direct broadcast programming hours via IBB-operated
shortwave and medium wave transmitters per week have been
eliminated (about 29%).
Despite these severe reductions, our broadcast operations have
accomplished:
the launching of Radio Free Asia in its first 5 languages,
as mandated by Congress;
joint ventures with USAID and Carnegie Corporation to
provide programming about Angola, Central Africa, and on
conflict resolution initiatives in the Balkans, Afghanistan,
and South Africa;
a reunification program in Central Africa through VOA's two
new languages to that area, Kirundi and Kinyarwanda, helping
hundreds of refugee families separated by the mass exodus there
to reunite;
the technical coordination of RFA, VOA and RFE/RL broadcast
schedules to avoid overlap;
crisis coverage of events this past year in Albania, Burma,
Rwanda, Zaire, Serbia, Belarus, and other regions;
intensive human rights coverage by all services, including
RFA's focus on repressive policies in China and Tibet and Radio
and TV Marti's regular program, ``Tus Derechos, Cubano (Your
Rights, Cuban).''
500 WORLDNET interactives dialogues with newsmakers beamed
via satellite to all regions of the world;
a joint initiative with the Justice Department and VOA to
broadcast ``International Crime Alerts'' profiling
international fugitives on VOA weekly and on VOA's world wide
web page;
initiation of the conversion to digital technology;
expansion of broadcast affiliates to broaden coverage and
access to listeners globally;
strengthening of RFE/RL journalism training program in
Prague, linking with privately-funded Foundation for
Independent Journalism to teach fact-based journalism to
promising reporters and editors from the region;
expanded live RFE/RL programming from its news bureaus in 19
capitals, adding new relevance to its daily broadcasts in 19
languages.
Mr. Chairman, international broadcasting is a real bargain. Our
successes in Africa, Iran, China, Serbia, Russia and elsewhere around
the world were accomplished with a 1997 budget that represents
approximately two percent of total Federal spending on international
affairs.
I believe that enactment of our 1998 request will enable
international broadcasting to stabilize operations after an unsettling
period of reorganization and downsizing. It will provide a solid
platform from which to advance our mission into the twenty-first
century.
I look forward to working with members of this committee as the
budget process proceeds and can assure you that I will work toward the
most efficient utilization of funds entrusted to us by Congress. I
would be happy to answer any questions you may have at this time.
Senator Grams. Thank you very much, Mr. Klose.
Senator Feinstein just had to attend another hearing, but
she plans on returning shortly this morning to also ask more
questions of this hearing. So, I would like to just start out
by addressing Dr. Duffey first of all, and also, Mr. Klose, if
anytime you want to chime in if some of these questions are not
directed specifically at you or for both of you.
Dr. Duffey, as I said in my opening statement, the
subcommittee is not going to be questioning you today on any of
the specifics of a particular proposal to reorganize the State
Department and related foreign affairs agencies. However, this
issue came up twice last week during hearings on the budgets
for the State Department and also the Agency for International
Development. Therefore, Dr. Duffey, I would like to just ask
you if it is your understanding that the administration is
developing a reorganization plan for U.S. Foreign Affairs
Agencies, and that this proposal will be presented in the near
future to Congress.
Mr. Duffey. It is my understanding, Senator Grams, that
Secretary Albright, Vice President Gore, members of the
National Security Council, are consulting, and will have
prepared for the Congress a program for addressing the issue of
consolidation.
Senator Grams. Of course, the obvious question would be
have they consulted you? Have you had your input on how USIA is
going to figure in or be reconfigured in this new organization
plan?
Mr. Duffey. Well, several of these consultations have gone
on for several years. USIA has worked closely with the State
Department to consolidate certain functions to make them more
efficient and reduce costs. The consolidation of the Office of
Inspector General, which has achieved considerable savings, was
a proposal by USIA, and I believe it has already been
demonstrated that it is successful. We have expressed our
views. They are very consistent with the testimony I have just
given.
My hope for USIA is first of all that it serves more than
the State Department and is not the public relations arm of the
State Department. We have a major presence overseas and provide
sup-
port to Justice, Treasury, Commerce, and other Agencies. USIA
must serve all of those Agencies.
I have tried very hard to make USIA a less bureaucratic,
more agile, flexible institution. I think we have already
demonstrated that we can respond more quickly and more directly
than some of the larger institutions. We are not an Agency that
makes policy, we are a service Agency to the Government in all
our presence overseas.
We have been a part of the conversation. The Secretary,
looking at this with fresh eyes, and I think a great deal of
familiarity with the institutions involved, will bring forth
her proposal. I think to date she has kept her counsel, but I
am quite sure the proposal will come to the Congress.
Senator Grams. OK. As you know, this committee is moving
ahead as quickly as possible to try to put this together. So,
we appreciate any effort on your part, and also on Secretary
Albright's, to forward that information.
Dr. Duffey, as you know, the International Broadcasting Act
of 1994, which you refer to, and also Mr. Klose, consolidated
all international broadcasting activities under a nine-member
Broadcasting Board of Governors, the BBG, of which you are a
statutory member. The statute creating the BBG specifies that
it is established within the United States Information Agency.
Now, the statute also specifies that the BBG should forward its
recommendations concerning its proposed budget to the Director
of the United States Information Agency for consideration of
the Director as part of the Agency's budget submission to OMB.
However, the statute also grants the board the authority to
direct and supervise all broadcast activities conducted by
USIA. So, the question, could you describe for the committee
how you view the institutional relationship between the Office
of the Director of USIA and also the Broadcasting Board of
Governors?
Mr. Duffey. Well, let me say first of all, Mr. Chairman,
that we are dealing here with an extraordinarily complicated
set of institutions and problems. The Congress did not have
responsibility for the Board of International Broadcasting,
which supervised Radio Free Europe and Radio Liberty for the
first 20 years of its existence. It had ample funding, but this
was covert funding.
Congress then began to work out an arrangement to have an
International Broadcasting Board, which was at the same time a
publicly designated and Senate-confirmed group that awarded the
funds they received to a corporation of which they were the
members to administer the Radio Free Europe/Radio Liberty
programs. When I came on board in May 1993, the previous
administration had proposed that this funding be eliminated
altogether.
It became clear to me that there was a need for changes.
Any institution that had existed with this kind of history
faced a difficult transition. But also that there was an
important need for this institution to continue. The Congress
then--we began to work with a great deal of consultation.
Representatives of RFE/RL will remember spending 2 or 3 days in
hotel rooms in various parts with Voice of America and other
personnel, and with an enormous show of good spirit and I think
great imagination, a proposal was made to you.
Before I talk about that I just want to say the following:
Just less than 2 years ago the Wall Street Journal commented in
its lead editorial on this proposal to close the Munich
operation, which had been incredibly expensive--1600 people--
and move it to Prague. The Journal's editorial was entitled
``Radio Free Europe/Radio Liberty, Rest in Peace.'' And at the
end of the editorial the writer said only time will tell what
will happen to the Prague-based RFE/RL, whether it will live up
to the reputation of its predecessor. We hope so for the sake
of the audiences it served, but we lament that its mission was
so abruptly and inappropriately halted.
In less than 2 years, I think we have evidence that this
move has, thanks in large measure to the leadership of Kevin
Klose, really invigorated this institution. Four hundred people
now in Prague, with the use of digital technology--something we
must bring to the Voice of America. Digital technology has made
a dramatic cut in our expenses. We need the investment
resources and we need to work with our unions to make this
change possible everyplace. But it just made a significant
change.
Far more important--far more important--is the respect that
Radio Free Europe/Radio Liberty has gained for its
understanding of a new time, taking on a new mission, moving
into the Internet wisely, broadening its sense of what it is
trying to do in terms of training and facilitation of the
growth of indigenous broadcasters. I simply want to say to
Klose and to the people at the Voice of America who have worked
together to make this move possible that they have already, I
think, been vindicated in a dramatic reinvention and
transformation.
I would like to say, Mr. Chairman, in response to your
question, that I think the best way to address this, if this
committee wishes to, is perhaps to look at the original
legislation submitted to the Senate in June 1993. That was 3
months after I began my responsibilities. I brought along
copies of that bill. History passes us all by so quickly with
all the changes that take place. But this is the bill, this
proposal was signed by Chairman Mica of the Board of
International Broadcasting and myself. It was discussed for a
number of weeks. It was the administration's proposal for the
way in which this new and rather complicated arrangement might
proceed.
Now, I am not suggesting that administration proposals are
the first and last word. Indeed, our system works well because
of the accountability of the Congress and the administration to
each other. In this particular case, however, I would point out
that what was proposed--carefully thought out and with very
wide participation--was that the direction and supervision of
broadcasting should be the task of the Director of
International Broadcasting, accountable to the board, and
accountable to the Director of USIA. This is a position that
Mr. Klose, I am delighted to say, is about to assume.
That was the proposal that was made in the legislation that
was submitted to you, and this is the description of the
Broadcasting Board of Governors, I quote: ``To provide guidance
and oversight to the International Broadcasting Bureau, which
is authorized to administer Radio Free Europe/Radio Liberty,
Voice of America, the Office of Cuba Broadcasting, Asia
Democracy Radio, and such serv-
ices of Worldnet Television and Film as are determined by the
board with the concurrence of the Director of USIA.'' The bill,
adopted by the Senate after discussion and consideration,
authorized the board to direct and supervise all broadcasting
activities conducted pursuant to this title.
There is an ambivalence involved there between the role of
USIA and the Broadcasting Board. I think it arose from the
great concern, which I share, that there be some protection
from intrusion on the professional status and responsibilities
of the journalists in radio, but it might be at least a place
to begin by looking at the proposal that came to you and was
signed by the Chairman of the Board of International
Broadcasting, as well as the language that was adopted by the
Congress at a later point under which we now function.
Senator Grams. When you say direct and supervise, the BBG
has the authority or oversight for all international
broadcasting. Is it correct to assume, then, that you, as the
senior U.S. official in charge of the overall public diplomacy
effort, then have oversight of that board?
Mr. Duffey. No, I do not think that is the understanding at
the moment. I sit on the board and we work together. I have
certain responsibilities having to do with the appropriation
and personnel and other matters that I believe are clear. But
it is a state of ambiguity and difficulty that I think puts the
board in a difficult position, and occasionally me in a
difficult position.
I am not sure that a board, however large a staff they
have, can administer a Government Agency. A board can be one of
the bodies to which that Agency is accountable, but it is
probably unfair to the board and unfair to the Director of
International Broadcasting who is hired to describe the board's
function as administering. I think that is something that is
done day to day by the person who is hired to do the job and
who has accountability.
Senator Grams. To follow up on that, do you believe that
you have or should have authority over the activities of the
BBG, or should it be an autonomous unit within USIA?
Mr. Duffey. I am uncomfortable responding to that without
Mr. Burke's presence. I think the two of us could have some
debate, I think perhaps in good faith, about the problems that
are created by the ambiguity of the language. The last thing,
frankly--with a job that has lots of responsibilities--that I
want to fight for is more authority. I have a lot on my plate.
I consider I do have budgetary and oversight supervision for
many aspects of broadcasting because it is a part of USIA, and
have found that the Congress and the administration both hold
me accountable, as they should.
But the board also lives with this ambiguity and
difficulty, and I think it is a point of stress with whoever
serves as the administrator, the Director of the Broadcasting
Bureau, as well as with the Director of USIA.
We can generally live with these things, and it is not the
only contradiction we live with in the government. But if the
committee wishes to address it, I think some guidelines might
be the original way in which the proposal was made. As I say
again, that, as it came to you, was signed by the Chairman of
the International Broadcasting Board, and it came out of a
great deal of careful consultation over some weeks.
But it is not a constant stress and difficulty. It may
create a problem more for the board than it does for me. I
understand what I am being held accountable for, and will make
the decisions necessary to be accountable.
Senator Grams. Well, there appears to be some of this gray
area that you have talked about, the ambiguity. Would you
recommend any changes that this committee could make or direct
to the International Broadcasting Act that would try to clarify
that relationship between the Director of USIA and the BBG?
Mr. Duffey. I think rather than making changes I would
think this is in the province of the committee. My
recommendation would be that the original language be examined
again and perhaps the board will want to inquire about the
reasons for that language. I have stated some of them, but we
could provide you in writing other reasons, because it had very
wide circulation, a very wide discussion. If the committee
pursues this, I think my recommendation would be that is a
place to begin.
Senator Grams. I know you talked about the professional
status and responsibility of journalists. As I mentioned, I was
in that field for a number of years, and I know the role and
the responsibility we had. I am not sure that it carries the
same 100 percent translation into this department. There are
some other--as you go back to what you said Mr. Murrow said in
1963, it is to further U.S. foreign policy objectives. There is
a difference there, and so again, if there is anything this
committee can do, or we will be looking at that and maybe
seeking information from both Mr. Klose and yourself, to maybe
help erase some of this gray area and to put in some definition
or lines, so we will work on that.
Dr. Duffey, also the Foreign Relations Committee will soon
be considering other legislation, as well, to streamline our
foreign affairs agencies and reduce duplication of services,
again an important area. As we continue that process, we will
be looking to steps, if any, that the USIA has undertaken to
eliminate such duplication. In that regard, could you explain
why USIA has had an Office of Congressional Affairs, yet the
Broadcasting Board of Governors, the BBG, which exists within
USIA, also has its own separate congressional affairs officer?
Mr. Duffey. The Broadcasting Board of Governors has the
authority under the legislation to create such staff as they
deem necessary, and so they have created a staff that addresses
congressional relations, budget matters, and other matters, at
the direction of the board.
Senator Grams. They have the authority, but is it
streamlining the efforts or is it duplicating some of the
services?
Mr. Duffey. Well, I think you would get different views on
that. Obviously there is some duplication involved, but I am
sure members of the board would feel that given the definition
of their responsibility to administer the Agency, this is
appropriate. It does create some duplications. These, I think,
are now sort of off limits for the Director to address. We have
other duplications that we are still trying to address in
personnel offices and others that I think we have to deal with
in the next year or so. This has now been de-
clared, I think, simply by the understanding of the
legislation, off limits for such examination.
Senator Grams. To move on a little bit further, does it
also make sense for both the BBG and the Voice of America to
have their own budget officers? Again, USIA already has an
Office of the Comptroller, which is basically in charge of the
Agency's overall budget.
Mr. Duffey. Broadcasting activities here are about a third
of the Agency's budget. A consolidated budget office that works
together where people are assigned the broadcasting
responsibility, I think, is one way this could be organized,
rather than having a separate office. Our office at USIA
assumes and will continue to exercise the priority role,
because we are the ones who are held directly accountable by
the Congress and the administration. It could be organized as
it is now, or it could be organized with specific functions.
Part of what we are trying to do here is to--and I think we
have been partially successful--is to eliminate so much of the
duplication in engineering, transmitters, all which existed
earlier between RFE/RL and the Voice of America. I think that
there has been enormous good cooperation in that regard, and
the board has worked hard for that.
I think we all recognize that we have not achieved the
consolidation that we proposed, and we will continue to work
toward that. I recently submitted a memo to the board with
respect to other things I think we can do, and we have yet to
fulfill the provisions that were incorporated in a proposal we
made about true consolidation. We need to look carefully at the
areas where that is not necessarily productive, but I think we
have yet to achieve that.
Senator Grams. Not to belabor the point, but looking at
another example, does it make sense for the BBG to have its own
legal counsel when USIA has an entire legal staff with 16
attorneys? Does that not inevitably lead to, again, duplication
of effort?
Mr. Duffey. It may lead to duplication of effort. I am sure
members of the board could also provide a rationale for why the
decision was necessary from their point of view, given the way
the legislation now reads.
Senator Grams. Mr. Klose, any comments before we move on to
other areas of this?
Mr. Klose. Mr. Chairman, I would only--from the
broadcasting perspective of Radio Free Europe, which is where I
would like to speak from, our concern is, and I think this is
probably reflected in the concerns of the other broadcast
entities, are the issues of fire walls which ensure the very
areas that you were speaking of yourself and which you know
from your professional career as a journalist are extremely
important, which is that there be a sense of independence, both
symbolic and real, of the Voice of America's charter and the
unique nature of the grantee organizations, RFE/RL, RFA, and
the slightly different provisions that have been taken in the
creation of the Office of Cuban Broadcasting, are all efforts
to address that in different and unique ways.
I believe that the broadcast mission is enhanced by that,
and as a person who reported to the Board of Directors of RFE/
RL, I felt very comfortable knowing that it was a corporate
board that I was speaking to, and that it had a natural history
of independence all by itself in addition to the relationship
it had to the Federal entities.
Mr. Duffey. I would like to underscore that, Mr. Chairman.
The principal role of the board as we proposed it initially and
its function even now is to be a protector of the professional
status of broadcasting. I think that, even with the VOA
charter, which now would extend to the Broadcasting Bureau, it
is still necessary for the board to take that responsibility.
However this committee decides at the end to adjust this
legislation, I assume that that role would be once again
affirmed. I certainly believe it is an important role.
Senator Grams. Not to cast any aspersion on the activities
of the international broadcasting and anything that has been
done in the past, but I know even the media in this country is
coming under scrutiny for its reporting practices and biases or
et cetera. The old quote is if the media is watching society,
who is watching the media? They are not, I do not think,
unaccountable for what they are doing, and I just want to
prevail that oversight will be just who is watching and who is
going to be responsible if and when questions arise.
Let me move on to some other areas. Again, when other
members of the committee return, and I expect Senator Biden to
be here as well, he may have some further questions in this
area, or comments. But let us talk more about the direction or
the mission of USIA. In the 1990's there have been two major
events that I assume have had a profound impact on USIA's
mission and its basic operations for its efforts to carry out
public diplomacy. The first, of course, was the fall of the
Berlin Wall and the end of the cold war. The second would be
the ongoing technology explosion that you have all talked about
so far this morning that has led to greater worldwide access to
information than ever before.
Could you explain how USIA has restructured, in the last
couple of years, its operations? And I know you have touched on
this, but just more detail to adapt to the post-cold war
environment, and what has been the impact of these changes in
terms of the USIA's focus on various regions?
Mr. Duffey. Let me say first of all that 4 years ago we
made a decision to end the publication of magazines. For 40
years, USIA had published magazines that were circulated around
the world. It took about 9 months to get the copy. There was an
extraordinarily competent professional team here in Washington.
The magazines were sort of real show pieces; they had wonderful
photography, and articles about American life. While it was a
bit traumatic to make a decision to end them, I think everyone
would agree now that in a time when magazines circulate freely
in almost every part of the world, and there is need for
shorter term communications, that that was a wise decision.
Many of the men and women who earlier edited those
magazines have learned now to design home pages, to produce
material for publication, what we call electronic journals,
which we do not send around the world because we think people
are going to read them via the Internet on a computer screen.
We have a broader audience of people who are curious, but the
main reason is to give our posts very quickly all the
formatting they need to download and publish in place magazines
and journals and fresh information about developments in
American life or American policy.
Then we abandoned the practice of producing and sending
large exhibits around the world, and we now work with other
agencies and organizations to facilitate their exhibits,
occasionally to work with them on design and planning, but we
are not in that business any longer.
We have integrated our support for arts and cultural
activity--from a very fine office of 24 people with an
admirable reputation that was administering a budget of about
$3 million--into all our programs. We have a much more
efficient operation that also recognizes that there are many
parts of the world now where the commercial exchange of art and
culture needs to be perhaps supplemented or encouraged, but
does not require the kind of funding it did.
It was important that our Embassy in India recently brought
the Paul Taylor dancers there for an anniversary. We got
terrific press, but I am proud to say that no Government money
went into that. It was done by the corporations that have an
interest in that country, and they essentially got the credit.
But USIA's role was absolutely vital. Our officers--
significantly more than in the past--are learning to be
entrepreneurs with the private sector and to work to facilitate
the many things that are happening.
We dismantled the Bureau of Policy and Programs and created
a new Bureau of Information which was 30 percent smaller. Mr.
Fulton is here now. I would be delighted to have some members
of the committee come down to learn more about that bureau. As
one example of the type of work this bureau does, take China,
where articles or issues of debate about the United States and
its intentions are viewed by the younger generation in China as
hostile and that we are trying to restrain development of
China. We pride ourselves in being able to turn around in just
a few days and translate a relevant article that is published
here, and have it back at the post where the men and women
working at the post can get it into the hands of journalists or
others.
The human element, the man or woman, the team at the post
who have relationships with opinion leaders, with younger
people being educated for roles of leadership, are an
indispensable element in this. We will never substitute that
with electronic communication. But we can make their jobs
easier. We can serve them better.
Another thing you would see, however, if you came to visit
Mr. Fulton, are two floors of USIA in which there are no longer
individual offices, private secretaries, and deputies, where
men and women work together on teams, in what I call the
architecture of reinvention. This is something fairly new to
the Government. Frankly, it is almost old hat now at General
Motors and most progressive American corporations. But it
represents our effort to take out layers of hierarchy and to
create a new atmosphere or new work culture.
There are a significant number of those changes that have
taken place. Other parts of the Bureau are looking at how they
may apply to their future. But without that we could not have
worked our way through the 33 percent reduction in real dollars
and about 30 percent reduction in staff.
Senator Grams. You made a mention of shortened term from
publishing to broadcasting. CNN often reports on events before
the U.S. Government even knows about them, and information can
be transmitted instantly worldwide through the Internet, so
when you talk about shortened term, how has this information
revolution affected your operations? Again, I think what you
have mentioned to some of the examples such as the publishing--
--
Mr. Duffey. Well, let me say first of all, this revolution
is not a complete blessing. First, let us recognize we have
this technology which is really the engine now of U.S. economic
revival. It is a most entrepreneurial, capitalistic explosion;
it is dramatically affecting our imports, our exports. We have
it because of the wise planning that went on by the Department
of Defense and others during the 1980's when we were trying to
find a method of communication that would be secure in the
event of major attacks. So, in a sense we developed it out of
sense of need, and now it has blossomed.
But it frankly, as we now know, is a tool for communication
and rallying of people for all kinds of purposes. The
terrorists in Peru have a fine home page. You can see them
talking about their message across the world, as the rebels and
the Chiapas have. On the one hand, the young people in Belgrade
who have been conducting, I think, the very effective
demonstrations in the streets, have also made extraordinarily
effective use of the Internet to communicate with networks.
There must be five languages, the last time I looked at it.
The young man who came over to talk about it recently said
they were told that perhaps this was too sophisticated for
them. He said I got the sense the rest of the world thought we
should be using jungle drums. But they have been
extraordinarily effective in building a large network of
communication.
We also know the militia groups in the United States use
this as a form of communication. I think many Americans are
getting information, making decisions about their lives with
new information, in terms of health and other things that are
very liberating. I suppose the generation of most of us, at
least on this side of the table here, caught up with this very
late. We have not been raised with this, as has a large part of
America for whom it is just sort of second nature.
We have moved early and quite boldly, and I think it has
enabled us to do more, to do it more effectively and more
rapidly than we would have been able to.
We are also looking at the problems that will emerge.
Let me just tell you one story. I had difficulty getting my
colleagues at the State Department to understand the
significance of this. One of my colleagues every morning looks
at The New York Times web page, and they have a kind of forum.
One morning about a year ago he found an incredibly crude
attack. It seems to me it was on the Chinese or on the
Taiwanese. It was signed by Winston Lord.
I sent over to Mr. Lord a copy of what had appeared that
morning, and he called back immediately and we went to work to
do a correction and make it clear that this kind of thing can
happen on the internet.
So, we need to be vigilant about it. It has changed our
work dramatically, because it has helped us understand new
audiences.
I would just close with one more example. Whereas we used
to have a situation where people would wander or come
deliberately into our centers for information, our libraries
and others, we are far less involved today in the investment in
property, because this material can just be available to the
inquirer who knows about it. Young people in schools and
colleges and others, journalists, can go directly to this
information. It simply reaches a much wider audience.
The CD ROM you have on American higher education and
opportunities, explaining it to foreign students. It is a $7
billion industry in the United States, and it makes a great
difference to our schools, many of them, to have these students
from overseas, and I hope we will continue to be the leading
place where students will come to study.
I do not believe anything else we have ever done has been
as influential around the world as the number of people who
come here to study and then become leaders in their countries.
This little CD-ROM can now provide information about study
in the U.S. to inquirers in their colleges, their high schools.
It used to be they had to come directly to the USIA center, and
many still do--I have seen the lines of young people waiting--
but it is far more effective as a supplement to have this
information available in other posts, other areas.
I think it is important that we have taken some of our
library collections and given them to universities,
particularly in Western Europe, where we have closed our
traditional libraries. We are not trying today to encounter in
most societies of the world the dissidents, the people whose
aim it is to disrupt their society. We are trying to encounter
the leadership, those who are going to shape the future, and we
must encounter them in their schools, their public areas. They
are not going to come to our centers, so this communication has
strengthened our ability to do that.
Senator Grams. I would like to go back again to a question
dealing with some of the congressional concerns about the
extent to which USIA's mission of public diplomacy reflects the
official foreign policies of the U.S. Government. The question
I would like to ask is, what do you believe should be USIA's
role in spreading the American viewpoint on world affairs? Is
it supposed to be to present a more neutral perspective, or
should it be able to advocate U.S. policies in an effort to
directly promote American national interests?
Dr. Duffey. Advocacy of the U.S. policy is the way we
understand the work of USIA. Now, a particular problem that you
have referred to earlier arises with respect to broadcasting.
Broadcasting will only have credibility if it does not appear
to be or is not, in fact, sort of a propaganda operation. I,
however, still believe that broadcasting has a responsibility
to convey amply U.S. positions and U.S. policy, so we come down
to the question of separating reporting of the news and other
matters from the presentation of U.S. policy pursuit of U.S.
interests.
That is a delicate call. I would be far happier if our
broadcasting did that in more than just the editorials. I would
be happier if it did it in more programming that was directed
to that end, and explained. There is--it is a difficult problem
for some of our journalists, but I sometimes think that we do
not give ample attention to the third part of the Voice of
America charter which describes this as one responsibility.
There was resistance, significant resistance initially to
working with the Department of Justice and the worldwide effort
to publicize terrorists and others from our broadcasters, but
they wisely I think found ways to adjust, and that is now
something we are very proud of.
We need to find ways to clearly distinguish what we are
doing. I think that the reporting of the news must be dealt
with with a kind of objectivity and neutrality, but we could
stand more genuine advocacy with every tool we have for U.S.
interests, because that, as Edward R. Murrow says, that is the
justification for using the public's money.
Senator Grams. You mentioned editorials, Dr. Duffey and Mr.
Klose. The Office of Policy in the International Broadcasting
Bureau produces editorials for broadcast for all the VOA's
language services, and the editorials are identified as
``expressing the policies of the U.S. Government,'' and that is
in order to distinguish them from other VOA programming.
Many of the editorials have played key roles in the past in
influencing events overseas, and I think you all will recall
the famous 1990 editorial titled, No More Secret Police, which
sparked an outburst from Saddam Hussein in that case. I have
heard that some individuals at USIA are questioning whether or
not VOA should continue broadcasting these editorials. Maybe
you would like to comment. What are your views on that concern
or question?
Dr. Duffey. Well, let me make a comment, and Mr. Klose, who
has not had to face this yet, will I am sure be looking at it.
I do not think there is much questioning of the editorials.
I think the question arises as to whether that fully meets the
responsibility of that part of our expectation that American
policy would be explained. I think that perhaps the resistance
is to a little more ample commentary in some programs that
might contribute to a better understanding of American policy.
I can understand resistance to this because of the
historical feelings that come out of the cold war, and all of
the tensions that were involved in addressing the complicated
task we have there.
The Broadcasting Board of Governors to its great credit has
been discussing this, and continues to discuss it.
I do not think that the editorials should be used as a way
of saying, well, that discharges our responsibility. We have
nothing more to do by way of accountability. I think we could
have more programming labeled for what it is and directed at
trying to explain certain aspects of U.S. policy.
There will always be tension over this role. Senator Biden
has pointed out, I think wisely, that to be a broadcaster and
to be a Government employee is an inherent tension.
But in these days when there is more broadcasting, and when
we do have quite specific objectives explaining ourselves to
the world, as I said earlier, which I think we must not take
for granted. I think this is a major problem in Western Europe
with the new generation, understanding why America is pursuing
certain policies, why we take the position we take with regard
to Iran, which has not received a lot of sympathy from our
allies, but which will persist.
We need to examine this relationship between advocacy and
news reporting and work out a better solution.
Senator Grams. So you think it is important, extremely
important for the U.S. Government to use VOA to present very
clear statements on our Government policy.
Dr. Duffey. Well, it is important to every instrument in
which we invest to see this as a major responsibility.
I can tell you that USIA advocacy is what this institution
is about. Oftentimes, explaining, as I have said, is the way we
go about it. Quite often we may report debates that go on in
the United States, and we should make it clear that our
spokesmen do not always speak for the majority point of view.
We have been sending a number of people who have worked in
both administrations in the White House and the Government to
China to explain to a younger generation there that the
presidents of the United States do not make foreign policy
arbitrarily, that it is a discussion, that it involves many,
many elements in our society. I think it is important to get
that message across.
It will be fatal when the Hong Kong transition takes place
if the Chinese do not understand the reaction of citizens and
others in the United States to even more flagrant violations of
human rights. That is a sort of advocacy in the sense of
explaining ourselves, but I see advocacy as the central role of
everything we do.
Senator Grams. Mr. Klose, any comments to add?
Mr. Klose. Mr. Chairman, this rubicon I have not crossed
yet, and I look forward to a vigorous discussion on these
issues.
My experience of news-gathering and dissemination is that
it can often be a contact sport when it comes to issues of what
actually ought to be said and how it is said. People's
reputations can rise or fall on exactly, even, intonation of
the delivery of a sentence, or paragraph spoken or done by
video, so it is a very, very sensitive area, and it is one that
I know with Evelyn Lieberman at the Voice of America and our
other colleagues, that we will be able to engage in a full
embrace of this issue.
Mr. Chairman, if I may, I wanted to make a comment on your
earlier question about the modernization issues, if that is all
right.
Senator Grams. That is fine. Go ahead.
Mr. Klose. I would like to say that in terms of the
broadcast entities with regard to stepping forward into this
interactive world, the reality is that the broadcast entities
moved very quickly when the world started to change, especially
in Central Europe and further East in the former Soviet Union,
when jamming stopped and the wall came down.
Both the Voice of America and the radios RFE-RL quickly
moved in the region. VOA was doing that in its own other
broadcast areas anyway. There is an active affiliates operation
that we have now, about 1200 affiliates worldwide. These are
local radio and television stations which take down
broadcasting segments, or in some cases hours at a time off
satellites and rebroadcast this in AM/FM to their local
audiences. It is a whole new way of reaching different kinds of
audiences.
At the same time, Mr. Chairman, I would emphasize that in
the world today there remain 600 million short-wave sets,
receivers, and short-wave is a major means of reaching all
kinds of not only remote audiences but audiences who, for
example, in the case of the Albanian situation right now, we
have turned to short wave not as a back-up but as the main way
to get there.
These assets of the U.S. Government which are worldwide, in
the worldwide transmission system are crucial and very
important strategic assets going forward into the 21st Century,
and as we move forward into the interactive internet age, we
want to make sure that these stay robust, that we have the
surge capacity in place when we need it.
Senator Grams. Moving on to other areas, we heard your
testimony, your talk earlier this morning about how important
it is to have students exposed to American policy. Although
USIA has had the authority to perform oversight for all
Government exchanges, the duplication and overlap of these
programs among Federal Agencies still remains a serious
problem, or a concern.
The most recent USIA report shows that 38 Departments and
Agencies spend more than $1.6 billion every year on foreign
exchange and training programs. Now, by comparison, as you have
said here, the USIA's entire fiscal 1998 budget request is just
over $1 billion.
The administration is requesting right now $565,000 to
establish an office within USIA that would coordinate exchange
programs among the Agencies. Under that, will any of the other
Agencies be required to justify their exchange programs, in
addition to just submitting the data on them? What is this
office going to be looking for and trying to coordinate or
enforce?
Dr. Duffey. Mr. Loiello, who is here today, has worked
closely first of all with Members of Congress who have
expressed this concern over the last several years, and with
the Office of Management and Budget.
It is my understanding, and Jack may want to comment on
this, that there will be representatives of other Agencies on
this team that will try to gather the information and sort it
and make it available, but that a working group from all the
Agencies involved will examine the duplications and clarify the
justification for many of the programs.
I think the intent of Congress and the Office of Management
and Budget, the administration, is that programs not continue
just because we have had them there for 20 years. Maybe Jack
wants to comment on the process that will ensue now if the
Congress responds to this request.
Dr. Loiello. Thank you.
Senator Grams. Jack, would you like to slide up and take a
microphone, so it will be a little easier to hold you
accountable for what you say?
Dr. Loiello. Yes, Mr. Chairman. First of all, as the
director has said, this initiative builds on what this
administration has been doing through the NPR process, but it
also takes a page from Chairman Helms' book on this whole
question of interagency exchange coordination.
What is looked at here is the creation of such an office,
but it is simply being placed in the United States Information
Agency.
The interagency working group that is called for by the
executive order, and the legislation which has been submitted
to the Congress makes it very, very clear that this is an
effort of all the Agencies of Government involved in exchanges
and training.
Now, the interagency working group itself mentions five
other Agencies, specifically State, Justice, Education, AID,
and Defense, and also representatives from the Office of
Management and Budget and the National Security Council and
such other Agencies among those 35 to 38 that you have
mentioned that are appropriate.
We have found already that there have been a number of
Agencies that have expressed a desire to participate since this
draft legislation has been circulated around the other
Agencies.
This iniative builds on legislation which, of course, had
already given the Bureau of Educational Cultural Affairs in the
United States Information Agency some authority to collect data
and publish an annual report on exchanges and training
government wide. That is the report that you just made
reference to which lists the 39 Agencies involved.
This initiative gives it much more authority because of the
$565,000, for example, that has been requested to create five
FTE's, but we do not expect these to all be from The United
States Information Agency. We expect these to be from other
involved Agencies as well.
Two responsibilities that are specifically assigned for the
working group in setting up this office, the office which will
serve as its secretariat, one is an annual--well, first of all,
within 1 year a report which outlines a strategy of cooperation
and looks at the issues of duplication and provides that to the
President of the United States through the Director of the
United States Information Agency.
Then, an annual assessment of that strategy each year. But
a second mandate, as the legislation proposed would put it, is
that in 2 years the working group must recommend to the
President, through the Director of the United States
Information Agency, a series of bench marking and performance
measures looking specifically at the question of duplication,
and this is what is principally new, I think, in the
legislation.
It also is to lay out a series of strategies for the
engagement of the private sector in a complementary way in the
whole area of exchanges and international training.
Again, if I may say so, our own Agency in this particular
area has set the standard for leveraging of private sector
funds and NGO funds.
So, this is a very serious effort. I think it is responsive
first of all to what we have been trying to do through the NPR
process within this administration, but second responsive to
the Congress as well.
Dr. Duffey. The only thing I would add is the question of
duplication is not where we would stop. We will look at the
question of purpose and effectiveness in light of the new
budgeting process.
Senator Grams. You mentioned, will recommend, I think you
said benchmarks and performance markers, I think.
Dr. Loiello. Yes, sir.
Senator Grams. In that regard, will this new office have a
mandate, or will it have the authority to see that those
directives or recommendations are carried out? Are you given
that type of authority? Have you identified, like Dr. Duffey
said, the purpose to carry out these recommendations?
Dr. Loiello. That authority is not specifically addressed,
Mr. Chairman, but it is very, very clear from the fact, first
of all, that this proposal comes from the Office of Management
and Budget as part of our pass-back. The very fact that these
recommendations are being made to the President, the character
of the office itself, as I have already described it, which is
not just USIA-centered, and the fact of the participation of
these other Agencies underscores its authority.
Senator Grams. Will you have any authority to deny funding
for exchanges that overlap or that fail to demonstrate adequate
benefits?
Dr. Duffey. Only the Congress has that authority, and the
information will be available.
Senator Grams. So you can make these recommendations to us,
and then Congress can then react?
Dr. Duffey. Well, I think we will first of all make the
information available. Even though USIA has been charged with
compiling this information every year, it has been
extraordinarily difficult to get Agencies to cooperate from
time to time, and I think Mr. Loiello has done a very good job
in the last 2 years of getting a much more comprehensive
report, but it still lacks information from some Agencies. We
will provide that, and I think--I hope the working group will
also be prepared to provide some recommendations. I am sure
that OMB will.
Senator Grams. And other Agencies, as you mentioned, will
be involved. Are there any ideas or plans to have them pay part
of this budget, or to contribute to the efforts?
Dr. Loiello. Well, like I said, the proposal for this
initiative came back in our pass-back from the Office of
Management and Budget. We hope, in a sense of collegiality,
that if this is an effective mechanism, obviously that it will
extend to the budgeting process in future years.
Senator Grams. The issue of duplication in exchange
programs always comes up for USIA, because it is part of your
signature program, you could say, but since USIA's annual
budget for exchange programs is under $200 million, it is clear
that your Agency does not have administrative control over the
vast majority of exchange programs run by the U.S. Government.
The Department of Energy alone has a $100 million budget
for international exchange and training programs.
As you have gained familiarity in recent years with the
scope of the exchange programs throughout the Government, are
you concerned that other Agencies' exchange programs do not get
the scrutiny and the oversight that they deserve, especially
compared to USIA?
Dr. Duffey. I think the other programs have a history.
First of all, I think it to be a compliment to USIA's long-term
strategy that exchange has been recognized as in the end one of
the most effective instruments for our work in the
international community, and they have blossomed and increased
I think precisely because they are effective in training and
exposure.
I was involved in an effort like this 20 years ago with
arts Agencies in the United States and the chairman of the
Federal Council on the Arts and Humanities. When we began, we
had a number of organizations whose programs duplicated the
number getting into international affairs, because every Agency
wants to have an international side to its work. Just the
making available of the information and the coming and working
together led us to the point where we could make some
assignments, establish some guidelines for Agencies.
I hope that will be the outcome here. Then that gives the
Congress at least one benchmark to look at when they need to
make decisions.
Senator Grams. I only have one more question in this area
that I would like to complete before I recognize Senator Biden,
who just joined us, but there has also been a report--I think
the USIA report--that has identified exchange programs that
total at least $600 million from private sector agencies or
foreign governments.
In that respect, will the USIA's new office also tackle the
issue of duplication there, in other words, try and coordinate
not only among U.S. Government Agencies but also look at how
you can best coordinate using private sector and other exchange
type programs as well? Is there going to be a combined effort
in this area?
Dr. Duffey. Our effort with the exchange programs, again
with the Fulbright program is to move closer and closer to the
time where none of these programs will simply be funded by the
U.S. Government.
Last week, when President Frei visited here from Chile, he
announced a participation of $1 million a year from the Chilean
Government in Fulbright program. The Secretary of State signed
that agreement. I think as I stood there waiting for it to be
signed Jack informed me that Venezuela now has a third of a
million dollars prepared to participate. That has begun to
happen in other parts of the world.
I believe that even in the countries that are developing
countries, what we used to call Third World countries, there is
a role that governments and institutions can play at
contributing in these programs. Sometimes it may be tuition
scholarships and resident support for our students who want to
go and study in those countries, and there are an increasing
number who do. We would like to move in the educational
exchanges at least, as rapidly as we can, to move these
programs from strictly U.S.-funded programs to where there is
some appropriate measure of support from the other governments.
Senator Grams. All right. I would just like to recognize
two other Senators who have joined us, Senator Biden and
Senator Feingold. Thank you for being here. We have limited
ourselves to just 30 seconds in opening statements.
Senator Biden. That is OK. I am against whatever Duffey is
for. Will that do it?
Senator Grams. That will do it.
Senator Biden. And I mean it.
Senator Grams. I would like to offer you an opportunity for
an opening statement.
Senator Biden. Joe Duffey is the only man I ever made a
deal with who honestly told me that when you make a deal, you
have a deal. If it changes, you do not like it, you just say
you changed. You learned that from Bailey you told me, Joe, and
you are practicing it very well.
I understand--let me make clear, last week I indicated I am
willing to reconsider any reorganization proposal. I am
presently working with the chairman of the committee in doing
just that, as long as we provide the resources commensurate
with our international responsibilities to ensure that
important functions are properly protected.
Although I have an open mind about the overall structure of
the reorganization, my mind is already made when it comes to
one issue. I would oppose any restructuring that would diminish
the powers of the Broadcasting Board of Governors or that folds
the broadcasting Agencies into the Department of State.
If anything, Joe, I have a solution for you. We will just
make them independent, independent of you and independent of
everybody, independent of the State Department as well.
I just want to make it clear that there has been a lot of
talk about how my friend Russ Feingold and I had disagreements
on this, and we did have some disagreements on this, and that I
engaged in or threatened to engage in the only filibuster that
I have ever threatened to do in 24 years as a Senator, and that
is true, but it was not about the power of the board. It was
not about the power of the board. That was not the basis of our
disagreement as relating to the power of the board.
As a matter of fact, the President's original draft of this
legislation that he sent up to us on June 15, 1993, he stated,
``We will create a new and independent board of Governors that
will replace and perform similar tasks as the Board of
International Broadcasting.''
It was new and independent. I know that bothers you, Joe,
the independent part, but that is what it was intended to be,
and I am amazed that we are still relitigating this battle,
when I thought we all had an agreement that we all sat down and
settled this issue, but in terms of reorganization, Mr.
Chairman, I think we should and will, and I think we will do it
in the next 3 to 6 months, come up with a reorganization plan
for our whole foreign policy apparatus. At least, that is my
hope and expectation that that will occur.
I have an open mind as to how we do that in terms of what
we are going to do relative to broadcasting, and relative to
USIA generally.
I have one question, Mr. Chairman. I am interested in how
decisions to allocate resources, both in terms of funds and
personnel to the USIS posts are made. Director Duffey, what is
your system for allocating these resources, funds as well as
personnel? Do you have a methodology? Do you have a system you
go through? How do you go about it? What is involved in the
decisionmaking process?
Dr. Duffey. We have a process and, of course, within the
State Department there is a process involving the Ambassador
and his concurrence with any plan that he receives from, say,
the USIA, so at the end of the process it becomes a dialog and
a negotiation in that respect.
Senator Biden. Between you and the Ambassador?
Dr. Duffey. No, between the Secretary--well, it begins
between the Ambassador and me, and generally, if we can settle
the matter, as we most often do. If not, it goes to the
Secretary. There have not been any cases during the last 4
years in which the Secretary did not accept the recommendation.
First of all, we have, as you recognized, faced a serious
decline in available officers and budgets, so we have had to
make those reductions.
We begin with, first of all, not a permanent grid but kind
of a template that is revised every year, looking at the size
of nations, the size of U.S. relationship, the existence there
of communication and other facilities and U.S. presence.
Senator Biden. Would you be willing to make that available
to the committee?
Dr. Duffey. Certainly.
Senator Biden. I would appreciate that.
[The following material was subsequently supplied for the
hearing record by Mr. Duffey.]
RESOURCE ALLOCATION GROUP (RAG) SYSTEM
The Resource Allocation Group (RAG) system is USIA's framework for
relating country-specific Agency resources with U.S. national interests
and policy objectives. It raises resource issues for discussion and
review by the Area Offices and the Resource Management Committee and
for final decision by the Director. It is designed to help establish
resource priorities and to identify resource anomalies.
RAG rankings are based on factors which indicate the level of U.S.
interests in each country and the potential for USIA programs to affect
U.S. interests. These factors include statistics derived from common
reference sources, such as population, gross national product,
bilateral trade, U.S. investment, U.S. assistance, U.S. mission size,
and media densities. Initial rankings based on the factors are analyzed
by the Area Offices and adjusted to reflect current policy
considerations.
RAG rankings are reviewed annually. This review normally takes
place each spring, in sequence with Agency planning and budget cycles.
Dr. Duffey. That is called a resource allocation grid.
Then, however, we need to bring other questions. Are there
anticipated problems or tensions in the area that should be
taken into consideration and are there specific objectives that
must be taken into effect?
These days we are also looking, Senator Biden, at can we
effectively or sometimes more effectively do the work by
approaching this with a different structural organization, or
working in regions and areas.
Senator Biden. Can you give me an example?
Dr. Duffey. Well, let us take the Caribbean. We have
Ambassadors and staffs on every island and country. We are
asking ourselves whether we cannot do what other countries do
and have somebody accredited to two or three places. It is
regrettable that we need to do that, but if we have a circuit
rider we can work stra-
tegically with the posts looking at a common program for the
embassy and sharing resources so that speakers or programs are
arranged, they are not just arranged for one country.
Senator Biden. You obviously have had--and I will yield,
Mr. Chairman, after this comment or question. You obviously
have had to deal with the constraints of the budget and budget
cuts; but I am a little confused. The resources allocated to
Western Europe versus the resources allocated to Eastern Europe
and the NIS seem to be a little out of whack.
You have 93 American officers covering 22 countries in
Western Europe, while in Eastern Europe and the NIS you have 73
covering 25 countries, and moreover, you reduced the presence
in the East between fiscal 1996 and 1997 from 81 to 74.
Now, I recognize the budget cuts, and I do understand that.
We have all been doing that with our staffs, with everything,
and we should. But what I am confused about is, it would seem
to me that if there is any time in our history when our
presence and the functions that you provide are most useful in
Eastern Europe and the NIS, it is now, and where they are least
needed is in Western Europe. Can you explain to me what I am
missing here?
Dr. Duffey. Well, some of this relates to the burden of my
opening statement. Let us begin with Western Europe. You recall
that we were given very few new resources at the turn of the
decade when we needed to staff the new countries in the former
Soviet Union. We had to find some place, as the State
Department did, from which to take the resources we had
available to open these new posts.
Since 1995, we have cut funding in Western Europe by 24
percent. We have closed four posts and cut 139 positions.
One can say on the one hand, look, it is a place with a lot
of communication. There is a lot of American presence. It
troubles me a great deal that we have made those cuts in
Western Europe.
Senator Biden. Why?
Dr. Duffey. Because I think that--I will go back to Senator
Dole's comment in the campaign after our recent experience in
Iraq, when he said, where are our allies? With new generations
we have got to work at explaining why we have the policies we
have toward Iran, as I said a few moments ago, why the policies
toward Cuba are our position and that we intend to stick by
those policies. We must show our resolve, and we must explain
that. We simply cannot, I think, change generations----
Senator Biden. Does that compare in your view to the needs
that exist in Eastern Europe and what is going on now to
explain to the Poles or to the Czechs----
Dr. Duffey. Let me explain a little bit about that. We are
moving into Eastern Europe at a time when, unlike the 45 years
of the cold war, all we did was sort of snap our fingers and
the resources were there, 45 years of growth. We had to
confront new ways to do our business.
First of all, we have gotten away from the edifice complex.
We are not making very large investments in property and
buildings. We think the resources we have can much better be
invested in programs and people.
As I said earlier, we are not in those countries now
seeking to contact the dissidents. We are seeking to establish
relationships with the men and women who are going to build the
future, and they are not going to wander down the street to a
U.S. center. They are in a university. They are doing other
things.
Senator Biden. Why the hell would they wander down the
street to the U.S. center in France, Germany, England, or any
place else?
Dr. Duffey. I am referring to the old days. Actually, of
course, in Western Europe those libraries and centers as you
know have regrettably been closed even earlier. That is where
we got some of the resources.
What I am saying is----
Senator Biden. I am talking about the assignment of
personnel. Either I did not say it clearly, Joe, or you are
avoiding the answer. Why are there more personnel assigned to
fewer countries in Western Europe than there are to more
countries in Eastern Europe and the NIS? That is my question.
No edifice.
Dr. Duffey. I wish I had more resources to apply to Eastern
Europe. We are understaffed there. That is why we are
appealing----
Senator Biden. That is what you get paid for, the big
decisions. Why are they in Western Europe and not in Eastern
Europe?
Dr. Duffey. I think it has to do with tradition and
momentum from the past and efforts to change. There is a
professional Foreign Service----
Senator Biden. Bingo. I do not have any further questions.
Dr. Duffey. There are many institutions from the past, and
we are struggling against that, but we are also being called
back a bit to understanding that Western Europe is not
unimportant. I think we need to work differently in Western
Europe.
Senator Biden. Joe, if you think there are avenues in
Eastern Europe and the universities, you and I should talk
about the 6 million additional avenues there are in Western
Europe.
Thank you, Mr. Chairman.
Senator Grams. Senator Feingold.
Senator Feingold. Thank you, Mr. Chairman. I commend you
for holding this hearing today. Since I am not a member of this
subcommittee, I really appreciate your continuing the hearing
so I could participate.
I also want to acknowledge the Ranking Member, Senator
Biden. We had a disagreement on this issue, and I learned right
there and then, and have followed the advice since then, that
it is really better to be in agreement with Joe than to be in
disagreement, and we have had great fun and have been
tremendous allies.
Senator Biden. I do not think we disagree on anything else.
Senator Feingold. No, but it is just better that way.
Senator Grams. And now you agree on that.
Senator Feingold. In fact, on this issue itself I have had
nothing but good feelings about the way Senator Biden and I
have worked on it since that time, and I hope that continues.
I want to thank the witnesses and I want to thank the
witnesses for some of the kind words about my efforts in this
area. I recognize the valuable contribution that USIA makes to
our foreign policy, but since the time is late, I do want to
talk particularly about RFE/RL, Radio Free Europe.
I am still of a mind that many, although not all of USIA's
broadcast activities are relics of another age, when our
foreign policy goals and priorities look much different than
they do today.
Unfortunately, as we knew from our debate several years
ago, there are also many examples of fiscal abuse which have
been talked about at length in the committee with regard to
Radio Free Europe and Radio Liberty in the management of the
activities, and many of these abuses, of course, took place in
far-away places.
That is why in 1994 I introduced the consolidation
legislation. My intention with that language was that these
surrogate radios should figure out how to function as privately
funded entities within a certain timeframe, and if that could
not be achieved, then maybe it was time to put these entities
out of business.
Mr. Chairman, we set that forth in legislation, and we now
in March 1997. That puts us just under 3 years since the
statute went into effect, and just under 3 years before the end
of 1999, which is the period when the privatization is to be
complete, or the time by which the privatization is to be
complete.
So, we are half-way through the transition period, and I
want to take just a few minutes today to take stock of where we
are.
Mr. Klose, can you detail for me what the status of your
efforts to privatize are?
Mr. Klose. Yes, sir. We thank you, Mr. Chairman and Senator
Feingold. I am pleased to respond to that issue.
Late in March 1996 we established an office of development
at the radios in Prague and set forth as its primary goals
finding ways in the venue of Central Europe, where the
broadcast services would most likely be plausibly administered,
in a way, and where most plausibly we could find outside
investment and private investors. That effort has gone forward.
We have in the Czech service, which previously was spun off
as a separate small subcorporation of RFE/RL and became a
subgrantee of the radios, the Czech service, which is called
RSE, Inc., formed a joint venture with Czech National Radio. We
have created a new independent public affairs network that is
nationwide in the Czech Republic, in cooperation with Czech
National Radio. It is called Radio-6, Radio Free Europe.
It is an international broadcaster. It includes programs
supplied by the Voice of America,the BBC, Deutschewelle, German
Wave. RFE-RL's support for this Czech enterprise in the past
fiscal cycle has dropped from $2 million a year down to
$450,000 in 1997, and we have found private means of some
support, or in effect institutional support in the Czech
Republic by institutional large companies, who are interested
in taking, in effect their institutional advertising. We would
call it program underwriting. That is perhaps the best way to
describe it.
Several hundred thousand dollars has been gained that way.
It is a very difficult situation, but it is an important one.
This is a nonprofit venture between Czech National Radio and
RFE/RL. It has a very interested and engaged audience.
If I may, Senator, I would quote from a Czech news agency
report of 1 January. This is the Czech telenews agency. Czech
Radio-6, Radio Free Europe, has gained a public image as a
highly profes-
sional commentator of political events. Public opinion regards
it as the best of all radio stations in this particular field.
We have also created an addition to the internal
development office. We have a group of private advisors outside
with whom I consult or have consulted as president of the
radios consistently, and we are about to go forward with an
initiative to a major private media company which is interested
in activities essentially making investments in Europe and
further East.
The Polish service of Radio Free Europe was also spun off
as a separate subcorporation several years ago. We viewed these
entries as Lunar landers, in effect, to put us down so they
could do some experimentation in the area and find out as a
test bed how you do this.
The RWE, Inc., as it is called, again a nonprofit radio
corporation that is based in Poland and also has a
representation, a legal entity in Washington, has created in
effect a private independent network in Poland of some 30
individual radio stations that we feed via satellite 18 news
feeds a day plus current affairs and current events, and this
enterprise after a stubborn and consistent due diligence search
for a series of investors, both Western and Polish-based, we
are now about to make an initiative through, again, a large
non-Polish independent media company which is interested in
investments in Poland.
We believe that the Polish and the Czech entities are
important to continue operating, because the media markets in
the Czech Republic and in Poland are the most viable in terms
of advertising dollars going in, in terms of people learning
how to make money, especially in television.
Radio is in a more parlovs state, but it is at a more
transition stage. We are there with these two activities.
With regard to RFE/RL itself, the large enterprise, a major
function of the move from Munich to Prague was to reshape,
modernize, and reinvent this enterprise so that it would have
the potential for viable interests by non-Federal broadcast or
media entities, and that process we believe we have been able
to do successfully.
We have gone to digital. We resemble in many ways a very
modern Western profit-driven radio operation, and with this
outside private group of advisors we are in the process of
pulling together in effect a business plan and proposal for a
particular set of people who we have been talking to outside.
Senator Feingold. Thank you. I appreciate the specificity
of your answers with regard to the Czech operation and the
Polish operation, but I want to get back to my main concern, of
course, which is that the public side of this be eliminated in
the appropriate timeframe in terms of the dollars.
I understood that the Czech and Polish services were going
to be the first of the RFE/RL services to be made fiscally
independent of U.S. support, and I of course recognize the
historical significance of these two operations, but now this
year, 8 years after the fall of the Berlin Wall, I would argue
that they are the best candidates for privatization. These two
countries are the shining examples of democratization in
Eastern Europe, and Congress actually specified that the
services in these two countries, which you have identified as
RSE, Inc. RWE, Inc., respectively, should be privatized soon
after the passage of the Broadcasting Act.
I would like to quote from the conference report. It says,
``The committee on the conference expects that the BIB and the
Broadcasting Board of Governors will do everything possible
within available resources to support this privatization
effort. It is not anticipated that the BIB or the board will
make grants to these entities after September 30, 1995.''
September 1995 was about 18 months ago, and still these
services which you have been discussing in some detail are
receiving subsidies from RFE/RL. I do not know how to
specifically characterize the level of progress toward
privatization based on your answer, which I thought had a fair
amount of specificity to it, but I guess I have to ask, given
where you are, what is the likelihood that RFE/RL as a whole
will be able to make progress in privatization to the point
where you can reach the 1999 deadline which is called for in
the legislation?
Mr. Klose. Senator, at Radio Free Europe we have understood
that deadline very well. We are exercising within our
competencies, we believe, due diligence on this effort. I
cannot tell you as to a certainty that we are going to reach
that point ahead of 31 December, 1999.
This is a very difficult situation, and most people who
have engaged in efforts of privatization in that part of the
world both in Central Europe and further East, where a
substantial amount of our operations are based, find--you can
ask any major oil company in the United States of America,
looking at the massive resources available to them, for
example, in Kazakhstan or in Russia or around the Caspian
Basin, how difficult getting these deals done really is, and we
have that issue ourselves.
What we do know is that there is intensifying interest in
the international media world amongst the giant players as they
continue to conglomerate, and as they continue to explore ways
to reach specific segments of audiences, and as the market
itself segments as to who listens to what and why.
We have had very interesting conversations. That is all I
can say about them. But they are positive conversations. There
is a kind of interest out there.
I would say, Senator, that one of the issues that is for
real in my view, in terms of what these particular broadcast
services do in terms of American presence in the region comes
up against some of the commercial realities that sometimes
play. There are some famous cases in recent history where, for
example, one of the major global media players, in control of
programming to China, took off the air the BBC World Service
because the authorities in China objected to the programming.
The point here is that the Radio Free Europe/Radio Liberty
and the kinds of information and flow of current affairs which
they provide to millions of people in the region are the kind
of asset that is there on behalf of American foreign policy.
There are two worlds. There is a commercial world and then
there is the world of American national security interests.
That is an issue which I think is also out there.
Senator Feingold. Well, I appreciate your response, again.
Let me just say, I think you understand how strongly I feel
about this. This was the first piece of legislation that I ever
introduced as a Member of the U.S. Senate. We passed it. After
a hard-fought debate in this committee, the Senate passed it.
The House passed it. The President signed it. Although,
certainly, we can argue about whether it was the right policy,
it does call for the finalization by 1999. Although I obviously
recognize there could be practical problems involved, I have
always thought that was a fair amount of time to be given for
this to happen. Perhaps you disagree.
I am somewhat disappointed at the amount of progress that
has been made. I want to have communication with you with
regard to how we can accelerate this. Because I am determined
to meet that deadline. I would like to note that my office has
been in touch with the State Department's Office of the
Inspector General, which has responsibility for USIA as well,
regarding this point. We have received assurances that part of
the 1997 audit plan will include a review of RFE/RL's efforts
to privatize.
But my preference, of course, is that we simply work
together to meet the deadline. So, I appreciate your response,
but I just want to use this opportunity, even though I am not a
member of the subcommittee, to say this is one thing that we
got done in the Foreign Relations Committee to save this
country some money, to reduce the deficit. We ought to do all
we can to finish the job in a timely manner for the taxpayers
of this country.
Thank you, Mr. Chairman.
Senator Grams. Thank you very much, Mr. Feingold.
I know Senator Biden is going to return, but in the
meantime I just have some brief questions that I would like to
wrap up with and to pose to you this morning--or now,
afternoon. They deal with the East-West Center and the North-
South Center. USIA's budget request also includes several pass-
through budgets on which, again, I would like to focus.
I realize you may not be familiar with some of the specific
programmatic details of the budgets, but there are some general
questions I think we should get on the table. First, the fiscal
year 1998 budget request for the East-West Center has
decreased, but it is only $1.8 million below the fiscal year
1997 request, even though the administration announced years
ago that it was going to phase out funding for this supposedly,
quote, private entity.
The East-West Center has been receiving a direct
noncompetitive taxpayer subsidy for over 35 years. In just the
last 10 years alone, it has received $200 million. Now, given
that the East-West Center has access to private funding already
and that it can compete for other Federal grants, has the
administration determined exactly when it will no longer be
requesting a direct subsidy for this program?
Dr. Duffey. We do not have a plan, Senator. I have known
the East-West Center for many years. I used to sit on its
board. As the importance of the relationship with China and the
Pacific emerges, the center becomes more and more a rather key
place for the kind of interactions that, frankly, are not going
to take place under direct U.S. Government auspices. They are
going to need that kind of center that has built some
confidence and respect from both sides of the Pacific.
I think the center has made significant progress in
adjusting to these lower subsidies. There is certain work that
I believe is very much in the national interest. Maintaining,
for example, a new, younger cadre of scholars, who can teach
and understand, spend their time working on the developments in
China. Their role in teaching and preparing us for the future
is very important. The publications there are fresh and used by
all our areas of government in trying to assess this important
relationship.
While I believe that the board of directors understands the
intent of Congress and of the USIA to move to a relationship of
significantly lower subsidy, I am not prepared at the moment to
recommend at some point at which I would withdraw all support
at the risk of losing some resources that I frankly do not
think we can duplicate anyplace else. It is a very unique role,
being established where it is and having the history it has.
So, I think I consider my job to be to try to assess those
things that are in our vital interest, which I do not think,
frankly, we are going to find subsidy for from the private
sector, and work with the center to try to effect a kind of a
transition. But I am not prepared yet to put the center on sort
of a schedule that would lead to no support. Because I think we
are gaining too much from it, and all the Agencies of
Government. I include, by the way, Commerce and others, because
it is a source of information and of meetings and of dialog
that just does not take place on our shores at all.
Senator Grams. Well, I am sure those at the East-West
Center would agree that they are important and should not be
de-funded.
Dr. Duffey. Well, I think our perspectives are different.
But I think we must continue to work them through.
Senator Grams. But I think you have got to look at, I
think, as Senator Feingold was mentioning, trying to save the
taxpayers some dollars and to streamline. When you look at the
East-West Center, which is not the only access to this type of
information, they have private funding. They have access to
other Federal grants. So, there are some of us that feel and
have worked toward completely eliminating funding for the East-
West Center as well as the North-South. We will continue to do
that.
But with the administration already having announced years
ago that it was going to phase out the funding, I guess what we
are really looking for is a time line. Is it going to have to
come through congressional action and impose this time line, or
is it going to be an area where they are going to finally say
we are going to phase this out?
Dr. Duffey. Well, Mr. Silverman tells me that OMB is now
indicating the year 2001 as the time line. We will ask for some
clarification on that.
Senator Grams. All right. I will move ahead, then. I will
remember that year 2001.
I also raised concerns about funding for the North-South
Center 2 years ago. I was told that its direct subsidy was
going to be phased out last year. That is why I say I am going
to remember 2001. Because we had assurances and an agreement
worked out on the floor, in the last minutes of the FY96
Appropriations Bill that it was going to be phased out. There
was going to be one more year of funding. Yet the $1.5 million
in the fiscal year 1998 budget request for the North-South
Center is actually $500,000 more than it was in 1997.
So, all the good intentions and all the deals and
agreements that we work out and adhere to, yet here we come
back and now we are not only not going to phase it out, but we
are going to increase the funding for the North-South Center.
So, prior to 1991, the North-South Center relied on private
funding, it relied on competitive Federal grants, but since
that time it has received direct subsidies totaling $40
million.
Now, given all this, can you explain why the administration
is requesting any funding for this organization and why we
should even continue to the year 2001 with the East-West
Center? And, again, I will say, Dr. Duffey, that there will be
efforts made, on my behalf and others, that we are going to try
to eliminate this funding, if not before 2001, at least in the
very near future. But the justification?
Dr. Duffey. Well, the Office of Management and Budget is
now talking about the year 2000. My perspective at the moment,
frankly, is not to set time lines for the following reason. Our
relationship to Latin America is changing dramatically. We have
very few AID and support mechanisms there, and I think that is
appropriate. These nations, almost all, have become democracies
and they are developing their own engines of trade and
development. We can relate to them in a more mature way.
Our military presence is not as large and significant as it
once was. We are increasing rather dramatically our trade
relationships. We need some mechanisms that we can devote much
more directly to the items we have talked about earlier here
this morning--understanding information.
Now, I would be, with respect to both of these
institutions, more in favor of the grant that is written with a
specific purpose in mind. The Congress has not made that option
available to us. We may want to go that way. I think USIA, with
respect to both of these institutions, would see some needs
that we would be prepared to spell out and argue for with
respect to grant-making. It may be that what we ought to do
with the Congress is work on a clearer understanding of what
the objectives are, and not have these set as completely by the
institutions and academic interests as we have in the past.
But I understand the position of the Congress, and I hope
the institutions understand it as well. It is a question of
moving from a blank subsidy to a directed subsidy that we could
more carefully defend and that serves the interest of the
United States.
Senator Grams. Just as I noted on North-South Center, which
you have just talked about, before 1991, they did not receive
this, and now, all of a sudden, they have received more and
more money. With promises to phase out, they have just gotten
bigger. So, it is like many other Government programs or
Agencies--they take on a life of their own. All of a sudden,
they become--they gain more support and more funding, and it is
harder and harder to wean them. So, we think it is very
important that we do take the first steps.
Another point is the National Endowment for Democracy. I
think a total of $30 million is requested for this Agency, the
same as it received, by the way, in 1997. There have been
concerns, such as those expressed last year in the Senate
Appropriations Committee report, that 65 percent of the
endowment funding is provided to four core groups without any
competition or competitive bidding. Moreover, these four groups
are affiliated with organizations that already have significant
private resources.
So, again, when we are looking at where this funding is
going and the need for public funding for some of these groups,
and in a noncompetitive environment, do you know if the
endowment has taken any steps to address these concerns?
Dr. Duffey. I believe there is a representative of the
endowment here. This program was created by the Congress more
than 10 years ago. I admire what the NED has been able to do,
confronting a level and, in fact, some reductions in funding in
the last few years. Perhaps Mr. Lowe can respond to your
questions.
Mr. Lowe. Senator Grams, first of all, that 65 percent
figure is not correct. It is 55 percent. These core groups
represent major sectors of American life--the political
parties, the trade unions, the business interests. They have
been a part of the endowment since the beginning. They do very,
very important work. They have, as you know, as you suggested,
made efforts to get funding from other sources, just as the
endowment is moving in that direction as well.
Senator Grams. Could I have you just identify yourself for
the record?
Mr. Lowe. I am sorry; I am David Lowe. I am an official
with the National Endowment for Democracy.
Senator Grams. OK, go ahead, sir. I am sorry.
Mr. Lowe. And so that those four institutions represent, as
I said, important sectors of American life. They do very
important work. They have a very important track record that
they can point to, in terms of party development, in terms of
trade union development, in terms of working to open markets to
help countries privatize their economic structures. We feel
that the work that they do is very integral to the work of the
endowment.
Senator Grams. I guess our concern or the question was that
these groups have a lot of money and access to private sector
funding. I guess the question is--I know it all could be spent
in good areas, but to continue this funding into the future,
why?
Mr. Lowe. Well, again, they do have other sources. They do
leverage a tremendous number of resources in terms of the work
that they do. We are looking at this. The board is very
independent. They take a very careful look at this every year.
We will certainly take those comments under advisement.
Senator Grams. All right. Thank you very much.
Mr. Lowe. Thank you.
Senator Grams. Just some closing comments. I understand
that Senator Biden will not have time to return. But if I could
just bring up a couple of other quick housekeeping issues
before we close out this hearing.
I have talked to Chairman Helms, and both of us have agreed
that we want to move expeditiously to mark up the State
Department authorization bill, as we noted earlier in this
hearing. Given that it is already March--I guess, Dr. Duffey, I
would address this question to you--can you tell me when the
USIA will be able to send its proposed language for the basic
legislative authorities it is requesting for fiscal year 1998?
Dr. Duffey. We are very close to that. It is practically
there. I believe that we should be able to get it to you next
week.
Senator Grams. OK. I appreciate that. The sooner, the
better, of course. Finally, I am also going to ask unanimous
consent of my colleagues that this hearing's record be kept
open for 3 business days. That is for the submission of written
questions by any member of the Foreign Relations Committee. I
do have some other questions that I will also propose to you in
writing. If we could expect to have those back also in a timely
manner.
[See appendix for questions submitted by Senator Grams,
along with answers subsequently received.]
Senator Grams. Dr. Duffey, I do not believe these written
questions would be unreasonable. Of course in view of the fact
that the Foreign Relations Committee, again, is preparing the
authorization bill, I hope you can assure us that you will be
able to respond within a week of the submission of the
questions.
Dr. Duffey. Might I just enter into the record, Mr.
Chairman--I am sorry Mr. Biden is not returning. I am not sure
what deal he is referring to. I want it noted for the record
that I have not come to this committee with any complaints
about the Broadcasting Board of Governors. The questions are
raised out of concerns from the Congress.
I have suggested that there was an agreement from all the
parties in the legislation submitted. That was examined and
should continue to be carefully examined.
For the record, I would also like to point out that the
budget you have before you for 1998 calls for, in terms of the
allocation of resources, Eastern Europe's allocation is $130.4
million. What may escape Mr. Biden's notice immediately is that
we do much more radio there, where it is important. We also
have significantly more exchanges.
The Western Europe budget, compared to that $130.4 million,
is still $92.5 million. I quite agree with the Senator that we
need to keep reexamining, and we are engaged in an intense
effort to do that now, on how we use those resources in Western
Europe. But we also have to acknowledge now that, where our
allies are, we need to work very hard to communicate with the
new generation and in changing conditions exactly what U.S.
policies are and how we will respond to any number of
situations that may develop in the future. I think that is very
important for the pursuit of our policy objectives.
Senator Grams. I do not know if he will accept that. He is
not here to answer. But I thank you for the explanation. It
will be noted.
Also, Dr. Duffey, just again to clarify, we are hoping that
you can get back the responses to our questions within a week
if possible. If we could have that commitment from you, we
would appreciate it.
Dr. Duffey. Thank you.
Senator Grams. Thank you very much. I appreciate your being
here. The hearing now is adjourned.
[Whereupon, at 12:35 p.m., the hearing was adjourned, to
reconvene at 10:05 a.m., March 12, 1997.]
SECURITY ASSISTANCE REQUEST FOR FISCAL YEAR 1998
----------
WEDNESDAY, MARCH 12, 1997
U.S. Senate,
Subcommittee on International Economic
Policy, Export and Trade Promotion,
of the Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel
(chairman of the subcommittee), presiding.
Present: Senators Hagel and Sarbanes
Senator Hagel. The subcommittee will come to order.
Gentlemen, welcome. Today, the subcommittee will hear
testimony in support of the President's fiscal year 1998
security assistance budget.
Our witnesses today are the Honorable Thomas McNamara,
Assistant Secretary of State, for Political-Military Affairs,
and Lieutenant General Thomas Rhame, Director of the Defense
Security Assistance Agency.
The President's budget seeks $5.9 billion for a range of
security assistance programs, including $3.2 billion for the
Foreign Military Financing Program, $2.5 billion for the
Economic Support Fund, and $50 million for the International
Military Education and Training Program.
The request also includes $90 million in funding for U.S.
voluntary peacekeeping programs, and $15 million to fund
international non-proliferation activities.
Our Nation's security assistance programs have gone through
a substantial evolution with the end of the cold war. Only a
few years ago a significant portion of our security assistance
was dedicated to rent payments for U.S. access to overseas
military installations.
Countries that assisted America in projecting its military
presence, Portugal, the Philippines, Spain, and Turkey, were
major recipients of American aid. But the emergence of
democracy in Eastern and Central Europe has brought with it a
new focus of our security assistance, targeted at potential new
NATO partners.
Hungary, Poland, and the Czech Republic, which only a few
years ago poised their weapons at NATO, now seek to become part
of it, and military officers in Russia and Bulgaria, who once
prepared to battle U.S. troops, now train side by side with
their American counterparts.
A vast majority of our security assistance during the past
2 decades has been dedicated to one region, the Middle East,
where American interests and the real risk of conflict remain
great, the peace process not withstanding.
In fact, the President's fiscal year 1998 request seeks to
allocate 94 percent of our entire FMF budget, and 88 percent of
the ESF resources to Middle East countries. There continues to
be strong bipartisan support for this, which advances the cause
for peace.
While its geographical focus may have shifted, the
rationale for a robust security assistance budget remains.
Without question, there have been instances, Zaire and Somalia
come to mind, in which USA aid propped up corrupt despots
during the cold war, but that has been the exception rather
than the rule.
The program remains essential to assist the President in
buttressing our allies, increasing military interoperability
with friendly nations, generating necessary exports for
American business, and helping professionalize foreign
soldiers.
Mr. McNamara, General Rhame, welcome to our subcommittee.
We look forward to your testimony this morning. I am going to
continue on with your testimony, and with our questions.
We have colleagues coming, and I suspect by the time you
are complete in your remarks, then my colleagues will join me,
and if it is OK with you, I would like very much to ask for
your comments, and I know neither of you are strangers to this
process, and you know what the deal is.
So, with that, again, I welcome you, look forward to your
testimony, and General Rhame, I would ask you to lead off this
morning. Thank you.
STATEMENT OF LT. GEN. THOMAS G. RHAME, USA, DIRECTOR, DEFENSE
SECURITY ASSISTANCE AGENCY
General Rhame. Mr. Chairman, members of the committee, good
morning. It is a pleasure for us to be here to testify in
support of the administration's request for security assistance
for 1998.
Mr. Chairman, I will keep my remarks fairly brief. I would
ask that you put my formal longer statement into the record, if
you would, please.
Senator Hagel. Yes.
General Rhame. In the security assistance portion of the
budget this year, as you know, we are requesting an increase
over the 1997 appropriation.
We believe the programs are strong, solid, and are fully
justified. Our goal of preserving Mid-East peace remains of
paramount importance to us.
This year you will find we are asking for increased support
for Jordan. This assistance will enable us to continue the
ongoing F-16 lease program that we have working for Jordan, and
strengthen this critical Mid-East peace partner.
Another of our critical challenges is to continue to
support the building of our new security relationships in
Europe. As a result of the requirements of preparing the new
democracies in this region and the former Soviet Union for full
participation in our Partnership for Peace initiative, and in
some cases, actual NATO membership, these requirements account
for a significant amount of the requested increase, which you
see in the Partnership for Peace account, or as we call it, the
Warsaw Initiative.
Mr. Chairman, we are also requesting money for programs in
the budget this year to train the forces of friendly nations
for peacekeeping and humanitarian assistance duties, which will
thus reduce, hopefully, the need to commit American troops to
these kinds of operations in the future.
Mr. Chairman, sometimes despite our best efforts, our
military forces get committed to regional disputes, and in that
case, we believe that security assistance has proven a benefit
to helping to ensure that our friends and allies have the
equipment, training, and infrastructure which allow them to
work with our American forces.
As a commander during the recent Desert Storm operation, I
was able to see firsthand how those years of active planning
and effort of building our military-to-military relations with
friendly governments, and the interoperability developed
through security assistance programs contribute greatly in the
operation of our coalition partners, and paid bid dividends for
us during the war.
As the director of the Defense Security Assistance Agency,
I focus on both those goals. One is to allow our friends and
allies to prepare themselves for their legitimate self-defense
requirements, and at the same time, hopefully, prepare them to
be interoperable with us, if a situation should arise, in which
we need their assistance.
This budget, Mr. Chairman, is fully supported, although it
is a State Department budget, by the Department of Defense.
Mr. Chairman, I also would say to you that IMET,
International Military and Education Training, is considered by
the Defense Department as being one of our most cost-effective
programs in the 150 account.
Every regional commander-in-chief repeatedly states, when
asked orally in front of the secretary, the importance that
IMET plays in his regional plan, and how it enhances his
political-military relationship with the countries of his
region.
Further, in my travels, I find that our Ambassadors posted
abroad all actively and energetically support IMET and the
objectives it attains.
This year, Mr. Chairman, we are asking for $50 million in
the 1998 request. This is an increase of $6.25 million over
what was appropriated last year.
The two factors driving this increase are the increased
number of countries that we support with the IMET program, and
some rising costs within our training base.
Since 1991, we support, with the IMET program, 28 countries
that we previously did not support. These countries are found
in Central Europe, predominantly, and in the newly independent
states of the old Soviet Union, and increasingly, our IMET
program has been focusing on preparing these countries for
their participation in Partnership for Peace, and in some cases
down the road, hopefully, NATO membership.
We are excited about what is going on in the traditional
IMET program, what is happening in the Expanded IMET portion of
the program, and we would strongly plead that this institution
of our Government strongly support our request for the IMET
program this year.
Likewise, the Congress provided to us $23.25 million last
year, and that is requested this year in FMF administrative
expenses, which allow us to support the non-foreign military
sales aspects of the security assistance business we do in the
Department.
This goes to support administrative costs within the
unified commands, and those portions of our embassies abroad
which do not support the generation of the FMS administrative
fund. These funds are critical to our overseas presence and the
operation of our unified commands, and like IMET, we would ask
for your strong support in those programs.
Mr. Chairman, that will complete my brief summary remarks
of my longer statement. With your permission I will turn to Mr.
McNamara.
Senator Hagel. General, thank you.
[The prepared statement of Lt. Gen. Rhame follows:]
Prepared Statement of Lt. Gen. Rhame, USA
Mr. Chairman, members of the committee, good morning. It is a
pleasure to be here today to testify in support of the Administration's
security assistance request for fiscal year 1998.
In our request we are asking for substantial increase over the FY
1997 appropriation. The security assistance part of this budget alone
represents a $55.775 million increase. We believe that this increase is
fully justified. It has become clear that even though the challenges we
face today may not be of the same magnitude as those we faced during
the Cold War, they nevertheless require American engagement. Many of
these challenges are better and more effectively met by the kind of
foreign policy instruments contained in this foreign aid request than
by direct military action. Old goals such as preserving Middle East
peace are no less important today, but we have important new goals as
well. Probably the single biggest of these is the challenge of building
a new security structure in Europe. As a result, the demands of
preparing the new democracies of Central Europe and the former Soviet
Union for full participation in the Partnership for Peace (PFP) and in
some cases, NATO membership, account for a significant amount of the
requested increase. We are also requesting small amounts of money for
programs to train and equip foreign troops for peacekeeping and
humanitarian assistance duties and thus reduce the need to commit
American troops for these kinds of operations in the future.
Sometimes, despite our best efforts, our military power must be
employed. In that case, security assistance has the proven benefit of
helping to ensure that our friends and allies have the equipment,
training and infrastructure to fight along side us if necessary. As
commander of the 1st Infantry Division in operation Desert Storm, I saw
first hand how our years of active planning and effort in building
military-military relations and interoperability through the security
assistance program with our coalition partners paid big dividends
during the war. As Director of the Defense Security Assistance Agency,
I am responsible for both of these major goals of the security
assistance program--preparing our friends and allies worldwide to
defend themselves, and preparing them to work better with us, if need
be. This budget request, therefore, has the strongest backing of the
Department of Defense.
Before I discuss our budget request in detail, I would like to
acknowledge the much-needed improvements to the Foreign Assistance Act
and the Arms Export Control Act made by P.L. 104-164. We look forward
to working with you on future security assistance authorization bills.
International Military Education and Training (IMET)
IMET is our single most cost-effective security assistance program.
IMET fosters military-to-military relations, promotes military
professionalism, and, via the Expanded IMET program, addresses issues
of military justice, respect for internationally recognized human
rights, effective defense resources management, and improved civil-
military relations. The Commanders in Chief of the unified commands
have consistently identified IMET as a key tool for enhancing
political/military relations with the various countries in their
regions.
Since 1991, we have broadened the reach of the IMET program to 28
new countries, primarily in Central Europe and the Newly Independent
States of the former Soviet Union (NIS). Increasingly, our IMET program
in this region has come to focus on preparing these countries for full
participation in the Partnership for Peace, and, in some cases, NATO
membership. Accordingly, we continue to work towards restoring the
level of IMET funding to a level commensurate with the program's global
utility and the new requirements for training in these new democracies.
This year we are asking for $50 million, an increase of $6.525 million,
of which $3.550 million is for countries in Europe and the NIS. Of
this, $1.5 million is for three countries, Poland, Hungary and the
Czech Republic.
Given that IMET was one of the few programs to be increased last
year, you might well ask whether this additional funding is really
justifiable in a time of budgetary stringency? The answer is yes. IMET
course costs are rising by an average of eight percent per year due to
reductions in the DoD student population that increase per-student
costs, along with normal inflation. Further, costs increase as country
programs mature. Starting an IMET program with a new country is
relatively inexpensive. English-language training is often a
prerequisite for IMET students before they can take the more costly
professional military education courses that bring the real benefits.
The early, inexpensive phase for these new countries is largely
complete, and follow-on training needs to be funded. At the same time,
we are also proposing to bring in 570 more students worldwide, of which
the majority will be from Central European and NIS countries. So this
proposed expansion in the IMET program is in part a natural consequence
of seeds planted several years before, and a component of our larger
efforts to improve the professionalism of, and enhance interoperability
with, the militaries of Partnership for Peace countries as well.
Foreign Military Financing (FMF)
We are requesting $49.25 million more than last year's allocations
for the FY 1998 FMF program, after accounting for the funding of
``FMF'' demining in the new Non-proliferation Anti-terrorism, Demining
and Related programs account.
Central Europe and the NIS
As with IMET, our interests in Central Europe are an important
factor in our request for increased funding. We are requesting $70
million in FMF grant funding for the Partnership for Peace initiative,
an increase of $10 million. Support for the Partnership for Peace helps
to ensure that Partners invited to join NATO will be ready to accept
the military, political and economic burdens of membership. It also
helps to keep the door open to countries not initially invited. The
necessarily flexible nature of the NATO enlargement process makes it
essential that we fund the program at a level sufficient to make the
armed forces of the earliest prospective NATO members truly
interoperable with NATO, while helping the other Partner countries
progress. At the same time, funds are needed to enhance cooperation
with eight countries of the NIS that we expect will become eligible for
FMF grant funding for the first time in FY 1997.
Loans to Central Europe
We are also requesting $20 million to subsidize an estimated $402
million in loans to Central European (CE) countries. Unlike the grant
assistance requested for the Partnership for Peace, these loans are
intended to help address major infrastructure deficiencies, such as
lack of airlift capability and NATO-compatible air defense, radar and
communications equipment. In some cases, loans may be used to support
transfers of excess equipment.
One important aspect of assistance to CE countries, especially
those that may not be invited to join NATO initially, is peacekeeping.
Virtually all of the CE countries already maintain or are forming
dedicated peacekeeping units. Unfortunately, lack of compatible
transportation and communications equipment is a major limitation on
these countries' ability to work alongside U.S. or NATO troops in
international peacekeeping missions. Grants and loans to these
countries can make their peacekeeping contributions more effective in
the near term, while helping to make them better prepared for possible
future NATO membership.
Greece and Turkey
We are requesting $46 million to subsidize the same FMF loan values
authorized for Greece and Turkey in FY 1997, $122.5 million and $175.0
million, respectively. In both cases, the loans are needed to continue
sustainment of existing U.S.-origin assets. Greece also plans to use
these funds to refurbish and upgrade existing U.S. equipment as well as
articles that will be acquired through the reduction of conventional
forces in Europe and the Excess Defense Articles program.
I appreciate that the proposed assistance to Turkey and Greece may
be controversial because of Turkey's problematic human rights record
and the potentially volatile situation with regard to Cyprus and the
Aegean sea. Yet the strategic importance of this region cannot be
overstated. We are committed to balancing tensions between Greece and
Turkey, and to promoting Turkey's place in the Western security system.
Turkey's secular-oriented, Western-leaning military establishment
remains a moderating force in the country and needs our continued
support.
Middle East Peace
Once again we are requesting $1.8 billion in FMF grants for Israel
and $1.3 billion for Egypt to fulfill our commitment under the Camp
David accords. Maintaining Israel's qualitative advantage and
modernizing the Egyptian armed forces continue to be major goals of
these programs. Regarding Egypt, I would like to point out that in
addition to its role in promoting regional peace, our aid there has had
the additional benefit of building a strong and reliable coalition
partner. Egypt provided over 40,000 troops in the Gulf War, troops
whose interoperability with U.S. forces was greatly increased by U.S.-
provided training and equipment.
Foremost among Arab countries that have recently taken risks for
peace in the region is Jordan. As part of our policy of assisting such
countries, we are requesting $45 million this year for Jordan to
continue with the F-16 aircraft lease program for which Congress has
already appropriated $100 million in FY 1996 and $30 million in FY
1997. The program is on schedule, with the first six aircraft scheduled
to be delivered in December 1997 and the remaining ten by February
1998.
Demining
The demining program is an important initiative this Administration
has undertaken. The FY 1998 request of $15 million will help to make a
reality President Clinton's pledge in May 1996 to strengthen global
efforts to deal with the tragic consequences of land mine contamination
of farmland and infrastructure in over seventy countries worldwide,
principally in Africa and Asia. This effort is intended to help
thirteen of the most severely afflicted countries by providing defense
articles and services needed to develop indigenous mine clearing and
awareness programs.
Enhanced International Peacekeeping Capabilities (EIPC)
I have already mentioned that providing training and equipment to
friends and allies for peacekeeping duties is an increasingly important
use of security assistance funds. In an effort to improve the
peacekeeping readiness of countries that have demonstrated significant
potential for greater contributions to international peacekeeping
operations, and at the same time reduce U.S. costs for such missions,
we are proposing a new program called EIPC--Enhanced International
Peacekeeping Capabilities. We are requesting $7 million to be allocated
regionally. The funds will be targeted to help selected countries
improve their ability to develop and implement effective peacekeeping
training and education programs consistent with internationally
approved standards. The effort will focus on the development of
peacekeeping training centers rather than on training and equipping
standing peacekeeping units. Through the procurement of special
education training aids, information technologies, and instruction on
the development of national-level peacekeeping training and education
programs, we will significantly improve the confidence and capability
of developing countries to contribute to international peacekeeping
missions. This program is being developed in consultation with selected
allies to ensure cooperative efforts at implementing common
internationally approved peacekeeping training standards. Standardizing
peacekeeping training via EIPC will enhance the cohesion and
credibility that often challenge a rapidly assembled multinational
peacekeeping force.
You may ask, why do we need a new FMF account separate from the
traditional voluntary peacekeeping account (PKO)? The answer is that
EIPC's program requirements will rely upon DoD to provide Mobile
Training Teams (MTTs) and specialized training and equipment. FMF,
which is administered by DoD, is better suited than PKO to procure
defense articles and services from the Department of Defense.
African Crisis Response Force (ACRF)
Humanitarian and peacekeeping crisis for Africa and beyond are
likely to be a recurrent problem in the near future. To deal with those
crises, we are requesting $5M in FMF for the African Crisis Response
Force (ACRF) initiative. Through provision or training and some
equipment, the ACRF initiative will enhance the capabilities of up to
10,000 African troops designated by African countries, for rapid
deployment in international peacekeeping and humanitarian operations.
Recently, the con-
cept has evolved away from the concept of a standing force and has
moved towards more emphasis on capacity building. In this form, several
countries, including France, have evinced support for the initiative
and have begun to make tangible commitments to provide training and/or
equipment or money.
East Africa Regional Assistance
Sudan, Africa's largest country, remains a destabilizing factor in
the Horn of Africa. Both the Organization of African Unity and the UN
Security Council have condemned the government of Sudan for its
involvement in the attempted assassination of Egyptian President
Mubarak in June 1995. Sudan continues to sponsor or assist efforts to
destabilize its neighbors, notably in Uganda, Eritrea and Ethiopia.
Under the rubric of East Africa Regional Assistance, we are requesting
$5 million in FMF to help these three countries resist Sudanese-
fostered destabilization.
Cambodia
Our FMF request for Cambodia is $1 million, as it has been for
several years. In concert with programs funded in other parts of the
President's foreign aid budget, we aim to use this small amount to help
preserve hard-won democratic gains in this devastated country, promote
continued democratization, and prevent the return to power of the Khmer
Rouge. This year's FMF request is intended to help develop the Royal
Cambodian Armed Forces engineers' capability to build and improve civil
infrastructure, support the Cambodian government's establishment of
development centers to provide employment for Khmer Rouge defectors,
and aid Cambodian efforts to remove an estimated 5 to 8 million anti-
personnel landmines.
Caribbean Regional Fund
Caribbean nations traditionally have been strong allies of the U.S.
Our long-term objectives in the Caribbean region include maintenance of
regional stability, as the Caribbean constitutes America's ``third
border.'' This entails assistance to cooperative security
organizations--principally through regional coast guards--against
international crime, including terrorism, narcotrafficking, arms
trafficking, money laundering, and illegal migration; plus search and
rescue and natural disaster response. We are requesting $3M for the
regional fund, a $1M increase, for long-deferred operations and
maintenance support to the Eastern Caribbean's Regional Security System
(RSS) and the broader Caribbean Community and Common Market (CARICOM)
states.
Administrative Expenses
The $23.25 million we are requesting for FMF Administrative
Expenses--the same amount for the past several years--pays for the
expenses of administering the non-Foreign Military Sales aspects of our
security assistance program worldwide. This includes financing for the
administrative costs for the security assistance activities of the
Unified Commands as well as the Security Assistance Offices in our
embassies abroad. IMET administration is a particularly important
component of these costs. Yet, despite the recent increase in IMET
programs, and thus the need for SAOs, in Eastern Europe and the NIS, we
intend to hold costs to the same level in FY 1998 as FY 1996 and FY
1997.
Korean Peninsula Energy Development Organization (KEDO)
On behalf of the Department of Defense, I would like to mention
this critical issue. The State Department has requested $30 million to
support KEDO for FY98. This amount is within the range for US
contributions anticipated by former Secretary Christopher in Senate
testimony in early 1995. KEDO is charged with implementing technical
aspects of the Agreed Framework, including delivery of heavy fuel oil
and construction of two light water reactors in North Korea, in return
for the North freezing activities at its nuclear facilities. From DoD's
perspective, this project is critical to safeguarding the security
interests of the US and its allies in the region. A failure of KEDO's
efforts could lead to a reactivation of North Korea's nuclear program,
which would pose a substantial risk to US forces in the region as well
as heighten tensions and insecurity among all Northeast Asian
countries. US financial backing is extremely important in demonstrating
to our partners in KEDO, particularly the ROK and Japan, that the US is
willing to assume its share of the burden in this security enterprise.
US funding also sets an example for other potential contributors that
are trying to assess the importance of this project.
Conclusion
I would like to conclude by reiterating that this budget request is
very much in our interest. These programs contribute directly and
indirectly to the security of the American people. The request is a
reasonable compromise between our worldwide commitments and
responsibilities on the one hand, and our budget constraints on the
other hand. The Department of Defense supports it completely. Thank
you.
Senator Hagel. Secretary McNamara.
STATEMENT OF ASSISTANT SECRETARY THOMAS E. MCNAMARA, DEPARTMENT
OF STATE
Mr. McNamara. Thank you, Mr. Chairman. I am pleased to be
here today to testify in support of the administration's budget
request. I have a longer written statement, which covers the
submission in detail, and I would like to ask that that
statement be included as part of the record.
Senator Hagel. Yes.
Mr. McNamara. Secretary Albright has laid out 6 mutually
reinforcing objectives, which form the framework of our
international affairs budget request for fiscal year 1998.
These objectives are securing peace, promoting U.S.
prosperity through trade investment and employment, fostering
sustainable development, providing humanitarian assistance,
building democracy, and advancing diplomacy and diplomatic
readiness.
Today, I would like to address the programs which serve two
of those objectives, securing peace, and building democracy.
These programs all increase the security of the American
people. That point is central to everything that I would say
here today.
The basic purpose of these programs is, indeed, to
strengthen the security of the United States, of the American
people, but they also improve the security of many of our
allies, partners, and friends as a secondary benefit, and
demonstrates the interrelationship of our security with that of
other nations.
But the strongest reason for supporting these programs is
that they reinforce American security.
Rather than refer to this as our security assistance
budget, I think it is more accurate to refer to it as our
security reinforcement budget. When we promote peace in the
Middle East, we promote American security.
When we improve our new security relationships with the
states of Central Europe, we improve American security. When we
strengthen other democracies, we strengthen our democracy.
If we can reinforce the nonproliferation norms and
institutions that have been established in the international
world, we reinforce American security. I repeat, this is not
security assistance for someone else, this is security
reinforcement for ourselves.
Let me turn first to our $5.78 billion budget request
devoted to securing peace. Ensuring the security of our Nation
remains our principal obligation, and there are dangers today,
in an uncertain world, presenting serious threats to that
security.
American military power is one of the principal means by
which we protect our interests against these threats; however,
at the same time, we must seek to prevent conflict and contain
these conflicts through strengthening our allies and partners,
specifically, the Middle East peace process.
Secretary Albright has set forth key areas that are
particularly significant opportunities for the U.S. in the
coming year. Helping to achieve a lasting peace in the Middle
East is one of the most important of those.
Peace would be impossible without U.S. leadership, and this
administration is determined to do everything it can to support
those who are willing to take risks for peace. Our budget
request includes $5.34 billion to support our efforts to bring
peace in the Middle East.
The request includes traditional amounts of economic and
military support for Israel and Egypt, and for other countries
which are important to the peace process, notably, Jordan.
This helps to meet their legitimate security needs, and to
promote continued economic reform and broad based economic
growth. Our request for the West Bank in Gaza is intended to
continue to promote Palestinian self-government through
economic development and institution building.
Mr. Chairman, in the past, Members of Congress have
expressed concern about the large piece of the pie which goes
to the Middle East peace process, and I can assure you that we
in the administration share that concern, especially as overall
discretionary fund levels continue to decrease. However, the
Middle East peace process is at a crucial point.
Through our diplomatic and financial engagement, we must
maintain the conditions necessary for peace by giving Israel
and the others in the region confidence to take further
difficult steps toward peace.
Through continued diplomatic and financial engagement, we
seek to avoid the costs of another Middle East war, and to
ensure that our vital oil supplies are protected. $5.3 billion
is a significant amount of money, but I believe, Mr. Chairman,
that it is money well spent to advance vital U.S. interests in
a stable Middle East, in which Israel is secure and at peace
with its Arab neighbors.
The next major area I would like to address is European
security. Secretary Albright also identified promoting European
security as an area of opportunity for U.S. foreign policy.
Our budget requests include $204 million in military and
economic support for our security objectives in Europe. Of this
total, $108 million represent programs of military cooperation
designed to help build new European security structure through
programs of security cooperation with the new democracies of
Central Europe and the newly independent states of the former
Soviet Union.
These nations are taking difficult steps to influence
social, political, and economic reforms to catch up with their
Western neighbors. Clearly, some have a longer way to go than
others, but we are committed to helping these countries build a
stable and integrated democratic Europe.
Of the $108 million, $70 million is for the Partnership for
Peace, and $18 million for the International Military
Educational and Training Program, IMET; $20 million is for
Central European defense loans.
The PFP program, Partnership for Peace, and IMET program,
will assist the partners to continue their active cooperation
with NATO and other partners, as we help those countries which
want to join NATO better prepare for that membership.
By developing the capacity of the partners to contribute to
actual operations, the PFP program will help to ease demands on
the U.S. allied forces, and other resources.
Since the establishment of the PFP a few years ago, this
program has been extremely successful in easing cold war lines
of confrontation, and in bringing former adversaries into a
community of shared values, principals, and interest.
As an example and demonstration of the effect, the
participation of 13 partners in the ICOR in Bosnia has shown
that the PFP is of value for in-the-field operations.
Our request for $20 million in loan budget authority is
going to provide approximately $402 in low-cost loans for
credit-worthy Central European nations to allow them to address
infrastructure deficiencies.
The loans, while they are distinct from the PFP request,
certainly complement the efforts of PFP nations who seek NATO
membership and commonality in their infrastructures.
We also plan to continue our support for two key NATO
allies, in recognition of their importance in maintaining
stability in a region that is critical to U.S. interests.
Our request of $46 million for subsidy costs, for a total
of $298 million in FMF loans for Turkey and Greece, will
support sustainment of U.S. equipment.
We are also requesting $50 million in economic assistance
for Turkey to assist in resolving their economic situation,
caused in part by its support for the Iraq sanctions.
It will be hard to overstate the importance of Turkey as a
U.S. ally. It sits at the crossroads of Europe, the Middle
East, and the newly independent states. It plays a critical
role in a wide range of issues vital to U.S. interests.
Achievement of U.S. goals in the region will depend largely
on our ability to maximize Turkish-U.S. cooperation on a broad
range of issues, where we have overlapping interests. Among
these are stability in the Caucases and in the Northern Gulf
area, lowering tensions in the Aegean, and a solution in
Cyprus.
Cooperation in these issues is dependent on preserving
Turkey's position as a democratic secular nation in a region
with weak democratic traditions and where political instability
prevails.
We seek, therefore, to strengthen Turkey's ability to carry
out its essential security role in the region, both through
democratic tradition through continued emphasis on human
rights, and to help its economy grow and prosper.
Now, let me turn to the global programs, which account for
$167 million of our request. First, peacekeeping. The budget we
are seeking of $102 million is to support a broad range of non-
U.N. multilateral peacekeeping programs and operations.
The number of contingencies requiring peacekeeping
operations has risen dramatically in recent years, and we
expect the trend will continue, especially in politically
charged areas of Central and East Asia, Europe, Africa, and
even in Latin America.
While the bulk of funding for multilateral peacekeeping
operations goes to the United Nations, it is sometimes in our
interest to support on a voluntary basis peacekeeping
activities that are not U.N. mandated or U.N. funded.
In addition to supporting long-term non-assessed
commitments, such as the Multinational Force and Observers
(MFO) in the Sinai, and in the Organization for Security and
Cooperation of Europe, the OSCE, this $102 million will be used
to promote regional involvement in the resolution of
neighboring conflicts.
In Africa, for example, we are requesting funds to support
a multinational African crisis response initiative, that seeks
to improve and expand on the abilities of African nations to
respond to peacekeeping and humanitarian crises in Africa.
Our request also addresses potential voluntary operations
in other continents, Europe, Latin America, and the Caribbean.
Second, a global program, which the General has referred
to, IMET. For fiscal year 1998, we are requesting $50 million
for IMET, a $6.5 million increase over 1997, so that we can
provide essential training to the emerging democracies of
Central Europe, the newly independent states of the former
Soviet Union, and our PFP partners, so that they will move
closer to NATO membership.
It will also provide important funding for programs in the
Near East, South Asia, Latin America, the Caribbean, Africa,
and East Asia.
While the bulk of the $6.5 increase will go to support
maturing IMET programs in Central Europe and the newly
independent states, it also is needed to offset rising IMET
costs.
Over the past 3 years, costs have increased about 25
percent, and the increase is attributable partly to inflation,
but mostly to the reduction in U.S. military training, so that
the increase of per-student tuition costs has risen.
The third element of the global program is demining. Mr.
Chairman, the demining program is one of the important
initiatives that this administration has undertaken. Clearly,
the removal of landmines is a major challenge, requiring long-
term solutions.
The United States has some compelling interests to promote
national and regional security and political stability, and
economic development, by reducing civilian land mine
casualties, and the tragic human, social, and economic costs of
countries with land mine problems.
Since the start of this program in fiscal year 1994, we
have worked closely with other Agencies on the program to
develop indigenous capabilities to remove landmines from mine-
inflicted countries.
Our request for $15 million this year will support programs
around the world, in Afghanistan and Angola, in Cambodia,
Ethiopia, Jordan, Laos, Mozambique, Rwanda, and in Latin
America.
Non-proliferation, with the dissolution in the Soviet
Union, and the proliferation of weapons of mass destruction now
being threatened, poses one of the greatest threats to the
security of the United States and of our allies.
Preventing the threat of these and other dangerous weapons
is an administration priority, and Secretary Albright has
identified non-proliferation as one of her foreign policy
priorities, as has the administration in the preceding 4 years.
We have been working diligently with the states of the
former Soviet Union to help dismantle their nuclear arsenals,
prevent the proliferation of the fissile materials that come
out of those arsenals, direct nuclear technologies to the civil
side, and to reduce the numbers of weapons of mass destruction.
Also, very important is to develop comprehensive and effective
export control regimes in those countries. Today, Ukraine,
Belarus, and Khazakistan are nuclear-weapons-free states.
We have established Science Centers in Kiev and Moscow to
provide meaningful research alternatives to former weapons
scientists, to prevent a brain drain to rogue states, and to
move these scientists into peaceful, civil scientific pursuits.
On the Korean peninsula, the KEDO program is preventing
North Korea from developing a nuclear arsenal that would
destabilize the entire region.
We hoped to make the future safer through this program, not
only for the next generation in those countries, but most
importantly, for our own country as well. However, that work is
not yet done, and so we are requesting $101 million in fiscal
year 1998 to continue these vital programs in the non-
proliferation area.
Building democracy, in this area, let me turn to the
Clinton administration's commitment to support democracy and
defend human rights, and how it reflects American ideals. Over
the past several years, the growing movement toward political
freedom around the world has profound and positive implications
for the United States.
Democratic transformation in Central Europe, and the birth
of democratic institutions in the states of the former Soviet
Union, has led to emergence of new partners in security and in
trade.
In the Western Hemisphere, all but one nation are now led
by elected governments. As a result, tensions have declined,
violent conflicts have been resolved, and market reforms have
led to impressive economic growth.
For example, Latin America is now the fastest growing
market for American exports. In Asia, our treaty alliances are
stronger than ever now that each of our allies is a democracy.
In Africa, we have seen that participatory democracies are
far more likely to avoid the man-made humanitarian disasters
that touch our conscious and require such large infusions of
resources from the international community and from the United
States; hence, our fiscal year 1998 budget request, $205
million to support a range of programs to help strengthen and
consolidate these democratic processes and institutions in
countries that have embarked on that course.
In Haiti, our $70 million request will help consolidate
Haiti's transition from military to civilian rule, and enhance
the training of the Haitian national police.
In Cambodia, another country making a difficult transition
to democracy, following decades of conflict, the Cambodian
coalition government is struggling to build a culture of
democracy in the face of enormous challenges. Our $37 million
request will enable the U.S. to advance democratic and economic
development through health care, education, rural development,
and legal, regulatory, and judicial programs.
In Latin America and the Caribbean, we are requesting $49
million in military and economic programs to promote and
strengthen democratic institutions, local governments, law
enforcement administration of justice, and the regional
security system in the Eastern Caribbean. We are also seeking
$39 million for similar programs in other areas of the world.
In conclusion, Mr. Chairman, let me return to the central
point of my presentation. The funding we are requesting in our
overall security budget directly increases the security of the
United States and of American citizens.
The U.S. security depends on promoting peace in the Middle
East, building a new security order in Europe, preventing the
spread of weapons of mass destruction, and helping emerging
democracies.
These programs to strengthen American security are
essential tools to pursuing American interests abroad, and for
our security here at home. Without adequate funding, however,
American leadership in the world and our vital interests are
going to be at risk.
The support of this committee is essential to achieving
these goals, and we are looking forward to working closely with
you and your staff to fully address any concerns or questions
you may have.
I want to thank you, Mr. Chairman, and the members of the
committee for your attention, and now I will be pleased to
answer any questions you may have.
Senator Hagel. Mr. Secretary, thank you.
[The prepared statement of Mr. McNamara follows:]
Prepared Statement of Mr. McNamara
Introduction
Thank you, Mr. Chairman. I am pleased to testify today in support
of the Administration's FY 1998 security assistance budget request for
foreign operations.
As America stands at the threshold of a new century, we face a
challenge that recalls the opportunities and dangers that confronted
our nation at the end of the First and Second World Wars. Then, as now,
two distinct choices lay before us: either to claim victory and turn
inward, or to continue to provide strong-American leadership in
international affairs and enhanced U.S. national security. After World
War I, our leaders chose the first course and we and the world paid a
terrible price.
No one can dispute that after the Second World War, our leaders--
and most of all the American people--wisely made the second choice. By
choosing a path of engagement, America made possible the construction
of a more secure, democratic, and prosperous world. To meet the
challenges of the next century and to build an even safer world for our
children, we must plot a similar course marked by vision and
steadfastness of purpose.
The United States has a remarkable opportunity in the years ahead
to shape a world conducive to American interests and consistent with
American values--a world of open societies and open markets. But the
pathway to a more peaceful, secure, and democratic world remains beset
with uncertainty. As in the past, the critical test of American
leadership will be our willingness to dedicate the resources necessary
to protect and enhance American national interests abroad. This task
will not be easy, in light of budget constraints and our commitment to
balance the federal budget.
However, if we fail to exercise our leadership now in meeting the
threats to the security of our nation posed by the proliferation of
weapons of mass destruction and other dangerous arms, drug trafficking,
terrorism, and other activities that undermine regional security,
impede democratic reform and stifle economic growth, we will pay an
enormous price later.
President Clinton's fiscal year 1998 International Affairs budget
request of $19.451 billion, a modest increase over the FY 97
appropriated level of $18.227 billion, will provide the minimum
essential tools for maintaining America's strong global leadership
role. The foreign operations component of this request totals $13.324
billion, up from $12.250 billion in FY 97. We look to Congress for
solid, bipartisan support in rebuilding a foreign affairs program base
that in recent years has slipped to dangerously low levels.
Mr. Chairman, the purpose of American foreign policy is to protect
and promote American interests. We can no longer afford to cut our
International Affairs budget and risk crippling U.S. prestige,
credibility, and influence on the international stage. If we do, we
threaten to jeopardize important political and economic interests, and
potentially compromise our national security. By supporting our FY 98
budget request, you and the members of this committee will enable a
dedicated corps of public servants to champion American political and
economic interests, further democracy, and maintain American leadership
abroad. Although the future may be uncertain, one thing is for sure: we
will continue to face crises and challenges. As we move toward the
twenty-first century, we must remain willing and prepared to protect
our nation's vital interests.
Secretary Albright has laid out six mutually reinforcing objectives
which form the framework of our International Affairs budget request
for fiscal year 1998. They include:
Securing peace;
Promoting economic prosperity;
Fostering sustainable development;
Providing humanitarian assistance;
Promoting democracy; and
Promoting diplomatic readiness.
Today, I would like to address in greater detail programs which
respond to two of those objectives: securing peace and promoting
democracy. First, let me discuss key regions where we are pursuing
peace. In each, these programs not only build but also leverage support
from our friends and allies for our common goals. From there, I will
review our security assistance programs that promote democracy, and
conclude with an overview of programs that confront global threats to
our national security.
Securing Peace in Regions of Vital Interest
Ensuring the security of our nation remains our principal
obligation. Today's uncertain environment still presents a variety of
threats to U.S. security including:
Efforts by rogue regimes to build or acquire weapons of mass
destruction, their delivery systems, and other dangerous arms;
Attempts by regional forces hostile to U.S. interests to
dominate their respective regions through aggression,
intimidation or terror; and
Internal conflicts among ethnic, national, religious or
tribal groups that undermine regional stability, impede
democratic reform, stifle economic growth and create major
humanitarian tragedies and refugee flows.
While American military power serves as the principal means by
which we can protect our interests against these threats, our critical
mission is to prevent such threats from requiring military
intervention. We do this through intensive diplomacy, multilateral
peace operation efforts, and strengthening of our alliances and
coalition partners. The foreign operations budget funds these important
efforts and, in the end, helps us avoid the costs of armed conflict
while preserving international peace and stability.
Middle East Peace
The Middle East is an area of vital concern to the United States.
Thus, a just, lasting, and comprehensive Arab-Israeli peace, including
full implementation of existing agreements between Israel and its
neighbors, remains a high priority for U.S. foreign policy. The
agreements achieved over the last two years between Israel and Jordan
and between Israel and the Palestinians, negotiation on the Israel/
Syria and Israel/Lebanon talks, the expansion of political and economic
contacts between Israel and Arab countries, and the long-standing peace
between Israel and Egypt form the foundation of a comprehensive
settlement of the Arab-Israeli conflict.
FY 98 Request for Assistance for the Middle East
(dollars in millions)
------------------------------------------------------------------------
FMF EST Total
------------------------------------------------------------------------
Israel........................... 1,800.000 1,200.000 3,000.000
Egypt............................ 1,300.000 815.000 2,115.000
Jordan........................... 45.000 25.000 70.000
ME Dev Bank...................... 52.500 52.500
West Bank-Gaza................... 75.000 75.000
Other ME......................... 29.000 29.000
------------------------------------------------------------------------
Total....................... 3,145.000 2,196.500 5,341.500
------------------------------------------------------------------------
Israel and Egypt
As in past years, support for the Middle East Peace Process
commands the largest share of the FY 1998 International Affairs
budget--about $5.3 billion. The Administration seeks traditional
amounts of economic and military support for Israel and Egypt to meet
the legitimate security needs of these countries and to promote
continued economic reform and broad-based economic growth. America's
commitment to Israel's security is strong and unshakable. Our
assistance is intended to strengthen a free and democratic Israel, as
well as to facilitate a negotiated peace and stability in the region.
U.S. assistance to Egypt reinforces its moderating influence in the
region and helps it play a crucial role in the negotiation process.
Mr. Chairman, in the past members of Congress have expressed
concern about the large percentage of our budget which goes for Middle
East peace. We in the Administration also share that same concern,
especially in this era of declining discretionary resources.
Nevertheless, we believe that this is money well spent. We are closer
now than ever before to achievement of a comprehensive Arab-Israeli
peace, but much work still remains. Political, social, and economic
developments in the region continue to present obstacles which must be
overcome.
Through our diplomatic engagement and financial assistance, we must
maintain the conditions necessary for resolution of long-standing
conflicts. We must help Israel and her neighbors implement existing
peace agreements and conclude new ones to move us closer to our common
goal. The U.S. stake in promoting peace in the Middle East cannot be
overemphasized; the consequences of renewed conflict would be dire for
U.S. interests. Without these resources, we put at risk the overall
Peace Process.
In FY 98, our military assistance (FMF) program will help maintain
Israel's qualitative edge by allowing the continuation of cash-flow
funding and providing follow-on support for major multi-year
procurement programs, such as the advanced long-range F-15I fighter
aircraft, SAAR corvettes, and continued upgrades of Israel's Apache and
Blackhawk helicopters. In addition, the proposed economic assistance
program (ESF) will promote economic reform, financial stability, and
structural adjustments needed for rapid and sustainable growth.
U.S. assistance to Egypt reinforces its moderating influence in the
region and encourages its continued participation and leadership in the
Middle East Peace Process. Given its key role in the Peace Process and
in regional politics more generally, the United States has a strong
interest in maintaining its long-established bilateral security
relationship, and in supporting Egypt's critical political and military
role as a moderating force in the region. Our assistance also serves
U.S. strategic interests by providing the United States with a capable
ally willing to contribute to international peacekeeping efforts such
as Rwanda, Somalia and, most recently, Bosnia.
Our FY 98 FMF program will allow Egypt to continue five major
programs--armor modernization, F-16 and Apache aircraft purchases, Hawk
modernization, and frigate procurements. Funding will also allow for
upgrading of secondary systems and increasing concentration on
interoperability and sustainment of U.S.-origin equipment. Supporting
such modernization is crucial to maintaining the military balance in
the region--demonstrated by the Egyptian commitment to Desert Storm--
and strengthening the security of those states at the forefront of the
Peace Process.
The FY 98 ESF program will target infrastructure development
and.policy reforms essential to basic economic growth. We will work
closely with the Egyptian government to encourage policy reforms which
promote macroeconomic growth and support structural change in the
agricultural, trade, and financial sectors. The ESF program will allow
us to expand upon the gains already achieved under the Gore-Mubarak
Partnership for Economic Growth and Development in privatizing public
sector enterprises and private sector investment. Finally, programs
will focus on infrastructure development of water and sewage treatment
systems, as well as electricity and communications networks.
West Bank and Gaza
Central to U.S. support for the Middle East Peace Process is
facilitation in Israeli-Palestinian implementation of the Interim
Agreement of September 1995 and in the permanent status negotiations,
which began May 5, 1996. The United States is fully committed to
supporting these processes, and to enabling the Palestinian Authority
to increase its economic growth and to advance democratic institutions
in the West Bank and Gaza. Stable economies in the West Bank and Gaza
are vital to the viability of new political structures, including the
new, democratically-elected Palestinian Legislative Council. With these
economies now severely depressed, the Palestinians need extensive
economic assistance to help them create effective institutions of self-
rule and to translate-the peace agreements into real and lasting
changes on the ground.
To provide a stable foundation for long-term prosperity and
Palestinian self-rule, the Administration is requesting $75 million in
ESF for programs that stress economic development based on private
sector activity and regional economic cooperation. Assistance programs
will focus on economic development through job creation activities,
improving the quality and sustainable use of water resources, and
promoting sustained production of goods and services by Palestinian
producers. U.S. assistance provided in coordination with other donors
is essential for the formation of the political, economic, and
institutional infrastructure necessary for self-government and economic
viability.
Jordan
Under King Hussein's leadership, Jordan continues to play a
positive, vital role in the Middle East Peace Process. Our assistance
provides tangible evidence of the U.S. commitment to Jordan for the
bold, courageous steps it has taken for peace in the region. Our FY 98
FMF and ESF programs are designed to expand and deepen Israeli-
Jordanian ties while enhancing Jordan's economic stability, promoting
its economic development, and building its military capabilities.
U.S. military assistance augments Jordan's important role in
contributing to the peace and security of the region and supports
Jordan as it enforces UN sanctions against Iraq. Our FY 98 FMF request
of $45 million will provide for the delivery and maintenance of a
squadron of F-16s provided under a no-cost/low-cost lease agreement.
These aircraft are crucial to sustaining Jordan's strategic and
security interest in the region. This assistance also assures strong
U.S. military access, and promotes interoperability of the Jordanian
Armed Forces with U.S. forces in potential military missions.
The $25 million ESF request will promote Jordan's long-term
economic viability by targeting two threats to Jordan's economic
growth: a major financing gap resulting from inadequate foreign
exchange; and an increasingly serious water shortage. USMD has focused
its efforts on increasing Jordan's foreign exchange earnings by
promoting economic reforms needed to improve its investment climate,
such as simplifying customs procedures, and automating export incentive
programs. ESF programs will permit construction of water treatment
facilities, and fund feasibility studies and infrastructure pilot
projects involving the private sector to allow upgrades for more water
supply and sewage treatment systems.
Lebanon
The United States believes that a peaceful, prosperous, and stable
Lebanon can make an important contribution to stability and a
comprehensive peace in the Middle East. For this reason, the U.S. has
publicly committed to support Lebanon's reconstruction and national
reconciliation following 17 years of civil war. The FY 1998 budget,
therefore, includes a modest $12 million economic support program for
Lebanon to assist in the rebuilding of civil administration
institutions vital to restoration of the government's ability to
provide basic services.
Middle East Development Bank
The Bank for Economic Cooperation and Development in the Middle
East and North Africa (MEDB) is the result of an historic joint
proposal by Egypt, Israel, Jordan, and the PLO, and is a key element of
the effort to strengthen the economic foundation essential to a lasting
peace in the Middle East. Our FY 98 ESF request of $52.5 million
represents an initial contribution to the MEDB, which has been de-
signed to leverage significant resources to address clearly identified
economic needs in the region in ways that cannot currently be met by
existing bilateral or multilateral programs. The bank will have a
strong private sector focus and a lean management structure. It will
support regional projects, particularly transborder infrastructure
systems for water, electricity, transport, and telecommunications,
private sector entrepreneurship, and regional economic cooperation.
Building a New European Security Structure
America's has a great stake in preserving and promoting peace,
democracy, and security throughout the European continent. Deep
political, military, economic, and cultural ties link Europe's security
and prosperity to our own. Twice in this century, Americans have gone
to war in Europe to protect our vital interests, and American troops
have remained in Europe since World War II. Europe is now in a period
of transition and transformation as we attempt to overcome Cold War
divisions in building a New Atlantic Community. But regional conflicts
persist in the Balkans, the former Soviet Union, Central Europe, and
the eastern Mediterranean, posing serious threats to regional--and
global--security and stability.
U.S. security policy in Europe rests upon the cornerstones of NATO;
the Organization for Security and Cooperation in Europe (OSCE);
cooperation with Russia; and an enhanced partnership with the European
Union on regional and global issues. The point of departure has been
and will remain the preservation of U.S. leadership in a robust
Atlantic Alliance. We have led in adapting NATO to meet the challenge
of ensuring peace and stability in Europe in light of the changed
security environment. In NATO, we face several critical, ongoing tasks:
1) continuing the momentum toward gradual, transparent enlargement of
the Alliance; 2) establishing a new, cooperative relationship between
NATO and Russia, expressed in a formal charter; 3) promoting a more
visible and capable European role; and 4) enhancing the Partnership for
Peace program.
The potentially volatile situation in Europe's southeastern corner
requires particular care. The United States is committed to promoting a
settlement on Cyprus, controlling tensions between Turkey and Greece,
and strengthening Turkey's place in the Western economic and security
system. The United States gives high priority, not only to bilateral
relations with these countries, but also to promoting ties between this
region and Western Europe.
For FY 98, we are requesting $219.3 million in military and
economic assistance to support our security objectives in Europe.
Together with our requested economic assistance program for Central
Europe and the Baltic States ($492 million) and MS ($900 million) these
funds will help to build a stable, free, undivided, integrated and
democratic Europe.
FY 98 Budget Request--Building a New European Security Structure
(dollars in millions)
------------------------------------------------------------------------
FMF ESF Total
------------------------------------------------------------------------
CE Defense Loans \1\................... 20.000 20.000
Cyprus................................. 15.000 15.000
Greece \1\............................. 12.850 12.850
PFP \2\................................ 70.000 70.000
Turkey \1\............................. 33.150 50.000 83.150
IMET................................... 18.300
------------------------------------------------------------------------
Total \3\.......................... 136.000 65.000 219.300
------------------------------------------------------------------------
\1\ Loan amounts: CE--$402.000; Greece--$122.500; Turkey--$175.000.
\2\ Does not include approximately $33.000 from Function 050 for PFP.
\3\ Does not include $19.600 in ESF for the International Fund for
Ireland.
Partnership For Peace
In 1994, the President proposed, and allies embraced, a program of
NATO adaptation. The goal is to create a new NATO, internally
restructured, equipped for new roles and missions, and open to new
members and deeper partnership. NATO's Partnership for Peace (PFP)
program is designed to strengthen practical cooperation and establish
strong security ties between NATO and participating countries in
Central Europe and the New Independent States of the Former Soviet
Union (NIS). It can also serve to prepare those Partners interested in
joining NATO for the obligations of membership. By forging close
cooperative ties between NATO and its Central European and MS Partners,
PFP will help erase Cold War lines of con-
frontation and bring former adversaries into a community of shared
values, principles and interests. The transformation of NATO's
relations with the rest of Europe will help provide a secure and stable
environment conducive to increased trade, development and market-based
reforms.
NATO enlargement creates a special need to enhance support to those
countries seeking NATO membership. Those countries which will be
invited to open accession talks need assistance to make their military
forces operable with Alliance forces. We must therefore increase the
FMF grant assistance available to these countries. For those countries
which desire to join NATO but will not be part of the first accession,
the need is equally critical. PFP links between Central European,
Baltic states, the MS and the West must be strengthened to reassure
these countries of their place in the West, and to prevent any sense of
a security vacuum.
Partner nations, while generally committed to making their forces
capable of cooperating with NATO, currently lack the necessary
resources to undertake improvements in logistics, equipment, and
training. We must be willing to contribute adequate resources to ensure
PFP's success. This assistance aims to improve Partners' abilities to
contribute to peace operations, search and rescue, humanitarian
assistance operations, and other joint operations that may be necessary
in the future. For example, the participation of 13 Partners in the
multinational Implementation Force in Bosnia reflected initial returns
on the small investments we have made in PFP, and provides an
indication of the potential for long-term benefits.
In FY 98, the Administration is requesting $103 million for PFP:
$70 million in FMF and $33 million within the DoD request. In Central
Europe, foreign assistance funds will support expansion of the Regional
Airspace Initiative, which will provide NATO-compatible air traffic
control systems in selected countries, English language training,
search and rescue equipment, communication and command,and control
systems, and transportation and logistical support for participation in
PFP exercises. Funds will also provide ongoing support for the Baltic
Peacekeeping Battalion. In the MS, we will build upon the foundations
that we expect to lay in FY 97 in the areas of language training and
communications equipment, to include emphasis on a Central Asia
peacekeeping battalion and a Ukrainian-Polish peacekeeping battalion.
The combined State/DoD request will continue support for Partner
participation by relieving some of the logistical and resource
deficiencies, equipment obsolescence, and operational shortcomings
which have hampered such participation.
Central Europe Defense Loans
In the interest of contributing to the stability of Europe, the
United States has a clear and compelling rationale for nurturing
expanded defense cooperation with the friendly, democratic states of
Central Europe and the Baltics. Our FY 98 request for $20 million in
FMF loan subsidies will provide approximately $402 million in market-
rate loans. The Central Europe Defense Loan (CEDL) program will
increase our ability to assist the region, in light of limited grant
resources, by encouraging credit worthy countries with growing
economies to use national funds to meet their defense sustainment/
modernization needs, ultimately improving compatibility with NATO
forces. Although the CEDL contributes to the overall goal of NATO
enlargement, it is separate and distinct from our PFP program in that
it addresses deeper infrastructure deficiencies, such as lack of
airlift capability or incompatible radar and IFF systems.
The CEDL program will enhance the defensive military capabilities
of Central Europe and Baltic states by assisting in the acquisition of
defense equipment and training such as: NATO-compatible airfield
navigation aids; computers for Defense Ministries, individual soldier
equipment for peacekeeping or rapid deployment units; transportation
equipment, including vehicles and aircraft; ground-based radar
upgrades; search-and-rescue equipment; communications modernization;
and airfield radars, navigational aids, and airfield landing systems.
Moreover, by focusing on qualitative improvements in defense
infrastructure, this program will allow some of the oversized, Soviet-
equipped militaries to continue down sizing and restructuring their
forces while maintaining essential defensive capability. The CEDL
program will support the trend in the region towards supporting
smaller, more capable, and more professional militaries.
Key NATO Allies
We are also planning to continue our support for two key NATO
allies in recognition of their importance in maintaining stability in a
region that is critical to U.S. interests. Our FY 98 request of $46
million for the subsidy cost of a total of $297.5 million in FMF loans
for Greece and Turkey will support sustainment of U.S.-origin
equipment. We are also requesting $50 million in ESF to assist Turkey
to address long-term structural reforms necessary to sustain growth, to
ease the transition as Turkey joins the EU Customs Union, and to help
offset the significant economic costs to Turkey associated with
enforcement of UN sanctions against Iraq.
It would be hard to overstate the importance of Turkey as a U.S.
ally. It sits at the crossroads of Europe, the Middle East, and the
Newly Independent States of the Former Soviet Union. It plays a
critical role in a wide range of issues vital to U.S. interests.
Achievement of key U.S. goals in the region will depend largely on our
ability to maximize Turkish-U.S. cooperation on a broad range of issues
where we have overlapping interests. Among these are stability in the
Caucasus and the northern Gulf region, lowering tensions in the Aegean,
and a solution in Cyprus. Cooperation on these issues is dependent on
preserving Turkey's position as a democratic, secular nation in a
region with weak democratic traditions and where political instability
prevails. We seek therefore to strengthen Turkey's ability to carry out
its essential security role in the region, to bolster its secular
democratic' tradition through continued emphasis on human rights, and
to help its economy grow and prosper.
Voluntary Peacekeeping Operations
While the bulk of ending for multilateral peacekeeping operations
goes for assessed United Nations operations, it is sometimes in the
U.S. interest to support, on a voluntary basis, peacekeeping activities
that are not UN-mandated and/or are not funded by UN assessments. The
Peacekeeping Operations (PKO) account has a demonstrated capacity,
under appropriate circumstances, to separate adversaries, maintain
cease-fires, facilitate delivery of humanitarian relief, allow
repatriation of refugees and displaced persons, demobilize combatants
and create conditions under which political reconciliation may occur
and democratic elections be held. This account provides the flexibility
to support pro-actively conflict prevention and resolution,
multilateral peace operations, sanctions enforcement, and similar
efforts outside assessed UN peacekeeping operations. The costs to the
United States of such voluntary operations are often much lower than in
UN-assessed operations.
For FY 98, we are requesting $90 million in PKO for voluntary
peacekeeping activities. In addition to supporting long-term, non-
assessed commitments, such as the Multinational Force of Observers
(MFO) in the Sinai and the Organization for Security and Cooperation in
Europe (OSCE), these ends will be used to promote regional involvement
in the resolution of neighboring conflicts. In Africa, for example, our
PKO request, combined with a small amount of FMF, will be used to help
sustain and enhance the African Crisis Response Force (ACRF)
initiative, which seeks to improve and expand the abilities of African
militaries to respond quickly to humanitarian crises on the African
continent and elsewhere. The ACRF represents a regional application of
our new global initiative, the Enhancing International Peacekeeping
Capabilities (EIPC), for which the Administration is requesting $7
million in FMF. The EIPC will assist selected ``focus'' countries in
improving their capabilities and readiness for peacekeeping operations,
thereby reducing the burden on the United States. Finally, the FY 98
PKO request also addresses potential operations in Europe, Africa,
Latin America and the Caribbean.
Demining
Mr. Chairman, the demining program is one of the most important
initiatives this Administration has undertaken. As you know, the United
States has a compelling interest to promote national and regional
security, political stability, and economic development by reducing
civilian land mine casualties and their tragic human, social, and
economic costs in war-torn countries. In May 1996, President Clinton
pledged to strengthen global efforts to clear mine fields through
developing better mine detection and mine-clearing technology, and to
expand demining training programs in countries with landmines.
The problem is enormous: more than 100 million mines have been
placed in the last 55 years in about seventy countries, mainly in
Africa and Asia. Clearly, the clearing of landmines represents a major
challenge requiring long-term solutions. Since FY 94, we have worked
together with DoD to design programs wherein FMF funds for demining are
used primarily to provide equipment to complement comprehensive
demining training programs funded by DoD humanitarian assistance ends.
Together, these resources have begun to develop indigenous capabilities
to remove landmines from mine-afflicted countries.
Our FY 98 FMF request for $15 million will support demining
programs around the world. We will build upon ongoing programs in
Angola, Cambodia, Eritrea, Ethiopia, Jordan, Laos, Mozambique, Namibia,
Rwanda, and Central America, as well as with the UN Office for the
Coordination of Humanitarian Assistance to Afghanistan, to assist with
their mine clearance/mine awareness programs.
International Military Education and Training (IMET)
IMET is an instrument of national security and foreign policy--a
key component of U.S. assistance that provides U.S. training on a grant
basis to students from allied and friendly nations. IMET is an
investment in ideas and people which has an overall positive impact on
the numerous people trained under the program. It is a program that,
for a relatively modest investment, presents democratic alternatives to
key foreign military and civilian leaders. My DoD colleagues frequently
cite this program as the best return dollar-for-dollar on investment
that we make.
From a military perspective, the principal value of IMET is to
enhance the military efficiency and effectiveness of participating
nations. Professional military competence is improved at all levels,
thereby promoting self-sufficiency as well as furnishing many skills
essential to nation building. This, in turn, provides a wide range of
benefits to the United States in terms of collective security,
stability, and peace. As foreign militaries improve their knowledge of
U.S. military principles, military cooperation is strengthened. IMET
fosters important military linkages throughout the world essential to
preserving the security of U.S. friends and allies, as well as for
advancing the global security of the United States.
In FY 98, we are requesting $50 million for IMET. This increase
over the FY 97 enacted level will provide essential interoperability
training to assist PFP nations as they move closer to NATO accession.
It will also provide important funding for programs in Near East and
South Asia, Latin America and the Caribbean, Africa, and East Asia and
the Pacific. Additionally, I'd like to point out that over the past
three years tuition costs for IMET students have increased about 25%.
This increase is attributed partly to inflation, but mostly to the down
sizing of our own military forces and training base. This decrease in
our force structure and training base has caused overhead costs for
foreign students to increase.
Promoting Democracy
The United States has a strong stake in supporting the growth of
democracy globally. In countries such as Haiti and Cambodia, where the
United States has invested significant resources and taken
international leadership to stop collapse and crisis inimical to U.S.
interests, assistance programs support democratic transitions, judicial
reform, and reconstruction. In these and other countries in transition,
assistance programs nurture the formal institutions of democracy and
the organizations of a vital civil society, combined with balance of
payments and other economic support measures designed to create
employment and conditions conducive to international investment and
trade. We are also requesting finding for programs to enhance the
administration of justice, including assistance to police through the
International Criminal Investigative Training Assistance Program
(ICITAP) administered by the U.S. Department of Justice.
Through regional accounts, ESF supports carefully-targeted
programs to assist democratic forces in emerging or threatened
democracies, and, in some cases, programs designed to strengthen pro-
democratic forces. Typical areas of assistance include technical
assistance to administer and monitor elections, capacity-building for
non-governmental organizations, judicial training, and women's
participation in politics. In FY 1998, ESF for building democracy will
continue to be used for a range of programs to help strengthen and
consolidate democratic processes and institutions in countries that
have recently embarked on a democratic course, or where democracy is
threatened.
FY 98 Security Assistance Budget Request--Support for Democracy
(dollars in millions)
------------------------------------------------------------------------
FMF ESF Total
------------------------------------------------------------------------
Angola................................. 10.000 10.000
Africa Regional........................ 15.000 15.000
East Africa Regional Asst.............. 5.000 5.000
Cambodia............................... 1.000 37.000 38.000
Mongolia............................... 7.000 7.000
East Asia Regional..................... 6.250 6.250
South Asia Regional.................... 3.000 3.000
Peru/Ecuador Peace..................... 5.000 5.000
Haiti.................................. 70.000 70.000
Latin American & Caribbean............. 3.000 31.000 34.000
Human Rights & Democracy............... 8.000 8.000
AOJ/ICITAP............................. 10.000 10.000
ME Democracy........................... 5.000 5.000
------------------------------------------------------------------------
Total.............................. 9.000 207.250 216.250
------------------------------------------------------------------------
For FY 98, we are requesting $70 million to strengthen Haiti's
nascent democratic institutions and foster economic development. U.S.
assistance, in coordination with donations from the international
community, will help consolidate Haiti's transition from military to
civilian rule by enhancing the training of the Haitian National Police
(HNP) and coast guard, fostering more effective and responsive
democratic institutions, including an independent judiciary;
facilitating private sector employment; and promoting sound
environmental resource management and sustainable economic growth.
Cambodia is another country making the difficult transition to
democracy following decades of conflict. The peaceful status of the
country and the strength of the government are fragile. Cambodia's
coalition government is struggling to build a democratic culture in the
face of enormous challenges, including a weakening but ongoing threat
posed by the Khmer Rouge insurgency. Our $37 million FY 98 ESF request
will enable the United States to advance democratic and economic
development through provision of technical assistance for health care,
education, rural development, and democracy promotion programs,
including legal, regulatory, and judicial assistance to the National
Assembly and courts. The $1 million in military assistance supports
ongoing efforts to develop the Royal Cambodian Armed Forces engineers'
capability to build and improve civil infrastructure. The funds will be
used to provide training and sustainment to maintain over 40 pieces of
engineering equipment already granted to Cambodia as DoD excess defense
articles.
We are also seeking $108.25 million in military and economic
assistance funds to advance important democratic gains in Latin
America, Africa, the Middle East, South and East Asia. We request for:
Latin America and the Caribbean, $49 million for programs to
promote and strengthen democratic institutions, local
governments, police training, administration of justice, and
the Regional Security System in the Caribbean; also to
facilitate implementation of the Peru-Ecuador border dispute
settlement agreement;
Africa, $30 million for programs to support free elections,
respect for the rule of law, and enhancing government
accountability; support for Ethiopia, Eritrea, and Uganda to
defend against Sudanese-sponsored aggression in the region; and
support democratic institution-building and election
preparation in Angola;
East Asia, $13.25 million for regional programs to reinforce
pluralistic civil society and accountable government, and in
Mongolia to promote private sector-led economic reform and
build democratic institutions through technical assistance in
regulatory and legal reform;
Middle East, $5 million to support democratic governance and
basic human rights on a regional basis through programs managed
by local and U.S. NGOs in countries of the region currently
receiving little or no Peace Process-related assistance; and
South Asia, $3 million to support the consolidation and
strengthening of democratic systems, respect for human rights,
and the rule of law in South Asia.
Human Rights and Democracy, $8 million to respond to
conflicts, human rights emergencies, and implementation
requirements of international agreements.
Confronting Transnational Security Threats
With the dissolution of the Soviet Union, the proliferation of
weapons of mass destruction, their delivery systems, and advanced
conventional weapons now poses the gravest threat to the security of
the United States and our allies. As Secretary Albright emphasized to
you last month, arms control and non-proliferation efforts remain a key
part of our foreign policy strategy to keep America safe. The
objectives of our non-proliferation programs are to reduce the risk of
war by limiting and reducing destabilizing forces, inhibiting the
spread of weapons of mass destruction and delivery systems, and
building confidence through measures which enhance transparency and
verification of compliance with national commitments. In addition to
enhancing our security directly, these measures also support other
important U.S. interests, including economic and political reform in
Russia and the other newly independent states, our economic interests
in Asia and the Pacific, and our broader political efforts to resolve
long-standing disputes in the Middle East and South Asia.
FY 98 Budget Request--Nonproliferation
(dollars in millions)
------------------------------------------------------------------------
IO&P NDF NIS Total
------------------------------------------------------------------------
NDFF........................ 15.000 15.000
Science Centers............. 15.000 15.000
IAEA Voluntary Contr........ 36.000 36.000
KEDO........................ 30.000 30.000
Defense Enterprise Fund..... 5.000 5.000
------------------------------------------------------------------------
Total................... 66.000 15.000 20.000 101.000
------------------------------------------------------------------------
To help us achieve our overall nonproliferation objectives, we are
requesting $101 million in FY 98. Through the Nonproliferation and
Disarmament Fund (NDF), we will undertake a variety of bilateral
assistance programs, including export control assistance. Under the
International Organizations and Programs (IO&P) account, we will
contribute to the International Atomic Energy Agency (IAEA) and support
the Korean Energy Development Organization (KEDO). Under the FREEDOM
Support Act, we are also seeking funding for the International Science
Center in Russia, the Science and Technology Center in Ukraine, and the
Defense Enterprise Fund (DEF).
The Nonproliferation and Disarmament Fund
The Nonproliferation and Disarmament Fund (NDF) was established in
1994 to implement specific nonproliferation projects. Since its
inception, the NDF has funded numerous projects for dismantling and
destroying conventional weapons and weapons of mass destruction and
their delivery systems, and for strengthening international safeguards,
export control, and nuclear smuggling efforts. Current NDF projects
include:
Elimination of SCUD missiles and their launch systems from
Romania and Hungary;
Dismantlement of South Africa's Category I missile
production infrastructure;
Assistance in the procurement of highly enriched uranium
stocks from the former Soviet Union;
Procurement of verifications and safeguards equipment for
the IAEA;
Procurement of seismic arrays in support of the
Comprehensive Test Ban Treaty.
Completion of the Phase I engineering assessment needed to
convert Russian plutonium production reactors to a power only
mode of operation;
Provision of export licensing and enforcement assistance to
Central Europe, the Baltics, and the former Soviet Union; and
Successfil deployment of an automated system in Poland for
tracking the export of sensitive materials.
To date, NDF has considered over 90 project proposals with an
estimated cost of $120 million; and has approved projects totaling over
$30 million. On March 5, we notified Congress of our intent to provide
$12.2 million for new NDF activities, leaving an available balance of
$10.6 million in the NDF. The FY 98 request of $15 million will
continue to provide ending for proposals to achieve our goals of
preventing the proliferation of weapons of mass destruction and
combating nuclear smuggling.
IAEA Voluntary Contribution
For the United States, the most critical function of the IAEA is
the implementation of safeguards to nuclear activities to deter,
through timely detection, the diversion of material and equipment for
nuclear weapons purposes. Safeguards establish the critical arms
control precedent of voluntary verification of compliance with
nonproliferation obligations, including on-site inspection, by a
sovereign state.
For FY 98, we are requesting a $36 million voluntary contribution
to the IAEA within the IO&P account to support safeguards and non-
safeguards-related technical assistance. Safeguards are the principal
but not exclusive U.S. concern with the IAEA. Another fundamental
premise of U.S. nuclear nonproliferation policy, also embodied in the
Treaty on the Nonproliferation of Nuclear Weapons, is the commitment to
facilitate the exchange of equipment, materials, and scientific and
technological information for the peaceful uses of nuclear energy. A
significant portion of the U.S. voluntary contribution to the IAEA is
used to fulfill this obligation. Because the vast majority of IAEA
member states consider this objective of paramount importance,
continued U.S. support for technical cooperation is crucial to maintain
support for a strong safeguards system.
Korean Peninsula Energy Development Organization (KEDO)
KEDO is the international consortium established to implement the
Agreed Framework between the United States and the Democratic People's
Republic of Korea (DPRK) signed on October 21, 1994. The Agreed
Framework will ultimately dismantle North Korea's nuclear weapons
capability. KEDO's central task is to manage the financing and
construction of the light-water reactor (LWR) project in North Korea,
to provide annual shipments of heavy fuel oil to the DPRK, and to
implement other aspects of the Agreed Framework. The U.S. role in this
consortium is to organize and lead KEDO and, with the help of the
Republic of Korea (ROK) and Japan, support the consortium in fulfilling
its tasks.
Our FY 98 request for $30 million within the IO&P account for KEDO
is essential to finance KEDO's administrative expenses and projects,
particularly the provision of heavy fuel oil to the DPRK. Support for
the LWR project and the majority of KEDO administrative expenses and
heavy fuel oil deliveries will come from cash and in-kind contributions
from other KEDO members, especially the ROK and Japan. Eleven
countries, spread over five continents, have become members of KEDO,
reflecting the organization's global character, composition, and
significance. The U.S. contribution is necessary to demonstrate U.S.
leadership and to supplement and leverage contributions from other
countries. Without this finding, KEDO will not be able to operate or
carry out its objectives, thereby weakening the credibility of U.S.
leadership, jeopardizing the implementation of the Agreed Framework,
and contributing to rising security tensions on the Korean Peninsula.
Full funding of this request is the best way to promote U.S. objectives
for peace, security, and nuclear nonproliferation in Northeast Asia.
International Science and Technology Centers
The International Science and Technology Center (ISTC) in Moscow,
operational since 1994, and the Science and Technology Center in
Ukraine (SYCU), which began to fund scientific research in early 1996,
help to counter the weapons expertise proliferation threat by putting
former Soviet weapons scientist to work on civilian projects. These
projects benefit all Science Center members and partners, including--in
many instances--U.S. universities, national laboratories and
corporations, which participate as unfunded partners. This program
seeks: 1) to encourage the transition to market-based economies; 2) to
help find solutions to nationally-and internationally-recognized
problems, such as nuclear safety, energy production, and environmental
protection; and 3) to integrate MS scientists and engineers into the
international community.
In FY 98, we anticipate providing up to $15 million under the
FREEDOM Support Act to continue the important work of these two
centers. The European Union and Japan also provide voluntary
contributions to the ISTC, and Sweden and Canada contribute to the
STCU. Procedures have recently been implemented to allow other
governments, inter-governmental organizations, and NGOs (including the
private sector) to participate in Science Center activities. To date,
the ISTC has funded 202 projects in Russia, Kazakstan, Georgia,
Belarus, and Armenia, with the participation of nearly 17,000
scientists and engineers, the majority of whom have expertise on
weapons of mass destruction or their delivery systems.
Defense Enterprise Fund
Our FY 98 assistance for the MS includes $5 million for the U.S.
contribution to the Defense Enterprise Fund (DEF), which is now
expected to reach self-sustainability in 1999. The DEF, initially
authorized by Congress and established with a grant from the DoD
Cooperative Threat Reduction (Nunn-Lugar) program, was incorporated as
a private, non-profit venture capital fund in March 1994.
Responsibility for funding the DEF shifted to the State Department in
FY 97.
Like other enterprise funds, the DEF assists the MS in the
development of successful private sector entities which contribute to a
stable market economy. However, the DEF focuses on the privatization of
weapons of mass destruction (WMD)-related defense industries and
conversion of WMD-related military technologies and capabilities into
civilian activities. It provides both equity investments and loans to
qualified joint venture initiatives which include personnel and/or
facilities currently or formerly involved in research, development,
production or operation, and support of the former Soviet Union WMD-
related defense sector.
The DEF encourages private sector participation in the ownership
and management of the entities in which the DEF invests, and only makes
investments involving enterprises committed to privatization. U.S.
assistance to the DEF significantly leverages private U.S. investment:
every $1 we have provided to date has leveraged an average of $5 of
private investment. Thus, the DEF supports both the national security
objective of nonproliferation--eliminating WMD production capability--
as well as economic reform objectives by promoting the development of
market economies.
Mr. Chairman, these nonproliferation programs are both critical for
the security of America and extremely cost effective. By making very
small investments today to help other countries prevent the spread of
sensitive materials and technologies, we obviate the need to spend
larger sums in the future to protect ourselves against weapons that
have fallen into the wrong hands.
Conclusion
Let me conclude by returning to the central point of my
presentation: the ending that we are requesting directly increases the
security of Americans and advances our direct interest in a stable,
peaceful and prosperous international system. We undertake these
programs to achieve specific objectives, each of which can be measured
in terms of their successes, and each of which makes America and the
world safer. U.S. security depends on promoting peace in the Middle
East, building a new security order in Europe, preventing the spread of
dangerous weapons, and helping foster emerging democracies.
Foreign assistance is an essential tool to pursue American
interests abroad and our security at home. Without adequate funding,
strong American leadership in the world and our ability to protect our
vital interests will be at risk Strengthening our diplomatic efforts to
address these threats now will help avoid the far greater costs, in
lives as well as resources, of military interventions later. The
support of this Committee is essential to achieving those goals and we
are ready to work closely with the Committee and staff to fi1lly
address any concerns and questions that you and they may have.
Mr. Chairman, I wish to thank the members of the Committee for the
opportunity to provide testimony on the FY 98 budget request, and would
be pleased now to answer any questions you may have.
Senator Hagel. I would now like to call upon my colleague,
Senator Sarbanes, from Maryland.
Senator Sarbanes. Mr. Chairman, thank you very much. I will
be very brief.
I was not able to here right at the outset. I want to join
with you in welcoming General Rhame and Secretary McNamara
before the subcommittee this morning.
It is interesting, that security assistance, which includes
economic support funds, ESF, as well as foreign military
financing, and other forms of military assistance, is by far
the largest share of our foreign aid budget.
It does not always receive the same scrutiny and the focus
and attention as some other components of the foreign aid
budget. At $6 billion, that makes up almost half of the foreign
aid budget, so obviously, we need to pay some careful attention
to it, as we reorient ourselves to new global challenges, and
reexamine our national priorities.
Of course, one reason the security assistance budget
remains at high levels, despite the end of the cold war, is
that we have important interests in sustaining peace
agreements, and supporting traditional allies.
Israel and Egypt account for the major portion of our ESF
and FMF programs, but I think there is widespread recognition
that such assistance is essential to the continued success of
the Middle East peace process, and essential to sustaining
Israel's qualitative edge against threats to the very
existence, which continue to present themselves in that area of
the world.
There are other elements, though, of this security
assistance program, whose rationale I think is less clear. As
military grants have declined overall, there seems to have been
a very substantial expansion of other mechanisms and
authorities through which the U.S. provides arms and training
to foreign militaries.
IMET is slated for substantial increases in this budget, a
new military loan program has been established for Eastern
European countries, most of whom are still struggling to get
their economies into some sort of decent shape.
Excess defense articles and defense draw downs have become
a major source of weapons transfers, one I think that the
Congress has not paid adequate oversight attention--to which
the Congress has not paid adequate oversight attention.
We have this defense export loan guarantee facility, about
which I have very substantial reservations, now just beginning
its operations. We continue to have some cascading of
conventional forms in Europe.
Last year, we worked on a bipartisan basis in this
committee and with the House, and the administration, to enact
a new law that would establish modest restrain on certain types
of military transfers, and improve disclosure, monitoring, and
reporting.
Later in this hearing, when I get to my questions, I want
to address the implementation of that new act, so I look
forward, Mr. Chairman, to this hearing this morning, and again,
I want to thank you, and commend you for this series of
hearings you are having with respect to the budget, which I can
play a very important base for the committee later to take
action on the authorizing legislation. Thank you.
Senator Hagel. Senator, thank you.
I would like to pick up, if I might, on a little of what
the ranking minority of this subcommittee referenced, as well
as each of you, and if we could, stay in the Middle East here
for a bit.
It has been noted on a number of occasions that Israel's
prime minister, fairly soon after he took office, talked about
moving Israel away from American foreign assistance.
Mr. Secretary, can you enlighten this committee on any
discussions that have been had in that area, or anything you
know about it, when we might start that, if we should start
that, anything you care to comment on regarding that point?
Mr. McNamara. Senator, I am not familiar with any specific
conversations that are designed to immediately lower the level
of as-
sistance that is now being given to Israel. I think it is
obviously an objective of both Israel and the United States, as
the peace process moves forward, to be able to reduce those
levels.
The levels and their reduction are directly related, it
seems to me, to the progress in the peace process and in the
achievement of a comprehensive peace.
What is most important, it seems to me, is that as we move
down the road toward a comprehensive peace, that there is a
sense of security in Israel that will enable it, as I said in
my opening remarks, to take those risks, to take those steps
leading to peace, which, in turn, leads to the requirement of
much less military expenditures by Israel, and, therefore, much
less security assistance coming from the United States.
I do not know of any conversations that have immediately
and directly addressed the question, for example, for fiscal
year 1998.
Senator Hagel. General Rhame, would you care to add
anything to that?
General Rhame. No, sir, I would support it. I have not
participated in any discussions either.
Senator Hagel. Thank you.
Secretary McNamara, do you believe that the security
assistance level that we are providing, have been providing, at
the President's request, is adequate?
Do we need more, do we need less? Is this about right?
Maybe you could break that down for us a little bit?
Mr. McNamara. I think given the fiscal constraints under
which we are operating, given the number of programs that we
are conducting around the world, and the competing interests
for those programs, I think we have, through compromise within
the executive, and through consultations here on the Hill, come
up with the best quantities and the best funding levels that we
think are possible under the current circumstances.
I would not argue that in a better world, with fewer fiscal
constraints, that we could not do better with more; indeed, we
very well could, but I think we all recognize the real world
that we are operating in, and, therefore, we have to do as much
as we can with what is available given competing interests on,
not only foreign affairs budget items, but also in domestic
spending, defense spending, and other areas.
So, I think we are satisfied, we want to see those levels
go up, and we think we can justify our request for the
increases where we have indicated that we wish increases, such
as in IMET and some other areas.
Senator Hagel. Thank you.
General, would you like to respond?
General Rhame. Yes, sir. Mr. Chairman, I sit on the
consultative committee with Egypt, that deals with how the
security assistance resources are used in their 5-year plan, I
have extensive conversations with representatives of the
Israeli government on transfers and acquisitions, and in both
countries, at any given time, you can see a need for more.
However, it is my view, after working this for the time
that I have, that I think the balance is about right. I would
support Mr. McNamara's view, given where we are in our
resources in this country and the status of the peace
situation, that the dollars are about right in the program and
where they should be.
Senator Hagel. Thank you. Let me come right back to you on
another point. The United States is, I understand, paying for
F-16s for Jordan. With the military assistance that we have
been giving to Egypt, and with our assistance programs to
Jordan, at what point do you think those nations will be
sufficiently strong enough that our programs will no longer be
necessary.
General Rhame. First, Mr. Chairman, let me address the
Jordan question. We started and embarked on a lease program for
F-16s in FY 96 through a total appropriation of $100 million,
and an appropriation of $30 million in this appropriation for
FY 97.
This year, for FY 98, we are requesting $45 million for
Jordan. The plan, our objective is to ask for another $45
million in 1999, which will complete the F-16 lease program
with Jordan, which was King Hussein's number one priority with
us, in his requirements.
Jordan's ground forces and naval forces continue to have
many needs, many requirements. At this time, we have
prioritized with their leadership, the F-16 program and have
not been able to address their ground forces requirement in FMF
dollars.
However, we have executed last year a draw down in the
amount of $100 million for Jordan, in which we have flowed some
major items of equipment and spares to their ground forces, a
C-130 to their air forces, and some things to their navy, and
also have watched very carefully older spare parts, which fit
their equipment, and excess ammunition, and light trucks and
medium trucks, and have provided those to Jordan through the
excess defense article programs, in accordance with the
approval of the State Department, and the appropriate
notifications to the committees of Congress.
Senator Hagel. Mr. Secretary.
Mr. McNamara. I agree. I think what we have done is we have
responded, following the peace agreement between Jordan and
Israel, to the main strategic interests and concerns of Jordan
with this program.
We have not limited ourselves to that, however. In the
request for this year, we have an ESF request which would
permit us to undertake expansion of programs aimed at expanding
Jordan's economic reforms and improving Jordan's overall
economic situation, because we think, particularly in the area,
for example, of water shortages, that these need addressing.
I will point out, as kind of a footnote to this, that even
with the Jordan program and the other areas where we have asked
for some slight increases, that the overall percentage, or
proportion of the ESF and FMF requests for fiscal year 1998,
for the Middle East, is lower than the percentage that was
requested in 1997. So, I think we are getting the balance about
right.
Senator Hagel. Moving around in that area a little bit, I
have heard reports that the administration is considering
selling F-16 aircraft to Saudi Arabia. As you know probably
better than most, there has been some concern in this country
regarding trying to get at least a perceived cooperation from
the Saudi government regarding the bombing over there a year
ago.
Is this a sale, first of all, that might take place
politically in the environment that we are dealing in now, is
this something that we should be doing?
Mr. McNamara. Mr. Chairman, the fact is that over the
period of the last 4 or 5 years we have been talking with the
Saudis on a number of occasions, and General Rhame can expand
on this, about replacement of their F-5 aircraft, which are
coming to the end of their life cycle.
As that F-5 problem, if you will, approaches, it is clear
that the Saudis are going to have to replace those aircraft
with newer aircraft.
The possibility of F-16s being that replacement aircraft
exists, but as of right now, there has been no request from the
Saudi government for such a replacement, even though there have
been press reports reporting on conversations with American
industry.
We believe that it is possible to have such a replacement
program that will keep Saudi military readiness, which is very
important to us and vitally important to both regions at its
current level. When such a request comes in, and if such a
request comes in, we are going to give it very serious
consideration. We will be consulting throughout the executive
branch, with Congress, and with other interested parties about
such a potential sale. But I want to emphasize that that has
not happened yet.
With respect to the Khobar Towers, I think we are getting
increasing cooperation from the Saudis in that area, and that
relatively short-term situation, I think, should be clearer
over the course of the next few months.
I do not anticipate that we will make any linkage with a
request for aircraft at this point, I do not think that is
necessary.
I do want to also point out that as we examine this issue,
we will examine it in the context of the Middle East peace
process, of Israel's security situation, and our commitment to
Israel for maintaining the qualitative edge.
Senator Hagel. Thank you. General.
General Rhame. Sir, I would add, I served there for 2 years
before coming to this job as the chief of the U.S. mission
there.
We have worked on the replacement of the F-5 over the last
5 years with the provision of capability data, price and
availability, those kinds of questions. It would be my view
that they have a clear aim to replace their F-5. We would hope,
in the long term, that it would be a U.S. platform.
It would also be my view that the decision to proceed with
that acquisition also would be tempered by the financial
ability within their trust fund to pay for the FMS
expenditures, which is one of the other things that I supervise
within the Department, is the administration of their trust
fund to pay for the obligations owed to U.S. industry for
previous acquisitions.
It is my view that right now at this moment, I believe that
Government will delay giving us a letter of request to proceed
with the acquisition for a year or two, until they have better
bought down the owed balance in their trust fund for previous
FMS acquisitions.
I would agree with Mr. McNamara that when the letter of
request is forthcoming, it will be carefully evaluated.
Technology will be a key issue, which will be discussed at
great length between De-
fense and State and will be carefully looked at before we make
a clear indication of how we intend to proceed.
Senator Hagel. Thank you.
Senator Sarbanes.
Senator Sarbanes. Thank you very much, Mr. Chairman.
Gentlemen, the first question I want to put goes to the
military authorities bill, to which I made reference in my
opening statement, we enacted last year, P.L. 104-164.
That reinstates a report, listing the value and quantity of
defense articles, defense services, and IMET provided each
country over the past year. The President was required to send
up that report not later than February 1.
Today is March 12th, and to my knowledge, we have still not
seen the report. First of all, am I correct in that statement,
and if so, what is the status of this report?
Mr. McNamara. Senator, you are correct in the statement,
and we are working on that report, and we expect it to be
forwarded very soon.
Unfortunately, in compiling a massive amount of export
license data that the report requires, we have had some
unforeseen problems with the computer data that need to be
assembled.
We are working to resolve the problems, and, indeed, it is
a technical delay at this point that is causing the report not
to be already here before the Congress. But we expect to get
this data assembled properly, put together very quickly.
Senator Sarbanes. Could you give use some definition of the
phrases ``very soon'' and ``very quickly''?
Mr. McNamara. I would hope within weeks.
Senator Sarbanes. Within weeks. Less than a month?
Mr. McNamara. If possible, it will be up here in less than
a month. Unfortunately, Senator, I do not have a specific--I
cannot absolutely guarantee you that we can do that. But as I
say, it is a question of assembling the data and getting it up
here, and we have had these problems.
I am not a computer expert, so I am not, myself, competent
to say just exactly how they are going to go about solving that
problem.
Senator Sarbanes. Well, let it be noted that there is an
awareness here of the fact that the report is not yet in, and
we are looking for this report. We just enacted this
legislation, and we want to see this legislation implemented.
Now, I would like to turn to the FMF loans and loan
subsidies. As I understand it, in the budget you have
submitted, you are taking the FMF loan level up from $540
million to $700 million, is that right----
Mr. McNamara. I believe that is correct, sir.
Senator Sarbanes. [continuing]. and you are taking up the
FMF loan subsidy to support of that level from $60 million to
$66 million, is that correct?
Mr. McNamara. I believe that is correct.
Senator Sarbanes. So you are raising the loan level by 30
percent, but you are raising the subsidy level by 10 percent.
Now, this has a little bit of a fishes and loaves----
Mr. McNamara. Pardon?
Senator Sarbanes. This has a little bit of a sort of fishes
and loaves perspective, if I may. It is a biblical reference,
Mr. Secretary.
Really, it is close to a miracle here. I mean if you can
continue to this, we ought to bring you up here to solve all
the budget problems. How do you do that? I am just kind of
interested.
Mr. McNamara. Well, I am not sure. If I understand it
correctly, it probably has to do with the countries that are
going to receive the increase, what their particular credit
rating, and status, and standing is, and, therefore, how much
of an amount needs to be actually appropriated for the 1998
fiscal year, in order to support an amount of loan that would
then be underwritten by that appropriation.
Senator Sarbanes. Let us pursue that for a moment. As I
understand it, you are supporting--in fact, you state in your
testimony, you are supporting $297 million in FMF loans for
Greece and Turkey, with $46 million worth of subsidies. Now,
that means you are supporting a balance of $402 million with
$20 million worth of subsidies. That is a pretty good trick.
How do you accomplish that?
Mr. McNamara. In the case of Turkey, the fact is that we
had, I believe, a larger amount in the preceding fiscal years
for the Turkey loans, and that currently, what we are asking
for does not raise the amounts that we were requesting for the
appropriated funds at the same rate as it raises the amount of
loans that is possible to be underwritten by those funds.
Senator Sarbanes. No, no, no. You are missing my question.
Let me refer to your statement, your own statement, at pages 9
and 10, the statement you submitted to the committee.
On page 10, you say, ``Our fiscal year 1998 request of $46
million for the subsidy cost of a total of $297 million in FMF
loans for Greece and Turkey will support sustainment of U.S.-
origin equipment.''
Now, I may come back and ask about that, but for the
moment, let us set that aside.
So, you are doing $297 million on the basis of a $46
million subsidy cost, correct?
Mr. McNamara. Correct. That----
Senator Sarbanes. All right. Now, let us turn to the rest
of it.
On page 9 you say, referring to Central Europe and the
Baltics, ``Our fiscal year 1998 request for $20 million in FMF
loan subsidies will provide $402 million in market rate
loans.''
So, in the one instance you take $46 million to support
under $300 million, and in the other, you support $400 million
with $20 million, half as much.
Mr. McNamara. Correct.
Senator Sarbanes. Less than half as much. How do you do
that? That is a nice trick.
Mr. McNamara. Well, the amount that is required to be
appropriated in order to support the loan depends upon the
country that is receiving the money, and what the credit rating
of that country is----
Senator Sarbanes. OK.
Mr. McNamara. [continuing]. for the loan designated, or
expected to be designated, for that country. If a country's
rating is X,`` then a certain amount of money is required. If
the country's rating is worse than that, than more money needs
to be appropriated in order to cover an equivalent amount of
loan.
Senator Sarbanes. Which countries are receiving the $402
million in FMF, so we can make some judgment about their credit
rating?
Mr. McNamara. Well, I do not have that here in front of me,
but we can certainly get that for you. But it is essentially
the countries in the defense loan program in Central Europe.
Senator Sarbanes. Well, I have been looking for lists of
those countries, and I have not been able to get it, and I am
not sure it has been submitted to the Congress.
Mr. McNamara. Three of them are Poland, Hungary, and the
Czech Republic, and I do not know--for fiscal year 1998--there
conceivably could be some others, which would then cause these
figures to be adjusted.
Senator Sarbanes. Have you allocated out the $402 million,
country-specific?
Mr. McNamara. No, but we have done it----
Senator Sarbanes. If you have not done that, how are you
able to assess the credit risk, and thereby reach a specific
determination on the amount of loan subsidy?
Mr. McNamara. Well, you will notice the loan says
approximately $402 million, and the reason for the word
approximately is because, indeed, the final loan that would be,
or loans--plural--that would be underwritten by that depends
upon how much goes to each of the countries, and what each
country's credit rating is.
Senator Sarbanes. You surely do not regard that as an
adequate response, do you? I mean how were you able to
calculate a $20 million in loan subsidy required to support
$402 million, unless you hide it country-specific, and did an
analysis of the credit risk of the country, or is it just sort
of kind of a floating figure?
Mr. McNamara. No. I think it is country-specific, with
respect to Czech Republic, Poland, and Hungary.
Senator Sarbanes. How much of the $402 million do they get?
Mr. McNamara. At the current time, they would get all of
it, unless we were to come here and add other countries, that
is suggest that there be other countries added to that. But
right now, it is based, I believe, on those three countries.
Senator Sarbanes. Is that right, only those 3 countries are
going to receive the $402 million?
Mr. McNamara. Yes.
General Rhame. In 1997, Senator Sarbanes, the loans were
earmarked for those 3 countries in Central Europe, FMF loans
for Central Europe.
Senator Sarbanes. How much for those?
General Rhame. The subsidy, sir, was $20 million. I do not
know----
Senator Sarbanes. But how much loan?
General Rhame. The loan value was $242 million.
Senator Sarbanes. $242 million, and you earmarked $20
million, is that right?
General Rhame. That is correct.
Senator Sarbanes. For the year we are in right now?
General Rhame. 1997. Yes, sir. 1997.
Senator Sarbanes. Next year, you are going to do $402
million, which is, what, about a 60 percent increase, and you
are going to do it with the same amount of loan subsidy, is
that right?
General Rhame. The current projection of the credit ratings
of the countries involved, that would be correct.
Senator Sarbanes. Who makes these projections?
Mr. McNamara. OMB is the one who makes the projections, and
who determines the credit rating.
Senator Sarbanes. Well, I would be interested in seeing an
analysis. As I understand what I am now being told, is that you
have gone from requiring $20 million to be set aside in the
budget to cover these loans in fiscal 1997, to support $242
million, and in fiscal year 1998, in a 1-year period, the same
amount will support $402 million.
So, your analysis of the credit rating, as such, that you
are able to take it from $242 million to $402 million, which is
an increase of $160 million, that is a 60 percent--more than a
60 percent increase, and sustain it on the same amount of loan
subsidy, is that correct?
Mr. McNamara. That is the projection, Senator.
Senator Sarbanes. Well, I am interested in how that was
arrived at.
Mr. McNamara. Let me try and get you the details. I will go
back and talk to OMB, and give you an answer.
I believe, as I said, that it has to do with the different
credit ratings of the countries, and could possibly have to do
with what is the going rate for credit, and, therefore, how
much the subsidy is buying down from that rate.
Senator Sarbanes. On Greece and Turkey, how is that
allocated out between the two countries? I mean in your
statement you group them.
You are going to provide us with the analysis that supports
a submission, with respect to these Central European countries,
that makes it reasonable and accurate to take the loan amount
from $242 million to $402 million, without increasing at all,
the amount of loan subsidy, is that correct, you are going to
submit that to us.
Mr. McNamara. I will so submit.
Senator Sarbanes. OK. Now, let us turn to Greece and
Turkey. How is that divided between the two?
Mr. McNamara. $175 million for Turkey, and $122.5 million
for Greece, and the subsidy division is $33.15 million for
Turkey, and $12.85 million for Greece.
Senator Sarbanes. All right. Well, that reflects, I guess,
the weakness of the Turkish economy, is that correct?
Mr. McNamara. Relative to Greece, yes.
Senator Sarbanes. Well, and relative to your Central
European countries.
Mr. McNamara. And also relative to Central Europe, correct.
Senator Sarbanes. In fact, there the subsidy is 8 percent
of the total, Greece, it is 10 percent of the total, and
Turkey, it is 19 percent of the total, correct?
Mr. McNamara. Correct. Once again, these are OMB
calculations, based on the credit ratings.
Senator Sarbanes. OMB gives you these figures, you do not
provide them up to OMB.
Mr. McNamara. It is determined by OMB.
Senator Sarbanes. I would be very interested in seeing that
analysis.
Now, let me ask you, in your congressional presentation
document for fiscal year 1998 you state, ``Grant ED aid to
Albania promotes sovereignty, stability, and security in the
volatile southern Balkans. Fiscal 1996, the latest year for
which we have figures, the U.S. delivered over $33 million
worth of excess defense articles at no cost to Albania, more
than any other country in the world, except Egypt, and vastly
so.''
Now, what kind of excess defense articles did we provide,
and how have they promoted stability? Let me just take the
question a step further, the New York Times editorialized only
a few days ago that we should stop military assistance to
Albania.
What is the position of the--is any thought being given to
that in the Department?
Mr. McNamara. I would have to get you the specifics on what
was provided, I do not have it here. I do know that a
significant amount of it had to do with transport and other
non-lethal equipment that was provided to the government.
Our objective there was, in fact, to maintain stability in
Albania. Circumstances totally apart from the U.S. security
programs, and, indeed, from the security area, have led to a
great deal of political unrest and instability in Albania,
which was our hope to avoid.
It is not beneficial to the United States or to that region
and sub-region that Albania be destabilized. That has come
about despite our best efforts. It sometimes happens.
What we are now doing is we are looking very carefully at
our----
Senator Sarbanes. Do you think the fraudulent elections of
last year contributed to the potential for instability in
Albania?
Mr. McNamara. I am not expert in that area, but I believe
that there were a number of factors that had to do with
elections, democratic institutions, the weakness of those
institutions, this financial scheme that appears to have caused
enormous losses and a great deal of economic hardship to
segments of the population, in fact, maybe most of the
population, I am not sure. All of those, I think, were
contributing factors.
Senator Sarbanes. Does the Department have a firm position
on whether we should stop military assistance to Albania at
this time?
Mr. McNamara. I do not believe that we have determined that
we will stop all military assistance to Albania at this time.
We are reviewing what the situation is in Albania, and what the
proper policy----
Senator Sarbanes. Now, Burns was asked about this at a
State Department briefing, and he made reference to the fact,
he was asked a broader question on assistance generally, and he
said, ``Well, some of that assistance goes to non-governmental
organizations, and is designed to promote democracy building,
and respect for human rights, and so forth.''
The military assistance does not go to non-military
organizations, does it.
Mr. McNamara. No.
Senator Sarbanes. No. It goes to the government.
Mr. McNamara. Yes, sir.
Senator Sarbanes. It seems to me that the administration
ought to be considering terminating it, at least the military
assistance.
Mr. McNamara. Well, I am sure that is being looked at along
with a number of----
Senator Sarbanes. Well, why do you not take that message
back with you, if you would. Let me turn to co-production.
Increasingly, as I perceive it, there is a growth in co-
production agreements, under which U.S. defense companies do
not merely sell finished weapons to foreign countries, but help
those countries to build the weapons themselves.
Now, it seems to me that such agreements are likely to lead
to the export of the very U.S. jobs which we claim we are
saving by allowing the sales to go forward. In other words, we
may save a few jobs in the short run, but we are certainly
guaranteeing their loss in the medium and long run.
Second, it means transferring some of the technologies that
give us our strategic advantage, perhaps losing control over
the weapons that are manufactured, and then may be sold to
third countries.
What is the general position on co-production agreements,
and how are these concerns I have outlined being addressed?
Mr. McNamara. Well, Senator, I can start from the--you have
listed three concerns, as I have noted them. Let me start with
the third, and that is the loss of control of the end items
that are produced as a result of the co-production.
The controls, when there is co-production, are the same as
the controls that we place on end items that are exported from
the United States as end items, so that the controls on, for
example, a tank or a gun that might be produced in a co-
production arrangement is very similar, and it requires the co-
producing country to come to the United States to request
permission for the sale to other countries.
We have agreements with the co-producing country as to
where it can sell, what it can sell, so we do retain the
control over the co-produced item in much the same way as we
maintain the control of an item that would be exported in
finished form from the United States.
Senator Sarbanes. How do you sanction that?
Mr. McNamara. How do we sanction that? Well, the sanctions
would be the same as the sanctions that are available if the
item were sold from the United States.
Senator Sarbanes. If a country develops a productive
capacity, then it can proceed with that, cannot it not?
Mr. McNamara. Well----
Senator Sarbanes. I mean I take it when you sell them--if
they then use it, you will say, ``Well, we will not sell you
any more,'' is that correct?
Mr. McNamara. Well, there is that, and----
Senator Sarbanes. So if we produce the item here and sell
it to them, and they then violate the agreement, what is the
sanction in that instance?
Mr. McNamara. That you stop exporting, and with co-
production, it is the same sanction, in essence, because it is
co-produced. That is to say, the APC, or the tank to be
produced in that country requires production in the United
States, and that gets back to your first concern, and that is
the export of jobs.
The fact is that jobs are there. There is some work, and,
therefore, presumably some loss of jobs by doing some of the
production in country ``X,'' but there is also production that
takes place in the United States, particularly of components
that go into the final assembly, in which the jobs here in the
United States are increased by the fact that there is more
production of that equipment here in the United States than
there would be were there not such an agreement.
For example, if such an arrangement were struck between a
country and Great Britain, then Great Britain would have the
additional production of generators, tank treads, and other
components that would go into a co-produced product in a third
country.
Senator Sarbanes. I thought that the co-production, though,
was leading inevitably to increased production abroad and less
here, is that not the case, even when it may start out with a
fairly reasonable allocation between the two countries?
The countries entering into it are invariably moving to
have their own arms industry, and have not these agreements,
over time, shifted continuously toward more and more of the
production being done abroad rather than here?
Mr. McNamara. Well, since these co-production agreements
are in large measure put together with private enterprise, they
have a major interest protecting their job base and market here
in the U.S. I do not know whether if you look just at the end
product----
Senator Sarbanes. Why is that?
Mr. McNamara. [continuing]. it is probably----
Senator Sarbanes. Why is that? If you are an international
firm, they may make a significant profit out of the production
abroad, rather than a production here, depending on the nature
of their contracts with the producing country, might they not?
Mr. McNamara. That might be the case, but I believe it is
true that--if you look at just the end product, I think what
you are saying is probably correct, that the number of tanks
that would, therefore, be produced here in the United States is
less than if it was all done in the United States, but if you
look at the components that are then produced here in the
United States to be put into these co-produced items in a
foreign country, I am not sure whether the equation is the
same.
Senator Sarbanes. I invite you to look at some of the
statements that these ministers of defense production make in
some of these other countries, because it is invariably along
the lines that they are going to buildup their own capacity to
be producers, that this is simply a way station along the track
to becoming an arms producer themselves.
Of course, once that happens, the argument you have just
advanced, about which I have some skepticism even in and of
itself, but that argument would cease to apply at that point,
would it not, on the job front?
Mr. McNamara. It may and it may not. If it is a U.S.-
produced item, then the controls would be maintained on that.
So also, if half or less than half of the co-production occurs
in the United States, then that item that comes out of the
factory in that country is going to be controlled by the United
States.
If a number of countries take on these co-productions, it
has been my experience that the reason they do it is for the
short-term job benefits, not that they expect to be able to
sustain a wide-ranging industry independent of the co-producing
countries working with them, the United States, in some cases.
Senator Sarbanes. Well, I think we are losing jobs, and I
think we are giving away a significant defense capacity. This
is something I will come back to.
Let me ask you this question. Recently, an article in the
New York Times reported that the U.S. has approved the sale of
AMRAAM missiles to the UAE and Thailand. Is that correct?
Mr. McNamara. It is not completely correct, Senator. In the
context of the purchase of American aircraft platforms, there
have been request for missiles from those two countries, and we
have responded, in the case of the UAE, that in connection with
a purchase of those aircraft, that we would entertain and
commit to the sale of the AMRAAM missile to the UAE, but only
in the context of the purchase of U.S. aircraft.
In the case of Thailand----
Senator Sarbanes. Well, let me read to you from this
article.
It says, ``Until now, those missiles have been sold only to
NATO allies, and even countries such as Saudi Arabia and Egypt
have been turned down on their request for the same missiles.''
After the sale to the United Arab Emirates, Thailand demanded
the same missiles. ``We caved to them as well,'' said a State
Department official in Washington. ``It shows how the threshold
gets past. Now, Saudi Arabia and Egypt, which have been turned
down in the past on a request for AMRAAMs, are expected to come
knocking again, and this time it will be hard to say no,'' an
American official said this week.
It sounds pretty accurate, does it not?
Mr. McNamara. Senator, I think that whether it is hard to
say no or not hard to say no, there are times when we say no
even if it is hard to say no. I am not saying in the specific
case cited in that article that we will or will not, we have
not gotten a request at this juncture.
In fact, we treat each of these cases separately, on a
case-by-case basis. In the case of the United Arab Emirates, it
was the decision of the administration that there was a serious
security concern that could be met by the aircraft, and if
those aircraft were sold, that we were willing to sell AMRAAM
missiles for those aircraft.
That does not necessarily mean that any other case that
particular comes up will get an agreement for the sale of
AMRAAM. They will be treated on a case-by-case basis, and it is
very possible that the sale will not be agreed to.
Senator Sarbanes. Now, this article says, and let me just
quote it, ``These days American officials say it is business,
not ideology that is driving sales. During the cold war the
Pentagon advocated restrictive policies on arms sales,
particularly sophisticated weap-
ons that might fall in enemy hands. Now the military services
push the arms trade as a way of helping defense contractors.''
Is that correct?
Mr. McNamara. I do not think any more so than in the past.
I think ``ideology.'' I am not sure what that means. You are
asking me to comment on an article in which I see a number of
inaccuracies and suppositions that are not accurate, and,
therefore, it is difficult.
I would rather address the issue myself, rather than reply
to an article that I have not read.
Senator Sarbanes. Was there an intense debate within the
administration, including sharp opposition from the Arms
Control and Disarmament Agency, to the sale of these AMRAAMs?
Mr. McNamara. There was a substantial debate within the
administration as to whether or not the AMRAAMs ought to be
sold and where they ought to be sold.
Let me correct another inaccuracy in the article with
respect to Thailand. We have not yet released the AMRAAM to
Thailand. With respect to Egypt and Saudi Arabia, which I think
they were mentioned in the article, we have----
Senator Sarbanes. We have not decided to sell the AMRAAM to
Thailand.
General Rhame. No, sir, we have not.
Mr. McNamara. We have not yet released them. That is
correct.
Senator Sarbanes. What does the word ``release'' mean?
Mr. McNamara. Release means that we have not told the Thais
that we will send them the AMRAAM missile. We are still in
the--we are still talking to them about it.
Senator Sarbanes. So it is still an open decision.
Mr. McNamara. It is a decision that is in progress right
now. We do not want to be the first to introduce that
capability into the Southeast Asian region, and, therefore, we
are hoping that we can see a policy of restraint practiced in
the region by the states in the region.
Senator Sarbanes. Well, I want to be clear on what you are
telling me, because I am hearing a lot of phrases that I cannot
sort of nail down. What is the status of providing this missile
to Thailand?
Mr. McNamara. The status is that we have not yet released
the missile.
Senator Sarbanes. No, I do not want the word ``released.''
I do not understand what the word ``released'' means.
Mr. McNamara. We have not yet sold the missile to Thailand.
Senator Sarbanes. Have you made a decision to sell it to
them?
Mr. McNamara. We have told the--no, we have not introduced
a beyond-visual-range missile, which is what the AMRAAM is,
into the region, and we believe unless there is a comparable
beyond visual range missile released into the region that it
would be best that there not be beyond visual range missiles in
the region. We are talking to the Thais about this.
Senator Sarbanes. Well, now Malaysia is getting the MG-29s
from Russia.
Mr. McNamara. MG-29s, I believe. Yes, sir.
Senator Sarbanes. Are they going to get sophisticated
missiles for the MG-29?
Mr. McNamara. We have no information that they have the
equivalent or roughly the equivalent with the BVR capabilities
of the----
Senator Sarbanes. What you are telling me is that you are
not going to provide this missile to Thailand unless someone
else in the region gets a comparable missile, but if that
happens, then the Thais will get it, is that right?
Mr. McNamara. That would be the import of the policy line.
Senator Sarbanes. Now, we are complaining about Russian and
South African arms sales around the world, is that correct?
Mr. McNamara. We have talked to the Russians and South
Africa about arms sales that concern us, with respect to
specific countries. Not around the world. I am not sure what
around the world means.
Senator Sarbanes. Have we dropped our policy of restraint
on the sale of advanced aircraft in Latin America?
Mr. McNamara. Yes, we have. To Russia, are you talking
about?
Senator Sarbanes. Pardon?
Mr. McNamara. Do you mean to Russia?
Senator Sarbanes. No. In Latin America.
Mr. McNamara. I am sorry. I missed the question.
Senator Sarbanes. Have we dropped our policy of restrain on
sales of advanced aircraft in Latin America?
Mr. McNamara. I am sorry. I thought you were still asking
about Russia. No, we have not. The policy of the United States
with respect to advanced weapons systems, including advanced
aircraft in Latin America, is under review.
The situation in Latin America, politically, economically,
socially, has changed dramatically in recent years. The need
for reasonable modernization of Latin American armed forces is
an issue that is very much alive in the region.
Senator Sarbanes. Now, if country ``A'' in Latin America
modernizes, then, of course, country ``B,'' its neighbor would
then have to modernize, is that right, and country ``C,'' which
is a further neighbor of the two?
Mr. McNamara. It is conceivable, but what modernization
means is another question, and that is one of the items that we
are discussing with our Latin partners, that there be
modernization in a context of restraint, in a context in which
it does not lead to either arms competition or to regional
instability.
Senator Sarbanes. Well, why will it not invariably lead to
that? What is the modernization directed toward, if it is not
some other party in the region?
Mr. McNamara. I think every country, Latin America, and
other regions, considers that the legitimate and modest self-
defense capability is essential to them as a nation, and that
is true in Latin America as elsewhere.
Senator Sarbanes. For what purpose?
Mr. McNamara. For the purpose of protecting their borders
and defending their----
Senator Sarbanes. Against their neighbors.
Mr. McNamara. Against neighbors and more distant----
Senator Sarbanes. Well, why can they not do that at a lower
level of arms technology instead of at a--if you take one to a
higher level, you are then going to have to take the rest to a
higher level, will you not?
Mr. McNamara. Well, Senator, the problem is--let us talk
about aircraft. As aircraft come to the end of the life cycle,
they start falling out of the skies, or they do not make it
into the sky, because they cannot be sustained, the aircraft
are either replaced, or the air force falls into disuse.
When they get replaced, the older aircraft are no longer
produced. So, eventually, after an extended period of time in
this situation, one could imagine that they come to the
conclusion that they are not going to have fighter aircraft, or
they are going to have more advanced fighter aircraft, because
that is all that is available.
Senator Sarbanes. Are you telling me that is the situation
that prevails in Latin America?
Mr. McNamara. I am saying that in certain countries in
Latin America their aircraft are coming, as one projects out
several years, in fact, up to 5 to 10 years out, that these
aircraft are coming to the end of their life cycle, and,
therefore, they must be replaced or there will be no aircraft
for the air force to fly, no fighter aircraft.
These countries, in fact, are spending lesser amounts now
than they have in the past on their military budgets, some of
them dramatically so, for example, Argentina. We are talking to
these countries and they are talking to each other about how
they go about modernization in a way that does not disrupt
either the downward trend in defense expenditures and the
maintenance of social and other programs that are very
important to these democratic governments. But at the same
time, that a legitimate national defense structure remains in
place in these countries.
It would be unrealistic and actually a policy doomed to
failure to say that they require no defenses, no air forces, no
fighter aircraft.
How one goes about, therefore, in this imperfect world
balancing the requirement of other needs with a legitimate
national defense. This is the desirable goal: That those
legitimate defenses not either take excessive amounts of their
budgets, do not lead to regional instabilities, and do not
create arms competition and arms races. This is what we are
doing.
Our policy of restraint, which we are discussing with the
Latin countries, is the result of a number of bilateral and
multilateral contacts and discussions in the region, among the
countries themselves, discussing with each other. It leads us
to believe that we can, in fact, practice a policy of
restraint, and does not lead to instability in an arms race in
Latin America. But it does not mean that we embargoing the sale
of fighter aircraft. To do so, I think, would be a failure.
Senator Hagel. Senator, may I ask a follow up question on
this point?
Senator Sarbanes. Sure.
Senator Hagel. When do you think the administration will,
in fact, have a decision on this issue?
Mr. McNamara. I asked that before I came up here, Senator,
and I was told, soon, but it is, as they say, above my pay
grade, and I do not have an answer as to exactly when. I would
expect that the issue certainly is going to be a topic of
discussion when the President visits the region, and that
certainly will be an event that will require a review of the
policy.
Whether or not the decision will be made before or after
that visit, I cannot say.
Senator Sarbanes. When is that going to be?
Mr. McNamara. I believe he goes down in May.
Senator Sarbanes. So I take it that the soon, in this
context, is later than the very soon that was used in the
context of the annual report, would that be correct?
Mr. McNamara. In the case of the annual report, I have more
control over that, and, therefore, I will say, very soon. In
the case of the second, I just do not know.
Senator Sarbanes. OK.
Senator Hagel. General, I do not want you to feel left out.
General Rhame. I do not, sir.
Senator Hagel. Let me ask a question regarding the part of
the world that Senator Sarbanes has been talking about. I am a
little confused on the ESF account being used for programs that
are, at least the way I understand them, similar to
developmental assistance programs, AID funds.
I want to focus on Haiti for a moment. I think you have
requested $70 million in ESF funds for Haiti, and really, we
are going to come back to you, Mr. Secretary, and I would be
very interested in both of your comments on this, but let me
quote, if I have accurate information here, on your $70 million
request for Haiti out of the ESF fund.
``For fostering more effective and responsive democratic
institutions, including an independent judiciary facilitating
private sector employment, promoting sound environmental
resource management, and sustainable economic growth.''
How does this differ from our large developmental
assistance programs that AID is funding?
General Rhame. Mr. Chairman, I do not do economic support
funds in defense, I would have to defer to Mr. McNamara.
Mr. McNamara. In trying to put Haiti back on its feet, both
economically and socially, we have a number of programs down
there, some of which are directed at raising the economic level
through ESF, and through other programs, for the transition
period that Haiti is now going through, from a united
tyrannical regime, to, we hope, a functioning and sustained
democracy.
But also, in moving in that direction, some of the problems
had to do with law and order, and, therefore, police functions,
some of them had to do with establishing a judicial system and
a court structure that leads to a functioning justice system,
and a sense, among the population at large, that justice is
being carried out.
Therefore, we have taken some of the ESF, other funds, and
devoted it to strengthening the law and order judicial
institutions in Haiti, that we think are necessary for a
democracy to survive in that country, as, indeed, a functioning
system of law and order and judicial institutions are necessary
in any democratic society.
Senator Hagel. But how does that $70 million differ from
what AID is doing down there? I do not disagree with what you
are say-
ing, but I am not sure where that $70 million is going
specifically, and how it differs from what AID is doing.
Mr. McNamara. Well, I think that the main difference, as I
understand it, I do not have the specifics here in front of me,
maybe someone behind me would be able to find it, but the AID
programs are primarily aimed at getting the economy running,
and getting a market economy in place in Haiti.
The ESF that is devoted to security and to judicial
programs are aimed at strengthening judicial institutions, the
Haitian police, and other institutions.
There is also an effort under way, which is not aimed at
economic development, subdemocracy-building programs that are
designed to assist the Haitians in their election processes, in
establishing political parties, and opposition, loyal
opposition within the Haitian political spectrum. There is a
range of programs going on.
Senator Hagel. Do you believe we are making some progress,
sir?
Mr. McNamara. I have been down to Haiti a number of times
since we ousted the dictators, and I think it is very clear
that we are making progress. I think it is clear that we have
not succeeded completely yet.
We knew when we went in there that we were looking at a
long-term program. One does not take, after so many years of
dictatorship and oppression, one does not take a country into a
stable democratic phase immediately.
I refer to it as a transition period, and, indeed, we are,
but there has been progress. For the first time in the history
of the country, we had the successful conclusion of one
Presidential term, a free election, a free and fair election,
and the inauguration and installation of a successor, and the
successor is now undertaking to carry on the Presidential
functions, with good expectations that there will be a
successful election and another president freely elected.
That, in Haitian terms, is a historic process that has not
occurred before. So, yes, we are making progress, but no, we
have not finished, and neither have the Haitians.
Senator Hagel. General, I want to go back to some of the
earlier conversation that Senator Sarbanes was having with
Secretary McNamara on Latin America, and the policy that the
administration is going to be coming forward with soon.
How much involvement do you and your people have in helping
craft that policy that we will be seeing come forward, I guess
timed with the President's trip in May?
General Rhame. Sir, we have worked extensively with our
Assistant Secretary for International Security Affairs, Under
Secretary of Defense for Policy and the Secretary himself, to
make sure that the Department of Defense's position is clearly
understood, and is represented as the policy being formulated
by the administration, and we have played quite extensively in
it.
I deal a lot with Latin American letters of request for
military assistance, sales, et cetera, and everything has to be
worked with the State Department, in sync with the current
policy.
Senator Hagel. Now, it is my understanding that some of the
countries in Latin America are in the process of negotiating
with or are close to signing contracts.
I have some information here concerning Peru, for example,
that they have purchased MIGs, Chile is looking at French
aircraft, Brazil is looking at Russian, French, and Swedish
aircraft. Does that concern you, that we are getting left
behind here?
General Rhame. Sir, it is our understanding that Peru has
purchased MIG-29s. They are also looking at another Russian
aircraft. We know that there is a competition going on in
Chile, in which they have asked for bids and proposals.
It is our belief that the French are competing with the
Rafale, it is our belief that the Swedes are competing with the
JAS-39, and we believe in the case of Chile that as advanced
aircraft are approaching, the technology has to be looked at
very carefully, and yes, it is a concern, because while these
air forces are going to modernize, we would like in Defense the
ability to very carefully, look very carefully on a case-by-
case basis of how we are allowed to develop those air forces.
Senator Hagel. Do you want to add anything to that, Mr.
Secretary?
Mr. McNamara. I think that there is a common desire on the
part of the different Agencies in the executive branch to see
that as the modernization, of whatever necessary modernization
takes place in Latin America, as it takes place, that the
United States and United States industry benefit from that
modernization.
I think that in some cases the sales will go elsewhere.
Historically, Peru has bought Russian military items,
particularly aircraft, and, therefore, they have continued
along that line.
In other markets, in other countries, we would like to see
the United States participate. Exactly how we will participate,
and precisely what the request will be is what remains to be
seen.
How we will participate will be known as a result of the
review that is now ongoing. What those countries wish will
depend upon what their requests are . So, far we have not
received requests for a sale from Chile or other countries down
there.
The Chileans had told us that over the course of the next
year they wish to examine and to evaluate a variety of
aircraft, including American, European, and other aircraft, to
see what they themselves think their needs are in the future.
At this point, we will have to get our policy settled, and then
address the issue of how we will respond to Chile's request for
information.
Senator Hagel. Thank you. I want to go back to the Middle
East, Lebanon. I noted that you are requesting an increase in
the ESF fund for Lebanon.
If I understand this right, the $12 million that would go
there is--I am not sure what it is for, and I would like to get
your thoughts on that, and explain to me what that money would
be used for, but I am a little puzzled. Here is a country
that--well, I am not sure it is a country.
I think you have Syria as an occupying force power there,
we have travel embargoes, we have an unstable situation, I'm
not sure anybody really knows what is going on there.
What would we be doing sending $12 million to Lebanon? Do
you have confidence that we can use that in the right way? I do
not know who wants to answer that first, but I would be
interested in why we are sending $12 million to Lebanon. I know
you cannot buy a jet aircraft for $12 million, so that probably
rules that out.
Mr. McNamara. That is correct. With ESF we do not buy
military equipment anytime.
Senator Hagel. Yes.
Mr. McNamara. Basically, what we are looking at here is a
very modest program in Lebanon to try and rebuild and to
strengthen the infrastructure of the country. To walk away from
Lebanon and leave it to Syria would be a grave mistake.
Lebanon has an important role to play in the Middle East,
Lebanon is an important country in the Middle East, although,
in recent years it has gone through some trials and
tribulations that have sorely stressed it.
We would like to see this money used to build
infrastructure, to train civilian administrators, to provide
more efficient services, to support the American-based
university system in Lebanon so that there would be American-
type universities, training Lebanese in mid-level management
areas.
We are also hoping that the infrastructure for water,
electricity, telecommunications, and other utilities and
facilities can be strengthened by this $12-million program.
Also, housing has been sorely hit in recent years, because
of the civil war in Lebanon. There is intense poverty and lack
of housing, and some of these funds will be trying to make some
corrections in that sad situation.
So, generally, it is infrastructure building in Lebanon to
enable Lebanon to get through this difficult period that it is
in, and resume its normal structure and its normal place in the
Middle east.
Senator Hagel. Who administers the $12 million? Where does
that go physically?
Mr. McNamara. AID administers most of the ESF programs,
which----
Senator Hagel. So they have the administration
responsibility----
Mr. McNamara. They have the responsibility----
Senator Hagel. [continuing]. in Lebanon.
Mr. McNamara. Yes.
Senator Hagel. OK. General, I know this is a little out of
your area, but if you would care to respond, that would be
fine.
General Rhame. Our dealings with Lebanon, Mr. Chairman,
have revolved around the sale of some light UH-1 helos, some M-
113s, all of which is equipment designed to strengthen their
armed forces for the future.
It has been a modest program. It has mostly been done for
sale, and no grant FMF, to my knowledge, has been administered
with Lebanon.
Senator Hagel. It has not been administered----
General Rhame. We have sold $6 million in major defense
items under FMS using Lebanese national funds. We have also
provided Lebanon with $13.5 million worth of miscellaneous non-
lethal equipment under the grant EDA program.
Senator Hagel. OK. General, you mentioned in your remarks
that you think we have gotten a considerable return on our
investment in the IMET program.
General Rhame. Yes, sir.
Senator Hagel. I would like you, if you could, to give me a
little clearer understanding of what we are doing now with the
military-to-military contact program, and how that works.
General Rhame. Yes, sir. In IMET, Mr. Chairman, there are
three components that I see. One is the professional military
education, which is going quite well, with numerous officers
from countries that previously we simply did not talk to from
Central and Eastern Europe, which we used to call the Warsaw
Pact, and newly independent states of the former Soviet Union
on and on again, and that has been exciting to watch them
develop.
I submit that our officers in our schools learn as much as
the foreigner does, because I think we are strengthened
professionally and intellectually by their presence in our
schools.
Second, an Expanded IMET program, which allows, in this
case, for both military and civilian people of foreign
governments to attend our institutions, to be exposed to the
way the democracy functions, how civilian leadership has
exercised control over the military, how that military performs
in a democratic society with civilian leadership.
We started out on this program attempting to do $5 million
of Expanded IMET a year, and last year we did almost $8
million. It is an exciting program. Countries like it. We like
it, we think it is making great contributions.
Third is technical training. We are doing--a minor portion
of IMET is dealing in technical training. Because of the
shortage of dollars and the demands in this new modern world to
do the things we do, we are not doing the expensive things like
pilot training, and the other things that used to consume large
amounts of money, we do not do that any more.
So, it is focused, and it is an exciting program, and we
are getting a lot of benefits.
The mil-to-mil contact program is a different program. IMET
is an educational program in which we develop officers here in
our training base or send our people there to do it.
Mil-to-mil contact teams are uniformed military personnel
of the armed forces, which are posted in the foreign countries
of Central and Eastern Europe and the Newly Independent states,
work for the unified command, to represent them for exercises
in mil-to-mil contact with those governments.
At the time these were put into place, Mr. Chairman, we did
not have officers out there doing security assistance, they
were an augment team to our attaches to assist them to develop
the mil-to-mil relationship with those countries.
So, the mil-to-mil contact program is a Title X program,
supported by Defense, with people in-country. IMET is an
educational program which seeks to bring those officers into
our educational system for professional development. That is a
long answer, but I hope I have answered your question.
Senator Hagel. Mr. Secretary.
Mr. McNamara. Mr. Chairman, I think that I could make a
very strong argument that dollar for dollar there is no U.S.
security money that is better spent than IMET. Let me approach
it from the point of view of education.
The ties that are formed between humans are strongest in
families, and they are weakest among people who do not know
each other. The second strongest ties that I know of, after
family ties, are educational ties.
If educated with somebody, there is a certain bond that
occurs that lasts in many cases, as we all know, for years and
years.
This is true in the military, also. Taking young military
officers to the United States, and exposing them to American
culture, American lifestyles, and teaching them how to do
things the way we do it is one of the best ways to ensure that
those officers go back to their home country, one, with a
favorable disposition toward the United States, two, with an
understanding of the United States and how to work with us, and
to get along with us, and three, how to perform their jobs and
their functions in the home country in a way that comes close,
as close as we can, to replicating the way we do it.
For example, we have noted peacekeeping operations in which
the United States has taken the lead and others have followed
us.
In those operations, invariably, American-trained officers
from the other countries perform those peacekeeping operations
in a manner more consistent with our values and our approaches
to peacekeeping than those that have not. In peacekeeping
operations that, for example, have been performed by Eastern
Europe and Russia, their way of doing peacekeeping is quite
dramatically different from ours, much rougher and, in fact,
more violent than we think is necessary.
Training those East European officers to do it the way NATO
and the U.S. does it in the long run means that we are going to
see them doing it that way.
To cite an even more distant example, Indonesia has got a
reputation, particularly here on Capitol Hill, of being pretty
difficult and not really responsive on human rights concerns.
There are some examples that I could cite of IMET-trained
officers who have undertaken hostage rescue operations in
Indonesia, crowd control and riot control in Indonesia, which
have received compliments from many international
organizations, NGO's, the International Red Cross, the U.S.
Government, as well as American citizens who are involved in
these incidents in Indonesia.
They were IMET trained, and they did the job the way, or
very close to the way we would like to see it done, because
when those officers went home, the way they knew how to do that
job was the way they were trained here in the United States.
I think that the IMET program, we should be devoting even
more money to it, but as I said earlier on, given the imperfect
world in which we live in, and the constraints on us, in terms
of budget, the modest increase in the IMET program is well
worth it.
Senator Hagel. I appreciate your thoughts. Indonesia is an
interesting example to use, since that country has been in the
news recently for a number of things.
On the military-to-military program, Mr. Secretary, what
role do you play in selecting those countries?
Mr. McNamara. The Department of Defense consults with us,
and obviously, also, with our Ambassadors in the field. The
CINCS in the different regions come back with their
recommendations and suggestions for which countries and what
types of mil-to-mil contacts, and there is the usual inter-
agency consultation before the final decisions are made.
Ultimately, the Department of Defense makes the decisions
with respect to the mil-to-mil contacts, in much the same way
as we make the ultimate decisions on the IMET program, which is
State Department funded. But we do it hand-in-hand with the
Department of Defense.
Senator Hagel. General, I happen to be well acquainted with
one of your predecessors, General Charlie Brown----
General Rhame. Yes, sir.
Senator Hagel. [continuing]. who is from, as you probably
know, Nebraska, and he is out punching cattle and living the
good life in western Nebraska, and I just want----
General Rhame. I have been told he is living a very good
life.
Senator Hagel. Yes, he is. Well, that is what happens with
retired generals. I know you have a lot to look forward to.
Gentlemen, I am grateful that you would take the time this
morning to come up. I have some other questions, I know my
colleagues do, on this committee, and what we will do, as is
always the case, is submit those for the record.
What I will do is leave the record open until close of
business Friday. If there is anything that you need to respond
to, please do. Are there any other comments that you-all would
like to include on the record for this hearing?
General Rhame. I do not have any.
Mr. McNamara. I do not have any, Senator, and I thank you
for the opportunity to be here.
Senator Hagel. Well, much success to you. Thank you.
General Rhame. Yes, sir. Thank you.
Senator Hagel. This hearing is adjourned.
[Whereupon, at 11:55 a.m., the hearing was adjourned, to
reconvene at 10:44 a.m., March 13, 1997.]
THE FY98 BUDGET REQUESTS FOR INTERNATIONAL ORGANIZATIONS AND
CONFERENCES AND ARMS CONTROL AND DISARMAMENT AGENCY
----------
THURSDAY, MARCH 13, 1997
U.S. Senate,
Subcommittee on International Operations
of the Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:44 a.m. in
room SD-419, Dirksen Senate Office Building, Hon. Rod Grams
(chairman of the subcommittee), presiding.
Present: Senators Grams and Feinstein.
Senator Grams. Good morning. I would like to bring this
hearing to order. I am pleased to welcome all of you to what is
the third in a series of budget oversight hearings being held
by the Subcommittee on International Operations. Today's
hearing will focus on the fiscal year 1998 requests for the
Arms Control and Disarmament Agency budget, and for the portion
of the State Department's budget covering International
Organizations and Conferences.
I want to thank the two officials who have agreed to
testify before the subcommittee. The first panel will be Mr.
John Holum, Director of the U.S. Arms Control and Disarmament
Agency, or the ACDA. The second panel will be Ambassador
Princeton Lyman, Acting Assistant Secretary of State for
International Organization Affairs. I should note that
Ambassador Lyman's nomination has been unanimously reported out
of the Foreign Relations Committee and is currently awaiting
action by the full Senate.
Now, risking the accusations of my colleagues that I sound
like a broken record, I would like to start out again today by
making the same statement to Director Holum that I made to
Acting Undersecretary of State Patrick Kennedy and also to USIA
Director Joseph Duffey during those previous hearings. I am
proceeding with this hearing on the assumption that the
administration is developing and will present to Congress a
proposal for the reorganization of the State Department and
also for related foreign affairs agencies, including ACDA.
While the subcommittee will not question you about the
specifics of any reorganization plan, you should note that
there is considerable bipartisan interest in this issue, and I
look forward to receiving the administration's reorganization
proposal and also to working with members of the Foreign
Relations Committee to craft a plan deserving of broad support.
I should also point out that this hearing will not focus on
the debate over the Chemical Weapons Convention since
discussions between the administration and Congress on that
treaty are being handled on a separate track. Of course there
may be some questions on the CWC-related funding request that
is included in ACDA's budget.
Turning to the budget request for the International
Organizations, the predominant issue on everyone's mind is
United Nations reform and also the repayment of U.S. arrears to
that body. Since the purpose of this hearing is budget
oversight on a broader basis, I do not intend to explore the
whole range of proposed U.N. reforms in any great detail today
as well. But, given that the administration has requested
almost $1 billion for U.S. arrears to the United Nations, let
me reiterate a couple of principles which I believe reflect the
general consensus of many, if not all, Senators who are working
on this issue.
That is, first, the repayment of U.S. arrears should be
explicitly linked in legislation to the achievement of
significant reforms at the United Nations. Second, that the
repayment of arrears should take place over several years to
ensure that it is feasible within budget constraints and that
reforms are proceeding at an appropriate pace. And third,
whatever agreement may be reached between Congress and the
administration should be considered during the normal
authorization and appropriations process, and this includes a
thorough review by this subcommittee and a markup within the
context of the State Department Authorization Bill by the full
Foreign Relations Committee.
Let me add that I truly appreciate the repeated offers that
have been made by the distinguished ranking member of the
subcommittee, Senator Feinstein, to work together on these U.N.
issues. I know that U.N. reform is a high priority for Chairman
Helms, the majority leader, Senator Judd Gregg, who is Chairman
of the Appropriations Subcommittee with oversight for the
United Nations, and also Senator Biden, the distinguished
ranking member of the Foreign Relations Committee. It is
certainly my intent to work with all of these Senators to see
if we can reach some consensus on U.N. legislation.
Finally, we should not forget that there are assessed
contributions for 48 other international organizations included
in this budget request. Although these organizations do not get
the same level of media attention as the U.N., budgetary
limitations and oversight responsibilities demand their
constant review. The subcommittee needs to make sure that every
U.S. contribution, no matter how small, is furthering specific
national interests that must be addressed on a multilateral
basis. All organizations should also be scrutinized for
duplicative functions or ineffective management practices.
With that, I look forward to a constructive discussion
today on a number of issues that will be raised by both panels.
Director Holum and Ambassador Lyman, we welcome you here to
outline the priorities for your respective areas of the
President's budget request for International Affairs.
Now I would like to turn to Senator Feinstein for some of
her opening remarks. Senator.
Senator Feinstein. Thank you very much, Mr. Chairman. I
will be very brief and enter my remarks in the record. I do
want to say a couple of things on each of the subjects.
The first is on the Arms Control and Disarmament Agency.
For many of us, when we think of arms control we think of the
U.S.-Soviet summitry of the cold war. There are those in
Congress that believe that because the Soviet Union is no more
that the world is necessarily a much safer place. I do not
necessarily agree with that. When I look around the world I see
a myriad of problems: Advanced missile proliferation in the
Persian Gulf, so-called non-weaponized nuclear deterrents in
South Asia, the threat of loose nukes in the former Soviet
Union, the danger of terrorists armed with chemical or
biological weapons, and,of course,certain renegade nations run
by people that simply just do not care. So in many ways the
work of the Arms Control and Disarmament Agency is even more
vital for American security today than it was at the height of
the cold war.
During the height of the cold war the world was a very
simple place. You had two very large nations, both sides lined
up in camps. If you were pro-free world you lined up behind the
United States. If you were pro-Soviet you lined up behind the
Soviet Union. There was a certain symmetry and control. That is
gone now, and consequently what we see are a lot of floating
weapons, a lot of floating technology, suddenly nations moving
weapons and moving this technology. I, for one, have very
serious concern about it, so I look forward to hearing the
testimony.
You are right, Mr. Chairman, I do look forward to working
with you with respect to handling the United Nations, our
arrearages, and the dues that we owe. I understand that the
meeting we had for later today has been postponed. I am very
hopeful it will be rescheduled rapidly. I think the word has
gotten through that both sides of the aisle in the Senate are
eager to have something worked out whereby there can be some
benchmarks attached to real reform, a statement of mission that
is clear and defined, and so on. So I just want to say that I
think we can get to that point, and hopefully it will be sooner
rather than later. So I am very happy to join with you here
today and welcome our witnesses.
Senator Grams. Thank you very much, Senator.
Mr. Holum, I would like to turn it over to you. I would
just remind you, I know you have to leave at 11:30, so if you
could keep your remarks as brief as we have so we could get
into a few questions, I would appreciate it. By the way, your
full statement will be entered into the record as read.
STATEMENT OF JOHN D. HOLUM, DIRECTOR, U.S. ARMS CONTROL AND
DISARMAMENT AGENCY
Mr. Holum. Thank you, Mr. Chairman, and Senator Feinstein.
I am pleased to be with you to discuss the President's agenda
for arms control and nonproliferation and our efforts to
advance it. The staff has advised me that there would be no
objection if I cut my statement shorter even than I had
planned, so I will do that as I go through.
I ask that you consider the President's fiscal year 1998
request of $46.2 million for ACDA in this light: We are a
compact agency under instruction to do more while becoming even
smaller, and we are succeeding on both counts. I would like to
briefly describe, first, our mission and second, the continuing
reform and streamlining our budget represents.
As President Clinton has stressed, we are pursuing the most
ambitious agenda to dismantle and fight the spread of weapons
of mass destruction since the atom was split. We have had some
successes, including the 1995 decision to make the Nuclear Non-
Proliferation Treaty permanent, and the 1996 completion of an
effort that began with President Eisenhower to negotiate a
global ban on nuclear explosive tests. But more work lies
ahead.
The cold war left behind a massive overhang of arms, and,
as Senator Feinstein has noted, a growing danger that weapons
of mass destruction will fall into the hands of terrorists or
into the arsenals of rogue states.
ACDA is engaged in literally scores of activities to serve
that core purpose. Much of that work is out of the public eye,
consisting of things like reviewing export licenses, reporting
to the Congress on compliance with arms control, or evaluating
intelligence and preparing demarches to interrupt shipments of
dangerous goods to bad places.
Let me just highlight some of our leading negotiating
priorities. First, in the strategic area we want to continue
reducing strategic nuclear arms. Once START II is in force,
President Clinton has made clear that we are prepared to
discuss further cuts.
We are working in Geneva to negotiate a cutoff in
production of fissile material for weapons.
Another priority is to strengthen the Nuclear Non-
Proliferation Treaty (NPT) regime, including its safeguards, to
ensure that another clandestine program, such as that uncovered
in Iraq in 1981, does not happen again.
We will press to ratify and implement the Comprehensive
Nuclear Test Ban Treaty. After conducting more than 1,000
nuclear tests, we gain security to the extent we lock all
nations in place on the nuclear weapons learning curve.
Our most urgent priority, as you know, is ratification of
the Chemical Weapons Convention (CWC) and the adoption of the
implementing legislation. I will not review here the reasons
why this treaty is important, as you have said it is being
worked in another context. But let me just underscore that the
treaty is a priority for President Clinton not only for its own
considerable value, but because failure to ratify would set
back the United States' role as the world's leader in building
global coalitions and enforcing strong export controls, and in
fashioning international regimes against all weapons of mass
destruction.
We are leading now in the 93+2 safeguards regime. We led in
negotiating the CWC itself under Presidents Reagan and Bush.
With proliferation dangers rising, this is not a good time to
weaken America's hand.
We are also working hard to enhance compliance with the
Biological Weapons Convention. Finally another leading priority
is our work in the Conference on Disarmament to negotiate a
global ban on antipersonnel land mines. We are determined to
meet President Clinton's charge to the U.N. last September that
our children deserve to walk the earth in safety.
As we pursue these and other arms control advances, we have
to attend to something less glamorous but certainly no less
important, arms control implementation. We are piling up arms
control implementation and verification requirements:
Conventional Forces in Europe, Open Skies, INF, START I, START
II, the CWC, Test Ban. These are joining older agreements to
form a prodigious architecture of international arms control
law. Realizing its full potential is becoming a momentous
mission.
With my South Dakota farm roots, I think of this as the
arms control harvest, where we actually reap the benefits of
all the work that has gone before. Implementation is assigned
by law to ACDA, and it occupies more and more of our time.
While it is a national security bargain, it is neither
effortless nor free.
Notwithstanding this expanding mission, ACDA is a
streamlined agency committed to efficient and effective arms
control. To date we have reduced our annual operating budget by
$2 million. We have reorganized internally to eliminate
unnecessary management layers and streamline for a more
efficient and effective operation.
ACDA has also worked with the Department of State to
eliminate unnecessary duplication by reorganizing, reducing
positions, and coordinating all arms control and
nonproliferation work.
For fiscal year 1998, the administration is requesting
$46.2 million for ACDA's responsibilities. That includes $42
million, a little over, for ACDA's ongoing activities, and $4
million for new activities related to the CTBT, the CWC, and
NPT.
Our 1998 operating budget request of $42 million is $2
million less than our appropriation 4 years ago. It is 18
percent below the appropriation for 1993. It also represents a
reduction of another 10 positions from the personnel ceiling
established for 1997. Those reductions in both personnel and
funds are part of the administration's right sizing initiative
across the Federal Government, and we continue to look for ways
to enhance productivity and provide more effective and
efficient arms control to the taxpayer. There is a list of
those efforts attached to my statement, and I invite your
attention to it.
I especially want to point out that ACDA has been working
hard to reduce its administrative support infrastructure. Over
the past 3 years our down sizing and streamlining efforts have
eliminated a total of 28 authorized administrative positions in
our domestic and overseas offices. Domestically we have reduced
administrative support by 23 percent, or 19 positions. Overseas
we have reduced administrative support by 45 percent,
eliminating another 9 positions.
We are continuing to search for ways to operate more
efficiently, including some legislative changes we have
submitted when we proposed our 1998 budget.
Mr. Chairman and Senator Feinstein, few doubt that the
world today still bristles with cold war over armament, and
faces new dangers of proliferation, terrorism, convulsive
nationalism, environmental pressures, drug trafficking, and
many others that directly affect us. Those challenges require
ever more effective diplomacy, what Hans Morgenthau called the
most important component of a nation's international power.
They certainly demand that we work together, even when our
government is divided, in fashioning the kind of unified
foreign policy that befits a great power in a perilous world.
It is in that spirit that ACDA presents to you the
administration's request for $46.2 million to fund its arms
control and nonproliferation work in fiscal year 1998.
Thank you.
[The prepared statement of Mr. Holum follows:]
Prepared Statement of Mr. Holum
Chairman Grams and Senator Feinstein, I am pleased to be with you
to discuss the President's ambitious agenda for arms control and
nonproliferation and our efforts to advance it.
I ask that you consider the President's fiscal year 1998 budget
request of $46.2 million for ACDA in this light: we are a compact
Agency under instruction to do more while becoming even smaller. And we
are succeeding on both counts. I'd like to briefly describe, first, our
mission and second, the continuing reform and streamlining our budget
represents.
* * *
As President Clinton has stressed, we are pursuing ``the most
ambitious agenda to dismantle and fight the spread of weapons of mass
destruction since the atom was split.''
We have had some signal successes--including the 1995 decision to
make the Nuclear Non-Proliferation Treaty permanent, and the 1996
completion of an effort that began with President Eisenhower, to
negotiate a global ban on nuclear explosive tests. A detailed
description of ACDA's contribution to U.S. national security is
attached to my prepared statement which is before you. I request that
both the prepared statement and this attachment be inserted in the
record.
But more vital work lies ahead. For the Cold War's end has left
behind a massive overhang of arms--and a growing danger that weapons of
mass destruction will fall into the wrong hands. Experience and
advances in technology have opened the way to new tools for building
our security by dismantling and averting threats, through the
preventive defense of arms control.
These are not abstract issues. Each indiscriminate incident of
terror, either the poison gas attack on the Tokyo subway or closer to
home in the Olympic Park bombing should fortify our determination to do
all we can to ensure that weapons of mass destruction are kept away
from terrorists and out of outlaw states arsenals.
ACDA is engaged in literally scores of activities to serve that
core purpose. Much of the work is out of the public eye, consisting of
things like reviewing export licenses, reporting to the Congress on
compliance with arms control agreements, or evaluating intelligence and
preparing demarches to interrupt the shipment of dangerous goods to bad
places. I'll just summarize some of our leading priorities, as defined
by President Clinton, and invite your attention to the attachment for
more detail.
PRESIDENTIAL PRIORITIES--NEGOTIATIONS AND RATIFICATIONS
First, in the nuclear area, we want to continue reducing strategic
nuclear arms.
We have made clear that this first requires Russian ratification of
the START II Treaty, which will complete a two-thirds reduction in the
ability to deliver strategic nuclear warheads and bombs. START II is
the door to START III, and there's no way around it.
But once START II is in force, President, Clinton has made clear
that we are prepared to discuss further cuts. This will address Russian
concerns over being unable to maintain parity with the United States at
the START II 3,000-3,500 warhead levels. If Russia wants to maintain
parity with the U.S. at START II levels, it would need to build
hundreds of new single warhead missiles, which it cannot afford, as it
eliminates remaining multiple warhead missiles as required by the
Treaty. Without START II, the U.S. would retain START I force levels of
6,000 weapons, making Russia's dilemma even greater. But reductions
beyond START II are warranted on their own merits, and a follow-on
negotiation can also open a new phase of arms control, in which we not
only control delivery vehicles, but also limit and monitor nuclear
warheads and materials, to help ensure that our hard-won nuclear
reductions are never reversed.
Strategic arms control has meant thousands fewer warheads
potentially aimed our way. And in a speech before the National Press
Club on April 27, 1995 Tony Lake, then-Assistant to the President for
National Security calculated that the U.S. has been able to ``pull back
from the Cold War nuclear precipice--and save some $20 billion a year
on strategic nuclear forces.'' Strategic nuclear arms control provides
both real security and savings benefits to the American taxpayer.
We are working in Geneva to negotiate a cutoff in production of
fissile material for weapons.
The highest obstacle to someone who wants to make a nuclear weapon
is not the technology, but the material--the highly enriched uranium or
plutonium. A non-discriminatory ban on production would cap global
stocks of these deadly materials, add momentum to further nuclear
disarmament steps, and help fulfill the promise of the 1995 NPT
Extension and Review Conference.
Another priority is to strengthen the Nuclear Non-Proliferation
Treaty regime including its safeguards.
In 1995, we succeeded in making the NPT permanent--a national
security triumph for the United States and all peace-loving nations. It
is also becoming more nearly universal--now with 185 member states, and
only five remaining outside.
Now our top priority is to further strengthen its safeguards.
Notwithstanding its NPT membership, we learned in 1991 that Iraq had a
well-advanced clandestine nuclear weapons program. We need to do all we
can to ensure that doesn't happen again--by adding new technologies and
access, such as environmental monitoring away from declared facilities,
to sharply increase the chances of uncovering secret nuclear weapon
programs. The 93+2 program we have been negotiating in Vienna will do
that. We hope to wrap up this long-sought initiative in May.
We will press to ratio and implement the Comprehensive Nuclear Test
Ban Treaty or CTBT.
It is possible to make a nuclear weapon without testing. Remember,
however, that our first nuclear weapon was so big that a trench had to
be dug underneath the B-29 which was to carry it. Without testing, it
is dramatically harder for anyone to advance to thermonuclear designs
or to make weapons small enough to fit into a light aircraft, a
rudimentary missile, or a terrorist's suitcase.
The United States has conducted well over 1,000 nuclear tests--
hundreds more than any other country. So we gain security to the extent
we lock all nations in place on the nuclear weapons learning curve. For
any tiny increment in knowledge we might gain from more tests is
dwarfed by the value of preventing tests by others--including rogue
states who could derive quantum leaps of capability from even a few
explosions.
Our most urgent priority is ratification of the Chemical Weapons
Convention and adoption of the implementing legislation.
The CWC will give us better tools to deal with some 20 countries--
many hostile to the United States--that have active chemical weapons
programs. As the Acting Director of Central Intelligence recently
testified, its verification provisions will give us more information
than we have now about threats we need to assess with or without the
treaty. And the information will be actionable, because even possession
of chemical weapons will be illegal, which is not the case now.
The CWC will also help address the threat of terrorist use of
poison gas. As Attorney General Reno said last month of the treaty and
its implementing legislation, ``these new laws will help law
enforcement agencies worldwide to investigate and prosecute chemical
weapons-related activities, and improve chances of detecting terrorists
before they strike.''
Keep in mind that this treaty is not about U.S. weapons. A 1985
law, signed by President Reagan, mandates destruction of the vast
majority of our CW stockpile, which is underway. The treaty requires
other countries to do the same. It is a bipartisan treaty, mandated by
President Reagan and concluded under President Bush, who said last
month, ``We don't need chemical weapons, and we ought to get out front
and make clear that we are opposed to others having them.'' Now the
treaty is being pushed for ratification by President Clinton.
Our military wants it--as exemplified most recently by the strong
support of General Norman Schwarzkopf, who led the troops facing poison
gas in the Gulf War. The affected business community, most notably U.S.
chemical manufacturers, strongly supports it. And so do the American
people--by a margin of 84 to 13 percent, according to a recent Wirthlin
Worldwide poll.
And now we no longer have the option of delay. The CWC enters into
force on April 29, with or without us. If we are not a party by then,
the U.S. will have no place on the Executive Council. Americans will be
ineligible to serve as inspectors. Americans now serving as head of
administration, head of industrial inspections, and head of security
will be removed, and those key jobs will go elsewhere. American
chemical companies will begin losing trade to their overseas
competitors--as much as $600 million, they estimate--as mandatory trade
sanctions against non-parties phase in. We will not have access to the
treaty's tools against rogue state and terrorist CW activities.
Let me conclude on CWC with a broader point. The CWC is a priority
for President Clinton not only for its own considerable value, but
because failure to ratify would be a grave, self-inflicted wound for
our country. For the United States is the world's leader--in building
global coalitions, in enforcing strong export controls, in fashioning
international regimes against all weapons of mass destruction. We led
in negotiating the CWC under the Reagan and Bush administrations.
With proliferation dangers rising, there could not be a worse time
to weaken America's hand. I can't imagine a worse time to tell the
world, we're less interested in fighting proliferation than in fighting
among ourselves.
I say this on behalf of people who deal with these problems
routinely--not as a genteel intellectual exercise or political outing,
but in the trenches--where shipments are made or stopped, where other
countries listen or turn a deaf ear, where negotiations succeed or
fail.
It is from this intensely practical perspective, among others, that
we need the Convention. For it is unavoidable that if you want results
in our global efforts against proliferation and terrorism, you'll get
less if this treaty fails--both because we won't have the tools in the
CWC, and because our leadership and effectiveness will be depleted
across the board.
The campaign against the CWC is effectively a far broader assault:
against our ability to follow through at home on what we have urged
abroad--against our claim to global leadership against all weapons of
mass destruction and terror.
So I urge the Senate to act promptly on the Convention, and I also
urge this Subcommittee and the Congress to act as quickly as possible
on implementing legislation--to help us keep chemical weapons off
future battlefields and streets.
We are working hard to enhance compliance with the Biological
Weapons Convention (BWC).
Biological weapons are often grouped with chemical weapons; but, in
my view, their destructive potential is more like that of nuclear arms.
Chemical weapons become less lethal as they are dispersed; biological
weapons are living things. So, in the right environment they can
multiply, mutate, and resist treatment.
The 1972 Biological Weapons Convention has broad prohibitions,
but--unlike the CWC--lacks teeth. To further deter violations, the U.S.
has supported a negotiation to achieve a legally binding protocol of
mandatory measures to enhance compliance, including both off-site and
on-site measures. We are aiming for a legally-binding protocol by 1998.
Even though treaties such as the BWC are aimed against countries,
they and their implementing legislation can have important anti-
terrorist uses at home. In 1995, for example, a member of a hate group
in Ohio fraudulently ordered the bubonic plague bacillus by mail from a
specialized supplier in Rockville, Maryland. The order was filled. But
the supplier also notified law enforcement officials, who, in turn,
searched the would-be terrorist's home, and stymied whatever plans he
was brewing. This happened, in part, because of a law, the Biological
Weapons Anti-Terrorism Act, which is on the books because of the BWC.
Finally, another leading priority is our work in the Conference on
Disarmament to negotiate a global ban on antipersonnel land mines.
If you consider the potential of arms to inflict damage, you are
obviously drawn to weapons of mass destruction, which can wipe out
whole cities at a time. But if you consider their actual impact, you're
drawn to conventional weapons, which routinely are wiping out whole
cities, a few people at a time.
Antipersonnel landmines are scattered across the globe. They kill
or maim some 25,000 non-combatants every year--mostly children playing
or farmers returning to their fields, long after a war is over.
Last year the United States led a successful international
negotiation to prohibit anti-personnel mines that can't be detected,
and unmarked anti-personnel mines that don't self-destruct and self-
deactivate. Now we are pressing ahead to fulfill the President's call
for negotiations leading to a complete ban on the use, stockpiling,
production and transfer of anti-personnel landmines. We are determined
to meet President Clinton's charge to the UN last September, that our
children deserve to walk the earth in safety.
Mr. Chairman, I have been grateful for the determined and
productive leadership of Senator Leahy on the land mine issue for a
number of years in the Congress and internationally. He described it in
a letter to me shortly after President Clinton an-
nounced the U.S. goal of eventual elimination of antipersonnel
landmines, ``There are at least 85 million unexploded landmines in over
60 countries, where they cause immense suffering among local people and
pose a grave danger to returning refugees, humanitarian relief workers,
and United States troops whether engaged in combat or as part of
international peacekeeping operations.''
IMPLEMENTAON OF ARMS CONTROL AGREEMENTS
As we pursue these and other arms control advances, we must attend
to something perhaps less glamorous, but certainly no less important--
arms control implementation, or the steady work of translating the
gains agreed to on paper into real results on the ground.
Functionally, implementation, not negotiation, is where most of the
action takes place in arms control--in monitoring behavior, evaluating
intelligence and inspection reports, challenging misconduct, resolving
issues of interpretation, and reporting on compliance to the Congress
and the American people.
And as we succeed in negotiations, we are piling up arms control
implementation and verification requirements. A number of recent
agreements--such as Conventional Forces in Europe, Open Skies, INF,
START I and START II, the Chemical Weapons Convention, the
Comprehensive Test Ban Treaty--are joining older agreements such as the
ABM Treaty and the NPT to create a prodigious architecture of
international arms control law. Realizing its full potential is
becoming a momentous mission.
With my South Dakota farm roots, I think of this as the arms
control ``harvest,'' where we actually reap the benefits of all the
work that has gone before. It is work specifically assigned, by law, to
ACDA. It occupies more and more of our time. And while it is a national
security bargain, it is neither effortless nor free.
We implement our agreements scrupulously. I see no sign that the
Congress wants us to relax or let down our guard. We must finish the
jobs we have started.
For this, after all, is what arms control means to Americans. They
know that arms control agreements represent only the promise that an
adversary's arsenals will be avoided or destroyed--that the promise
isn't kept until those arsenals are actually taken down. And they
understand something that we inside the Beltway often forget: After the
Rose Garden ceremonies have ended, and the strains of ``Hail to the
Chief'' have died away, the heavy lifting has just begun.
ACDA'S AGENDA AND ITS BUDGET - STREAMLINED FOR GREATER EFFECTIVENESS
AND EFFICIENCY
Notwithstanding this expanding mission, ACDA is a streamlined
agency.
ACDA is committed to efficient and effective arms control. We are
able to do more with less in part because we have set priorities
through a strategic planning process that is now in its third year.
ACDA developed a strategic plan three years ago because we saw the
need for such a plan as the agency identified two major objectives: to
implement an expanding arms control agenda and to downsize.
Therefore, I note with interest the fact that the Government
Performance and Results Act (GPRA) of 1993 starts this year. ACDA
welcomes this opportunity to consult with the Subcommittee on the
strategic plan that we have already been implementing. ACDA is
committed to working with this Subcommittee to improve our efficient
and effective operation thereby enhancing the contributions we make to
U.S. national security.
To date, we have reduced our annual operating budget by $2 million.
We have reorganized internally to eliminate unnecessary management
layers and streamline for a more efficient and effective operation.
ACDA has also worked with the Department of State to eliminate
unnecessary duplication by reorganizing, eliminating duplication, and
coordinating all arms control and nonproliferation work. This on-going
joint ACDA/State dialogue has resulted in both ACDA and State
continuing to make their respective unique contributions to national
security while saving hundreds of thousands of dollars by sharing
scarce resources and avoiding unnecessary expenditures. For example:
In our Geneva operations we have moved our Conference on
Disarmament Delegation from commercial office space in the
Botanic Building into the U.S. mission for a savings of
$750,000 per year;
ACDA has eliminated administrative duplication with State in
the areas of document and treaty retrieval and dissemination of
diplomatic and other communications; and,
ACDA has closed its library by transferring it to the State
Department's library, and has eliminated its photographic
services by out sourcing with State as needed.
As a small, nimble organization, we have also continuously
restructured ourselves to meet new objectives as earlier ones are
achieved. For example, once the recent NPT and CTBT agreements were
achieved, the divisions assigned those missions were realigned to work
on other challenges. We have also worked closely with our colleagues in
the Department of State to ensure that missions are assigned to those
best qualified to perform them.
For Fiscal Year 1998, the Administration is requesting $46.2
million for ACDA's responsibilities. This request provides $42,058,000
for ACDA's ongoing activities and $4,142,000 for new activities related
to CTBT, CWC, and NPT, which address some of the most dangerous
proliferation threats.
$2.8 million will partially fund the CTBT Preparatory
Commission's work to establish the Treaty's verification
regime, including networks of seismic, radionuclide,
hydroacoustic, and infrasound sensors.
$892,000 is for the Office of National Authority for the
Chemical Weapons Convention, needed under the treaty to compile
declarations and reports, interact with the OPCW, and provide
administrative support for U.S. implementation activities.
$250,000 will support preparation for the Nuclear
Nonproliferation Treaty (NPT) Review Conference. The first
preparatory committee meeting takes place in New York this
April.
$200,000 is to address special requirements of ACDA's Data
Repository. We need to upgrade our technical capabilities in
order to keep pace with the many treaties now entering
implementation.
Leaving aside these special requirements, our FY 1998 operating
budget request of $42 million is $2 million less than our appropriation
four years ago. Our FY 1998 request also represents a reduction of
another 10 positions from the FTE personnel ceiling established for the
FY 1997 Budget.
These reductions in both funds and personnel are part of the
Administration's systematic right-sizing initiative across the federal
government. And ACDA continues to look for ways to enhance productivity
and provide more efficient and effective arms control to the U.S.
taxpayer. I will cite a few examples and invite your attention to the
attachment for more.
We consolidated most of ACDA's export control functions into
a single Division and implemented a new licensing referral
system, resulting in faster processing time.
We dual-hatted personnel among the CTB, Fissile Cutoff, and
Landmines initiatives without adding new personnel.
We have implemented a system for computerized storage and
retrieval of policy documents and decisions. Now, within
minutes, we can retrieve information which once took days.
Over the past four years, ACDA has completely modernized its
computer systems without increasing our annual budget request.
This achievement prompted the computer industry to rank ACDA as
the first among all federal agencies in terms of a working
environment for computer professionals.
Mr. Chairman, I want to point out that ACDA has been working hard
to reduce its administrative support infrastructure. Over the past
three years our downsizing and streamlining efforts have eliminated a
total of 28 authorized administrative positions in our domestic and
overseas offices.
Domestically, we have reduced administrative support by 23%,
or 19 support positions.
Overseas, we have reduced administrative support by 45%,
eliminating another 9 positions.
This reflects both internal economizing and the results of Vice
President Gore's National Performance Review, which reaffirmed ACDA's
importance to effective arms control, but also set specific
requirements for consolidating administrative functions across the
foreign affairs agencies. We have taken that mandate seriously. We are
also keeping faith with the Arms Control Revitalization Act of 1994,
reflecting the shared view of the President and the Congress that U.S.
national security in the post-Cold War world requires a revitalized
ACDA.
We are continuing to search for ways to operate more efficiently.
For example, in legislation submitted on February 14, 1997, we propose
a number of changes which should result in additional efficiencies and
savings beyond the $2 million already specified. These changes would
eliminate a redundant report, streamline our publication efforts, and
achieve economies in our security clearance process.
Mr. Chairman, ACDA is a small, expert agency charged with
advocating, negotiating, implementing and verifying arms control. Next
year we will have less than 250 people, plus detailees. We have a
continuous presence only in Washington, Geneva, Vienna and The Hague.
That means I'm as concerned about the State Department and other
150 budgets as about ACDA's own. For we are among the many who throw
our voice abroad through others, especially State's embassies and
missions. And very often we need that voice in remote places. On the
NPT extension, for example, Micronesia's vote counted exactly the same
as China's.
On this basis, I also urge your careful attention to the budgets of
all the foreign affairs agencies, including ACDA's.
CONCLUSION
Mr. Chairman and Members of the Subcommittee, few doubt that the
world today still bristles with Cold War overarmament--and faces new
dangers of proliferation, terrorism, convulsive nationalism,
environmental pressures, drug trafficking, and many others that
directly affect us.
Those challenges require ever more effective diplomacy--what Hans
Morgenthau called ``the most important'' component of a nation's
international power.
And they demand that we work together--even when our government is
divided--in fashioning the kind of unified foreign policy that befits a
great power in a perilous world.
It is in that spirit that ACDA presents to you the Administration's
request of $46.2 million to fund its arms control and nonproliferation
work in Fiscal Year 1998.
__________
ARMS CONTROL AND NONPROLIFERATION CONTRIBUTIONS TO U.S. NATIONAL
SECURITY BY THE U.S. ARMS CONTROL AND DISARMAMENT AGENCY
Led the successful USG preparations for and managed the U.S.
delegation to the Extension Conference of the Nuclear Non-
Proliferation Treaty -- the fundamental basis for our nuclear
nonproliferation policy. The decision of the Conference, taken
without a dissenting vote, made permanent this indispensable
legal and political barrier to the spread of nuclear weapons.
Led interagency efforts that resulted in strengthened
security assurances for non-nuclear weapon states party to the
NPT through action by the President and adoption of a Security
Council resolution, steps which enhanced the NPT and
contributed to achievement of its indefinite extension.
Managed USG policy (through backstopping and representation
on the U.S. delegation) for successful negotiation of a
Comprehensive Nuclear Test Ban Treaty.
Managed USG policy (through backstopping and heading the
U.S. delegation) for negotiation of a legally-binding protocol
to strengthen the Biological Weapons Convention.
Continued to manage U.S. participation in the Chemical
Weapons Convention Preparatory Commission and organized the
U.S. Office of National Authority for implementation when the
United States ratifies the CWC.
Managed USG policy (through chairing backstopping) for
negotiations of a future Fissile Material Cutoff Treaty.
Managed USG policy preparations for negotiation in the
Conference on Disarmament in Geneva of a comprehensive ban on
Anti-Personnel Land Mines.
Led USG participation in negotiations leading to the African
Nuclear Weapons Free Zone and coordinated interagency
preparation of legal documentation for U.S. signature to its
protocol. Coordinated preparation of legal documentation for
U.S. signature to the protocol to the South Pacific Nuclear
Weapon Free Zone.
Contributed significantly to the IAEA's ability to detect
undeclared nuclear activities by leading U.S. Delegation to
IAEA committee on strengthening international nuclear
safeguards (more than 65 countries; final agreement expected in
May 1997).
Developed and negotiated with North Korea procedures for
dealing with plutonium bearing spent fuel to ensure its safe
storage under IAEA safeguards and continue to coordinate U.S.
support for IAEA activities in North Korea.
Provided essential technical and nonproliferation policy
expertise leading to enhanced transparency measures for the
agreement to purchase HEU from Russia, the end of production of
weapons-grade plutonium, and setting of the direction for
international cooperation within the G-7 to help Russia secure
and ultimately dispose of its excess weapons plutonium.
Led interagency efforts to develop a verification regime for
the agreement to end permanently Russian production of weapons-
grade plutonium and led the technical team that successfully
negotiated these provisions.
Initiated and implemented a training program on arms control
verification for the Korean Arms Verification Agency to enhance
regional arms control; a similar program has been approved for
delivery to Chinese arms control officials.
Ensured restoration of funding for several NTM systems,
including COBRA DANE and COBRA JUDY radar systems, assets vital
to the verification of compliance with arms control agreements.
Became the sole USG entity responsible for developing, in
coordination with other national security agencies, the
analysis of other nations' compliance with arms control
agreements and the assessment of the verifiability of arms
control provisions.
Coordinated USG arms control research and development
through the Nonproliferation and Arms Control Technology
Working Group, for which ACDA is the Executive Secretary and
co-chair (with DOD and DOE).
Played a key role in developing U.S. policies which led to
START I Treaty entry into force, the withdrawal of nuclear
weapons from the territories of Belarus, Kazakstan, and
Ukraine, and the accession to the Nuclear Nonproliferation
Treaty as non-nuclear weapon states by those same countries.
Managed the negotiation of the START II Treaty, which
increases national security by providing for a dramatic
reduction in the total number of strategic offensive arms as
well as prohibits heavy ICBMs and multiple warhead ICBMs.
Played a leading role in advocating U.S.-Russian
negotiations on nuclear warhead controls and monitoring to
reduce the threat of ``loose nukes,'' now a key component of
the U.S. post-START II strategic arms control negotiating
framework.
Led and managed policy implementation of the INF and START
Treaties. For example, the Joint Compliance and Inspection
Commission (JCIC), for which ACDA provides the U.S.
Representative, has concluded to date a number of documents
clarifying START Treaty provisions and codifying agreement on
procedures mandated by the Treaty.
Provided the U.S. Representative to the CFE Review
Conference, the U.S. chief delegate to the CFE Joint
Consultative Group, and the U.S. Representative to the Open
Skies Consultative Commission in Vienna.
Provided U.S. Representatives to the Comprehensive Test Ban
Treaty Organization, the Preparatory Commission of the
Organization for the Prohibition of Chemical Weapons, the
Conference on Disarmament, and the U.S. head of delegation to
the Biological Weapons Convention Ad Hoc Group.
Provided the U.S. Representative to the Special Verification
Commission (INF Treaty) and the U.S. Commissioner for the
Standing Consultative Commission (ABM Treaty). ACDA also
provides the head of delegation, delegation executive
secretary, and technical experts for State-led delegations on
nuclear transparency, plutonium production cessation, and
related activities.
Provided staff support for both the U.S. delegation and the
international staff in supervising implementation of Article IV
of the Dayton Accords in Bosnia.
Ensured that nonproliferation equities were taken into
account so that the use of the Global Positioning System would
not be used for providing guidance to, and improving the
accuracy of, missiles employed by governments with interests
inimical to the United States.
Ensured that U.S. National Space Policy took account of arms
control treaty equities regarding the use of space, and sought
to ensure that the National Space Policy adequately guarded
against military activities in space by governments with
interests inimical to the United States.
Commenced a dialogue with China on strategic and other arms
control issues as a component of the United States strategy of
constructive engagement.
__________
EFFORTS TO DOWNSIZE, ELIMINATE REDUNDANCY, ECONOMIZE, AND STREAMLINE BY
THE U.S. ARMS CONTROL AND DISARMAMENT AGENCY
Reduced the administrative support infrastructure by
eliminating 19 FTE within the Offices of Administration, Public
Affairs, Congressional Affairs and General Counsel since FY96.
This represents a 23% reduction in these domestic support
offices. Additionally, since FY95, nine administrative
positions, representing a 45% reduction, were eliminated
overseas.
Avoided a capital investment of approximately $90,000 and
sourced referral and counseling services through an MOU with
the Department of State for ACDA use of the State Career
Development and Resource Center.
Reduced the number of executive vehicles by 50% and
apartments overseas by 40%.
Consolidated office space in Geneva into the U.S. Mission
for a savings of $750,000.
Supported USG preparation for participation in the 1995 NPT
Review and Extension Conference through reorganization and
identification of temporary resources; after the Extension
Conference was successfully completed, reorganized again to
optimize ability to address other nonproliferation challenges.
Reduced number of ACDA personnel in The Hague (CWC PrepCom
Delegation) by acquiring detailees for permanent change of
station from other agencies.
Co-chaired with OSD the task force for development of
verification elements of BWC Protocol.
Dual-hatted the ACDA representative as the Deputy Head of
the U.S. Delegation to the Conference on Disarmament and the
IVI Bureau representative as the Deputy Head of the U.S.
Delegation to the Biological Weapons Convention Ad Hoc Group,
consolidating administrative and functional responsibilities
and saving personnel slots; and dual-hatted ACDA staff among
CTBT, UNFC, Fissile Cutoff and Land Mines activities, allowing
absorption of additional backstopping responsibilities without
personnel increases.
Absorbed Office of National Authority requirements for CWC
implementation into existing manpower structure.
Reduced overall personnel requirements by two people by
managing inter-bureau task force on Fissile Cutoff
negotiations.
Consolidated the Agency role in the development and
implementation of verification and compliance policy within a
single bureau, the Bureau of Intelligence, Verification, and
Information Management.
Consolidated most of ACDA's export control functions into a
single ACDA Division and implemented a new automated
interagency export licensing referral system for dual-use goods
and technologies, under Executive Order 12981, achieving
unparalleled processing time.
Consolidated ACDA's Vienna operations for CFE
implementation, OSCE, Open Skies, and Bosnia (Dayton Article
IV).
Eliminated a division and its division chief SES position by
transferring the Defense Conversion Division from NP and
incorporated it within SEA's Strategic Transition Division.
Eliminated the International Security Division of the Bureau
of Multilateral Affairs by dividing its functions among the
remaining divisions of that Bureau.
Avoided expensive duplication by using the State Department
and Diplomatic Telecommunications Service communications lines
to connect ACDA computers to overseas delegations.
Decreased the need for paperwork and meetings on
intelligence and technology matters and increased dramatically
the amount and kinds of information that will be made available
to interagency delegations by working with DOD and the
Intelligence Community to establish connectivity to Intelink,
Intelink-S, and SIPRNET.
Saved hundreds of thousands of dollars by jointly developing
with the Department of Commerce the Chemical Weapons Convention
data declaration software.
Reduced costs for both ACDA and State by jointly developing
with the Nuclear Risk Reduction Center the CWC communications
systems.
Streamiined and sped the formulation, implementation and
recording/reporting of arms control and nonproliferation
deliberations and policies and eliminated reliance on tedious
outdated processes by implementing a system to enhance
accountability for and rapid access to sensitive diplomatic,
Presidential and Executive Branch arms control and disarmament
correspondence, decisions and policies.
Senator Grams. Thank you very much, Mr. Holum. We will
begin a couple rounds of questioning, and maybe hold them to
about 7 or 8 minutes each, so we can get through a number of
questions with you before the half hour.
Director Holum, as I said in my opening statement, the
subcommittee will not be questioning you today at all on the
specifics of any particular proposal to reorganize the State
Department and its related foreign affairs agencies, but this
issue has come up repeatedly in earlier hearings that have been
held by me and by Senator Chuck Hagel, who is Chairman of the
Subcommittee on International Economic Policy. So therefore I
would just like to ask you, is it your understanding that the
administration is developing a reorganization plan for U.S.
foreign affairs agencies, and that this proposal will be
presented to Congress?
Mr. Holum. We are certainly looking very hard at how we can
restructure and integrate our functions in the most effective
and efficient way to carry out the various missions of the
Department of State and the three foreign affairs agencies. It
is premature, I think, to forecast a specific outcome of that
review, but it is consistent with Secretary Albright's
testimony during her confirmation hearing that she wanted to
examine these issues carefully. I think we have a continuous
obligation to do that.
The extent to which any change would require legislative
authorization is still an open question. There are a lot of
things, obviously, we can do, including the streamlining we
have done under the Gore Reinvention Plans, without legislative
authority, but it is something we obviously want to work on
with the Congress. We certainly want to hear your views, as
well as present our ideas.
Senator Grams. In that respect, has there been an effort to
actively seek your input specifically into any of this
development of a proposal?
Mr. Holum. Yes.
Senator Grams. So you have been talking to them?
Mr. Holum. Yes.
Senator Grams. When the Foreign Relations Committee
considers legislation to streamline our foreign affairs
agencies and reduce duplication of services, we will look to
steps, if any, that ACDA of course has undertaken to eliminate
duplication within its sister agencies. But, as you know, ACDA
already relies on the State Department's Inspector General for
audits and investigations. In its fiscal year 1998 budget, your
agency is requesting a total of about $15 million to employ 63
staff in its offices of administration, Congressional affairs,
general counsel, and public affairs.
So what attempts has ACDA made to insure that these
functions do not overlap with State Department activities?
Mr. Holum. As I mentioned in my statement, Mr. Chairman, we
have eliminated roughly 28 total, including overseas and
domestic, administrative positions. We have also eliminated
positions in the Office of Public Affairs. So we are scaling
back in those areas.
One of the consequences of our legislative mandate is that
we conduct public information activities, so I hesitate to say
that ACDA is excessive in that area. We, for example, maintain
a Web page and we circulate a lot of information. We have
thousands of requests annually from the public, so a lot of our
work is devoted to serving those concerns. But we are
continuing to streamline in all of those areas.
I might mention that in terms of consolidating
administrative services, it is not always a case of
consolidating into the State Department. In the case of the
motor pool in Geneva, a rather mundane subject but nonetheless
important, and expensive, the decision was made that the ACDA
operation was more efficient. So on the basis of that, the
State mission in Geneva has relied on our motor pool for their
services. But that is the kind of activity that is under
continuous review.
Senator Grams. So in other words are you saying that ACDA
has explored ways of relying on existing offices within the
State Department for some of these functions in an effort to
find some cost savings, that you are looking at ways to
integrate and to use those facilities or officials when
possible, and vice-versa?
Mr. Holum. That is right. And in fact that was one of the
mandates that came out of the Reinvention examination of the
foreign affairs agencies under Vice President Gore. We looked
at thirty-some administrative areas. In many of those cases,
because we are physically inside the State Department and
because we do not maintain a presence continuously in more than
three places abroad where we have negotiating missions, we are
already heavily integrated with the State Department and have
been historically, but we looking at more. As you said, the
Inspector General of ACDA and State have been merged, and that
has been true for a number of years.
Senator Grams. So, as you said, we will look forward to the
details on that type of activity. When it comes to
streamlining, ACDA's Inspector General determined, it was back
in August 1995, that, quote, ``ACDA's overall response has been
slow,'' and that, quote, ``even the modest proposals made by
the National Performance Review Task Force have not yet been
implemented.'' That judgment seems to have been reiterated in
an October 1996 IG report which stated that ACDA's actions have
not yet resulted in a net reduction of full-time equivalent
positions.
ACDA's fiscal year 1998 budget request contemplates a cut
of 10 positions, but in the 1995 Pell report ACDA declared
that, quote, ``our streamlining will eliminate 34 full-time
equivalent positions.'' Do you contemplate any further
personnel reductions in the future then?
Mr. Holum. We are about to submit a final duplication
report that was mandated in a House Appropriations subcommittee
report. We have gone through a very diligent and careful effort
to eliminate duplication and overlap.
One of the things that is difficult to get a handle on is
the extent to which people might be working on the same thing
in State and ACDA generally but doing different work related to
it. A good example is our delegation to the International
Atomic Energy Agency that monitors safeguard agreements under
the Non-Proliferation Treaty. The U.S. Governor for that agency
is a State Department official. Our Ambassador to the
international organizations in Vienna is a State Department
official. But the technical expertise and the delegations that
go over to negotiate the details of changes in safeguards are
ACDA personnel with a long technical history in the area. You
could say that they are all duplicative in the sense that they
work on the same thing, but they do different work. We need to
be careful not to just eliminate on the basis of line items of
authority.
What the first duplication report concluded was that there
were some 37 people in the State Department working on arms
control, the primary mission of ACDA, and half of those were
affiliated with the Nuclear Risk Reduction Center, which is an
administrative function that the whole government relies on. Of
the others, many, I think all but nine have since been
eliminated. We have also since eliminated a number of
positions, and we are in compliance with the Inspector
General's requirement.
Senator Grams. I would just like a quick follow up. How
many of the ACDA 28 personnel reductions were full-time
equivalent, compared to part-time or temporary staff? Do you
have those numbers?
Mr. Holum. There were 19 full-time equivalent personnel.
Senator Grams. Thank you very much. Senator Feinstein.
Senator Feinstein. Thanks, Mr. Chairman. Mr. Holum, some on
this committee have questioned whether ACDA is the most
appropriate agency to house the Office of National Authority
for the Chemical Weapons Convention. Assuming, of course, that
this body ratifies the treaty, which I hope we will, does ACDA
provide any special expertise or abilities that make it the
best or most logical place for this office to be housed, and
what would be lost if it were located somewhere else in
government, such as in the Departments of Defense or Commerce?
Mr. Holum. The Office of National Authority is, as you
know, the agency that interacts between the United States and
the international body. ACDA will provide the staff support for
that, but the function will be an interagency function
involving all the agencies that have responsibilities. I think
the main reason why ACDA is the logical agency to do this,
aside from the mandate of legislation assigning us the
implementation function, is that ACDA is the agency that
negotiated the treaty, and therefore has the deepest expertise
in the substance of the treaty, and also in developing and
being very frugal, I might say, in developing the Preparatory
Commission activities that have been underway until now. I
think it is most efficient to have the people that are
knowledgeable and experienced do the work.
If it were assigned elsewhere, the likely outcome would be
that they would try to hire the people from ACDA who have been
doing it, and it would mean we would lose some of our in-house
expertise on chemical weapons and other issues because a lot of
these people work on more than one thing.
Senator Feinstein. Thank you very much. Given that the
Comprehensive Test Ban Treaty cannot enter into force until
India and North Korea have acceded to the treaty, could you
describe your current negotiating efforts to implement this
treaty? I think it is extraordinarily, very important.
Yesterday I had a brief meeting with the vice foreign minister
of North Korea, and made the point to him how important the
agreement with respect to the nuclear power plant was in their
country, and that it must be followed. He indicated their
willingness to have peaceful reunification and confidence
building with South Korea.
I would be very interested in any comments you might be
able to make which could update us both on the Indian situation
and the North Korean situation.
Mr. Holum. In the case of the test ban, actually, North
Korea is a transition point in this answer because they are one
of the indispensable countries for the entry into force of the
test ban, along with India and Pakistan. Forty one out of the
44 necessary countries have signed the treaty. We have a great
deal of work to do to persuade the Indians that it is in their
interest to ratify. I think if the Indians do, the Pakistanis
will. They have said that they will not until India does.
Our approach is a careful one, making clear to India that
the test ban is consistent with India's long-standing position,
going back to Prime Minister Nehru in the 1950's, that this is
something that they have agitated and led for, and that it does
not undermine their security interests. They have an interest,
I think, in making sure that their neighbors do not advance
their nuclear capabilities.
Senator Feinstein. Not to interrupt you, but I do not
understand why they would not ratify it, unless again it is the
Pakistani situation, and what we are going to see is an
escalation.
Mr. Holum. Well, they have given several reasons, a
principal one being their concerns about China and their
interest in preserving their nuclear option. But the test ban
as such does not change their ambiguous nuclear posture. I
think they will make this decision in the first instance based
on their national security interests.
They also make the argument that the Conference on
Disarmament should establish a committee to negotiate a time-
bound framework for the elimination of all nuclear weapons. It
is just not going to happen that way, that is a non-starter in
terms of negotiations, and I think a way to prevent the test
ban from entering into force and prevent progress rather than
accelerate it.
But we have 2 years, I am sorry, 3 years to work on this
ratification issue. 2 years to ratify--the earliest it can
enter into force is in 2 years, and then after a third year, if
it is not in force, there can be a special conference to
examine steps to encourage the further ratifications. We plan
to be very active in all of those efforts.
Senator Feinstein. Would you speak a little bit about North
Korea, because if it is going to keep its agreement, there is
no reason why it should not sign this treaty.
Mr. Holum. That is right, and North Korea has not, to our
knowledge and I think we would know, conducted any nuclear
explosive tests. I have always maintained that as we go through
and implement the agreed framework and freeze their nuclear
facilities, that the implementation would be every bit as
complicated as the negotiation of that framework, which is to
say very complicated and very difficult. And it has proven to
be that way. Political disruptions, any kind of event, can set
things off track.
But the bottom line is that we are satisfied that the
agreement is being kept, that the reactors, the small reactor
that was producing the potential for plutonium is shut down,
that the canning operation is proceeding on the spent fuel so
that it cannot be reprocessed, that the reprocessing plant is
closed, and that the other re-
actors are not being built. So, I think we have averted the
threat of not only the material they diverted a couple of years
ago, but the potential for a number of nuclear weapons every
year to be produced out of those additional reactors.
But it is not over yet. The end point is when the North
Koreans will have the obligation to persuade the IAEA not only
that they are not producing plutonium now, but to account for
the discrepancies in their past behavior. And that has to
happen before there will be the first item of value provided
that will make the light water reactors operational. So we have
a lot of work to do. The interim steps are being fulfilled, but
this is a long way from over.
Senator Feinstein. Could I ask one other quick question?
Senator Grams. Sure.
Senator Feinstein. The Ambassador from South Korea
indicated to me his country's concern about an agreement for
Taiwan to store their nuclear waste in North Korea. Could you
tell us what you know about that agreement, and what
precautions are being taken? Because all of that water flows
north into the Arctic, and unless the nuclear waste is really
properly stored it could present real hazards, I think, to a
large area of that ocean bed.
Mr. Holum. Yes. We are not supporting that idea at all, for
the reasons you cite. There is a serious risk that the
material, while probably not a proliferation risk, is a
pollution risk, and there are very serious doubts about the
capacity of North Korea to handle that material properly. I
cannot go into much more detail in an open session about
specifically what we know and where the transaction stands, but
we can provide additional information either in a closed
briefing or for the record.
Senator Feinstein. If you could do that, I would appreciate
it very much. I am very interested.
Mr. Holum. I would be happy to.
[The following material was subsequently supplied for the
hearing record by Mr. Holum.]
We first raised this issue with Taiwan Atomic Energy Council
officials in December, 1996. These officials confirmed that they had
heard a rumor of a deal involving the Taiwan Power Company (Taipower),
but they assured us that before any such shipment could take place, a
license would be required and that this would provide an opportunity
for review.
We subsequently had numerous discussions with various officials
from Taiwan. We have consistently emphasized that we do have concerns
about this shipment based on regional sensitivities, and that we want
to ensure that (1) the transfer does not interfere, even inadvertently,
with the IAEA implementation of the U.S.-DPRK Agreed Framework; and (2)
that the transfer conforms to the safety and environmental aspects of
the IAEA's Code of Practice on the International Transboundary Movement
of Radioactive Waste.
We have consistently urged Taiwan to discuss all aspects of this
shipment with the IAEA. We understand that a team from Taipower visited
Vienna last month for preliminary discussions, and we expect more
consultations to follow.
As we understand that no uranium or plutonium is involved, we have
no reason to believe that this deal is a proliferation concern.
However, Taiwan has invited the IAEA to make a special visit to Taiwan
to confirm this, and we expect the IAEA to accept that invitation. We
hope that the IAEA would be invited later to visit the disposal site to
confirm the safe disposal of the material.
Senator Feinstein. Thank you, Mr. Chairman.
Senator Grams. Thanks, Senator. Back to some questions on
staff, technical experts, Mr. Holum. In the July 1995 Pell
report, you heralded the value of ACDA as an independent,
technically competent arms control agency. In February 1995,
ACDA declared to Congress its intent to, quote, ``strengthen
its scientific and technical capabilities, coupled with new
authority to hire specialized technical and expert personnel.''
Yet in August 1995 the Inspector General concluded that ACDA's
managers have not considered it necessary to increase the
proportion of scientific or technical specialists on its staff.
When you look at an internal review of ACDA's staff in
1994, it shows a total of 80 academic degrees in political
science, government, and international relations, and that was
compared to 57 degrees in the hard sciences. Now, the IG report
said, again, quote, ``the agency's instinct to duplicate policy
expertise already found in other agencies, as well as a
disinclination to give higher priorities to scientific
expertise, removes a creditable additional argument for its
existence.'' So with that, what steps have you taken since then
to reverse this imbalance, and also to try and ensure the
majority of ACDA's personnel are trained scientific or
technical specialists?
Mr. Holum. Our ability to hire additional technical
specialists depends to a considerable extent on where the
vacancies occur. That is not the only skill we require. A lot
of our work is in active negotiations, which requires the
skills of a negotiator. A lot of our scientific personnel have
developed those capabilities, but there are others who have
them as well. So I would disagree with the notion that we
should be completely dominated by technical staff. We are a
negotiating body to a very large extent.
As the positions open, we look very hard for qualified
scientific personnel. Another thing we do is rely on our Foster
Fellows Program, which is almost entirely made up of
scientists, because our need for a particular expertise will
change over time. When we are negotiating a compliance protocol
for the Biological Weapons Convention, we need biological
experts, experts in the biosciences. For the CWC, obviously, we
needed chemists. What we do is go for the short-term period
through the Foster Fellows Program, is bring in academics for a
year. We also use consultants extensively for short-term
assignments.
I will get you an updated figure on the proportion of our
personnel, which I will be happy to do. My impression is that
we have continued to look for qualified scientists, but I do
not know the ultimate impact. Remember that we have been
shrinking, so we have not been doing as much recruiting as we
might otherwise.
Senator Grams. I do not think the intent was that you be
inundated with all technical experts, but you are satisfied,
then, with the ratio, you believe, of the expertise that you
need compared to administrative duties?
Mr. Holum. What I can say is that when I look for technical
expertise for a particular function, I do not find us missing
it in the agency, that it is inaccessible. It is there. For
example, ACOA has a former military officer who is one of our
leading experts on chemical weapons. He is not a scientist, but
because he has worked with these issues for the last 20 years,
I would not trade him for a leading chemist because he knows
the ins and outs of the disciplines that are relevant to the
arms control mission. All I am saying is that it is not as
stark a picture as one group does one thing and one group does
another.
Senator Grams. ACDA's fiscal 1998 budget request included
$2.8 million as an assessment that was to establish a
preparatory commission for the Comprehensive Test Ban Treaty.
Aside from the fact that I am concerned that the administration
is seeking money for an organization established by a treaty
for which the Senate has not given its advice and consent,
there is also concern that money spent on this organization may
be wasted. Entry into force of CTBT requires ratification by
44, I think as Senator Feinstein mentioned, specific nations.
One of these, India, has sought to block the CTBT at every
step, vetoing it in the Conference on Disarmament, voting
against it in the United Nations, and declaring that it will
not sign the treaty. North Korea, again as the Senator
mentioned, a similar case because the CTBT will not enter into
force until these countries have ratified it.
I believe swift implementation is unlikely, so how can you
assure the subcommittee that ACDA is not requesting money for
an organization that will have little to do for years to come,
that is until India and North Korea agree to let the CTBT move
forward?
Mr. Holum. The basic premise is similar to the one that has
been applied in the case of the Chemical Weapons Convention:
that is, the treaty contemplates that once entry into force
arrives, the ability to monitor compliance should be up and
running. Therefore, we are beginning our own program to add the
sensors that will be required by the treaty, including various
kinds of sensors on United States territory. And we are anxious
for others to do that because when the treaty enters into force
we want the system to be operational.
The amount requested for fiscal 1998 is $2.8 million. Our
share of the operations of the CTBT organization, whose first
year budget has just been funded, is 25 percent, and we think
it is essential to have this structure ready for operation when
the treaty enters into force.
Senator Grams. One final question I would like to ask is,
again I will go back to August 1995 when ACDA's Inspector
General determined, and I quote again from that report, ``the
utility of the many research projects commissioned by the
agency have come into question as bearing little relation to
the agency's priority goals and objectives. The policies
established by the agency for its external research programs
require that the research review board identify arms control
issues over a 3 year planning period and select the external
research necessary to support such issues. So far the process
has not been undertaken.''
So at the time ACDA was requesting $1 million in funding
for external research projects. It seems that ACDA is still
spending money on these projects since the fiscal year 1998
budget request includes another $822,000 for external research.
Has ACDA implemented the planning process referenced in the
Inspector General's report?
Mr. Holum. All of the recommendations in the Inspector
General's report have been closed. There were 28
recommendations and they have all been resolved but one. That
one relates to the question of examining or predicting the
costs of arms control treaty implementation.
I can tell you that our external research budget is devoted
to immediate and high priority matters. In fiscal 1977 we have
allocated it for Comprehensive Test Ban implementation and
verification studies, Chemical Weapons Convention
implementation and verification, looking to the future of
strategic arms control in START III and beyond, and studies on
regional arms control issues which are a very important part of
our mission.
So we devote the money to high priority, current matters,
number one and number two, this research is highly leveraged.
Very often what we do is propose a small amount of ACDA funds
that would be accompanied by large amounts of funds from the
Department of Energy, Department of Defense, or another agency
or the intelligence community to focus on a particular issue.
So I think we get very good value for our research funding.
Senator Grams. A lot of the concern was how they differ
from the studies that are undertaken by the agencies such as
DOE, the Defense Special Weapons Agency, et cetera. So it seems
like it is duplicative, again, studies or projects.
Mr. Holum. It is not duplicative, and in fact one of the
things that I am proudest of that ACDA has been doing, and this
is pursuant to the 1994 legislation, is basically being the
organizer, the convener of a nonproliferation and arms control
technology working group whose specific responsibility is to
examine the possibility of both overlaps and gaps in our arms
control and nonproliferation research. So we are working very
hard, in fact I think improving dramatically across the board
not only our own technical investigations and research, but
roughly $5 billion of funds that are being spent on these
subjects across the government. But in the case of our own
funding, it is almost in every case seed money for additional
studies by other agencies.
I also want to say that we try first to find, because our
amount is so small, to find somebody else to do this, to do the
work that we need, and we look first to see if it has already
been done. The technology working group helps us do that.
Senator Grams. I am sorry I ran over my time a little bit.
Senator Feinstein, I will turn to you. I know when you have to
leave. If somebody from your staff wants to raise their hand,
we will try and accommodate that.
Senator.
Senator Feinstein. Thank you, Mr. Chairman. Mr. Holum, I
wanted to spend just a few moments on this changing world as we
know it today. I know when TWA flight 800 went down some people
reported seeing this streak in the sky, and we began to take a
look and we found that there are something like 60 stinger
missiles that could be launched from the shoulder in a small
boat floating around unaccounted for. That is point one. There
is also the question of the loose nukes that I spoke about very
briefly that are moving around the world and no one really
knows too much about. There is the India-Pakistan situation,
where both countries have the potential and perhaps already the
ability to be indigenous nuclear producers, and can launch
devices within a couple of weeks. Then we move to the Aum
Shinryko cult in Japan and the production of chemical weapons
in a civilian society, let alone what we know about chemical
weapons that are still being produced around the world. So the
list of these new challenges kind of goes on and on.
How has ACDA adapted itself, organizationally as well as
substantively, to try to be pro-active and move ahead in this,
quote, new world?
Mr. Holum. I would say the major way we have done that is
through the strengthening of our nonproliferation bureau and
its expanded work, as mandated by the Congress, in dealing with
the proliferation threat in dealing with export licenses in
particular. Up until 1994 the agency had very often been
excluded from review of sensitive export licenses, for example
to countries like Iraq, which was a proliferation concern in
that period. That is being remedied.
The reason why the independent and purist, if you will,
perspective of an arms control agency is important is because
there may be a diplomatic reason why a military sale or an
export, dual use export license should go through, and you need
somebody there to say wait a minute, let us look clearly at the
proliferation impacts. That is one of the things that we do
more and more of.
Senator Feinstein. Let me just stop you on this one point.
OK, these are the legal movements of weapons. What is
concerning me most are the illegal movements, the things that
are found in flukes where you discover large caches of weapons
that may be moving from one country to another. I think this is
something to really be concerned about. How can you meet that?
Does your budget allow for it? Do you consider this as part of
your mission?
I happen to believe, and I am just speaking for myself,
that this is a major problem in the world today, and we had
better be on top of it.
Mr. Holum. Well, I personally believe that the most serious
proliferation threat, certainly in the nuclear area, that we
have to address is the danger that material coming out of
nuclear weapons in Russia or out of research reactors scattered
across the former Soviet Union, out of naval fuel facilities,
will fall into the wrong hands. ACDA does not have the
resources to deal with that issue exclusively, nor should we.
It requires a whole range of answers, including by law
enforcement agencies. We have an FBI office in Russia for the
first time. Including, obviously, by the intelligence
community, by military planning.
But there certainly is an arms control role in dealing with
strengthening safeguards of those materials, arguing for and
negotiating for limitations on the production and secure
storage, and ACDA is very much involved in that, but it is
something that needs to involve all agencies with relevant
expertise because the danger is so high.
I hope that is responsive to your question.
Senator Feinstein. Yes, except to this point. I think we
are in a non-traditional time, and I think the seeds of
potential future destruction can be well established in this
non-traditional window of opportunity that is out there. Some
agency--I understand law enforcement, I understand the FBI, I
understand the CIA, I understand all of this--but somebody on
behalf of this nation has to really take the responsibility. In
terms of arms control, I think the whole kind of untapped area
is the illegal movement of arms, and there I think we are way
behind the action. I do not think we are ahead of the action. I
do not think we have the intelligence sources that are
adequate.
You say your agency really is not staffed to do this, and,
Mr. Chairman, I would agree they are not staffed to do it, but
in my opinion this is an unmet need out there and I think we
have got to get cracking to take a look at it.
Mr. Holum. I would make the argument that there is quite a
bit going on.
Senator Feinstein. Well, tell me who knew about Aum
Shinryko?
Mr. Holum. I am glad you brought that back up, because that
is one I would specifically want to refer to. There is not a
silver bullet to deal with these issues. It requires a whole
range of capabilities. That is one of the reasons why I think
the Chemical Weapons Convention will help. I do not maintain
that this treaty is even aimed at terrorism. Its purpose is to
be a treaty that deals with chemical arsenals maintained by
countries, and obviously terrorist groups do not join.
But the treaty requires every country that is a member of
the treaty to adopt domestic implementing legislation to make
possession of chemical weapons against the law. It is not
against the law here now, and it was not against the law in
Japan at the time when the Aum Shinryko cult was buying
chemical weapons precursors. That would be controlled by the
treaty and would be controlled under implementing law on the
market in Japan. Japan's reaction was to ratify the Chemical
Weapons Convention and to pass, more particularly, the domestic
implementing legislation.
We have had experiences here to show how that can help.
Under the Biological Weapons Convention, which does not have a
verification regime but does have domestic implementing
legislation, we have interrupted potential domestic terrorism
using biological agents. In 1995 there was a case where a
medical supply house in Rockville, Maryland got an order from
an organization in Ohio for plague bacillus, and they filled
the order but reported it to the authorities because of the
domestic implementing legislation. They interrupted the
shipment, which turned out to be, I think it was a skin head
group that was trying to acquire this stuff.
So I think it goes to the point that you need the whole
range of additional tools, and obviously an enforcement
determination, strong intelligence capabilities. And I agree
with you, Senator, the non-traditional threats are the ones we
need to worry about the most now.
Senator Feinstein. Could I just ask one other question?
Could you provide to this committee, and if you need to do it
on a classified basis that is fine, I am also ranking on the
terrorism subcommittee of Judiciary, how the specific
components of the Aum Shinryko sarin gas was purchased, and
from where it was purchased, and exactly how this was done?
Mr. Holum. Sure. We can do that.
Senator Feinstein. I appreciate that very much. Thank you.
Thank you, Mr. Chairman.
Senator Grams. I have just one clarifying question before
you leave, Mr. Holum. Declassified statements by the
intelligence com-
munity make it quite clear that the CWC would not have done
anything to stop that terrorist chemical attack in Tokyo. Is
that true?
Mr. Holum. I am not sure I agree. It is true that that is
what the statements say, or the examinations say. But what I am
referring to is the broader chilling effect of the domestic
implementing legislation and the impact that might have had.
You would still have to have law enforcement under that
domestic implementing legislation. I started out by saying the
treaty is not aimed at that kind of thing. I have said that I
think it would help deal with that kind of problem.
Senator Grams. So it would not provide the type of security
or calming effect that we might have it projected to do?
Mr. Holum. On the contrary, Mr. Chairman. My feeling is
that the treaty, by giving us more information about the
dangers, will cause us to be more prepared than we are. This
treaty is not going to make the danger of chemical weapons,
either by countries or terrorists, go away. What it will do is
give us some additional tools to deal with those dangers, but
those dangers will persist. There are going to be countries
that will join and try to cheat, there will be countries that
will not join. So we are still going to need to keep our guard
up, and we are going to need the political will, and to amass
the political will internationally to enforce the treaty.
Senator Grams. I want to thank you for your time. I know
you have to leave, but I just wanted to ask unanimous consent
that this hearing's record be kept open for 3 business days for
the submission of written questions by any member of the
Foreign Relations Committee. Mr. Holum, I do not believe that
these written questions will be unreasonable. Of course, in
view of the fact that the Foreign Relations Committee is
preparing the State Department Authorization Bill, I would just
like to ask if you could assure this committee that you will be
able to respond within a week of the submission to you?
Mr. Holum. I am quite confident we can, and would be happy
to do that. I would also like to submit for the record, if I
can, more specific detail, if I did not ask to do that, on the
breakdown of scientists and professionals.
Senator Grams. We would appreciate that information.
I have a couple of questions that I will submit in writing,
and others have as well. So again, if you could promptly get
them back to us so we can move ahead with this project.
Thank you very much, Mr. Holum. I thank you for your time.
Mr. Holum. Thank you.
Senator Grams. Our next panel, again I want to welcome the
Honorable Princeton Lyman, Acting Assistant Secretary of State
of International Organization Affairs. Mr. Lyman, welcome to
the committee. I want to thank you for taking your time to be
here, and I would like to open it up for your opening remarks
if you have those, and again just ask if you could keep them
brief if possible. Welcome.
STATEMENT OF AMBASSADOR PRINCETON N. LYMAN, ACTING ASSISTANT
SECRETARY OF STATE FOR INTERNATIONAL ORGANIZATION AFFAIRS
Ambassador Lyman. Thank you very much, Mr. Chairman, and
Senator Feinstein. First of all, let me express my personal
appreciation and gratification for the support of the committee
for my nomination. I am very honored. I am grateful also for
the opportunity to testify this morning on behalf of the
administration's request for our contributions to international
organizations. I have provided the committee a written
statement, and with your permission, perhaps that could be put
in the record and I will just summarize some comments here.
Senator Grams. It will be accepted into the record.
Ambassador Lyman. Before going into the details, however,
with your permission I would like to call attention to a
presentation I heard just the other day on the child survival
program, a program that involves both multilateral and
bilateral donors and a major role by the private sector. As you
know, this program has operated over 10 years with very strong
bipartisan support, and it seeks to immunize children and
provide other support to decrease dramatically the tragedy of
child mortality. I learned in this presentation that because of
this program 3 million children each year are now saved,
children that would otherwise just a few years ago have died in
infancy.
My wife and I know the pain of losing a child, so perhaps
that is why I was so attracted to this presentation. Millions
and millions of children are alive today, and so much terrible
family pain and tragedy is avoided because of this
collaborative effort. I raise it because it is a program of
which we can all be proud. It has been a bipartisan effort. It
involves international organizations such as UNICEF and WHO.
USAID has been a major donor; the private sector--Rotary,
Kiwanis--are involved in a major way. It is the kind of results
that we all want from the U.N.
When we talk of dreary things, if you forgive me, like
budgets and reform and restructuring, we are all of us, as you
said to me yesterday in your office, Senator, we are really
talking about making the U.N. a strong, effective organization
that delivers results like these to people, our people and
people around the world. We want a U.N. that will deliver just
as strongly as it does in this program of child survival in
preventing new infectious diseases from spreading across the
world, dealing effectively with the threats of terrorism and
drugs, which have been discussed earlier, with corruption that
robs countries of development and business of honest profits.
We want a U.N. that helps in conflicts which cause such havoc
and humanitarian disaster and send thousands upon thousands of
refugees and migrants out of their country. This is what U.N.
reform and U.N. support are all about.
There is another aspect of our interest that I would like
to call attention to. In the proposals that I will summarize
shortly is our proposal to address the arrears problem. There
are many reasons to do this, but the one that concerns me the
most is the preservation of U.S. influence. And let me be very
candid. Today the European Union countries provide 35 percent
of U.N. finances, something the EU is very quick to point out.
Japan provides nearly 18 percent. Together they provide more
than half the funding for the United Nations, the specialized
agencies like the FAO and for peacekeeping. They are our
allies, and their contributions are a boost to our own
interest.
But we also differ on some issues, and in the economic area
we are competitors and our interests do not always coincide.
Many of the organizations that we are discussing today are
charged with making findings, sometimes very technical but
which have a major bearing on our trade. For example, FAO--
where the European commission is a member in addition to the EU
member states--together with WHO sets the phytosanitary
standards which govern much of the $60 billion of U.S.
agricultural exports. At this very time FAO is studying the
issue of biotechnology and its proper role in setting these
standards. It is an issue of tremendous importance to our
agribusiness industry, affecting virtually every State in the
union.
Up to now the FAO has responded to these issues with the
best evidence and on a scientific basis. Our voice has been
strong. But agricultural interests in the U.S. are worried
about the future if we continue to fall behind as others
maintain their place. Today we owe FAO over $100 million in
arrears, more than a full year's assessment. I want the United
States to maintain its influence, its presence, its place in
all these discussions, in all these decisions, so that they
remain scientifically based and fully fair to our trade. We
cannot concede our proper place.
That, and a dozen other examples I might give, are the
concerns that have led the administration to seek to deal with
the arrears question comprehensively this year, to remove it
from the international agenda, keeping the U.S. in a strong
position wherever its interests are at stake.
We are thus at a critical juncture regarding future U.S.
participation in international organizations, but it is also a
time of exceptional opportunity. We believe we can accomplish
three ambitious and demanding tasks working together over the
next few years.
First, substantially reform and reinvigorate the system so
that it can meet the challenges of the 21st century. Second,
reassert and sustain American leadership. And third, reduce
U.S. financial contributions to a politically sustainable level
in the United States. And that is what our proposal is designed
to achieve.
In concrete terms we are proposing $969,491,000 to cover
the full assessment of these organizations for the calendar
year 1997, which we pay from our fiscal 1998 appropriations.
For peacekeeping, $240 million, and I want to note that that is
$66 million below last year's request. It is still vitally
important, but we have been able to reduce the number of
peacekeepers from 85,000 a few years ago to just over 25,000
today. And for international conferences and contingencies,
$4.9 million. Finally, and I know those are not the subject
necessarily of our hearing today, international organizations
and programs, our voluntary contributions, $365 million.
At the same time, as you noted, Mr. Chairman, we are
requesting that we pay in full the arrears that we recognize
under the first two of these accounts, that is the
contributions to international organizations and to
peacekeeping. We are requesting $100 million in fiscal 1998 for
this purpose, and an advance appropriation for fiscal 1999 of
$921 million.
I want to underscore the importance of all these requests
because they all serve American interests. From your opening
remarks, Mr. Chairman, and from those of the distinguished
Senator from California, I think we are very much in agreement
on the principles by which we should proceed to address these
problems, because parallel to the provision of the funds that
we have requested, the administration does indeed intend to
continue its very vigorous pursuit of U.N. reform.
Largely at U.S. instigation and indeed with very strong
Congressional support, several significant reforms have already
been introduced. We have a no growth budget in the United
Nations, we have the creation of an inspector general function,
we have substantial cuts in staffing, we have an informal
moratorium on future global conferences, we have, as I said, a
substantial reduction in the number of U.N. peacekeepers, and
much closer review and consultation in the U.N. and with the
Congress on any new or expanded peacekeeping operation. But we
still have a long way to go, and we know that.
We are pursuing a broad range of reforms designed to
introduce better efficiency and budgetary discipline in every
part of the U.N. system in which we operate, in UNCTAD, in the
economic commissions, and in the specialized agencies. On the
budgetary front in particular, and parallel with this funding
request, we seek this year to cut overall U.N. costs and the
U.S. share of these costs. It is particularly timely this year
because in these next few months the budgets for the
specialized agencies will be established for the 1998-'99
period, affecting our contributions in our fiscals 1999 and
2000. And this is the year in which the scale of assessment
will be set for the next 3 years. So this is the year, if we
are going to not only bring about budget discipline but lower
the share of U.S. costs.
We have put on the table at the U.N. in New York a proposal
to do that, to do two things: To get the U.N. to recognize the
congressionally mandated cap of 25 percent on peacekeeping, and
to bring our regular assessments down closer to 20 percent.
That is going to be debated and it is going to be a tough
debate, and we need your help. We have had support from allies,
from others, from the Secretary General, from the U.N. General
Assembly President, whom I think you met here in Washington not
long ago, to carry out these and other reforms. But everybody
says to us the same thing, we have to have a commitment from
the United States that your arrears are going to be paid and
this future funding arrangement will be one on which we can
count.
That is why we have asked for the good faith indications
present in both the FY-98 request and the advance
appropriation. We think we need that leverage this year, indeed
in the next few months, to carry out these reforms. I think
with that we are going to get them, I really do.
I just want to say, Mr. Chairman, in closing, that, as you
know, the Secretary has emphasized how important this is for
the administration for our overall foreign policy. She
welcomes, as do all of us in the administration, the formation
of the leadership group to work with her and Ambassador
Richardson and ourselves on this. I want to assure you, Mr.
Chairman, on behalf of the administration, that we want to work
with the relevant committees who authorize and appropriate
throughout this process. This has to be a collaborative
process, it has to be one in which we reach an agreement on how
to proceed.
On that basis, Mr. Chairman, I am more than happy to answer
any questions that you have. Thank you.
[The prepared statement of Ambassador Lyman follows:]
Prepared Statement of Ambassador Lyman
Mr. Chairman, members of the subcommittee;
I am grateful for this opportunity to testify before the
subcommittee in support of the Administrations request for funding for
international organizations and conferences for fiscal year 1998. This
is considerably more than a routine funding request, and I hope to be
able to use this session to explain what we are trying to achieve by
it. Let me note at the outset that Secretary Albright and other
Administration representatives are looking forward to the meeting with
the Congressional leadership later today to engage more fully on
proposals for reform of the United Nations.
We are at a critical juncture regarding future U.S participation in
international organizations, especially the United Nations system. As
recent experience has shown, the and its affiliated organizations are
vitally important for the United States, as a forum for pursuing our
broad policy goals in such diverse areas as security, trade and human
rights, and as a source of practical benefits to the American people
and American business. For example:
The UN has helped to end civil wars and build democracy
throughout the globe, notably in several Central American
countries close to our own borders; massive flows of refugees
from these countries can now be concluded;
The World Health Organization, having eradicated smallpox at
a savings to the U.S. of more than $300 million annually in
immunizations costs, is now embarked on a similar worldwide
campaign against the scourge of polio;
The Food and Agricultural Organization sets quality and
safety standards that help protect American consumers and
facilitate U.S. food exports, which earn us more than $60
billion annually;
And in the new threat areas of terrorism, crime and drugs,
the UN is becoming an important force in mobilizing the
international cooperation we need.
The UN system serves our interests well. But our ability to
use it effectively in the future will be undermined unless we
can accomplish three ambitious and demanding tasks over the
next few years: first, substantially reform and reinvigorate
the system so that it can meet the challenges of the 21st
Century; second, reassert and sustain American leadership; and
third, reduce U.S. financial contributions to a politically
sustainable level. The Administrations budget proposal is
designed to give us the tools to achieve these goals.
In concrete terms, this proposal is as follows:
--for Contributions to International Organizations (CIO),
$969,491,000, which would fully fund our assessed contributions
for calendar year 1997;
--for Contributions to international Peacekeeping Activities
(CIPA), $240,009,000;
--for International Conferences and Contingencies (ICC),
$4,941,000;
--and for International Organizations and Programs (IO&P),
$365,000,000.
In addition, the Administration is seeking funding to pay, in full, our
arrears under the first two of these accounts. We are requesting $100
million in FY 1998 funds, $54 million for UN regular budget arrears in
the CIO account and $46 million for CIPA; and an FY 1999 advance
appropriation of $921 million as an FY 1997 supplemental.
While requesting this funding to cover our current obligations and
past arrears, the Administration will at the same time continue its
vigorous pursuit of UN reform. Largely at U.S. instigation, several
significant reforms have already been introduced: adoption of a no-
growth regular UN budget; creation of an inspector general function;
and substantial cuts in staffing. An informal moratorium on global
conferences is in place. The number of troops involved in UN
peacekeeping operations has been reduced from 78,000 to about 25,000
over the past two years. New peacekeeping proposals are far more
carefully reviewed for size, mission and exit strategy, as well as
appropriateness to the task.
We have made a good start on our reform agenda, but clearly much
more is required. And indeed our efforts continue unrelentingly. We are
pursuing a broad range of reforms designed to introduce greater
efficiency and budgetary discipline in every part of the UN system in
which we participate--in UNCTAD, the economic commissions, FAO, the ILO
and every other part of the system.
The Secretary General has the authority to adopt significant
managerial reforms within the UN Secretariat, and we will continue to
urge that he do so as quickly as possible. But the broader budgetary
and structural reforms that we also seek must be negotiated with the
other member states of the UN as well as with the governing councils of
affiliated organizations. If we are to succeed in these negotiations,
we will need the powerful leverage that will come from having in hand
an authorized and appropriated funding to pay our arrears. This is
where the advance appropriation we are seeking for fiscal year 1999 is
so important to our reform efforts.
The broad reforms that we intend to pursue fall into five general
categories: budgetary, personnel, oversight, management peacekeeping.
We seek to eliminate functions that are no longer relevant, consolidate
overlapping programs, and set priorities that are clear and achievable.
We aim to set up or strengthen effective oversight systems in the major
UN specialized agencies.
Specifically on the budgetary front, we seek to cut both overall UN
costs and the U.S. share of those costs. Our goal is a reduction of
five percent in the budgets of the major UN specialized agencies for
the 1998-99 biennium, together with a ceiling of zero nominal growth in
other UN budgets. We will also seek to trim the budgets of other
international organizations not part of the UN system. In upcoming
negotiations on the United Nations scale of assessments, our objective
will be to lower the U.S. share of regular UN costs from 25% to
something closer to 20%. At the same time, we would bring our UN
assessment for peacekeeping down to the 25% mandated by Congress. We
will work to ensure that any revised scale of assessments agreed in New
York would also be adopted by the specialized organizations affiliated
with the UN.
Our intent here, with the help of the Congress, is to reduce U.S.
assessed contributions for FY 1999 and 2000 to international
organizations currently funded by the CIO account to about the level
actually approved by the Congress for fiscal years 1996 and 1997--about
$900 million. This would represent a reduction of about ten percent in
our current obligations to these organizations. Assuming the Congress
would be willing to continue to appropriate funds at this level, the
U.S. would not incur further arrears. We would thus have established a
sound and sustainable basis for U.S. participation in a reformed and
more effective UN.
The Administration has heard the message from the Congress. You
want a UN system that is leaner and more efficient, that costs less,
and that is responsive to U.S. interests in the international arena. So
do we. This is the overall purpose of our reform effort.
But reform will not be an easy task. Crucial to the success of our
efforts will be decisive action on our part to pay our current arrears
to the UN and to prevent any future build-up. These arrears now total
more than $1 billion, and if we are not able to reduce our assessments
as planned and Congressional appropriations remain at the FY 1997
level, they will grow by some $100 million annually. Our influence and
reputation have already suffered appreciably as a result of this heavy
indebtedness; further erosion of our ability to lead is manifestly not
in our interests. Our allies and friends are increasingly eager to work
with us to bring about the reforms that we need; but without exception
they insist that we must at the same time demonstrate that we will
promptly pay our arrears.
Thanks in large part to the groundwork that we have carefully laid
over the past few years, there is a momentum for reform throughout the
UN system. The new Secretary General has voiced strong support for
reform and has undertaken both to introduce managerial improvements in
the Secretariat and to put forward proposals for wider reform for
consideration by the member states. The current President of the
General Assembly is likewise a firm supporter of reform. We need to
move swiftly and decisively to take full advantage of this window of
opportunity.
The coming nine months present a unique opportunity to achieve
budgetary reform. During this period budgets for the 1998-1999 biennium
will be set and the triennial review of the scale of assessments will
be conducted. Decisions on several of these budgets will be made by
June. We are fully committed to pursuing the targets for these
negotiations which I have just outlined. But our ability to achieve
them will depend substantially on our credibility regarding our
arrears. Early approval of our FY 1997 supplemental request for an
advance appropriation of $921 million, payable in FY 1999, to help
clear these arrears will provide us the negotiating leverage we require
during this critical period to achieve the reforms I've been discussing
with you today. We are asking the Congress to come together with the
Administration to give a prompt and clear signal that the U.S. will pay
its debts. If we can do this, we stand a good chance of success. But if
we cannot, then we will have lost a valuable opportunity to secure the
changes in the UN system that we both agree are necessary.
I would stress one other point: this proposal for the U.S. to get
out of debt and stay out of debt depends not only on budgetary reforms
and provision of funds to pay existing arrears but also. on full
funding to cover our regular contributions for FY 1998. U.S.
assessments for calendar year 1997--paid out of FY 1998 monies--are
already set in the 1996-97 biennial budget. They cannot be changed in
the budget negotiations we will undertake this year. Failure to fund
these FY 1998 assessments fully would land us back in debt right away.
Mr. Chairman and members of the subcommittee, Secretary Albright
has emphasized in recent statements the importance that the
Administration attaches to moving forward with a better set of
international organizations led by a strong and respected United
States. But doing this, as she points out, requires us to put the issue
of arrears behind us, for once and for all.
The Administration and the Congress share the goal of a reformed UN
system that costs less and in which the U.S. continues to lead. We are
prepared to work intensively with the leadership group established by
the Majority Leader as well as with the relevant committees and
subcommittees of Congress in order to reach agreement on the means to
achieve this goal.
Thank you very much.
Senator Grams. Thank you very much, Mr. Lyman. I would like
to just start out talking about the arrears, and of course the
mandated U.N. reforms that Congress is looking for. Just to
kind of go back a little bit, you know, the administration has
frequently disagreed with some of the congressionally mandated
withholdings of U.S. payments to the U.N. to gain leverage on
the reforms that we have been seeking. However, we should look
at the results.
Do you think that the U.N. and other member states would
have agreed to set up an inspector general's office or adhered
to a no growth budget for the 1996-1997 biennium without this
type of pressure from the U.S.?
Ambassador Lyman. I think there is no question, Mr.
Chairman, that without extraordinary U.S. efforts and pressure
this would not have been accomplished. I think that the U.S.
has unquestionably been the leader in getting these reforms. No
question about it.
On the other hand, there is also a negative side to it in
that there is a very strong feeling, including among some of
our allies in the reform process, that the United States tends
to be unilateral about it, tends to legislate on commitments
that need to be worked out in the context of the United
Nations, such as on the scale of assessment. So it cuts a
little both ways. But I have to tell you, Mr. Chairman, I
agree, there is no question that without the strong pressure
from the United States, and I mean both the Congress and the
administration, we would not be where we are today.
Senator Grams. In fiscal year 1997 Congress did appropriate
$50 million to begin repaying some of the peacekeeping arrears.
However the payment was conditioned on at least two of the
following three reforms being achieved. One would be the
savings of at least $100 million in the expenses of certain
U.N. divisions and activities. Two, a reduction of 10 percent
in the number of U.N. staff. Or three, the adoption by the U.N.
of a budget outline for the 1998-1999 biennium that was below
the current no growth budget for 1996-1997. So although we are
now almost halfway through the fiscal year 1997, the $50
million still has not been released, pre-
sumably, because the administration cannot certify that the
above reforms have been achieved.
Ambassador Lyman, can you give us an update on the status
of the certification that would be able to release the $50
million? What are some of the specific problems making the
certification yet to this point?
Ambassador Lyman. I am glad you raised that, Senator. We
take these certifications very, very seriously, and we look at
them with a great deal of attention, including all our lawyers.
We have just sent up to the Congress our certification
determination on the inspector general's office, which was also
in the legislation. We wanted to be very, very careful in that
case that we had indeed satisfied ourselves that the terms of
the legislation were met.
I am very confident we are going to be able to meet the
terms with regard to the $50 million, particularly the latter
two of the three that you mentioned. As you know, we have been
working very hard to get detailed figures on staffing, which we
just got yesterday, and that is going to help us greatly on one
of those. The budget outline has been submitted but we have to
see the recosting of it to get the final costs of it. I am
confident that we will be able to meet those criteria, but I
want to be absolutely certain and on very solid ground before I
recommend to the Secretary.
Senator Grams. In another area, on U.N. tax credit, kind of
controversial, but in the State Department's budget request the
administration is utilizing a U.N. tax credit of $27 million
from the 1994-1995 biennium. Those dollars are being used to
offset new U.S. contributions to the U.N. for fiscal year 1998.
Now, that is kind of complicated for me anyway, but can you
explain exactly how this U.N. tax credit, how the procedure
works and why this credit is left over from the 1994-1995
biennium?
Ambassador Lyman. Boy, I was afraid you would ask about
that. That is one of the most complicated things in this whole
business. In essence what the U.N. does is reimburse employees
of countries who require their citizens to pay income taxes,
because in general international employees do not. So what they
do is estimate the amount that they would have to reimburse the
American employees for their payment of income taxes, and put
aside funding for that from our contribution.
What happened in this case is that after the fact they
discovered that they set aside much too much money, and they
have now said they have $27 million in excess. They wanted to
apply that to our arrears. We said no, we would rather use it
to reduce our assessment, and we want to deal with the arrears
question in the way we have. So that is the way it works.
It is not a happy situation. We do not like this whole set-
up. To change it we have to work with our Internal Revenue
Service on a different way of doing it. We are engaged with
them on that, and it is one of the things we hope to work on
over the next year.
Senator Grams. Why not apply it to the arrears rather than
future contributions?
Ambassador Lyman. Well, because we thought in the first
instance we would be able to reduce our request for this fiscal
year and second, we wanted to deal with the arrears, as we said
before, in the context of getting changes in the way we are
financed across the board in the U.N. as part of this overall
package. We felt that it was best to not apply that to arrears,
but to just reduce our requirements for this year. It could
have gone either way, but we just felt this was better.
Senator Grams. In February of this year, two officials with
the Rwandan war criminals tribunal were forced to resign after
the U.N. office of Internal Oversight Services, the OIOS, found
serious problems in the operation of their offices. Do you know
what other actions have been taken to address the serious
management and operational difficulties at the tribunal at all?
Ambassador Lyman. Yes. They have put new people in charge
there of those operations. Two senior officials have been
dismissed. I think there are further actions being studied
which have not been announced yet. I think that is a good
example of why it was so important to get an independent
inspector general function into the United Nations. I do not
know what further steps, whether restitution or other things
are being pursued, and I will try and get you that information.
[The following material was subsequently supplied for the
hearing record by Ambassador Lyman.]
Upon the issuance of the report by the UN Office of
Internal Oversight Services (0105), Secretary-General Kofi
Annan stated that he is ``committed to closing the gap
identified by the 0105 and taking all required measures to
streamline and strengthen the Secretariat's support to the
Tribunal.'' The 0105 report made 26 recommendations for
improving the functions of the ICTR. Certain of the
recommendations, such as appointment of a new Registrar and a
new Deputy Registrar, have already been completed. The report
also recommended selection of a qualified Deputy Prosecutor,
and we are aware that Chief Prosecutor Louise Arbour is close
to making her selection to fill this key post. She is also
visiting the region frequently and reviewing prosecution
strategy.
Previously, no single Department of the UN Secretariat had
been assigned to oversee the Tribunal's operations. The 0105
report recommended that the UN Department of Administration and
Management be designated as the lead department in the UN
Secretariat to support and monitor the Tribunal's operations.
The U.S. mission to the UN is having meetings with
appropriate UN Officials to impress upon them that, in addition
to implementing other 0105 recommendations, the Department of
Administration and Management must carry out this
responsibility completely, intensively, and on a sustained
basis.
The OIOS has committed to conduct a follow-up review in the
areas where serious problems were noted. This review is
scheduled to take place in the second quarter of 1997.
Senator Grams. But right now do you feel the U.S., or maybe
the U.N. are confident that the Rwandan tribunal is now
competent to deal with the crimes that it is investigating?
Ambassador Lyman. I think so, and at least we have put an
end to what was going on before and we have got better people
out there to do these functions. You know, it comes at a very
sensitive time because the trials are beginning, and they are
very important trials of people accused of genocide. So it came
at a terrible time. They work under very difficult conditions
in Arusma They work under much more difficult conditions
physically than in The Hague. But I think the Secretary General
has acted very quickly. He wants to put this on a very sound
basis.
I will get you updated information as we get it on what is
being done.
Senator Grams. Thank you very much, Mr. Lyman. Senator
Feinstein.
Senator Feinstein. Thank you very much, Mr. Chairman.
I am glad you mentioned Rwanda and the war crimes
tribunals. I have had real concern, Mr. Lyman, for some time,
particularly with respect to Bosnia. I gather in Bosnia there
have been some 75 people who are wanted for prosecution in The
Hague for war crimes, and I cannot remember the exact figure,
like 5 or 6 delivered.
To those of us that happen to be women, and I have
discussed this with women of both political parties in the
Senate, I think it is fair to say that we feel very strongly
that these people should be brought to justice. This is the
first, well, not the first time, but a major instance where
rape was used as an instrument of war, and to let people get
away with this I find is most obnoxious and unacceptable.
I notice this small amount in the budget of $6.2 million
for Bosnia and $6.2 for Rwanda. How exactly is this money used?
Where does the money come from for the exhuming of graves? Many
of us would like to see the situation in Srebrenica, where
there are still some 6,000 or 7,000 people missing, resolved.
Could you explain how this part of that budget works, and how
we can have some confidence that these war crimes criminals are
going to be brought to justice, and that these graves are going
to get exhumed?
Ambassador Lyman. Well, on the funding, the tribunals are
funded in an unusual way. They are funded half through the
peacekeeping assessment and half out of the regular U.N.
budget. It just happens to be the way in which the tribunals
got started. We fully fund our share in both cases, both
through the regular budget and through the peacekeeping.
Funding is not a major problem for the tribunal. I might add
that we have seconded expert staff to the tribunal.
Senator Feinstein. So what you are saying is there is
adequate money.
Ambassador Lyman. There is adequate money. The problem is
more in access and, of course most of all, the cooperation of
the parties in turning over those who are indicted.
This is of major concern to us. Cooperation with the
tribunal was written into the Dayton Accords. It continues to
be a major concern on our part. I know the administration is
giving a lot of thought to how to have this more fully
implemented.
I might say, you point out something very, very important.
I discussed this question with Justice Goldstone, who was the
first prosecutor and whom I had known in South Africa, and he
felt too that it was extremely important that the tribunal had
identified and made this kind of terrible rape a war crime.
That had never been done before; now that the tribunal has so
designated it people can be indicted on that basis and brought
to justice.
There is a lot of thought and work going on, which I can
have briefed to you, on what we believe can be done to get the
war crimes aspects of Dayton fully implemented. But it is not a
funding problem. It is much more a political problem.
Senator Feinstein. This is just my feelings, Mr. Chairman,
but I am going to express them not being terribly reserved. In
some way aid development help really ought to be conditioned on
the turning over of war crimes criminals. If we cannot do it in
this sit-
uation, think of what the future could portend. The atrocities
that were committed, I mean, I really thought that the whole
world learned from World War II. If anything, what this war
points out is that the world did not learn at all. I think what
some of the situations in African countries point out is that
the world did not really learn at all. So I think those of us
that really believe that there has to be some morality, some
responsibility for that morality in the world, this becomes a
very important focus. I really want to stress that.
Ambassador Lyman. Senator, you are absolutely right. Not
only is it a moral necessity, but there is no way to end this
kind of enmity and conflict if there is not some justice. If
people do not feel, for example in Rwanda or in Bosnia, that
there is culpability and justice, then what will happen is a
thirst for revenge will fester and fester and manifest itself
in a worse way. So it is not only a moral necessity, which it
is, but it is also necessary to take this kind of a conflict
out of the revenge-counter revenge cycle, and get at it into a
way that people do not continue to carry out this kind of
thing.
Senator Feinstein. Are we pushing for more exhumation of
graves?
Ambassador Lyman. I will have to get an answer from our
people who work directly on Bosnia on that, but I will get you
an answer on that.
Senator Feinstein. I would appreciate it if you would.
[The following material was subsequently supplied for the
hearing record by Ambassador Lyman.]
Under the auspices of the Office of the High Representative
(OHR), the Bosnian parties have agreed on an exhumations
program which will commence in a few weeks. The U.S. Government
is supporting the program by providing demining assistance. We
see exhumations as a confidence-building measure among the
parties.
Senator Feinstein. There is one other area that I wanted to
ask you about, and it has to do with Afghanistan. I have
watched this, and it is just one horror story after another. I
believe that since 1979 more than a million of Afghanistan's 16
million inhabitants have been killed, and millions more have
become refugees. Kabul has virtually been obliterated by
factional fighting, with over 45,000 civilians killed, almost
every prominent building is either destroyed or damaged.
Now, with the ascendancy of the Taliban, Afghanistan really
is going through a new conflict. Some say it is true Islam,
others say it is rampant abuse of human rights, with the women
of Afghanistan really becoming the latest victims. Could you
provide us with more detail on exactly the contours of a United
Nations led peacekeeping mission in Afghanistan? What it might
look like, what sort of plans are being used to provide you
with the means to estimate the costs of the operation? Beyond
the $15 million requested in this budget, would there be any
additional U.S. obligations or involvement?
Ambassador Lyman. Senator, I share your horror at what has
been happening in Afghanistan over these many years. We put in
a budgetary request for Afghanistan on the hope and possibility
that the conditions would be right some time during the coming
year for the U.N. to play a peacekeeping role. But one thing we
have learned painfully over the last few years is the only time
a U.N. peacekeeping force or presence is effective is where the
parties have come to an agreement that they want peace, and
where the U.N. is therefore an effective bolster to that
process, and there is a political process going on to resolve
the issues.
Those conditions do not exist today in Afghanistan, and
without them, putting in a U.N. peacekeeping would be like the
terrible things we saw in Bosnia when the U.N. went in when
there was no peace. But there is a U.N. envoy and there are
lots of other efforts going on trying to get to that point,
either because the parties get exhausted from fighting or
because they realize there is no military solution or because
moderates who feel that enough is enough decide that it is time
to have a process and to stop the fighting. At that point we
hope the U.N. can indeed play a role.
We have done very rough estimates here, and they are not
based on any detailed planning from the United Nations, because
we are not at the point where we have the conditions to say OK,
here is what the parties are ready to do, here is the kind of
peace process they are willing to engage in, and here is what
the U.N. specifically has to do, whether it is to observe,
whether it is to walk a line, et cetera. Until we get to that
kind of a point, I am afraid we do not have those details. But
as soon as we think that is possible we will start consulting
with the Congress on it. For now, the efforts are
overwhelmingly on the diplomatic side to bring about those
conditions.
Senator Grams. Thank you, Mr. Lyman. We will move onto
another round of questions here while the Senator gets a drink.
Duplication among some of the international organizations is
what I would like to focus on, and to refer back to the fiscal
1998 budget, the State Department is requesting contributions
of $50 million for the Pan American Health Organization, which
is an inter-American organization, and then another $107
million for the World Health Organization, which is a U.N.
specialized agency.
Can you explain the relationship between these two
organizations in the funding requests?
Ambassador Lyman. The Pan American Health Organization
precedes the U.N. it was created earlier and was in existence
when WHO was created. The agreement was that the Pan American
Health Organization, in addition to its original role, would
also serve as the regional arm of WHO. But when the Pan
American Health Organization puts together its budget, it does
so based on the contributions that come through the inter-
American system and a contribution from WHO, and presents a
single budget to the board. So we are able to look at that
budget in terms of what we contribute to each organization.
PAHO has been very well run. I have to say much better run
than WHO is right now. It has been doing some very fine things
in the Americas. There is a worldwide campaign, as you know, to
stamp out polio. Already the transmission has been stopped in
the Americas. No measles cases have come into the United States
in the last year from other parts of the Americas. So it is a
good operation.
But there too we are going to call for some budget
reductions.
Senator Grams. Has there been any concern by the U.S. of
any overlaps of the two organizations? And if so what has been
done, are efforts made there?
Ambassador Lyman. We do it by looking at the total budget
which incorporates both the contributions to the inter-American
system and the WHO, so that in effect anything that is carried
out in the Americas from WHO is really carried out through
PAHO. They are the arm. So by looking at the PAHO budget,
examining it, seeing what it is doing, we get a handle on what
WHO does in the region.
As I said, their budget is more transparent than the WHO
central budget. They are better managed. And therefore we have
a better understanding of where there is duplication or overlap
or just not lack of prioritization. We have lots of problems
with WHO on this.
Senator Grams. I guess the obvious question would be why
are they not just merged, consolidated?
Ambassador Lyman. Well, in effect they are because PAHO is
the entity.
Senator Grams. But with separate budgets.
Ambassador Lyman. They get a contribution from the central
budget, but the larger part of their budget comes through the
inter-American process.
Senator Grams. Are there any other reforms that the U.S. is
looking at as far as PAHO goes that you would like to highlight
or talk about?
Ambassador Lyman. I think in PAHO and in WHO in general we
are arguing for much more prioritization. In health you can
look at almost everything, and we are saying, you know, there
are some things that PAHO and WHO do not have to look at.
Therefore we think by focussing on the most prominent disease
threats PAHO could reduce its staff somewhat, reduce some of
its studies and concentrate on things like measles, like polio,
et cetera, and in their strengthening country capacities to
carry out these programs. That is why--with that and some
management improvements--we are calling for a 5 percent
reduction in their budget.
Senator Grams. Other international organizations in the
question of duplication, again I will go back to the fiscal
1998 budget which requests contributions of $17 million for
what is called the Inter-American Institute for Cooperation on
Agriculture, and $81 million for the Food and Agricultural
Organization, which you highlighted, the FAO. Again, one is an
inter-American organization and one is a U.N. specialized
organization, both having the same goals.
Could you explain again the relationship between the two,
and if there are any U.S. concerns over the overlap of
responsibilities or services?
Ambassador Lyman. Where the overlap comes is in a problem
we have with some of the specialized agencies. In other words,
we think an organization like FAO ought to concentrate on
establishing norms, setting standards, providing a scientific
and professional basis for trade and agriculture for problems
of food security, et cetera, and should be less of an
operational, technical assistance agency. FAO, because most of
its members are developing country members, is under pressure
to do a lot of technical assistance as well as these other
things, and that is one of our problems in the FAO because then
it ends up duplicating UNDP or the World Bank or the Inter-
American Development Bank.
The IICA in our view can focus best on issues particularly
in the Americas of producing better trade in agriculture,
better development of seeds and testing, and things that
facilitate growth of agricultural trade and development in the
Americas. It is a very country-specific and region-specific
organization.
There are problems of overlap, and it is part of the reform
we are pushing in this organization and in FAO exactly along
the lines you have suggested.
Senator Grams. Again, the question is why not
consolidation, where both sides could work for a mutual goal,
still having their specialties but under one set of
administration, so to speak, and be able to downsize?
Ambassador Lyman. I think some of the Latin American
countries would probably prefer to have FAO consolidated in
IICA than the other way around. Your point is very well taken,
and we will pursue that further, Mr. Chairman.
Senator Grams. Going back to the World Health Organization,
I had another question I would like to ask on that. Again, a
February 1997 GAO report indicated that WHO trails other
agencies in management and budgetary reforms. I think you have
kind of alluded to maybe not as good as PAHO. But according to
the report the U.S. and others have urged the organization to
eliminate non-priority programs to bring the budget in line
with available resources. Instead of eliminating non-priority
activities to meet shortfalls caused by late or non-payment of
regular budget assessments in 1995, WHO froze 10 percent of the
budget program. In addition GAO reports that from 1991 to 1995
the number of senior level promotions given by WHO's director
general have increased. Senior level ungraded posts increased
by 23 percent, and also other senior level graded posts
increased by 16 percent.
So, should the U.S. pay its arrears to WHO if reforms to
correct these kinds of problems are not implemented?
Ambassador Lyman. Mr. Chairman, as I mentioned before, we
have serious, serious management problems at WHO, and we feel
very strongly, and we make no secret of it, that it needs new
leadership. Some of the reforms--most of the reforms--probably
are not going to be implemented until we get new leadership.
Here is one of the most distinguished, and should be one of the
most revered organizations in the international system, with a
history of achievement and importance, but quite frankly the
very things you have mentioned have bothered us.
We are not getting the shifting of resources into the
priority programs. We are not getting the staffing transparency
that we want or the allocation of staff that we want.
What some other donors have done, because they feel
differently than we do about assessed contributions--they do
not feel that they can withhold those under treaty provisions--
but some of the other donors cut back their voluntary
contributions. For example, a year ago Denmark, which is a
major contributor in foreign aid, cut its voluntary
contributions to WHO by 50 percent in order to get cer-
tain reforms. One of the other Scandinavian countries did the
same. And they got the reforms in those programs they were
working on. We have talked to them about this question and they
said well, they do not believe in doing that with assessed
contributions but they agree with us on WHO reform.
With an eye to the general assembly of WHO, the World
Health Assembly in May, we have already started demanding not
only budget reductions but a much more transparent budget. We
are going to keep fighting for that. There is a lot of
resistance for a lot of reasons, but I think we are building up
support. Quite frankly, I think we need new leadership to get
the full range of reforms we want.
Senator Grams. Some of the concern has been we are facing
these budget restraints and the reforms have not been coming.
Full funding of WHO, how would that lead to reform?
Ambassador Lyman. WHO has done something we do not like,
and we have raised this throughout the U.N. system. When they
have shortfalls they borrow internally, including from their
own pension fund. It is not a way to deal with financing. It is
not a way to deal with budget transparency, and that is another
complaint we have had and one of the reasons we have argued for
a different approach to the budgeting in WHO.
Senator Grams. The U.S. has completely withdrawn from some
agencies. An example is the United Nations Industrial
Development Organization. We withdrew at the end of 1996. Could
you explain the reasons for the U.S. withdrawal from this
organization?
Ambassador Lyman. We have a lot of problems with UNIDO for
two basic reasons. One, we did not think it was terribly well
managed, and second, we did not think it deserved to continue
to operate as a separate entity.
One of the things I think we have all learned is that when
it comes to industrial development, the private sector plays
the major role and should play the major role. Where assistance
can be useful is in developing the laws, the framework, et
cetera, to allow private investment to flourish. And there are
other aspects of training, et cetera, that could be valuable.
We did not think UNIDO was therefore playing a role that
justified this kind of assistance and we withdrew because we
were not getting the changes we wanted. Other donors to UNIDO
feel very much the same way. They are debating now a number of
things, either reform of the entity or its being folded into
another organization. Some people want to fold it into UNCTAD
so it is strictly related to policy and training; others want
to fold it into UNDP for technical assistance purposes. We are
not party to that discussion anymore because we are not there.
The treaty required that we pay the following year's dues
when we withdrew. We have not done so. Congress has not
permitted us to do so. But even if you abolish the
organization, some of the other donors pointed out, you have
got to fund out the pension plan; and if the U. S. does not
make its last contribution we all get stuck with it. So we do
owe that money, but I think there is a lot of feeling that
UNIDO is not carrying out a function of the kind that was
originally intended and which is as relevant today.
Senator Grams. I think you have half answered my follow up
on that. The administration is asking, I believe it is for $68
million to fund an organization that we have pulled out of.
Again, why should we fund this? But maybe you can elaborate on
that.
Ambassador Lyman. The agreement governing UNIDO, to which
we were a party--and this is true of most of the U.N.
organizations--says that if you withdraw from the organization
it takes effect at a certain date but you are obligated to pay
that and the following year's dues. So we owed them the
following year's dues and there was a shortfall from the
previous year, and that is what adds up to this. So by the
agreement we entered into when we joined UNIDO we are obligated
to pay those funds even though we withdrew. Congress put a
prohibition on doing so last year, but we feel that we should
come back because we will not get that wiped off the books as
arrears because it is clearly part of the obligation when we
joined.
Senator Grams. So even if the organization was disbanded,
the obligations would still be there in some respects?
Ambassador Lyman. The obligations would still be there, and
as I mentioned, some of the people I have talked to who are
thinking of abolishing it are worried about how one takes care
of things like pension funds, et cetera.
Senator Grams. In addition to that organization, UNIDO, the
U.S. also withdrew from the Pan American Railway Congress
Association and the World Tourism Organization. Again, can you
outline the reasons for the U.S. decisions to withdraw from
these organizations?
Ambassador Lyman. Well, we took a look at all the
international organizations to which we belong--and you made a
very good comment in your opening remarks about the number of
such organizations of which we are members. We did two things:
We prioritized them, and then we looked at ones that really did
not serve American interests enough to be worthwhile. We did
not think either of those organizations served significant
enough interests to stay in them.
Tourism issues can be taken care of much better in other
forums, and frankly I do not think anybody is going to miss our
participation in the railway commission.
We looked at the other smaller organizations that deal with
highly specialized parts of our economy or trade or law. In
those areas they are very, very important, but we needed to
prioritize them since last year Congress's appropriation was
$85 million short of our total assessments. So we took the
priorities and we said OK, there are certain organizations for
which we will make no cuts, like NATO, et cetera. Then there
are others which are of very special importance to the United
States because they touch a lot of Americans in a very
significant way or they are very close to our region, like OAS,
OECD--we will cut them a little. And then for the other
organizations we will hold back even more. Now, we buildup
arrears in doing that, but we took the largest percentage cuts
in the category that we felt had very specialized but not very
broad scale interest.
We are continuing to look at this list, and have to
continue to evaluate whether we should stay in each and every
one of the orga-
nizations. For each one there is a constituency, but we have to
decide whether that is a significant enough interest for the
United States, for taxpayers' funding.
Senator Grams. So in other words of all the organizations
we still are members of, this prioritization is going on and
assessment is being made on whether we are going to remain or
maybe the possibility of withdrawing from some others?
Ambassador Lyman. You are exactly right.
Senator Grams. Outside of the U.N. system the largest
amount of funding for arrears that the administration has
requested is a line of $24 million for OAS, the Organization of
American States, an inter-American body. Since the U.S. already
pays for almost 60 percent of the OAS budget, the sum of which
I guess totals $53 million in fiscal year 1998, how can the
arrears really affect our influence within that organization?
Ambassador Lyman. Well, I think we are, as you point out,
paying close to 60 percent. We obviously play a major role.
What happens when you fall into arrears is you do not
immediately lose influence in that sense. You do create some
resentment because people feel it is an obligation and they
worry that we are setting a precedent that individual countries
can decide yes or no, whether, when, where they want to pay
their obligations. We remain a major player in the OAS. I think
the issue about arrears in this case is more that this
organization is important and it does good work, and that when
we fall into arrears there are some things that the OAS is just
not going to be able to do.
OAS has really come a long way in being an important force
for democracy and human rights in Latin America in a way that
just was not true 10 or 15 years ago. It has played a very
important role in preventing reversals of democracy in places
like Paraguay or Haiti or Peru. Now it is focussing more on the
agenda of the Summit of the Americas to produce more trade,
more economic development, more markets. So the real problem
with the arrears is just reducing the amount that the OAS can
do. I cannot say honestly that at this point it is curbing our
influence.
Senator Grams. When we talk about assessments versus
voluntary participation, and again I will go back, we have 49
international organizations for which the President is
requesting assessed contributions. The U.S. participates in
dozens of international organizations programs that it funds on
a voluntary basis. Last year, just to throw some figures out,
those voluntary contributions totaled $267 million, which the
U.S. thought was important to be a part of, to support and to
help, and that included donations to such programs as UNICEF,
the U.N. High Commissioner for Refugees, et cetera. As you
know, your predecessor, Mr. Bolton, had recommended that the
U.S. consider moving to a more voluntary agreement for many of
the organizations to which we currently must make those
assessed contributions.
I guess the question would be if we went to more of a
voluntary system would it create more of a free market type of
an attitude in which contributions were directly linked to the
performance of the organization? In other words, try and get
them to respond to the most important part, and that is to
donations. So would it help, would it be a good idea to
increase this and be more accountable to the taxpayers, again
looking for the results from these agencies?
Ambassador Lyman. Well, the assessed contributions are for
the maintenance of an organization in general, which does not
necessarily cover assistance programs for example, but does
include, like in WHO's case or FAO's case, setting norms,
standards, et cetera. These functions require a constant
infrastructure of expertise. There is a very strong feeling
within the U.N. that you need a base of assessed contributions
to maintain that structure.
On the other hand, we have taken the position that in major
assistance programs, whether humanitarian or development, we
want to do those on a voluntary basis. So UNDP, UNICEF, et
cetera, are done by agreement on a voluntary basis. That is the
distinction we have made, giving our country and others the
right to judge whether a particular assistance program is a
good one, is in our interest, and is well run.
But if you applied that approach to many of these
organizations, their very future would be uncertain. The
ability to keep a certain minimum staff, to maintain a basic
set of ongoing operations would always be subject to up and
down fluctuations. I think we would get tremendous resistance
from the other countries if we tried to move many of these
particular organizations in that direction.
Many other countries prefer the assessed system anyway. But
I think it is more because of the need for a certain base
infrastructure that has to be predictable.
Senator Grams. Would it not mean that the well run and the
well producing agencies would always get the funding, and that
would be the incentive?
Ambassador Lyman. That is true, but it may be essential to
keep going even one that is not running as well as you want. I
mentioned how some of the other donors have handled the WHO
problem, for example. They cut the voluntary side but not their
assessed contributions to WHO, and it had some impact. In fact
WHO's voluntary programs are larger than their assessed
programs, because other donors like us make a distinction
between that basic infrastructure, which is to set norms,
standards, et cetera, and carrying out assistance programs
overseas on which donors should make individual decisions.
Because you enter into an agreement at the beginning to
provide a certain base contribution on a regular basis, that is
the way almost all of these organizations are set up. I think
we would get very great resistance trying to change that.
Senator Grams. One of the biggest areas of concern of
course has been peacekeeping contributions. Many Senators will
note that the President's request for U.S. contributions to
international peacekeeping activities has gone down to $240
million, and I think that is from $304 million in fiscal 1997,
excluding the proposed arrearage payments. Moreover, this is
significantly less than the U.S. contribution of over $1
billion as recently as back in fiscal year 1994. As you know,
the U.S. unilaterally lowered the U.N. peacekeeping assessments
from 35 to 21 percent, and that was done in 1994. The law
passed, then by a Democratic controlled Congress, and was
signed into law by President Clinton.
The question is, Ambassador Lyman, do you think this action
by the U.S. has caused the U.N. and also some of its member
states to think more carefully about what peacekeeping
operations they initiate, and then to calculate and to try and
determine how much they are going to cost in advance? So again,
has this not been a move to try to reign in some of these
budgetary questions?
Ambassador Lyman. I think, Senator, that what has motivated
the U.N. the most to reevaluate peacekeeping operations much
more carefully were the failures in Bosnia and Somalia and
Rwanda. There was recognition that all of the members were
attempting to put peacekeeping operations in place of political
settlement, if you will, to try to put in peacekeeping where
there was no peace. Out of that came a very extensive internal
study in the United States, and most of the principles that
came out of that study have now been adopted by the Security
Council itself and its peacekeeping office--principles such as
looking very, very carefully at the mission, its
appropriateness, its size, and its cost before you commit. I
think that sobering experience has had more to do with it,
frankly, than the change in our contribution.
What has caused a problem from the contribution side--not
so much the reduction to 25 percent as the general arrears--is
that peacekeeping nations are not being paid. This creates a
problem in recruiting peacekeeping nations in the future.
I think we all learned a lesson, and I think the
consultation process that Congress has called upon us to do and
which we have been carrying out has been very helpful to us. It
gives us the chance to discuss peacekeeping operations--we
meet, as you know, with the staffs once a month for a review--
and then we formally notify Congress in advance of any new or
expanded peacekeeping mission. I think it has given us all a
chance to look much, much more carefully at these operations.
Senator Grams. Just a couple of quick questions before we
adjourn, one dealing with Haiti and another with Africa. On
Haiti, the administration is required by statute to brief the
Foreign Relations Committee monthly on U.N. peacekeeping
missions around the world, and during the December 1996
briefing of the committee the State Department officials
informed the committee that the Security Council had renewed
the U.N. special mission in Haiti, but it also added that the
council did decide this would be the final extension of the
Haiti mission, so this operation would end no later than July
1997.
The President has not requested any fiscal 1998 funds for
peacekeeping in Haiti, yet during the March 1997 peacekeeping
brief the administration did inform the committee that
consultations currently are underway to create a third mission
for Haiti, so that would thereby extend the U.N. presence
there.
Ambassador Lyman, does the President's fiscal year 1998
budget request accurately reflect the administration's current
consultations at the U.N.? And how does the administration, how
would it intend to pay for any follow up mission in this
regard?
Ambassador Lyman. It is a very good question, Senator. This
is a difficulty in so many of these peacekeeping operations.
You always have to look at the situation on the ground and make
sure not only that you have examined the appropriateness to
start with, but that the exit strategy is right in terms of the
objectives. In the case of Haiti we had a lot of opposition
from some members of the Security Council to continuing the
operation at all, and the agreement was to make it final. But
there is a feeling that some kind of international presence,
although not the same structure, is going to be needed when
this present operation ends.
What the form of that will be is still very unclear within
the U.N. and in our own discussions. If there is a follow on,
and if it is under U.N. auspices, there are two ways it might
be financed. It might be financed still in fiscal 1997 because
the bills might come in then, or we might have to come to you
with a revision of those estimates in 1998, within the overall
total though, and say look, now we think we need to reprogram
to cover it.
But no decision has been made on that yet. I know that
there have been a lot of discussions, there are still more
visits going on down to Haiti. We will be keeping very closely
in touch with you on what, if any, U.N. presence is going to
follow the July 31 deadline.
Senator Grams. So the administration is not committed then
to an exit date yet out of Haiti?
Ambassador Lyman. We have not made a final decision on what
kind of international presence is appropriate after this
particular presence reaches the July 31 date. A lot of focus is
on the police side; that is where a lot of the attention is
being put.
Senator Grams. On the police?
Ambassador Lyman. On the police.
Senator Grams. Also, in dealing with the Africa issue, in
the fiscal 1998 budget for peacekeeping the President is
requesting $50 million for an African crisis fund. As you know,
the administration created this fund I think last year. It was
appropriated $20 million for peacekeeping efforts in the great
lakes region of Africa, particularly again Rwanda and Burundi.
Ambassador Lyman, the Budget in Brief for fiscal year 1998
indicates that the money will be used for large scale
peacekeeping efforts in the great lakes region. Does the
administration support sending a large scale mission to the
region, and if so, what kind of conditions would have to exist
for the U.S. to support such a mission by the Security Council?
Ambassador Lyman. I am sorry we used that term.
Senator Grams. Which term?
Ambassador Lyman. Large scale. First of all, I think the
Congress was tremendously responsive in putting in the $20
million in 1997. It was an extraordinary act by the Congress.
We were faced at that time with what we thought might be an
immediate and impending crisis in the Great Lakes region which
would require a peacekeeping effort. That has not developed
yet, and we have not drawn on those funds yet, but that
situation remains so delicate and explosive in Burundi in
particular. Now we have this whole new situation in Zaire.
Quite frankly, Senator, we have been looking very hard at
this issue. There are very different opinions in the
international arena about how the U.N. might play a role in
this. We continue to feel, as we do in general, that you do not
structure an operation in that area of that kind unless you
have some framework, some political framework and some process
of cease-fire and political movement. You cannot just put a
peacekeeping operation in the middle of a civil war.
We are very concerned about the humanitarian circumstances.
We are working very closely with UNHCR to see if they can get
to those refugees without the need for a force to do it.
When you look at Zaire and you look at the size of that
territory, I think we feel very strongly you cannot just assume
that you can put in enough forces to monitor the whole country.
So what we are looking at is first of all the political
process, to get stabilization of that situation politically, so
that the sides are ready to talk about peace and about a
political process, in which the United Nations, beyond its
diplomatic efforts, can play a role. Then we would look very,
very carefully at the most practical way in which the U.N. and/
or others could reinforce that process; but we would not be
looking at it in a massive, large scale way. We do not think
that makes a lot of sense at all.
It is too early to give you details, because we do not
really have them. That is why I said I am sorry about that
term, large scale. The shape of this is still yet to be seen,
and we have to think of not only the Zaire case but the still
very dangerous situation in Burundi. But we do not have
specifics, we are not ready to even agree that a force should
be put there, and we just have to stay very, very closely in
touch with you on a regular basis.
Senator Grams. If no money has been drawn on the account
yet, the $20 million, and another $50 million being requested,
is this going to be used as some kind of a slush fund for
activities in Africa like Angola, et cetera? You mentioned
Zaire.
Ambassador Lyman. No reprogramming nor other use of that
fund will be made without consultation with Congress. That is
clear and certain on our part. This year we may still have some
use for that fund. There is an operation possible in Sierra
Leone, but again the conditions are not yet right. But most
likely of all, we could have the conditions for doing something
in the Great Lakes region before this fiscal year is out.
I am glad we have not spent the $20 million without the
right conditions, quite frankly. We will not use it as a slush
fund. We will come to you whenever we think the conditions are
right for spending that in an appropriate way.
Senator Grams. One final question, I would just like to
know how long did it take to learn all the acronyms for all
these programs, and do you have them all down pat now? You have
done a good job.
Ambassador Lyman. I am glad you did not quiz me on it. It
has taken a long time.
Senator Grams. You have done a great job on it. Thank you.
Finally, I just want to ask unanimous consent that this
hearing's record be kept open again for 3 business days, and
that is to allow for any further questions by any member of the
Foreign Relations Committee or this subcommittee to submit to
you in writing any questions. Again, Mr. Lyman, I do not
believe these written questions will be unreasonable. In view
of the fact that the Foreign Relations Committee is again
preparing the State Department Authorization Bill. Again I
would just ask you, can you assure me that you will do your
best to have them back within a week of receiving these?
Ambassador Lyman. We will do so, Mr. Chairman.
Senator Grams. Thank you very much again, Mr. Lyman. Thank
you for your time today. I want to thank you for all of your
answers.
Ambassador Lyman. Thank you.
Senator Grams. The committee stands adjourned.
[Whereupon, at 12:44 p.m., the hearing was adjourned, to
reconvene at 10:05 a.m., April 9, 1997.]
MULTILATERAL DEVELOPMENT BANK FUNDING REQUEST FOR FISCAL YEAR 1998
----------
WEDNESDAY, APRIL 9, 1997
U.S. Senate,
Subcommittee on International Economic
Policy, Export and Trade Promotion,
of the Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m. in
room SD-419, Dirksen Senate Office Building, Hon. Chuck Hagel,
(chairman of the subcommittee), presiding.
Present: Senators Hagel and Sarbanes.
Senator Hagel. The committee will come to order.
Today the subcommittee meets to receive testimony in
support of the President's Fiscal Year 1998 budget request for
multilateral development banks.
We are pleased to have with us the Deputy Secretary of the
Treasury, Hon. Larry Summers.
Secretary Summers, welcome. It is nice to have you.
The President's 1998 request for the multilateral banks
totals $1.5 billion. This amounts to $583 million more than
Congress appropriated for Fiscal Year 1997, and $143 million
more than the President's Fiscal Year 1997 request.
Secretary Summers, you and I had an opportunity to meet in
my office a little earlier this morning and I appreciated that
opportunity because we were able to talk a little bit about
your assignment and what we hope to accomplish this morning.
This is a challenging time for you, for all of us, as we
prioritize resources. And I really do, as I said in the meeting
this morning, look forward to understanding in more detail, as
I am sure that the committee does, what your thoughts are, as
well as the Secretary's, as to what we want to do and what we
want to accomplish as we go forward into the next fiscal year.
Most Americans and many Members of Congress do not accept
the notion that the foreign aid budget must be increased at a
time when our Nation is $5.4 trillion in debt and is running an
almost $200 billion annual deficit.
I appreciate that this administration has negotiated new
replenishments with various multilateral institutions and I
suspect my colleagues are grateful for that as well. These
replenishments are 40 percent lower than in previous years, as
we discussed. But the President's budget will face a bumpy road
ahead. Given our Nation's enormous debt and deficit and given
that the World Bank has just celebrated its 50th anniversary,
it seems to me, and I sus-
pect to many of my colleagues, that we must reassess our
Nation's role in these institutions to determine if they are
worthy of U.S. support into the next century.
Again, we were able to talk a little bit about that this
morning. As I said to you, Mr. Secretary, I certainly did not
come to the U.S. Senate to defend the status quo. Let's look at
all our programs, all our resources. Let's prioritize them,
let's sort out what works and what does not work. I think along
with that we will, and should, develop some confidence in the
American public and within the American public, which is, after
all, the taxpayer and the bill payer for all of this. We want
them with us as we go forward and use this money in efficient
and effective ways.
The United States should participate in multilateral
lending institutions -- the World Bank, IDA, and the other
regional banks -- only if they can demonstrate tangible,
positive effects on the lives of Americans and only if we have
the ability to stop loans which run counter to U.S. economic
and security goals.
The first question we should ask is do these banks further
U.S. national interests and bring stability, democracy, and
respect for human rights to the developing world. Often they do
not. Many times they do. Let me cite a few examples. I cite
these, Mr. Secretary, for the record. You have been up here
many times and you know the drill around here. We do things for
the record. Then we can get into some serious dialog.
Syria, black listed by the State Department for its support
for international terrorism, received $660 million from the
World Bank. Mauritania received $20 million from IDA in 1996.
Meanwhile, the State Department's 1996 human rights report
states, and I quote: ``Mauritanians continue to suffer the
effects of slavery, many years and generations of slavery.''
The people of Somalia and Liberia have watched while their
countries' economies collapsed despite $760 million from IDA.
And, of course, the Government of China, which has received 173
loans from the IBRD and IDA worth more than $25 billion, as we
know, is no champion of democracy or basic human rights and we
should take a careful look in that direction.
Second, we must ask ourselves do the multilateral banks
promote economic growth. Let me again cite for the record some
examples. According to the Heritage Foundation, of the 66
developing countries which have received World Bank loans for
the past 25 years, 37 are no better off today economically than
they were prior to receiving World Bank loans.
The Ivory Coast, which received more World Bank aid than
any other African nation in 1996, has seen its Gross Domestic
Product fall 18 percent since first receiving World Bank aid in
1968. Between 1965 and 1995, Nicaragua received $637 million in
World Bank aid. Meanwhile, its GDP has plummeted by 50 percent
during the same period.
Perhaps as we consider these examples, we will see that
some are exceptions rather than the rule for these institutions
and I am well aware of that. But in any event, literally
billions and billions of American taxpayers' dollars have been
misspent over the years in pursuit of policies at these
institutions that are fundamentally inconsistent with American
interests.
If these organizations claims that they are worthy of
continued United States taxpayer support, they are going to
have to change the way they have traditionally done business in
some respects.
Again, Mr. Secretary, as you and I discussed earlier, I
think we all agree that we want to pursue that and that is in
the interest of all of quite. Quite frankly, it is in the
interest of the recipient nations as well and the people of
those nations.
I look forward to your testimony and I would now like to
say that the ranking minority member, my distinguished
colleague from Maryland, Senator Sarbanes, I think is engaged
in another hearing where I should be. But you take precedence,
Mr. Secretary, so I am going to leave the housing issues of
America at this time to Senator Sarbanes and trust that his
able leadership will see us through this morning. And if he
trusts me to get started, which I understand he does, we will
move forward, sir. I am very, very pleased now to ask you for
your comments.
STATEMENT OF HON. LAWRENCE H. SUMMERS, DEPUTY SECRETARY OF THE
TREASURY
Mr. Summers. Thank you very much, Mr. Chairman. I am
grateful to the close attention that you have paid to a set of
issues that I think are profoundly important to the future of
our country.
In many ways, the most important foreign policy challenge
we face, as the post World War II generation faced the
challenge of containing communism, is addressing the tremendous
change that is taking place in the developing world where five-
sixths of humanity lives and where almost all of the world's
future population growth is going to come.
Differences across the developing world are seismic, with
more than 2 billion people living in countries where standards
of living double within a decade but with hundreds of millions
of other people living in countries that are poorer today than
they were 20 years ago.
Prospects for the United States remaining secure depend
critically on what happens in the developing world and so, too,
the capacity of the United States to remain prosperous. Nearly
42 percent of our exports, nearly $350 billion last year, went
to developing countries. Our exports to the developing
countries of Asia exceed our exports to Japan.
I believe that the international financial institutions are
a central tool of U.S. policy addressing change in the
developing world. That is why I welcome this opportunity to
discuss them today.
I believe that these are extraordinarily cost effective
tools of policy in the sense that they lever U.S. resources in
an extremely efficient way. They lever U.S. resources because
our contributions are pooled with the resources of other
countries, and they lever U.S. resources because, by virtue of
providing loans to other countries rather than grants, we get
something back.
Indeed, the leverage is so profound that the $1.2 billion
of scheduled payments from the United States to the
multilateral development banks give us a profound influence
over some $46 billion of annual development lending that they
undertake each year. This is far more than we can afford to do
bilaterally.
By far, the multilateral development banks are the world's
largest supporters of AIDS programs, child survival programs,
girls' education programs, clean water, and other essential
investments in basic poverty reduction. They are also a
principal tool that we have in seeking to bring about trade
liberalization.
Indeed, it is worth remembering that a large fraction of
the trade liberalization that has taken place in the developing
world has taken place in the context of adjustment programs
supported by the multilateral development banks. Mexico's
tariffs came down from 30 percent and more to 10 percent in the
context of a World Bank structural adjustment program prior to
discussions on NAFTA beginning. India's tariffs were brought
down very dramatically in the context of an IMF/World Bank
program in 1991, following their financial crisis. These kinds
of examples can be multiplied.
The international financial institutions also have a
crucial role in advancing our security interests by supporting
reconstruction in places like Bosnia where the World Bank is
coordinating donor funds, in Russia where the IMF has played a
crucial role in encouraging a process that, while still
incomplete, has produced a sea change in the value of the
Russian currency and a very important disinflation.
In Africa, where the international financial institutions
have struggled, there are some important results. Uganda and
Mozambique have pursued concerted economical forms that have
translated into annual growth rates of nearly 10 percent a
year. Overall, in Africa the growth rate has risen from 1
percent to 4 percent in the last 3 years.
You mentioned in your prepared statement Cote d'Ivoire.
While Cote d'Ivoire has struggled and is, indeed, poorer today
than it was 2 decades ago, in the last year supporting a
vigorous adjustment program, growth in Cote d'Ivoire has
actually come to approach 7 percent.
The many disappointments that we face in the effort to
develop some of the poorest countries should not blind us to
profound progress that has taken place in the last generation.
For IDA countries, countries that are only eligible for
concessional lending, the poorest countries in the world,
standards of living on average have doubled in the last 25
years. Infant mortality rates have declined by nearly 40
percent, fertility rates have declined by nearly 40 percent,
primary education rates have increased by a third, and life
expectancy has increased by 8 years. It is worth putting that
last figure in perspective.
If you eliminated all cancer in the United States, life
expectancy would increase by less than 3 years. So that 8 year
increase represents a substantial achievement in human
development. This is not to say there have not been huge
disappointments, there have not been occasions where resources
have not been used as well or as selectively as they could have
and they should have been.
The United States has an important role in shaping policies
of these institutions to the extent that we are able to meet
our obligations. The IMF is now emphasizing earlier detection
of emerging problems, encouraging countries to cut unproductive
expenditures, and expanding its financial market surveillance.
The World Bank has increased the transparency of its
operation, encouraged much greater participation of affected
peoples in project design, created an independent inspection
panel and auditing department and focused more attention on
basic issues of governance, such as corruption.
The World Bank's reform efforts have culminated in a major
new program recently proposed by President Wolfensohn. Under a
strategic compact, the bank will move staff and decisionmaking
into the field and develop an improved information system so
that organization can better learn from its experience.
The administration supports this effort at reform and we
continue to work with the bank on ways to refine the compact.
Let me say this, Mr. Chairman. I am convinced that
leadership is not free and that we cannot lead with other
people's money. Questions legitimately raised by others
regarding our commitment to these institutions as large arrears
accumulate erode our international influence and our
credibility.
To preserve our capacity to lead, it is essential that we
find a way to pay off our large and persistent arrears to the
multilateral development banks which currently total $862
million. These arrears have accumulated. They are a legacy of
commitments that have been made over many years.
Over the last 4 years, we have negotiated, as you mentioned
in your statement, down the continuing budgetary cost of the
multilateral development banks by 40 percent. In fact, the
total of scheduled commitments of the United States to the
multilateral development banks is now less than the annual
commitment just to the IDA program that was entered into by
President Bush and his administration. And yet, our failure to
meet even these reduced commitments calls into question our
commitment to the international system. We are at a critical
point in our relationship with other donors and with these
institutions. Our $1.56 billion request for the MDB's therefore
includes $314 million as the first of 3 installments to clear
our arrears by the year 2000.
Let me just in conclusion spend a couple of minutes ticking
off the specific authorizations we are seeking.
For the IMF, we are requesting approximately $3.4 billion
for U.S. participation in the new arrangement to borrow. This
action, which does not have budgetary cost, represents a
contingent set of credit lines to the IMF to deal with
financial crises that could potentially threaten the stability
of the international financial system. It provides us a way of
locking in burden sharing in the event of any future Mexico
type crisis.
IMF members are also reviewing the adequacy of current IMF
quotas which finance the ordinary lending of that institution.
If as a result of that review we believe that an increase in
IMF quotas is needed and we are able to negotiate a
satisfactory agreement, we will propose the Congress authorize
an increase in the U.S. quota. We will consult with Congress as
this review proceeds.
Again, let me emphasize that the administration and the
Congress have agreed for many, many years under administrations
and Congresses of both parties that transfers to the IMF, such
as the new arrangement to borrow and the quota increase, are
treated as exchanges of monetary assets and, therefore, do not
-- do not -- increase the budget deficit.
We are also requesting authorization for the remaining $75
million of the $100 million that we pledged to the ESAF
program, the IMF's program for the poorest countries in 1993.
Let me turn to the multilateral development banks. Our
authorization request for IDA is $1.6 billion, which we have
pledged to fund the 2 year IDA replenishment for Fiscal Year
1998 and 1999. This commitment of $800 million per year is a 36
percent reduction from the $1.25 billion annual IDA 10
contribution negotiated by the Bush administration in 1992.
IDA has improved its effectiveness by increasingly
concentrating on supporting health and institution building and
education, which are building blocks of market led development.
IDA has also -- and this, Mr. Chairman, I think is a crucial
point and one that Secretary Rubin and I have asked our
executive directors in the banks to push -- concentrated on
becoming more selective and focusing resources on those
countries that can use it well. 84 percent of lending over the
last 4 years has gone to countries rated average or above
average in terms of economic reform.
Our second request is for authorization for the final 3
years of the Inter-American Development Bank's eighth capital
increase, agreed to in 1994. This would, at a cost of only $25
million a year to the United States, support $7 billion per
year in lending to our hemisphere.
Third, we are requesting authorization for what we expect
to be an important milestone, a final recapitalization of the
European Bank for Reconstruction and Development. Our request
for $35 million per year for the next 8 years is a 50 percent
reduction from our previous annual commitment and would
represent a terminal capital increase for that bank after which
it would be operate in a fully sustainable way without further
Congressional funding.
Fourth, we are requesting authorization for the Asian
Development Fund, where we have recently concluded a remarkable
successful replenishment agreement despite our $237 million
arrears. This 80F7 agreement incorporates a 41 percent
reduction in the annual U.S. commitment, as well as increased
burden sharing from Asian donors.
Finally, we are requesting $34 million to cover recognizing
the reality of debt reduction costs for the poorest countries
and for Jordan.
Mr. Chairman, as I said in beginning my statement, I
believe that what we do in the developing world will probably
be the most important chapter that we will contribute to
history books a century from now. I believe that these
institutions, because of their leverage, because they take
relatively small sums of American money and are able to do
large things in the developing world, are as potent a tool of
leverage in the developing world as any that we have.
At this point, we face a fundamental choice as a Nation. We
can meet our obligations to these institutions and change them
so they pursue our interests or we can fail to meet our
obligations and allow them to pursue other agendas that may be
much less related to American interests.
So I believe an agenda of meeting our obligations for
bringing about the necessary changes is the right one for this
country, and that is what is reflected in this budget.
Thank you very much.
[The prepared statement of Mr. Summers follows:]
Prepared statement of Mr. Summers
Mr. Chairman, it is a pleasure to testify before you today on the
President's authorization requests for the International Financial
Institutions (IEFIs). I have worked with these institutions for many
years and I am pleased to have the chance to discuss with you how they
serve our interests and how our continued leadership can make them
better.
I will focus my comments today on authorization requests for the
IMF's New Arrangements to Borrow (NAB) and Enhanced Structural
Adjustment Facility (ESAF), on Multilateral Development Bank
authorization requests for the World Bank's International Development
Association (IDA), the European Bank for Reconstruction and Development
(EBRD), the Inter-American Development Bank (EDB) and the Asian
Development Fund (ADF), and on our debt reduction programs. These
institutions are a critical piece of the Administration's overall
international affairs request which also includes our diplomatic
resources, our bilateral aid programs, and agencies such as the Export-
Import Bank and OPIC which level the international playing field for
American companies.
The President has often said that America is the world's
indispensable Nation -- that there are certain critical tasks on which
the world depends that only the United States can perform. Leadership
of the multilateral economic system is unquestionably one of these
tasks.
As the world's largest economy, its largest exporter, and a country
with truly global interests and reach, we have an enormous stake in
ensuring that the global economy remains stable and growing. America's
prosperity depends on the prosperity of our trading partners, who
increasingly are in the developing world. The share of our exports
going to developing countries is 42% and rising. US exports to
developing countries were $351 billion in 1996.
The IFIs serve more than just our economic interests. Peace and
democracy cannot flourish amidst abject poverty and financial crisis.
In places like Haiti and Albania poverty and economic collapse were a
prelude to social upheaval and violence. In the Middle East, lack of
economic opportunity is a major factor contributing to political
conflict. In the former Soviet Union, the path to stable democracy
depends on the success of economic reforms. Our economic leadership is
thus vitally linked to our national security and to our values as a
Nation.
The Role of the IFIs
The IFIs -- which include the International Monetary Fund (IMF) and
the Multilateral Development Banks (MDBs) -- are the linchpins of U.S.
international economic leadership.
The IMF oversees the operation of the international monetary system
and responds to shocks to the global financial system such as the debt
crisis in the 80's and the Mexican financial crisis in 1994-95. It
provides essential guidance and support to countries making free market
economic reforms. Its normal lending, primarily to middle income and
emerging market countries, promotes sound fiscal and monetary policy
and open markets. Its concessional loans to the poorest countries
through the Enhanced Structural Adjustment Facility (ESAF) support
comprehensive reform programs which prepare countries for full
participation in the global economic system.
Our participation in the MDBs determines our direct influence over
$46 billion of annual development financing and our indirect influence
over at least as much in co-financing. This is far more than we could
ever provide bilaterally. MDB loans and policy advice support basic
infrastructure, human capital development and institution building --
all essential building blocks of equitable, sustainable, private
sector-led growth. The MDBS, led by the World Bank's International
Development Association (IDA), are by far the largest supporters of
AIDS programs, child survival, girls' education, clean water and other
essential investments in basic poverty reduction. The MDBs directly
invest in private sector projects in countries where their presence can
unlock additional foreign investment. The MDBs often take the lead in
coordinating aid programs, as the World Bank is currently doing in
Bosnia, and thus are a major leverage point for how other international
assistance is directed.
IFI Support for U.S. International Interests
By leveraging our relatively small contributions to these
institutions we ensure that they are responsive to our priorities and
support our foreign policy. Let me cite just a few examples of where
the IFIs are advancing our interests:
In Bosnia, where the U.S. has provided the leadership to
begin the reconciliation process, the World Bank and the EBRD
are coordinating $5.1 billion of their own and other donor
funds to support the massive rebuilding process. These efforts,
which build upon and extend U.S. bilateral assistance to the
region, are critical to maintaining peace once the U.S.
military presence is removed.
In Russia, the IMF and the MDBs have helped keep fundamental
economic reforms moving forward. The government's commitment to
the program objectives of the IMF's current $10 billion loan
remains strong, and the close working relationship between IMF
and Russian government officials maintains momentum despite
periodic difficulties. The World Bank and EBRD have supplied
nearly $10 billion thus far in direct investments in private
sector ventures, and to privatization and institution-building
projects which lay the groundwork for foreign investment.
In the Middle East, the World Bank is financing jobs
programs in the West Bank and Gaza to help alleviate the
employment crisis -- a key requirement for regional stability.
Long-term MDB support for countries such as Tunisia, Jordan,
Morocco and Turkey have helped those countries achieve economic
progress and encouraged them to be moderating forces in support
of the peace process. In the future, key MDB support for Middle
East peace will be provided by the Middle East Development Bank
which Congress authorized last year and for which the
Administration has requested appropriations. This Bank will
support cross-border infrastructure projects and regional
private sector investment that will help to cement a peace
agreement.
In our own hemisphere, the World Bank, the Inter-American
Bank and the IMF's ESAF program are providing hundreds of
millions of dollars to support the difficult transformation of
countries like Haiti and Guatemala. In Mexico, IMF balance of
payments support has been integral to the recovery that has
allowed the country to repay its loans to the United
States.while continuing on its reform path. The MDBs are
working aggressively on the basic policy reforms needed to
cement the gains made thus far.
In Africa, the MDBs are providing support for basic health
care, institution building and infrastructure to countries such
as Uganda and Mozambique. These programs underpin ESAF and IDA
sponsored economic reforms which are allowing these countries
to return to growth and stability after years of civil war. In
Uganda, the rewards of nine years of concerted economic reform
have translated into annual growth of around 10%. Mozambique is
also showing signs of accelerating growth as a result of an
IDA-led fiscal stabilization, privatization and demobilization
plan. Foreign investment was nearly $500 million last year and,
according to The Economist magazine, an additional $6 billion
is under consideration by investors.
The recent records of these countries belie the view that the IFIs
cannot effectively assist African countries in private sector-
led development. When the institutions and the countries
themselves pursue a sound, market-driven growth strategy, the
results can be impressive.
In these and many other areas, the IFIs are vital partners in our
foreign policy. We have a strong interest in maintaining our leadership
position so that they remain responsive to our international
priorities.
The IFI Reform Agenda
Our traditional leadership role in the IFIs also gives us a strong
voice in setting the reform agenda for the institutions.
In the IMF, we have concentrated on improving the quality of the
Fund's economic reform advice and its early warning capacities. With
strong U.S. encouragement, the IMF is emphasizing earlier detection of
emerging problems, and in its lending programs is focussing on the
quality of fiscal adjustment. It is also encouraging countries to cut
unproductive expenditures such as military spending and to shift more
resources to primary education and health care and to essential capital
investment. Since 1990, military spending has declined significantly in
countries with IMF programs while social spending has increased as a
share of government outlays.
Responding to G-7 initiatives, the IMF has expanded its
surveillance activities to give greater emphasis to financial markets
and has developed a Special Data Disclosure Standard (SDDS) to guide
countries in the provision of comprehensive, timely, and accurate
economic and financial data. To improve its capacity to deal with
crises in the event that prevention fails, the IMF has adopted new
streamlined emergency procedures that permit the institution to respond
more quickly to a member's request for emergency access to Fund
resources.
The MDBs have also been actively reforming. Largely as a result of
U.S. efforts, the World Bank has increased the transparency of its
operations, encouraged greater participation of affected peoples in
project design, created an independent inspection panel and an auditing
department to evaluate project implementation, and focussed more
attention on issues like the environment, corruption and labor rights.
The Bank has also cut its administrative budget by 10% in the last two
years.
The World Bank's reform efforts have culminated in a major new
program recently proposed by President Wolfensohn. The ``Strategic
Compact'' is an ambitious plan designed to improve the effectiveness of
Bank programs in addressing poverty, particularly in Africa, and to
focus the Bank on a fundamental set of development issues private
sector development, environment, governance, corruption and
participation which are key to sustainable development in a world where
private capital flows are surging. Under the plan, the Bank will move
more staff and decision-making to the field, develop an improved
information system so the organization can better learn from
experience, and adjust its skill mix to fit its evolving role in
development. The Administration supports this effort at reform and has
been working intensively with the Bank on ways to further define the
Bank's mission -- including phasing out of some current activities --
and to reduce the cost of the Compact. President Wolfensohn and his
staff have been responsive to our concerns and are committed to
continuing to refine the Compact.
The Need for Continued Engagement
Mr. Chairman, the IFIs support our international interests and they
are actively reforming along lines that we support. But they will not
continue to do so if we fail to meet our obligations and pay our fair
share. Leadership is not free and we cannot lead with other people's
money. Questions regarding our commitment to the IMF, and our large
arrears to the MDBS, erode our international influence and credibility.
Our leadership in the IMF over the last 50 years has helped ensure
adequate resources for the Fund to meet both normal and extraordinary
challenges to the global financial system. But with the rapid growth in
world GNP and trade -- growth that this institution has directly helped
to bring about -- the Fund has been steadily shrinking in size relative
to the world economy and capital markets, even after the increase in
quotas agreed to in 1990 and endorsed by the Congress in 1992. World
GDP and trade have roughly doubled from the time of the quota review
which resulted in that increase. The rapid growth of international
capital markets increases the risk that crises can erupt very suddenly,
resulting in a large financing gap for a country in crisis. In this
time of rapid global economic change, it is particularly important that
we remain fully engaged in determining and supporting an appropriate
level of resources for the IMF which includes emergency borrowing
capacity.
Paying off our large and persistent arrears to the MDBS, currently
$862 million after the recent release of IDA funds appropriated in
FY97, is also vital to preserve America's international leadership.
Ironically, these arrears have accumulated during a period in which we
were already sharply reducing our new commitments to the IFIS. Account
by account, over the last four years we have negotiated down the
budgetary costs of the MDBs by an average of 40%. This is appropriate
given the increased capacity of other countries to share the burden and
higher repayments from borrowers. Yet we have consistently failed to
meet even our reduced obligations, calling into question our commitment
to the international system that we largely created and that we have
shaped over the last 50 years. As other donors have stepped in to pick
up the slack, we have faced procurement restrictions on U.S. business
and threats to our voting power in the Banks. I believe that while our
leadership position in the multilateral arena remains largely intact,
continued failure to meet our commitments would pose a growing threat
to our long-term interests. We are at a critical point in our
relationship with other donors and with these institutions and we must
act decisively to fulfill our promises to them.
The Administration's Budget Request
Before I discuss our proposed authorizations, I would like to
highlight the Administration's proposed $1.6 billion budget request for
the IFIs which is part of the President's 5-year plan to balance the
budget. This amount does not include the required budget authority for
the U.S. share of the IMF's New Arrangements to Borrow (NAB), since
transfers under these arrangements are treated as exchanges of assets
that are not scored as outlays and thus do not increase the deficit.
Our request achieves the following main goals:
Meets our $1.2 billion of scheduled MDB commitments -- what
we owe excluding our arrears. This reduced annual commitment
level to the entire institutional system is less than our
annual IDA commitment alone under the prior IDA-10 agreement,
reflecting the 40% reduction in U.S. commitments we have
negotiated.
Fully clears our $234 million of arrears to IDA, which is
the most important source of development aid to the poorest
countries and where arrears present the greatest problem for
our international leadership.
Begins a three-year process of clearing our $862 million of
overall MDB arrears. This will lead to a permanently lower
level of required MDB funding after the year 2000.
Provides approximately $3.4 billion in budget authority, and
a related adjustment to the budget caps, for U.S. participation
in the NAB, the IMF's new emergency reserve tank to be used in
the event of a major international financial crisis.
The Administration's request for the IFIs represents our firm
belief that, in the context of diminishing budget resources, these
institutions cost-effectively serve the foreign policy, economic and
security interests of the American people.
IMF Authorization Requests
The Administration is requesting authorization to provide the
dollar equivalent of 2.462 billion Special Drawing Rights (SDRS)
(approximately $3.4 billion) for U.S. participation in the NAB. This
amount would be in addition to the SDR 4.25 billion previously
authorized and appropriated for the General Agreements to Borrow (GAB).
The NAB was endorsed by the IMF in January, 1997. Modeled on the
GAB, which was created in 1962, the NAB is a set of contingent credit
lines to the IMF to deal with financial crises that threaten the
stability of the international financial system in the event that the
ordinary resources of the IMF are inadequate. The NAB would double the
resources available under the GAB, bringing the total credit line to
SDR 34 billion or approximately $47 billion. The GAB would remain in
effect and could be activated independently, but the NAB would be the
facility of principal recourse and no more than SDR 34 billion could be
provided under the GAB and NAB combined. G-10 countries would
participate in both facilities. By bringing in additional countries,
the NAB provides better burden sharing among the international
community than the GAB, while enhancing our ability to block
inappropriate activation. The United States will have just under a 20
percent share of the total amount of the NAB which gives us sufficient
voting power to block activation with the concurrence of one other
participant, or in some cases on our own.
IMF members are also reviewing the adequacy of current IMF quotas,
which finance the ordinary lending of the institution. If, as a result
of that review, we believe that an increase in the IMF quotas is needed
to ensure that the IMF has adequate resources to carry out its
responsibilities well into the next decade -- and if we are able to
negotiate a satisfactory agreement -- then we will propose that
Congress authorize an increase in the U.S. quota. We will consult
closely with Congress as this review proceeds.
With respect to credit lines to the IMF and quota subscriptions,
the Administration and Congress have agreed since 1968 that transfers
to the IMF are treated as exchanges of monetary assets and therefore do
not increase the deficit. When we provide such resources to the IMF, we
get a liquid interest-bearing claim on the IMF which is backed by its
substantial reserves, including gold. Our claim is like a deposit in
the soundest of banks on which we are paid interest and which we can
withdraw on very short notice if needed. Since 1980, authorizations and
appropriations have been required, but the ``no outlay'' treatment has
remained in place. Consistent with this treatment, the Budget
Enforcement Act of 1990 (BEA) provided for an adjustment to
discretionary spending limits to accommodate the previous increase in
the U.S. quota for the IMF. Following the precedent of the BEA, we will
propose that there be an adjustment to the discretionary budget
authority caps for the NAB and have already done so for a possible
quota increase.
We also are requesting authorization for the remaining $75 million
of the $100 million we pledged in 1993 to the ESAF for its Interest
Subsidy Account. The ESAF provides up to $1.4 billion annually in
concessional lending to the poorest countries in Africa, Latin America,
the Caribbean and the former Soviet Union who commit to making
comprehensive, market-oriented structural reforms. The ESAF is also the
vehicle for IMF participation in the multilateral initiative to relieve
the unsustainable debt burden of the most heavily indebted poor
countries (HIPC). ESAF donor funds are drawn very slowly and we are
only asking for $7 million in appropriations for FY98. Nonetheless, as
a way of affirming our commitment to this program which has helped
create budding success stories such as Uganda and Mozambique, it is
important that we provide full authorization. If we step back from our
commitment to the poorest, others will join the retreat.
Finally, we may request authorization to vote in favor of an
amendment to the IMF articles of agreement to provide a special, one
time allocation of SDRs to enable newer members of the IMF to
participate on an equitable footing in the SDR arrangement. Any
allocation of SDRs would not require appropriation of budget authority
MDB and Debt Reduction Authorization Requests
Mr. Chairman, our current arrears situation with the MDBs makes
this year's multi-year authorization requests for the Banks
particularly important. It is vital that we send the signal that we are
committed to these institutions for the long haul and are willing to
bear our share of the financial burden.
Our authorization request for IDA is for $1.6 billion, which we
have pledged to fund the two-year IDA-11 replenishment for FY98 and
FY99. This commitment of $800 million per year is a 36% reduction from
the $1.25 billion annual IDA-10 contribution negotiated in 1992.
IDA has become increasingly effective in its role of fostering
private sector-led growth in the poorest countries. By concentrating on
support for basic education, health and infrastructure, it is fostering
the building blocks of economic growth. By helping build institutions
to improve the legal system, enforce contracts, and reduce corruption,
it is helping create an atmosphere where the free market can thrive.
IDA has also become more selective by concentrating its resources in
countries who show commitment to reform and privatization but do not
have access to private capital. Eighty-four percent of lending over the
last four years has gone to countries rated by the Bank as average or
above in terms of economic reform. China will graduate from IDA in FY99
and its borrowing this year will be less than 20% of prior levels.
Results are starting to show. Average growth among IDA-only
borrowers, excluding blend borrowers India and China, went from 1% in
1991 to 6% in 1995. In Africa, even with all of the crises of the last
few years, overall growth has risen from 1% to 4% during the same
period. As the World Bank continues to reform and the effectiveness of
IDA programs improves, the return on our modest investment in this
institution in terms of better trading partners and increased stability
will continue to grow.
Our second request is for authorization of the final three years of
the Inter-American Development Bank's eighth general capital increase,
agreed to in 1994. This authorization would continue our annual
commitment of $25.6 million of paid-in capital to the EDB which lends
approximately $7 billion per year and leverages an additional $2.4
billion in co-financing. It continues to be instrumental in supporting
the region's dramatic shifts toward greater democracy, lower tariffs,
fiscal responsibility and economic growth. On the ground, the IDB is
helping cement the Guatemalan peace process by funding roads into
isolated areas and rural development programs to raise incomes in
indigenous communities. It is helping countries like Mexico and
Argentina to privatize and strengthen their financial sectors to reduce
vulnerability to external shocks. It has also been a leader in
developing effective micro-enterprise programs which bring financing
and technical assistance to private enterprise at the grass roots
level.
Third, we are requesting authorization for what we expect to be the
final recapitalization of the European Bank for Reconstruction and
Development. Our request for $285 million of paid-in capital over 8
years, or $35.8 million per year, is a 50% reduction from our previous
annual commitment. We nevertheless maintain our status as the largest
single shareholder in the Bank with a 10% share.
After deep internal reform, the EBRD has matured into an effective
catalyst for economic reform and democracy in transition economies.
Seventy percent of the EBRD's $10 billion in cumulative funding has
gone directly to private sector projects where it has leveraged over
$20 billion in private co-financing. As part of its charter, the Bank
may only operate in market-oriented economies applying the principles
of multi-party democracy. If a country's reform program lags, the EBRD
reduces or ends it participation. The EBRD also is effectively
targeting its resources to where they are most needed. As countries
such as Poland, the Czech Republic and Hungary attract more private
capital, the EBRD is shifting its focus further East to the former
Soviet Union, where its role as an a magnet for private capital is more
sorely needed.
Fourth, we are requesting authorization for the Asian Development
Fund where we have recently concluded a remarkably successful
replenishment agreement. It is remarkable because we face arrears in
the ADF of $237 million, slightly larger than our arrears to IDA.
Despite this situation, the ADF-7 agreement incorporates a 41%
reduction in the annual U.S. commitment with only a small reduction in
our share from 16% to 15%. In addition, we achieved all of the major
goals we had laid out when negotiation began:
There are no procurement restrictions or special funds in
the ADF which mirror IDA's Interim Trust Fund (ITF). I credit
this result in large part to Congressional reaction to the ITF
and the strong case the Administration made to lift the ITF's
procurement restrictions.
Despite the wishes of many donors, China and India will
continue not to have access to the Fund.
Very importantly, the Fund has set a goal to become self-
financing in half a generation (about 15 years) which would
eventually eliminate the need for future funding from donors.
New high-growth Asian donors such as Korea, Malaysia and
Thailand are taking a greater share of the burden. For the
first time Asian donors as a group will provide \1/2\ of the
total funding for the replenishment. The new donor's among them
have benefited greatly from the Asian Bank and Fund's support
and are now showing their commitment to helping their poorer
neighbors lift themselves out of poverty.
Finally, we are seeking authorization for our debt reduction
programs for the poorest countries. Of the $34 million that we are
requesting, $22 million will fund U.S. participation in Paris Club debt
reduction for approximately 10 countries that may be eligible in FV98.
Our request anticipates that Cote D'Ivoire, Ethiopia, Mozambique and
Bolivia may qualify for treatment under the new Heavily Indebted
Poorest Countries (HIEPC) Debt Initiative. Our debt reduction programs
are part of a coordinated multilateral effort to ensure that the
poorest countries which are undertaking economic reforms can reduce
their debt burdens to sustainable levels. The remaining $12 million in
our request will allow us to finalize the U.S. program of debt
reduction for Jordan.
In conclusion, let me say that these MDB and debt agreements are a
good deal for America - they significantly reduce the MDBs budgetary
cost and they advance American interests. Together with the IMF
programs you are considering, they will enhance our financial security
and improve our long term trade opportunities. But, as I have said, we
cannot lead in the multilateral system if we are unwilling to fund our
commitments or to act to head off potential crises. I urge you to
support the Administration's budget request and full authorization of
these institutions as a statement of our commitment to international
engagement and leadership.
Thank you. I look forward to your questions.
Senator Hagel. Secretary Summers, thank you very, very
much. What I would like to do is start a flow of exchange here
with a number of questions and then we can, I suspect, use this
opportunity to talk about all the dynamics of what you want to
talk about and some of the things that we want to talk about
for the record and just enter into a good, open dialog.
Mr. Summers. Terrific.
Senator Hagel. Some of my colleagues will be coming, and
while they are not here I will take advantage of the
chairmanship to enter into and engage you in some of these
issues.
First, I think our role as the preeminent world leader is
not only critical to understand and essential to implement, as
you are talking about the resources that you and Secretary
Rubin have obviously given some thought to as to where we want
to go and how we want to prioritize those resources, but, as I
said earlier and you and I have had a private conversation
about this, this is a very unique opportunity and time in our
history where we can prioritize our resources not just with
what you are doing financially but as you touched in some of
the areas on what we will want to do and how it affects people,
our national interest, and how it develops our foreign policy.
I think that is something that we want to get at, Secretary
Summers, as much as anything else. Obviously we want to talk
about numbers and dollars, but we want to talk about the long-
term investment in lives and how that, then, relates in a
relevant, direct manner to foreign policy for this country and
our people.
With that, I see my distinguished colleague, Senator
Sarbanes, has joined us. Since he has cured all of the housing
ills in America, he can now turn to foreign policy. Senator
Sarbanes.
Senator Sarbanes. Well, we have only begun, Mr. Chairman. I
have to go back to that hearing as well.
First of all, I want to welcome the Secretary before our
subcommittee this morning. The Secretary and I have worked
together over the years on a number of important international
economic issues and we look forward to continuing that
cooperation in the period ahead of us.
I actually think that this issue of the multilateral
development banks is an important issue. We can't on the one
hand argue that we want to share the burden with other
countries whose economies have advanced, the international
burden of one sort or another, you know, recognizing the
importance of development for the under developed countries,
and then pull back on our support for the multilateral
institutions which are a classic example, I think, of effective
burden sharing.
In fact, the U.S. percentage contribution in those
institutions is, I think it is fair to say, on a very steadily
declining downward trend line. I think there are a lot of
misperceptions about the multilateral development banks and how
they work. They have not been an unalloyed success but they
have had some good stories, and I think if the U.S. is smart,
the international financial institutions can play a key role in
advancing our foreign policy and security interests.
As I noted, by leveraging contributions from other
countries, each dollar we provide to the MDB's allows us to
have far greater influence over policies and events than we
otherwise would be able to exert.
Finally, let me say that I really have a very strong view
on this question of arrearages. As I have just indicated, I
would argue that the MDB's play an important role and,
therefore, we should be supportive of them out into the future.
But it seems to me there is no acceptable rationale that would
justify failing to pay off the past commitments that the United
States undertook and, therefore, other countries undertook
commitments, in effect matching the U.S. decision. The other
countries, with few exceptions, have paid those commitments and
we have not yet made good on these obligations.
I know the administration has made some requests here in
order to try to meet that problem, and I very much hope that
the Congress will respond to that.
I, frankly, see this as a whole separate issue. This was an
obligation we undertook. We constantly pound our chests that we
are the world's leading power, the leader of now the entire
world since there has been an implosion of the Soviet Union,
and I think it is a highly embarrassing position in which to
find ourselves to be in arrearages to these institutions.
So I think it is critically important that we meet those
arrearages. Failure to do so undercuts our influence in these
institutions. Any time the U.S. comes to the table and sort of
insists on reforms or on a policy change, everyone sits around
the table and if they don't laugh directly in our face they
laugh up their sleeves in the sense of who are you to come to
the table when you are the biggest deadbeat here in the
institution.
I just find that an embarrassing situation in which to find
ourselves. Many of these replenishments that we are talking
about date back to previous administrations. It is not a
Democratic or Republican issue. These undertakings have been
made and continue to be made over time in more or less
consistent fashion by administrations. I just think we should
meet the arrearages, clearly.
The next issue is what do we do going forward. I am
supportive of continuing participation. But that is an issue
for debate and we will have to weigh the pluses and the cons of
doing so, and I would hope that the pluses would prevail out
and that then we would move forward. So that is how I see the
issue.
I hope, Mr. Secretary, we will be able to do something in
this Congress to try to respond to this situation.
Now, Mr. Chairman, am I in a question session as well? Have
you had a chance to ask your questions?
Senator Hagel. Senator, since the two of us are running the
show this morning, I think we will just do about anything we
want. So you go right ahead.
Senator Sarbanes. Well thank you. I do have a couple of
questions.
Am I right in my perception that our failure to pay our
full assessments in some of these MDB's has impacted negatively
on our influence in the institutions?
Mr. Summers. I don't think there is any question about it.
As you may know, Senator, before I came into the administration
I worked for 2 years at the World Bank. So I have a fairly
clear sense of that institution. If you think about things that
are important to the American Government--lending, finding ways
to channel more money to the private sector and less money to
public enterprises, putting a larger fraction of lending into
support for programs like girls' education, putting more
emphasis on selectivity and the avoidance of lending where
there are serious corruption problems, applying leverage
through lending to other countries, former colonies, to reduce
their military budgets, just to give examples of the kinds of
issues that those institutions face where we feel strongly, and
making records public would be another one--these are all
issues where American attitudes differ somewhat from those of
our allies. And while we have made progress on each of those
things over the last 4 years, I don't think there is any
question but that if the United States was meeting its
financial obligations and people didn't say why are you even
voting as you are not paying your bills, that we would have
been able to move those institutions much further and we would
have been able to much more potently influence the way that $46
billion was being lent at a price that I think would have been
relatively small for us, small numbers of hundreds of millions
of dollars per year.
I think regarding influence, our executive directors come
back each year for a retreat where we discuss our policies
toward all the banks. We are always saying we've got this idea,
we've got that idea, we think it is very important that you get
your bank to do something different in Country X, and they say
to us look, on the ground the only thing the bank wants to talk
about with us is how come we have not paid our bills. Countries
with a tenth of the per capita income of the United States have
paid their bills. How come the United States has not paid its
bills and met its commitments?
So I think it has a tremendously corrosive influence in the
sense that we have just been emphasizing that it reduces our
influence. It also, frankly, reduces our leverage and our
ability to get others to contribute more money to these
institutions. And it leads to an unraveling of the multilateral
approach to assistance in these situations, since you get these
situations where each country decides not to work through the
World Bank but to do its own projects and to plant its own
flag. And when there is a good project to be done on the West
Bank, you have 9 different countries rushing to do it first,
bidding up the salaries of a small number of officials who can
carry on a program competently.
So I think it is terribly destructive in terms of our
influence in these institutions and I think it is terribly
destructive to cooperation and efficiency in assistance efforts
in places that are desperately important, like Bosnia and
Haiti.
Senator Sarbanes. Let me turn to another area.
I am concerned about the amount of information and
disclosure that these institutions make on occasion. Much of it
involves environmental issues. For instance, I understand that
the IFC, the World Bank's private sector arm, has an
information disclosure policy that is quite restrictive. I am
told it does not allow for the release of any information once
a project is approved by the Board of Directors.
I wonder if our representatives at the IFC have any plans
to try to improve this information policy.
Also MIGA, the bank's political risk insurance arm, needs
an information policy. As I understand it, you cannot even get
information about environmental assessments of MIGA backed
projects. They are not publicly available.
How much of a problem do you perceive this as being and
what can be done about it?
Mr. Summers. This is something that has been a concern of
ours, and I think most people would agree that there has been
real progress in the last 4 years, particularly at the bank,
but that there has been somewhat less progress at the IFC.
We actively support the creation of an independent
inspection function in the IFC which would serve to permit much
of this information to come out in the way that many of the
environmental groups have been concerned about. This has been a
concern in particular of Congresswoman Pelosi over the years.
There are some important issues that need to be worked out.
The issues I think are of two kinds. One is that the businesses
that are carrying on these projects do not want full
descriptions out for their competitors to see for a variety of
competitive reasons. The other is that other countries,
frankly, are less enthusiastic about a fully transparent
approach. But this is one of the--and I don't know whether it
is one or two, or three or four--but this is one of the highest
priorities of our officials at the World Bank and it is
something that President Wolfensohn has proposed.
So I think we are likely to see progress on that going
forward. But the thing that has to be balanced and that I think
we can do a better job of balancing, frankly, is business
interests and not disclosing all of the details of projects
versus the legitimate environmental interests in knowing what
is going to happen to affect the people.
I think this is very much a work in progress.
Senator Sarbanes. Some of the environmental interests have
assaulted the bank and even suggested it ought not to function.
Now that, it seems to me, would raise very serious questions
about how you get sustainable development around the world.
The argument that the environmental groups made is that the
bank's private sector lending operations are replicating what
the commercial banking sector can do and are not focused
sufficiently on the sustainable development issue. Then, of
course, it is compounded in that, even when they do focus on
that issue, there is not sufficient transparency to allow the
environmental considerations to be taken into account.
What is your response to that line of argument?
Mr. Summers. Let me, if I could, Senator, just step back
slightly from your question to try to put it in a framework.
We did an exercise several years ago as we thought about
the various replenishments that were coming up of asking what
was the role of the banks in today's world. When these banks
were set up, there was no private capital market that financed
projects in developing countries. The idea of India issuing an
international bond issue was just something that was not on the
radar screen.
Today, $250 billion a years in private capital is going
into the developing world. So the question is what is the role
of the banks in a world where that is happening.
Our answer was that there were three crucial roles that the
banks have to play in such a world. First is support for
projects that had a high social return but not a pecuniary
bankable return, such as educating girls, which many of us have
estimated as maybe the highest return project in the developing
world. Carrying out sewage treatment, protecting tropical
forests are others. These need to represent a much larger share
of the banks' portfolio in the future than they have in the
past.
In fact, over the last 4 years, the share of lending to
these sectors has more than doubled, to the point where it now
represents about a third of lending, and that has been in
response to pressure from us and some other share holders,
reflecting exactly the salience of environmental concerns.
Second, we recognize that there are many countries that are
not yet fully able to access private markets for which the
banks had a role in bridging their work to private markets. Of
that $250 billion, some 90 percent goes to 12 countries.
Third, the banks have an important role in doing what is
very difficult for a private sector agency to do, which is
making loans that are conditioned on policy changes. For
example, loans that are conditioned on policy changes to reduce
subsidies to coal, which, in turn, lead to a great deal of
environmental degradation; or loans that support infrastructure
development but only on the condition that there is full
popular participation.
So our focus in the banks is on supporting the kinds of
policy reforms that promote our environmental, democratic,
economic values, focusing on countries which will have
difficulty accessing the private market and on supporting the
kinds of projects that are not bankable in a commercial sense.
I think that approach, which was quite unconventional 4
years ago, has come to be a much more conventional approach and
is leading to substantial reallocations of their portfolios.
I also think under Jim Wolfensohn's leadership and under
Enrique Iglesias' leadership at the Inter-American Development
Bank, the banks have drawn closer to a number of the
environmental groups and have come to a greater understanding
of the concerns of a number of the groups.
Senator Sarbanes. I think Iglesias, in particular, has
provided a really first rate leadership at the IDB. I attended
an IDB conference many, many years ago in which he, or I think
the first amongst many of the multilateral development banks
held almost an all day session with the environmental groups
and has subsequently tried, I think, to show a sensitivity to
their concerns.
Mr. Chairman, could I just put two more questions to our
witness? I don't want to impose.
Senator Hagel. Sure. Go ahead.
Senator Sarbanes. Thank you.
Would you say, Mr. Secretary, that often--because you
mentioned this conditionality issue--by working through the
multilateral institutions, the U.S. is able, along with others,
to have important conditions imposed that are really necessary
to get the discipline into the economies but without taking the
blame or the finger pointing, which would occur if we tried to
do that with respect to bilateral assistance. People sometimes
say why do it multilaterally rather than bilaterally. Well, of
course, multilaterally you get leveraging and you get burden
sharing. But it also seems to me you can get discipline without
being made the fall person in the politics of the country for
doing that, which might well be the case and often is the case
if it is done in connection with bilateral assistance.
Mr. Summers. Senator Sarbanes, that is an absolutely
crucial point and it is a point that is probably particularly
crucial with respect to the International Monetary Fund,
although it is also crucial with respect to the World Bank.
I give you an example of an area in which we have pushed
the IMF and the World Bank to be more active. That is the whole
area of financial supervision.
One of the security issues that has been in the headlines
for the last several weeks has been events in Albania. That
situation basically has, as its root, a failure of financial
regulation, a massive pyramid scheme that blew up,
impoverishing a significant fraction of the population and
almost completely undermining legitimacy of large parts of
their government.
If we can avoid those kinds of situations within countries
in the future, we need to have a mechanism that does that. It
will always be extraordinarily difficult for the United States
to say we are going to condition financial support on your
having a bank regulatory system that meets the standard, or
that standard, or some other standard.
On the other hand, an institution that can speak with the
legitimacy of the entire international community, not just the
United States, and which is there to take the heat--so it is
not America that is doing this to Country X, or Germany that is
doing this to Country X, or Japan that is doing this, but it is
an international institution that is set up for this purpose,
that has common standards that it applies to a large number of
countries--I think there is no question that the kind of
conditionality that is involved would be something that would
be almost impossible for us to pursue diplomatically.
It is difficult in a session like this to give some of the
specific examples where loans have been held up until corrupt
officials were changed or until an instance of corruption was
removed. But they represent a kind of activity that I think
would be extremely difficult for us or for any other single
country to undertake unilaterally.
Senator Sarbanes. And, of course, if a single country tries
to do it, then other countries may not do it in order to be
able to gain an inside track in the country.
Mr. Summers. Particularly where procurement is involved.
Senator Sarbanes. Yes. I want to ask, finally, about
procurement. Am I correct that, at least with respect to many
of these institutions, the amount of procurement done in the
United States significantly exceeds the U.S. contribution to
the institution?
Mr. Summers. I think in aggregate, Senator, we will furnish
exact numbers for the record. But I recall numbers that are now
probably a couple of years old that suggest that our
procurement that is generated for U.S. firms in aggregate from
the banks is about twice as large as the U.S. annual
contribution to these institutions. So just in a very direct
sense of payback, in terms of demand for U.S. products, they
pay off, not to mention the contribution from, for example,
joint ventures. Recently I have been in touch with officials
from the European Bank, which works in Central Europe and
Russia. They have a quite impressive record. $1 in every $7 of
investment that has gone into their region has gone in in
connection with one of their projects.
[The following information was subsequently received for
the hearing record from Mr. Summers:]
The latest complete procurement data (1995) indicates that
US firm procurement from the MDBs was $3.2 billion including
loans and equity payments, while our contribution in that year
was $1.8 billion, a roughly 1.8:1 to 1 ratio.
Mr. Summers. Often their contribution is only 10 percent.
They have really leveraged a large part of the private
investment into it, and nearly 25 percent of those projects,
those joint ventures, are with American companies, even though
our share in the bank's capital is only 10 percent.
I have just been passed a number. Recalling that our annual
commitment to these institutions is $1.2 billion, last year we
received over $3.2 billion in business from the institutions.
So that is a 2.7 to 1 ratio.
Senator Sarbanes. Just to underscore the obvious, the
balance of that procurement was, in fact, resulting as the
consequence of the contributions made by other governments to
these institutions.
Mr. Summers. That's right. Exactly.
Senator Sarbanes. Do you have all your positions filled at
the various institutions?
Mr. Summers. I believe that all the executive director
positions are now filled, yes. They have been filled.
Senator Sarbanes. Well, we are anxious that that be the
case, that you have your team in place.
Mr. Summers. Yes. We have actually been very fortunate. We
have a first rate group of executive directors, and many of
them, at least one of them has at least some past service as a
staff member of this committee. This is Karin Lissakers at the
IMF.
I am told that we have an executive director designate at
the European Bank for Reconstruction and Development who has
already been in a position to provide us with some very
important advice on issues facing that bank. We are very much
focused on the need to fill this team out.
Senator Sarbanes. Yes, and Senator Hagel, to his credit,
scheduled a hearing for her at really the earliest opportunity.
We have reported it from this committee, and I think it is now
pending on the Senate calendar. Hopefully, we will be able to
get it through the Senate shortly.
Mr. Summers. Yes, and thank you very much.
Senator Sarbanes. I want to thank the chairman again. He
really moved with great alacrity in handling that nomination.
Thank you, Mr. Chairman.
Senator Hagel. Senator, thank you.
Secretary Summers, let me go back to the arrears issue that
Senator Sarbanes talked a little bit about. As you know, I am a
United States Senator for all of about 3 months. So I do not
have the traditional base of information that most of my
colleagues have.
Explain to me why we are in arrears, how that works. Are
arrears considered in these multilateral banks definitionally
the same way we reference arrears at the U.N.? Are these
commitments that we make or are the terms that we use the same?
Are they obligations? Are they voluntary obligations?
If you can, take me back through that and start with this
question. Why have we found ourselves in the position, as you
state, of being behind in these payments?
Mr. Summers. If I commit a legal inaccuracy, somebody
behind me will whisper in my ear.
In many ways it is parallel to the U.N. situation, but not
in all ways. The administration negotiates replenishment
agreements or capital agreements for these various banks. These
agreements are negotiated with representatives of the other
countries that are involved and they represent a total, and
then that total is allocated among the different countries and
an agreement is reached.
We, as a matter of practice, which I suspect is nearly
compulsory--it probably is legally a compulsory practice--have
close consultations with the Congress prior to entering into
the replenishment negotiations and on what the U.S. strategy
will be. So while there is no formal role prior to entering
into the agreement, there is close consultation, and my staff
and yours, for example, have been and will be in touch with
respect to future negotiations that are coming up and that
would require this committee's authorization.
The commitments typically are multi-year commitments, and
the commitments are then authorized by the Congress. The
question is then whether the funds are appropriated by the
Congress to meet the commitment.
When I speak of $862 million in arrears, I am speaking
about money that has been committed by the executive branch to
the institutions and subsequently has been authorized by the
Congress. So the only gap is that the funds have not been
appropriated and, therefore, they cannot be paid.
But all of the $862 million in arrears represents funds
that were committed with prior consultation and then were
authorized by the Congress.
I should emphasize that, while I do not have the exact
figures in front of me, the lion's share of the commitments
which produced these arrears are commitments that were entered
into by the previous administration.
Senator Hagel. Do you think it is a result of the Congress
not feeling that objectives have been met as to why we have had
this arrearage problem? Are there thresholds or are there
standards?
Obviously, one of the things that you stated earlier, when
talking about investment, is measurable standards. These, in
many cases, as you get down into these 7 multilateral
institutions, are loans, not grants. I am trying to get my arms
around a little bit as to why we are in this problem and then,
second, what do we do about it and how you can make your best
case to the committee, to the Senate and to the Congress as to
how and why we should get caught up, which I assume you would
like to do.
Mr. Summers. I am not sure that I am the best authority on
why the funds have not been appropriated. While clearly there
is a range of concerns of the kind that you expressed in your
statement and I expressed in mine about the performance of the
banks, these are funds that were authorized. So I think the
failure to appropriate them in part reflects the very strong
budget pressures that Congress has felt in recent years. And it
may reflect some sense that it doesn't make any difference,
that it's, oh, just some international institution, it is a
long way away, and it won't have any effect.
Well, I am here to tell you that it has a very, very
important effect on our leadership.
I suspect also--and this is a tendency that I know exists I
think with all of us--that it is more exciting in certain ways
to start new things than to meet old obligations. So there is a
tendency to want to earmark money for the newest international
program or to start a new international initiative, rather than
say well, we have not been meeting our obligations and now we
are. It does not have quite the same sizzle.
This is why we took a look at this situation starting in
1993 and set very strong standards that, given the budget
situation of the country, there were limits to what we were
going to be able to do. We negotiated the commitments downward
to the level that we could sustainably afford.
This was, I think, a very important step. But this does not
solve the problem of the overhang from the commitments that
were negotiated in the early 1990's. So I think we have to work
off that obligation, and when we do, we will be in a position
to have these accounts be running at a much lower level.
But I don't think there is a tenable alternative approach.
It is hard to see how we could justify the United States being
a kind of international outlaw, failing to meet what was a
solemn agreement on which other countries reasonably could have
relied. I think that if we continue to try to do that, we will
pay a very substantial price, not just in terms of lost
influence but I think as we are already starting to see in the
IDA case, U.S. businesses will pay a price because their access
to procurement will be put under increasing pressure if we are
not contributing to the institutions that are generating the
procurement.
Senator Hagel. I note here from some of the information I
have that, if these numbers are correct, African nations now
owe more than $52 billion to the World Bank and IDA. I suspect
things like that have an effect as well on how the
representatives of the people in this body have pulled back a
little bit and are concerned about where is this money going if
we have a $52 billion debt that is outstanding by African
nations.
I am not picking on Africa, but I suspect you could go
across the globe and find that elsewhere as well. It gets back
to our original point about investment. I don't know if those
numbers are correct, but certainly that is having an effect
that is out of your control, too.
Mr. Summers. If I could say, though, the figure you cite
represents a cumulation of 40 years of lending.
Senator Hagel. Yes.
Mr. Summers. I think if you look, and we have looked rather
closely at the financial position of the World Bank, you will
find that it is really very, very strong; that the number of
defaults has been quite low; that that has been the case even
in situations where--of course, when you hear the statistic
that the number of defaults are quite low, you ask the question
has there just been relending to avoid default.
Senator Hagel. Sure. There is then a new infusion of
capital coming from the United States and everybody else.
Mr. Summers. Sure. But I think you would find that there
have been quite a number of countries that have been, for a
period of several years, in a position of repaying the World
Bank, even when they weren't getting new loans from the World
Bank, which I think is really the right test for whether the
loans are good.
Senator Hagel. Do you have that number, by the way, that
ratio of bad debt versus good debt?
Mr. Summers. We will furnish it for the record.
[The following information was subsequently received for
the hearing record from Mr. Summers:]
The number of countries with net negative flows to the
World Bank -- ie. who on balance are repaying old loans rather
than incurring new debt is 57 out of the 96 current and former
borrowers from the Bank.
Mr. Summers. The number of loans that are nonperforming now
I suspect is under 2 percent of the portfolio and the reserves
are much closer to 10 percent of the portfolio.
Mr. Summers. I think it is also important in assessing the
$52 billion figure to note that at least a part of that, and I
suspect a significant part of it, is concessional loans that
are 40 years loans at interest rates of 1 percent, which have
been budgeted for and are part of what we paid for up front.
But it is not that on those kind of loans there would be the
same concern that there was an unpleasant surprise awaiting for
us, since we have already budgeted for them to have a
substantial concessional component.
I think that the concerns about lending and whether
adequate standards of credit worthiness have been applied, I
think most of the experts who have looked at this would say
that that was not a major concern at the World Bank. I think
that concern would be more serious, perhaps, at some of the
regional development banks, and particularly that concern could
be asked at the African Development Bank.
We have been working very hard with that bank to assure a
tightening of standards and to assure that lending on a hard
basis goes only in situations where it is warranted.
I think you will find at the World Bank, though, that one
should never be absolutely certain, but that most of the people
who look at it, who look at the performance record on loans and
then look at the size of reserves, would feel that there is a
lot of financial prudence there.
Senator Hagel. Well, certainly you were there and you had
your strong, insightful, clear-eyed arms around that when you
were there. I know that.
Mr. Secretary, let me get back to a point that you made,
too, because it kind of intrigues me and you started to get
into it with Senator Sarbanes. If I have this right, you
mentioned that $250 billion of private capital is going into
developing countries. Is that right, as you know it?
Mr. Summers. (Nods affirmatively)
Senator Hagel. Should we be restructuring these
multilateral banks in some way? I don't know where $250 billion
stacks up in the last 40 years. I suspect we have never had
that much private capital going in. I don't know that. But what
I am getting at is something you and I talked about earlier,
which is how do we do this better. How can we do it better? You
talked in your statement about leveraging these resources.
Do you have any ideas about that?
Mr. Summers. Yes. First, Senator, your premise is right.
Flows in the last several years have been almost unprecedented,
far larger than they have been in the past.
But, again, I think the first point to emphasize is that
the vast majority of that goes to 12 countries, and there are
another 100 countries that get much less.
I think the basic restructuring that is called for in
response to that in the banks' activities is lending only where
there is something to add. I tried, in answering Senator
Sarbanes' question, to identify what I thought were crucial
categories where the banks had things to add.
There is the whole human development and environmental
area, where it is profoundly important to send a kid to school
but there is not a payback screen to pay back a bank for doing
that. The countries where credit worthiness has not been fully
established but where the opportunity to borrow from the World
Bank contributes to the establishment of credit worthiness is
another example. Also are loans where the World Bank, by virtue
of being an international, kind of quasi-governmental
organization, can impose conditions of a kind that a private
bank could not on reducing tariffs or privatizing enterprises.
Finally there are loans that are directed at catalyzing further
private sector lending.
For example, when I was in Russia just several weeks ago, I
visited a project under development for the World Bank where
the World Bank's only role would be to provide a guaranty
against expropriation type risk that would then be cross-
guaranteed by the Russian Government. That makes it easier for
a major U.S. aerospace company to come in there and once they
are in there, there is no incentive to violate the covenants
because the Russian Government would just have to make a
payment to the World Bank.
So you can lend in a way that supports without supplanting
the private sector.
I think these kinds of ideas, restructuring around what the
private market cannot do, are very much the essence of what Jim
Wolfensohn is trying to do in his strategic compact at the
World Bank and is very much what Enrique Iglesias at the IDB
has done. I think that we, the United States, can take some
credit for the fact that the terms that we have reached in
these agreements that you asked me a few moments about--you
know, how we came to these arrears--as part of these
replenishment agreements, there is a replenishment agreement
which addresses in important ways the bank strategy.
So there are, in effect, conditions on the institutions as
a condition for getting the money. We have negotiated a set of
conditions that have basically produced substantial movement
toward this kind of reinvention, away from things that the
private sector could be and perhaps should be doing in today's
world.
I don't want to oversell this. I don't want to tell you
that there aren't more ways in which we would like to see the
banks change, or that they are not still doing some things that
it might be better if they stopped doing. But I think we would
be in a much greater position to accelerate this process of
reinvention if we were meeting all our financial obligations.
Senator Hagel. Do you think the multilateral institutions
that we are involved in are more significant today, less
significant, about the same, than, say, 20 years ago?
Mr. Summers. I think they are probably more significant for
three reasons.
First, they have a crucial role in addressing problems
within countries. If you think about our crucial security
problems today, whether it is Bosnia, whether it is Haiti,
whether it is Russia, they, in many, many cases, not to mention
global warming security problems, in many, many cases they
involve problems that take place within countries rather than
problems that take place between countries.
So our capacity to influence policies within countries in
our interests, I think these are our best tool for doing that
for the reasons Senator Sarbanes and I discussed, in terms of
the ability to maintain political distance.
Second, I think that the developing world, frankly, 25
years ago was marginal to U.S. economic interests. Today it is
the most rapid growing source of export demand and exports are
the most rapidly growing source of advantage for our economy.
So supporting economic reform in developing countries is much
more important then than it is now.
Third, I think they are most important right now in a
political sense because with the security organizations in some
cases less salient than they once were, they are the one set of
institutions where countries come together and they do not just
talk but actually do something. They work together to promote
common interests in key regions, like Latin America.
In a real sense I think you might say that the multilateral
development banks are to the New World Order what the
collective security organizations were to the former world
order.
So I think they are much more important, basically, because
the developing world is much more important than 25 years ago.
Something that is very disturbing to me is if you look at the
size of our contribution in real terms, after correcting for
inflation, now versus 20 years ago or now versus 15 years ago,
it is just way, way down. That makes it a particular tragedy,
that we are not even able to meet the size of the contribution
that we have committed, which is much reduced from a time when
these institutions were probably less central to our interests
than they are today.
Senator Hagel. Would you apply that to China, for example?
China is receiving as massive amount, as you know, of private
investment, still, I believe, taking down World Bank loans.
Would you characterize China as still being in that part of
the orbit that you have just characterized as to the importance
of these multilateral banks today versus 20 years ago?
Mr. Summers. China is a complicated case.
As you know, China had a major change in course in 1978
toward economic reform. A substantial part of the blueprint for
that reform and for moving toward more capitalist institutions
came from a major World Bank six volume study that was done in
1980.
Frankly, it has been my view, and I think the view of most
American officials for some time now, that China was an
inappropriate candidate for concessional lending.
As part of the international negotiation process since
others disagreed, we continued concessional lending in the
current IDA, but have now reached an agreement that starting in
1999 the World Bank will cease making any concessional loans to
China, which I think is an important milestone given the size
of their reserves.
The bank will continue to have a role in making loans on
hard money terms to China in certain areas, and I think their
lending has been importantly catalytic with respect to certain
aspects of environmental sensitivity and certain aspects of
private sector development in China.
But, clearly, in looking at the lending program for China,
it is very important--and this is the guidance our executive
directors give--that the lending be directed at being
constructive with respect to our broad agenda with respect to
China, rather than supporting the kinds of things we would like
to try to bring about change in China.
But I think the end of concessional lending to China
represents a really substantial and important milestone.
Senator Hagel. Thank you.
Senator Sarbanes.
Senator Sarbanes. Mr. Chairman, I do not really have any
further questions. I do want to make this observation.
I think it is important to recognize on the public record
the efforts that Treasury has made to reduce the budgetary
costs of the international financial institutions. I mean, when
we do these hearings, it is always about the budget request for
the next year and there tends to be a focus, then, on the
amount that is being asked for in the budget context in which
we find ourselves.
It seems to me, just to sort of broaden the context a
little bit, as I understand it, there has been a sort of multi-
pronged effort to address this question.
First of all, I gather you have lowered the ratio of paid
in to callable capital.
Mr. Summers. (Nods affirmatively)
Senator Sarbanes. Second, you have stretched out
replenishments over longer periods of time, so the cycle has
been lengthened. Reflows and net income are being used for the
soft loan windows as a way of addressing that issue, and new
donors have been brought in. I think the percentages of some
countries have, I think, been adjusted upward--I am not certain
about that, but I think that is correct--to reflect the
relative strengths of their economy. And there has been a major
negotiation reducing the U.S. commitment.
Am I right that our overall annual commitments are now 40
percent lower than they were under the prior set of
replenishments? Is that correct?
Mr. Summers. That's correct, yes.
Senator Sarbanes. Well I think that is a very striking
achievement, frankly, to in effect continue out the work of the
IFI's and to have the subsequent replenishments, but for the
U.S. burden in those subsequent replenishments to have been
reduced 40 percent.
One of the problems we are facing now is we are trying to
meet the current obligations and clear the arrearages. Now if
we could once clear the arrearages, as I understand it, the
permanent obligations would represent a significant drop from
the previous level of obligation.
Is that correct, Mr. Secretary?
Mr. Summers. That is correct. In the current appropriation,
in the current request, about more than 20 percent of it, in
excess of $300 million, is to clear about one-third of the
arrearages we have accumulated in the past.
Senator Sarbanes. Then you are going to have to ask for
that in subsequent years to finally clear it all.
Mr. Summers. That's right.
Senator Sarbanes. Once it is finally cleared off, where are
we going to be in terms of what you will be asking for each
year--this is with no arrearages, then, to deal with--compared
with what was previously being sought? Will not there have been
a significant drop in the amount?
Mr. Summers. That, Senator, is the 40 percent reduction. We
will be seeking about $1.2 billion, just above $1.2 billion a
year for these institutions, and the commitments that were
inherited in January 1993 were in the range of $1.9 billion to
$2 billion a year.
We have negotiated those commitments down with, frankly, I
think it has been two parts good negotiating and good financial
engineering and one part, because we are able to contribute
less, the institutions are able to do with a little bit less.
So it is both, I think, some tough minded financial management
and it is also just a recognition of reality and making painful
choices.
Senator Sarbanes. But that part of it is accepted by the
international community, is it not?
Mr. Summers. That part has come to be accepted. It has come
to be accepted.
So I think it is important to emphasize in the overall
budget context that the cut the Congress has put in the
appropriation for the multilaterals in the last 2 years of 45
percent is one of the deepest cuts that you can find anywhere
in the foreign affairs area or, indeed, more generally, looking
across the whole budget.
Senator Sarbanes. And, of course, that is right in the face
of a very skillfully negotiated reduction in the U.S.
undertakings.
I think that really needs to be put on the record because
there is a tendency to take what you have done and just kind of
put it in your pocket without recognizing the achievement it
represents.
Mr. Chairman, I think it is very significant that if we
could just clear this arrearages problem at a level of $1.2
billion, they could carry through from what was previously a
level of just under $2 billion annually, which is obviously no
small achievement, particularly when you factor in, which we do
not, the fact that on the procurement side we are getting $2.50
in American procurement for every $1 that we are putting in.
I don't think we ought to let the Secretary come and go
without some recognition of the skillful negotiating they have
been doing in the face of having to carry this burden of the
arrearages problem, which is not a good way to be at the table
trying to negotiate a tough deal.
Thank you very much.
Senator Hagel. Senator, thank you.
Mr. Secretary, let me ask a couple of other questions and
then we will submit questions for the record as we always do.
Then I would be pleased to entertain any additional comments.
I wanted to ask a question regarding the budget. In your
testimony, you make clear that the administration wants very
much to participate in the IMF's new agreements to borrow. The
President's budget contains a line item of $3.4 billion to help
establish this new international line of credit.
However, the President's budget did not seek a waiver, as I
understand, of Section 251 of the Budget Act relating to how
this funding will be scored against overall discretionary
spending caps.
I understand Senator Domenici, the chairman of the Senate
Budget Committee, would like the administration to request a
budget waiver for NAB funding. Can you shed a little light on
this?
Mr. Summers. It is our intention to seek the waiver that
Senator Domenici would like us to seek.
Senator Hagel. All right. Thank you.
I have some prepared questions here that we have really
kind of gotten to in general ways and in some more specific
direct ways. But let me ask you, Mr. Secretary, if you would
like to add anything for the record or conclude with any
remarks.
Mr. Summers. If I could, I will not try to summarize the
basic argument, because I think I have stated it. But let me
try to just make three additional points if I could.
First, there are important programs that are not being
funded that do not require authorization that we have not
mentioned here today--new authorization. I would highlight in
particular the Global Environmental Facility, which has been
the lead international organization in taking on problems like
biodiversity, the deterioration of international waters, and
depletion of the ozone layer. We have been funding only a small
portion of what we owe to that institution, and I think in
light of our commitment and desire to show leadership on global
environmental problems our failure to make an additional
contribution, whatever it is--the increment is less than $100
million a year, the total that we would need is $100 million a
year; we have been funding it at a rate of closer to $30
million--is just a terrible tragedy for America's ability to be
able to be a leader in those institutions.
Second, we have spent most of our time talking about the
multilateral development banks. I just want to highlight for a
second that there is also the question of support for the IMF,
which really is crucial to economic reform in many countries.
One thing that I think the science of economics does know is
that economies and democracies do not survive hyperinflation,
and that if we are to have a chance of promoting the kind of
stability in countries that we want to see, we have to enable
them to create a stable financial environment. That is the task
of the IMF and it has had a number of very conspicuous
successes in that task in recent years.
If we do not want to be called on when there is a financial
crisis to provide a bail out, we need for there to be an IMF
that is working to prevent financial crises.
I think they have done a particularly important thing in
the last year by setting a standard that exists for countries
on the way they have to disclose all their data. In many ways,
it is like generally accepted accounting principles here in the
U.S. we are finally getting something like that for developing
countries.
I think that is going to have a big effect in making
markets surveil people and, probably more importantly, as
accounting standards do in this country in reducing the
tendency to slip and slide when you have a problem.
The third thing I would just say is that if I had to reduce
everything we have been saying here today to one thought, it
would be this one. This is forward defense of American
interests. This is forward investment in our security, by
creating conditions that will prevent kinds of conflicts from
emerging in which Americans will have to intervene much more
expensively in a military way and much more expensively in
terms of human life. And to invest another few hundred million
dollars in making it possible to create greater stability in
the developing world where most of the world's people live,
even if there is only a small chance that each bit of it will
prevent another Somalia, or another Bosnia, or another Haiti,
just in terms of its direct consequence for the U.S. budget,
not mentioning any economic benefits to exporters and all of
that, if it has even a small chance of preventing one of those
incidents, fully meeting our obligations will pay for itself
many times over.
Thank you very much.
Senator Hagel. Mr. Secretary, as always, we are grateful
for you coming before us today and giving us your thoughts. I
might echo my colleague, Senator Sarbanes, and his compliments
to you and your team. We appreciate the work you are doing.
We all have an obligation here and a responsibility. We are
on the same team and we will look forward to working with you
as we go down the road.
Mr. Summers. If we have done things right in the last few
years, it is in no small part due to Bill Schuerch, who has
worked on these issues for many years from both a Congressional
perspective and, more recently, from an executive branch
perspective, and his extraordinarily able predecessors, Lionel
Johnson and Susan Levine, who I think have really done an
absolutely fantastic job of standing up for the United States
in these negotiations.
Senator Hagel. Thank you. The record will reflect that.
I got acquainted with Susan Levine many years ago, when we
were both interest he real world and actually making more
progress maybe than what I am doing here. She has always been
very talented and has been an asset to this country in every
way.
I would remind you, Mr. Secretary and your team, that we
will keep the record open until close of business on Friday for
my colleagues to submit any questions. We will have written
questions.
Thank you.
[Whereupon, at 11:30 p.m., the hearing was adjourned, to
reconvene at 2 p.m., June 12, 1997.]
MARKUP: THE FOREIGN AFFAIRS REFORM AND RESTRUCTURING ACT OF 1997
----------
THURSDAY, JUNE 12, 1997
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 2 p.m. in room
SD-419, Dirksen Senate Office Building, Hon. Jesse Helms,
(chairman of the committee), presiding.
Present: Senators Helms, Lugar, Coverdell, Hagel, Smith,
Thomas, Grams, Ashcroft, Frist, Brownback, Biden, Sarbanes,
Dodd, Kerry, Robb, Feingold, Feinstein, and Wellstone.
Also present: Senator Gregg.
The Chairman. Thank you, Senator Robb, for joining us. The
committee will come to order. This afternoon the committee is
meeting, of course, to consider the Foreign Affairs Reform and
Restructuring Act of 1997, which, as is well-known, provides
sweeping and long-overdue reforms to America's foreign affairs
agencies, and mandates tough reforms of the United Nations.
From the beginning it has been my hope that this effort
would be a bipartisan one, dedicated to the reorganization and
revitalization of our foreign policy institutions.
Unfortunately, in the 104th Congress the effort degenerated
into regrettably a partisan battle, and when Congress finally
enacted legislation to send it to the President, the President
vetoed a bill that would have eliminated just one Federal
Agency which had temporary status for half a century. Ronald
Reagan used to say there was nothing so near eternal life as a
temporary Federal Agency.
In any case, this year I was determined that this spectacle
would not be repeated. Shortly after the election last November
I spoke with the President and I expressed the hope to him that
we would and could work together this time around, thereby
forging a proposal to give the American taxpayers a break,
certainly a more efficient and effective foreign affairs
apparatus, and the President agreed.
I also conveyed this hope both publicly and privately to
Secretary of State Albright, who unhesitatingly agreed to work
with us in a bipartisan fashion, and she has been true to her
word.
Also, I discussed this matter with the distinguished
Ranking Member, Senator Biden, who readily agreed that it was
essential that this be a bipartisan project.
Thereby, we together sent the administration a clear
message that there must be no repeat of the unsuccessful
battles waged in 1995 and 1996, and to the credit of both the
President and the Sec-
retary of State, the administration came forward with a reform
plan addressing many, though not all of my key concerns, and in
the ensuing months Senator Biden and I, along with our
respective staffs, devoted dozens of hours to hammering out the
final package that we have before us today.
Let me make this clear. Neither of us got everything we
wanted, but the result of that give-and-take is the legislation
that we have before us, a bipartisan bill that will abolish two
of those 50-year-old temporary Federal agencies, the Arms
Control and Disarmament Agency, ACDA, as it is known, and the
U.S. Information Agency, USIA, and bringing some of the
functions of a third such agency, the Agency for International
Development, AID, under the direct control of the Secretary of
State.
Candor requires that I make clear that if I had my way we
would abolish AID entirely and start over again, but I also
recognize that this bill is the first step in a long process of
inventing and reinventing our foreign affairs apparatus.
Now, rest assured we will seek further reforms in the years
ahead if I have anything to do with it, but for now this
legislation does disestablish AID's independence from the
Department of State.
By transferring many AID functions to the Department,
including the legislative affairs and the public affairs
functions, and it will assure that the allocation of economic
assistance henceforth will be administered by the State
Department and directed by the Department of State. Under this
reform package the Secretary of State will at long last--at
long last--have policy control over this Nation's foreign aid
programs.
Now then, the legislation also contains the U.N. reform
benchmarks that I promised United Nations Secretary-General
Kofi Anon. He instructed me to remember that his last name
rhymes with canon, Kofi Anon when he came down and visited with
our committee back in January.
I believe it is fair to say that this bill represents the
most comprehensive and far-reaching U.N. reform package ever
considered by the Congress of the United States. Among other
reforms this bill will require the United Nations to reduce the
size of the U.S. contributions from 25 percent today to 20
percent by the year 2000, a measure that will save the American
taxpayers roughly $100 million a year.
It will require the United Nations to adopt a real negative
growth budget and eliminate at least 1,000 bureaucratic jobs.
It will prohibit future United Nations global conferences--for
example, the Beijing Women's Summit and the Rio Earth Summit--
meaning that the American taxpayers will not have to pay the
large cost of such meetings.
It will require the United Nations to reimburse the
American taxpayers for United States contributions to U.N.
peacekeeping operations, meaning that the U.S. defense budget
will no longer be raided to support U.N. experimentation with
such operations.
And most importantly, this bill would prohibit the payment
by the American taxpayers of any so-called U.N. arrears until--
and let me emphasize, until these congressionally mandated
benchmarks have been met by the United Nations.
The message to the U.N. is simple but clear: No reform, no
American taxpayer moneys for so-called arrears.
Last but certainly not least, this legislation is
authorizing funding for the Department of State and other
related agencies, and imposes very strict and very specific
disciplines on spending.
Now, let me reiterate at this point that this so-called
chairman's mark is a bipartisan effort. It does not contain
everything that I wanted. Senator Biden is a tough but fair
negotiator. Nor does it reflect everything that the Minority
desires, but in the end, all things said, I believe we have
produced a bill containing important reforms for this country
and for the taxpayers of this country.
And let me say, with all the sincerity I possess, that I
appreciate Senator Biden's effective cooperation in helping to
move this process along. It says a great deal that this package
is being introduced today as the Helms-Biden bill.
Of course, calling it the Helms-Biden bill is in a way a
misnomer, because this legislation would not have been possible
without the tireless efforts of the chairman of the
International Operations Subcommittee, Senator Rod Grams.
Senator Grams has devoted countless hours presiding over
oversight hearings on issues contained in this bill and to
working with other Senators and me to craft legislation that
the committee can support.
I have particularly relied on Senator Grams' special
expertise as the congressional delegate to the United Nations
in the crafting of a comprehensive United Nations reform
proposal. Senator Grams is the author of many of these historic
reforms, and I believe he has earned a place in the annals of
U.S.-U.N. relations for his work in designing this package.
I hope that the spirit of bipartisanship so evident today
will continue throughout this meeting today, and that the
committee can complete its markup today.
As I said earlier, I intend for this committee meeting to
continue until we have finished our work on it, because if we
can complete our work today I am told by the Majority Leader
that the full Senate can consider this legislation as early as
next week, and in that way this bill will be on the President's
desk at the earliest possible time, at which point it is my
full expectation that the President of the United States,
continuing the spirit of bipartisanship so evident today, will
sign this bill into law.
With that in mind, I now yield to the distinguished Ranking
Member.
Senator Biden. Thank you, Mr. Chairman. We are scaring the
living heck out of everybody. Helms-Biden, I am sure that half
the guys on your side are going, oh my God, it cannot be any
good if Biden signed on with you, and I know half the people on
my side are saying that to me.
But this is not just the Helms-Biden proposal here. I want
to make it clear that the administration has been aware of
every single solitary compromise that I have agreed to. They
have not necessarily agreed with every one of them, but they
have been aware of it all.
And so I fully expect--and I spoke with the President last
night about this. I fully expect--he did not comment, he did
not respond to me, I want to make clear--that I fully expect
that if we pass this bill in the essential form it is in now
that it will be signed by the President.
I want to thank you personally, Mr. Chairman. I know that
we are sort of this year's odd couple in the Senate, most
people think, but you and I have been working together for 24
years. We came the same day, and we have very different views
on a number of things.
But when I took over this spot on the retirement of
Claiborne Pell you and I had a long talk, and I think it is
appropriate to lay it out here very briefly, which is that I
went over to you not only to pay my respects to you as
chairman, but you and I talked about the future of this
committee, and I indicated to you then, as you did, that we
wanted to make this committee relevant.
We wanted to make this committee relevant in the sense it
makes no sense to be on this committee if we do not pass an
authorization bill. I might as well have joined the
Appropriations Committee and forgotten this committee, and
there is the Appropriations Committee member who writes our
bill for us, and he is generous all the time, I know.
But I might as well have stayed on the Intelligence
Committee or moved to the Armed Services Committee, because the
practical fact of the matter is the major items on the agenda
of this committee, in large part because of lack of any
bipartisanship, have in fact been determined by other
committees, and I did not sign on for a fifth term to be
irrelevant in that sense.
You made it clear that it was your intention to do the
same. As a consequence of that you have made some, and I can
see it on your face, some very, very difficult compromises. I
quite frankly know it has been hard for you on some of these
compromises, as it has been for me, but these compromises have
not been compromises that have, I think, in any way compromised
principle that we each of us share.
We are not in agreement on all that is in this package, but
in a sense, in the 24 years that I have been on this committee,
I do not know of any package that has been as significant or as
broad or as all-encompassing as this one effort we are
attempting to make.
And I might add Lee Hamilton and Chairman Gilman attempted
and thought we had all talked about this--they were going to
attempt to do the same thing. It is just a little more
difficult over there.
But this mark has three big components. When we talked at
the beginning of the year we both said there are five major
items on this committee. One we disagreed on, but agreed to
fight out, and that was the chemical weapons treaty.
The second one was the U.N. arrearages and reform. The
third one was the authorization. The fourth one was the
reorganization of the State Department, and one left to go--or
these still have to go, but the last one was the expansion of
the United Nations. I mean, the expansion of NATO.
That is a Freudian slip on my part, and my desire to expand
our efforts at the United Nations. I am sorry, Mr. Chairman.
So here we are. This is the basic authorization legislation
for the Department of State, the U.S. Information Agency, the
Arms Control and Disarmament Agency, and the Peace Corps.
The funding levels in this bill closely reflect the
President's budget. The total bill for fiscal 1998 is $6
billion as compared to the request of $6.1 billion that the
President asked. In fiscal 1999 the amount provided in this
bill is $5.9 billion. This is a modest reduction, and the
reduction is in the international organizations account,
consistent with the administration's commitments.
Within this framework we have provided full funding for the
State Department's core activities, and that is the diplomatic
and consular program salaries and expenses, protection and
maintenance of embassies. After years of reductions in spending
on diplomatic readiness I am heartened that we have provided
the full amount of the President's request in this account, 99
percent of the funding for USIA diplomatic programs, full
funding for exchange programs, full funding for international
broadcasting, full funding for the National Endowment for
Democracy, the Peace Corps, the Asia Foundation, and most
international commissions, and $819 million for 3 years, to pay
on our U.N. arrearages.
The only reductions of note come in two accounts,
Contributions to International Organizations, and Contributions
to International Peacekeeping Activities. I regret the cuts in
these important activities, but recognize we are closer today
than last week, and hope we can make further adjustments prior
to this bill becoming law.
I point out to my colleagues who support these programs
that they are fully funded, or nearly fully funded in the House
authorization bill. I also regret, as I am sure you do, various
portions. I also regret the inclusion of certain foreign policy
provisions to which the administration and some of my
colleagues have registered their objections. I hope we can
continue the dialog about modifying these provisions as the
bill moves forward, and in that spirit I would hold proposing
any amendments to these provisions at this time.
A second point I would like to make. The bill provides a
framework for reorganization of the foreign affairs agencies
that is consistent--that is consistent with the plan announced
by the President on April 18, and you have come a giant step in
accommodating their registered concerns, sticking to your
commitment to have a fundamental reorganization downtown.
Like the President's plan, the bill provides for
integration of ACDA into the State Department within 1 year,
but ensures that arms control function is maintained in the
position of prominence by establishing a position of Under
Secretary of State for Arms Control and International Security.
Like the President's plan, the bill provides for
integration of USIA into the State Department within 2 years,
and creates the position of Under Secretary of State for Public
Diplomacy. There is only one minor difference. It integrates
the Office of Public Liaison and Legislative Affairs into State
in 1 year.
In addition, the bill puts flesh on the bones of the
President's plan with regard to international broadcasting. The
President's plan is virtually silent on the question, stating
only the ``distinc-
tiveness and editorial integrity of the Voice of America and
the broadcasting agencies would be preserved.''
This bill upholds and protects that principle by providing
the existing Broadcasting Board of Governors will be maintained
as a separate Federal entity. All the broadcasting agencies
will be under the oversight of the board. There will be a
dotted line relationship to the State Department, and the Under
Secretary of State for Public Diplomacy will have a seat on the
board. Additionally, the Secretary of State will provide
foreign policy guidance to the board.
I should emphasize here that all the existing principles
and guidelines for international broadcasting set forth in the
legislation enacted in 1994 will be retained. So that everyone
may have full appreciation of these standards, we will
circulate a copy of the relevant sections of the existing
statute and show how we have amended the statute in the mark.
Like the President's plan, the bill maintains AID as an
independent agency. Let me repeat that. It maintains AID as an
independent agency but provides for partial integration of the
Agency for International Development into the State Department.
Just as the President announced, the AID administrator will
be placed under the direction of the Secretary of State, and
consistent with the plan's objectives to improving coordination
between the regional bureaus in State and AID, the Secretary
will have the authority to coordinate aid policy. This is
hardly a radical concept, Mr. Chairman. We have had aid
coordinators in the State Department since the early 1990's to
supervise aid programs in Eastern Europe and the former Soviet
Union.
This legislation is modeled on that concept. Indeed, the
language is borrowed directly from the Freedom Support Act,
which I had the privilege of coauthoring.
It bears emphasis that, unlike the bill reported by the
committee last Congress, this bill does not--does not--mandate
specific reductions in budgets or personnel. Instead, it
requires only periodic reports on savings that are achieved.
Additionally, the legislation provides considerable
flexibility to the administration to reorganize the foreign
affairs agencies within the framework we have provided. The
President and Secretary are given the authority to develop and
implement a reorganization plan. Ultimately, there will be some
transition and personnel authority that the administration will
need. I hope the administration will be prepared, by the time
we go to conference, to present us with the proposed
legislation in that regard.
The administration has submitted legislation which would
authorize it to reorganize with maximum flexibility--their
phrase--but this plan does not provide any less flexibility to
reorganize.
To be sure, the plan locks in the date for the ultimate
integration of the two agencies into State, and it speeds up
the partial integration of AID into State. That is the
difference. But I think it is good policy.
But within the broad outline, the administration has
considerable flexibility to take and implement the thousands of
decisions required under the reorganization. Ultimately it will
have to come back to Congress for certain authorities. This is
not extraordinary. This is the daily business of Government,
and so I hope the administration will work with the committee
on this procedure.
If the administration is committed to the reorganization
outlined by the President on April 18, as I believe it is, then
it should have no trouble implementing the legislative
framework laid out in this bill.
Finally, Mr. Chairman, the bill provides for payments of
U.S. arrears to the United Nations. The agreement which is
before us in division C will allow us to pay $819 million in
arrears to the United Nations over a 3-year period, contingent
upon the United Nations achieving specific benchmarks, to
borrow your expression.
I will mention a few of the particularly noteworthy
benchmarks. The plan calls for a two-stage reduction in our
regular assessment from 25 to 20 percent. At today's budget
level, that would mean the United States would save nearly $65
million in each year of regular U.N. dues.
Now, those who say to me, and the editorials I read, and
some of my friends in this committee say, we should not be
having any benchmarks. Well, I have been here a long time, and
I notice we have tried to pay these arrearages for a long time,
and we have got nowhere, so we either compromise or we get
nothing.
And the fact of the matter is, the House has nothing, and
the fact of the matter is, as well, that this notion of telling
the U.N. that certain things have to change I am not making a
lot of apologies for, for if we were today to be establishing
the U.N. in the first instance, does anyone think, in light of
the other world economies, we would be assessed 25 percent?
Now, granted, it would be better if it was not conditioned,
in my view. That is where my friend and I have a disagreement.
But my choice here, as I see it, is to condition and get what
the administration says is the bare bones they need, or get
nothing, and it seems to me it is vitally important to get what
you were willing to commit to, Mr. Chairman.
But again, I also think on a policy basis--just think of it
in these terms, folks. If the U.N. were being organized today
in San Francisco, would the United States be assessed 25
percent? I do not think any reasonable person would suggest
that would be the assessment.
The plan also requires the U.N. make a commitment that the
United States will be reimbursed for support we provided for
peacekeeping operations, something that is very important to
the chairman. It also conditions payment on assurance that the
United Nations has no designs on American sovereignty. I
believe they have none, but it makes it very clear.
In addition, the plan calls for a number of budgetary and
oversight reforms that promise to improve efficiency in both
the U.N. Secretariat and the largest specialized agencies. I
met with the President of the General Assembly for a couple of
hours and a number of people who are part of his staff, and
members of the United Nations, and they came to see me, and
they said, we do not want any conditions.
I said, fine. What changes do you think have to be made?
They outlined changes, and they are the same changes you think
should be made.
I said, well, you have choice here. You have a choice of
making the changes you think have to be made under the
understandable resistance of saying the United States is making
us do it, or making the changes on your own and getting no
money.
So it seems to me again I would prefer it not be
conditioned, like my friend from Indiana, but the truth of the
matter is, I would also prefer that we get this behind us and
get in good stead with the United Nations and move on.
I thank the chairman for working through this issue on a
bipartisan manner. I would also like to take a moment and
recognize and commend the efforts of Ambassador Lyman and his
team, who probably spent more time in his office and my office
and yours as well, with your staff, than they ever intended to
do and probably hope never have to do again. Ambassador Lyman,
who more than anyone else in the administration--and this will
probably get him in trouble, by acknowledging how helpful he
was--provided valuable assistance to me and to the chairman
over 4 months of very detailed negotiations that have led to
this bipartisan agreement.
Let me conclude by saying this. I know a lot of you--and I
do not blame a lot of my colleagues on my side, at least--are
understandable concerned that this is being presented to them
in a way where they are not in on every bit of the negotiation.
Well, the truth of the matter is we try to keep everyone
informed. The administration was informed. I do not blame them
if they--but I do not know any other way to do this. I do not
know any other way to do this.
Maybe I spent too much time doing criminal justice
legislation. I do not know how it gets done if it does not get
done this way. But I want to acknowledge that I respect the
views of any of my colleagues who may disagree with the
totality of this. But put it in this context. If the Senator
and I had come to you all and said, in January, we will be able
to present to you a package we can both agree on, that funds
the U.N. to the degree the administration says it needs, it
reorganizes the United States foreign policy establishment in a
way that the administration agrees with 99 percent of, and
basically fully funds for the next 2 years authorization for
the State Department, I think you all would have thought we
were crazy.
Well, that is where we are. Now I urge you all not to let
the perfect become the enemy of the good. This is a first-rate
move, in my view. This is an important step in the direction of
not only making this committee relevant, but, in my humble
opinion, of establishing for the first time in a long while a
genuine sense of bipartisanship in the conduct of American
foreign policy, at a time when much of it is necessarily up for
grabs.
And so I thank you, Mr. Chairman. I yield the floor.
The Chairman. I thank you, Senator. I thank you for the
hours that you have spent working with us and with the staff.
You have been most helpful and generous.
I note the presence at the table of the distinguished
Senator from New Hampshire, Mr. Judd Gregg. He is the
distinguished chairman of the appropriations subcommittee which
oversees the Departments of Commerce, State and Justice. I
think what he may be preparing to see will be important, in
terms of launching consideration of this bill.
I guess it would be accurate to welcome you back, Judd. He
was formerly a member of this committee. But I understand why
he changed to Appropriations. But his expertise in foreign
affairs obviously has served him well in his new role on the
Appropriations Committee.
As a matter of fact, to be honest about it, I do not think
we would be here today without Judd Gregg's early and active
support of the concept of this legislation. He has been a major
contributor to almost every aspect of it. Indeed, his tireless
work in promoting this legislation signalled, I think, to the
administration early on that the appropriators and authorizers
could not be divided and conquered, that we were a united
front, and that we meant business.
So we welcome you and your comments sir. Welcome home.
Senator Gregg. Thank you, Senator. I appreciate the
invitation to be here. I recognize that you have got a lot of
work to do. I thank you very much for the chance to speak with
you, which was an invitation extended by yourself. I do not
want to take a lot of your time. A lot of what I have to say
has been summarized by yourself and Senator Biden.
I simply want to make a couple of comments. First, I
believe the bill that you are about to mark up is an
extraordinary document, that is a very positive step forward
for our foreign policy as a Nation. As chairman of the
committee on appropriations, which has oversight over a large
percentage of this bill in the spending side ledger, it is
going to be the courses we are going to follow as we sail down
the process of funding the agencies.
Second, I want to speak specifically to the U.N. agreement.
This, as has been mentioned, was an agreement which took
literally months of intense negotiation. When it started out, I
think most of us did not feel we would reach an agreement. But
with the strong leadership of yourself, Senator Biden, and
especially Senator Grams, whose efforts in this area have been
extraordinary, and the imprimatur of get something done that
was given to us by Senator Lott, we were able, working closely
with Secretary Albright and Ambassador Richardson, to reach
this understanding.
And the way I view this understanding is as follows:
Basically, what we are going to do--well, there were three
issues. The first was we had an issue of the amount. How much
do we owe in arrears? The second issue was, what should the
benchmarks be? What should we set as the goals that we feel the
U.N. should try to obtain? And, third, what would be the
payment procedure?
What I think we ended up with was essentially a letter of
credit. We are saying to the United Nations, you reach certain
conditions and we will pay you. All letters of credit require
that obligations be met. So we are going to expect some
obligations. But if they meet those benchmarks, we are going to
pay. The benchmarks that we have set out are reasonable. They
are negotiated benchmarks with the administration and with the
understanding of what the U.N. felt it could do and it could
not do. They are not unreasonable demands.
If you go down through the list, they involve fairly
obvious things, such as that our Constitution will be
recognized as sovereign; that there will not be a standing army
at the U.N.; that there will not be any tax policy initiated by
the U.N.; and substantive things on the area of fiscal
management, which I happen to think are very important, because
I think the U.N. has serious fiscal management problems; things
like an accounting procedure, where we can actually find out
where the money goes; a personnel procedure, so we can know who
they hire and why they hire them; a procedure for evaluating
when they deliver a service, whether it was actually delivered
or whether it was not delivered.
And then, third, an issue that has been of significant
concern, which is, what is the proper burden for the American
taxpayer to pay of the cost of managing the U.N.? And we have
reduced that burden, and reduced it, I think, in a reasonable
way. We are still picking up a huge percentage of the U.N.
burden, but it will not be quite as large as it has been in the
past.
And, of course, the bottom line to all this is that I
believe, after you have passed your bill and we have put in
place the language which spends the money conditioned on the
language of your bill, that we will be able to return to our
people in our States, our taxpayers, and say yes, the dollars
that you are sending to the U.N. are going to be spent
effectively. The U.N. is an institution which deserves support.
It is an institution which should have a positive impact in
international affairs. It is an institution which can have a
positive impact on American policy. But we have to make sure
that we can say to our taxpayers that they are spending our
dollars well.
And the end result of this effort, which has been put
together by Senator Helms, Senator Biden, Senator Grams, and
Senator Lott, who played a major role, Secretary Albright, and
Ambassador Richardson, is to produce a package which
accomplishes that goals.
Also, I would like to thank the staff. Because the staff
hours on this, as in anything else, were extraordinary. My own
staff person, Vas Alexopoulos, spent literally hundreds of
hours on this; Tom Kleine, Patti McNerney, Chris Walker, and of
course the inimitable and unreplaceable Admiral Nance, who did
an extraordinary job of keeping this moving.
So I thank you, Mr. Chairman, for allowing me to come here
today and just simply say thank you for the effort you put
together, because it is going to make my job as an appropriator
a heck of a lot of easier.
The Chairman. To the contrary, sir, we thank you. We thank
you for being here today. Thank you for your comments.
Now, then, my recommendation is that we should proceed
through the bill by division, beginning with division A,
relating to reorganization. Then we can turn to division B,
related to State Department basic authorities. Then division C,
relating to reform at the United Nations. If there are no
objection, then, I suggest that the committee now begin
consideration of any amendments to division A.
Now, on both sides, I believe--I know on my side--I want
the experts to be able to answer technical questions that may
be raised about phraseology or procedures and so forth. So I am
delegating Tom Kleine to do that job on our side.
Are there amendments to division A?
Senator Coverdell. I move the adoption, Mr. Chairman.
Senator Feingold. Mr. Chairman, I offer an amendment.
The Chairman. The Senator will state it.
Senator Feingold. To strike the provisions establishing a
new independent Agency for International Broadcasting. Mr.
Chairman, if I can proceed?
The Chairman. Yes, absolutely.
Senator Feingold. Mr. Chairman, I am very concerned about
the provisions included in the committee mark that will
establish a new independent Federal Agency to administer United
States international broadcasting programs. I just do not see
how this section of the bill makes any sense, in light of the
hard work this committee invested in 1993 and in 1994 in
restructuring the U.S. role in overseas broadcasting by
consolidating various programs and taking clear steps to move
Radio Free Europe and Radio Liberty down the road toward
privatization.
In 1994, this committee took the lead in doing something
very unusual in Washington. This committee wiped out a Federal
Agency. It finally did it. I do not know if it was Reagan or
Bush who said that the only thing that is immortal in
Washington is a Federal Agency. Well, unfortunately, if we take
this step, we are going to prove them right again.
The agency was called the Board for International
Broadcasting, or the BIB. We consolidated international
broadcasting programs in the Voice of America, along with all
the surrogates within a Federal Agency--one Federal Agency, the
USIA. We imposed tight fiscal controls on the two programs that
were just rife with fiscal abuses and mismanagement, and
mandated steps toward privatization for RFE/RL. In fact, we
said that Radio Free Europe and Radio Liberty should be
completely privatized by 1999. It is Federal law right now that
that should happen. We have saved the taxpayers close to $1
billion over a 9-year period by doing this.
At the time the committee took this action, Mr. Chairman,
as you well recall, RFE/RL was spending 25 percent of their
budget on administrative costs, while the Voice of America was
only spending 12 percent on theirs. Extremely lavish
government-paid salaries and perks for executives were a deeply
ingrained way of life for these programs.
Now, today we have before us a proposal to recreate what
appears to be something virtually identical to the old Board
for International Broadcasting, an independent Federal Agency,
governed by a board of directors. Now, colleagues, this is a
road map to return to where we were 3 years ago.
I find it incomprehensible that just as we, under the
chairman's leadership, are consolidating our foreign policy
apparatus under the reorganization plan in this bill, that we
would create a new Federal Agency virtually identical to the
one we wiped out less than 3 years ago.
Let me very briefly outline the problems I have with the
Biden proposal. Let me just say that Senator Biden and I have
been at this for years and understand each other on this. We
have agreed on almost everything since I have gotten here, but
this one was our first encounter and it is going to be
apparently a continuing encounter.
Senator Biden. And hopefully our last.
Senator Feingold. Well, it depends on how it comes out.
But these are my problems. First of all, fiscal abuse. The
structure Senator Biden has proposed has historically been a
breeding ground for fiscal abuses. These were not just
uncovered in 1993. I have a stack of GAO reports and I.G.
reports going back two decades, documenting the fiscal abuses
that this independent structure generated. Senator Howard
Pastore, in his 1976 account of this problem, said the abuse
has reached the point of becoming almost scandalous. That is
what we put an end to in 1994. We finally put an end to the
abuse.
Second, privatization. There was a commitment made in 1994,
put into the law, that we would eliminate this thing and
completely privatize it by 1999. Why would we recreate an
independent agency to administer the grants for RFE/RL for this
short period of time? If we recreate this entity, I can assure
you, as all Federal programs do, it will find a justification
to continue. All the hard work and consensus that was developed
around the idea that RFE/RL should be privatized will be under
attack.
And, third, there may be attempts to suggest that this
somehow is not a new Federal Agency. But I assure you it is
simply a new Federal Agency. I find it hard to believe that the
members of this committee, many of whom are deeply committed to
downsizing the Federal Government and achieving deficit
reduction, want to have a hand in creating a new Federal
Agency, an agency that not only would be new, but just is not
needed. That is exactly what these provisions will do--create
an unnecessary new Federal Agency, with all the overhead and
bureaucracy and trappings of a brand-new agency.
And I am not alone in this view. I think, if I could, Mr.
Chairman, I would like to put a letter from the Taxpayers for
Common Sense in the record.
The Chairman. Without objection.
[The information referred to follows:]
Taxpayers for Common Sense,
June 12, 1997.
The Hon. Russell Feingold
United States Senate,
SH-716 Hart Building,
Washington, DC 20510
Re: Support Feingold amendment to
State Department reauthorization
Dear Senator Feingold: Taxpayers for Common Sense supports your
amendment to the State Department Reauthorization bill that will be
marked up today. We urge all members of the Committee on Foreign
Relations to support your amendment.
In 1994, Congress passed legislation terminating the Board of
International Broadcasting, (BIB), an independent federal agency
responsible for administering the grant for Radio Free Europe and Radio
Liberty (RFE/RL). In doing so, the legislation mandated that steps be
taken to privatize RFE/RL. The legislation also established a
Broadcasting Board of Governors within USIA in order to curb extensive
internal problems that plagued the programs under the BIB structure.
Contrary to the law and to congressional intent, the committee
version of the State Department Authorization Bill that will be marked
up today would create a new federal agency strikingly similar to the
BIB. Congress terminated this just three years ago by an overwhelming
bipartisan vote. The BEB structure fostered rampant fiscal abuses,
lavish executive salaries and executive perks, despite numerous GAO and
Inspector General reports noting fiscal problems over the course of two
decades.
Your amendment would simply strike the committee's language on this
issue. TCS supports your amendment because it would prevent creation of
a new federal agency. While the budgetary savings may be relatively
small compared to the entire federal budget, the principle at stake is
large. Can Congress follow through on budget cuts? Finally, your
amendment is a step in the right direction at a time when many believe
it is important to restore confidence of American taxpayers that U.S.
international programs are wise expenditures.
Sincerely,
Ralph Dennaro,
Executive Director.
Senator Feingold. And if I may, Mr. Chairman, everyone
should have received a copy of this. It says as follows, in a
letter dated today to me, which I have distributed:
Taxpayers for Common Sense supports your amendment to the
State Department reauthorization bill that will be marked up
today. We urge all members of the committee on foreign
relations to support your amendment.
Contrary to the law and congressional intent, the committee
version of the State Department authorization bill that will be
marked up today would create a new Federal Agency strikingly
similar to the Board for International Broadcasting. Congress
terminated this just 3 years ago by an overwhelming bipartisan
vote. The BIB structure fostered rampant fiscal abuses, lavish
executive salaries and executive perks, despite numerous GAO
and Inspector General reports noting fiscal problems over the
course of two decades.
Your amendment would simply strike the committee's language
on this issue. Taxpayers for Common Sense supports your
amendment because it would prevent creation of a new Federal
Agency. While the budgetary savings may be relatively small
compared to the entire Federal budget, the principle at stake
is large: Can Congress follow through on budget cuts?
Mr. Chairman, I submit that this is a significant issue,
just in general, because of the deficit issue and our efforts
on balancing the budget, but specifically, in light of the
spirit and the accomplishments embodied in the rest of the
agreement, which is in the direction of consolidating, not
creating, new agencies in the Federal Government.
Thank you, Mr. Chairman.
Senator Biden. Mr. Chairman, let me respond, if I may.
First of all, let us understand what the fundamental
disagreement the Senator from Wisconsin and I have. He does not
believe, I think it is fair to say--and please correct me,
Senator, if I am wrong--that there is a need for private,
public or in any circumstance Radio Free Europe, Radio Liberty
or Radio Free Asia. That is the fundamental disagreement we
have to begin with, number one.
Number two, if they are to exist, the issue is they only
have efficacy if they are totally independent. They cannot be
the voice of the official policy of the United States in order
for them to have any efficacy. That was why Radio Free Europe
helped bring down the Berlin Wall. No one doubted its
independence, its journalistic integrity.
So I will acknowledge one thing. If there is no
journalistic independence, then there should not be the radios.
So the key here is, if you start off and say there are to
be the radios, the radios make sense--if you agree with the
Senator, having the radios, public, private or otherwise, makes
no sense, then you are right. Because to fold them into the
State Department completely eliminates their objectivity in the
minds of the people we are trying to get to. That is number
one.
Number two, this notion that we are creating a new agency.
What we are doing is stripping everything out of an existing
agency except for one thing. The only reason we are not
stripping it away is because of the need for independence,
journalistic independence.
Now, it may seem strange that a guy like me would be
spending so much of my time in the last 10 years doing this.
But I think, I truly believe, there is as much a need for
unfiltered, reliable information, not able to be--not able to
be--censored by even our government, to get to a part of the
world that will be in chaos and confusion for the next two
decades, particularly the establishment of Radio Free Asia,
which so many of you supported me on.
Now, this notion that it undermines privatization. I agree
with my colleague when we reached a compromise a year and a
half ago or whenever it was that we should work toward
privatization. But, quite frankly, that is more consistent with
my notion of its independence.
Let me ask you the rhetorical question: How many of you
think there is a greater chance of it being privatized if it
sits out here by itself with that mandate attached to it or if
it is subsumed into the State Department with USIA? What do you
think, folks? Where do you think it is more likely to have a
shot at being privatized and having the push to privatize it?
This does not in any way change the directive by 1999.
Kevin Klose is here. I do not want to take up the committee's
time, but he is prepared to testify and tell you about the
efforts toward privatization.
The third point--and there is much more to say, but we have
many more things to cover I acknowledge, and I am not in any
way trying to trivialize the amendment--it is very important,
and it is very important to me--but this notion that we are
going to put in place this sort of spendthrift cesspool that is
going to go out and do all these things now. The truth of the
matter is this is a broadcasting board we put in place 3 years
ago. It has a direct line responsibility, answering to--in
terms of connection to--we handed out this little
organizational chart for you here--to the State Department. The
State Department has, as a permanent voting member, the Under
Secretary of State, who will give policy guidance on that
board, but is only one of the board members--only one of the
board members.
Now, the idea that this broadcasting board of Governors,
which, by the way, all the savings my friend has acknowledged
we have accomplished, through his leadership on this, were
accomplished by this board--these are the folks that went out
and did it. These are serious people. They moved the operation
from Germany to Prague. They modernized it. They consolidated.
They cut.
I love my staff, but I drive them crazy and they drive me
crazy. They want me to point out that this says dotted line,
not straight line. I apologize.
But, at any rate, they are the ones--they are the ones--the
board are the ones that initiated these savings. These are
serious people. This is not a boondoggle.
And the last thing I will ask you: Do you think it is
harder to hire, do you think it is harder to hide, do you think
it is harder to waste the taxpayers' money sitting within the
gigantic bureaucracy called the State Department or sitting out
there all by yourself with my good friend from Wisconsin, with
his--as my kids would say--spyglass, watching everything they
do?
So I would argue the following, and conclude with this.
One, privatization is more likely keeping it where we have it
in the bill. Chicanery relating to spendthrift tendencies is
less likely with it sitting out there in the cold light of day
rather than buried in the bowels of the State Department.
Three, it is absolutely critical, if you think Radio Free
Europe, Radio Liberty and Radio Free Asia has any relevancy, it
is absolutely critical that they maintain their journalistic
independence. They cannot do that, with all due respect to a
Secretary of State I love and future Secretary of States who I
may, it cannot do that within the State Department.
So the fundamental difference my friend and I have--and we
had this conversation yesterday--is, at its root, in addition
to saving money, which this has become the most fiscally
conservative guy I know from the time he got here--I do not
know, I mean this is an unusual guy--but the root problem is
not just saving money, it is you do not think these Radios make
any sense any longer, do not have any relevance any longer. So,
for all those reasons, I would urge my colleagues to vote
against the amendment if and when we get to that vote.
The Chairman. I agree with the Senator, and I find it
somewhat novel that I am indirectly or implicitly being charged
with favoring the creation of a new Government Agency.
The fact is that this provision does not create a
Government Agency. What is does, as Senator Biden has so
eloquently demonstrated, it simply keeps a current function of
USIA--namely, the freedom radios--separate from the Department
of State. No new missions are created. No new bureaucracies are
established. We simply maintain the independence and editorial
integrity of the already existing radios.
Now, I understand the arguments that the Senator has made.
I think I made some of them myself when I introduced the
reorganization in 1995. But then I was approached by a number
of distinguished Americans who have been active in this field--
people like Jeanne Kirkpatrick, who made the case for their
independence, and Steve Forbes, and others. I took note then,
as I do now, that the clamor for maintaining the independence
of the radios is coming not from an entrenched bureaucracy
opposed to reforms, but rather from the very conservatives who
have championed reforms.
So I think most Senators will agree that, thus far, freedom
radios have served us well, as Senator Biden has said. So well,
in fact, that we recently created a new Radio Free Asia to
broadcast to the oppressed peoples of mainland China and Tibet
and East Asia. At the behest of Senator Brownback, we are, in
this very bill, creating a new Radio Free Iran, with a similar
purpose, with offsets of course.
So I thank the Senator for his comments, and I join him in
hoping that we will defeat this amendment.
Senator Brownback. Mr. Chairman.
The Chairman. Yes.
Senator Brownback. Thank you very much.
I want to reemphasize a point, if I could, and make certain
that--I know the chairman is with this--that we are going to
continue the privatization effort on those entities within the
radio free area that we can, at the same time that we are
adding into areas where we think we really--we can go again and
do and accomplish again, with these new radio messages, into
areas what we have already accomplished in some others areas
that we ought to be privatizing.
The Chairman. Exactly.
Senator Brownback. And that the chairman and I think the
rest of the committee is committed to privatizing. I hope that
message goes through to the people that are operating these
radio free operations.
The Chairman. I thank the Senator. I can assure him that
will be done.
Senator Feingold. Mr. Chairman.
The Chairman. Yes, sir.
Senator Feingold. May I respond?
The Chairman. The Senator is recognized.
Senator Feingold. This is exactly how they told me it would
go once I got out here. Eliminate an agency, but then they
would figure out a way to give it a different name, recreated a
couple of years later, and you are off to the races again. This
is a boondoggle. This is a boondoggle that is going to be
recreated.
Senator Biden says let it sit out there in the plain light
of day and not in the State Department and see what happens.
Well, we saw what happens for 20 years when it sat out there by
itself. Salaries exceeding $200,000 and $300,000 a year for
executives in Munich. This committee worked long and hard, with
the support of the chairman and others, to finally say enough
is enough, there needs to be accountability.
The only accountability that is left after this agreement
is what Senator Biden correctly said--one guy from the State
Department is going to sit on a board--one vote out of nine.
There is no direct budgetary responsibility to the USIA, which
exists under the current agreement. Under Senator Biden's
provision, this organization does not have to go through the
USIA for their budget. They go straight to OMB. A separate, new
pleader in the Federal Government for Federal dollars.
And let me correct something Senator Biden said. I never
said I was against any form of RFE/RL. If it wants to privatize
and compete against CNN and BBC and the private, free
enterprise market to do a better job, I am all for it. Why
should we subsidize it at this point? What is the justification
for creating a brand-new agency that will do this?
Senator Biden. Freedom.
Senator Feingold. Oh, it is government-subsidized freedom.
Senator Biden. I do not care; it is freedom.
Senator Feingold. Yes, well, the information I have gotten
from a number of my colleagues here is they think other
entities that are not government funded are able to do this and
are doing it well. But the point is that there is no
credibility to the notion that this is not a new Federal
Agency. You can put as many words around it as you want, but it
is. It is appointed by the President. It is accountable to no
one but the President himself. I got a feeling he has got a few
other things to do than to micromanage this deal.
So, my colleagues, I assure you, I certainly will want it
taken up here and hope we can defeat it here, if not on the
floor. But this is just a classic example--a classic example--
of where the rhetoric does not meet the reality. We finally
hunkered down on something, consolidated, and saved. I thank
the Senator from Delaware for acknowledging the savings that
came out of this.
You know, you made the comment that this agency worked hard
and made the savings. They did not make the savings. They were
mandated to by Congress. We cut their budget to $70 million a
year and they had to. It was not out of the goodness of their
heart.
So the fact is here, Mr. Chairman, that this is reversing
course in a way that it is inconsistent with what I think is
really a commendable direction of your overall proposal. I
think it is regrettable, and I will certain revisit it as many
times as I need to in order to make sure that we do not make
this mistake and start moving in the opposite direction of why
so many of us came here in the first place--to bring this
government spending under control and to have a little
rationality to the organization of the government.
The Chairman. Senator Coverdell.
Senator Coverdell. Senator Feingold, an interesting debate
here. Are you asserting that the mandates and construction in
your initial work is deemed obviated by the plan that is
supported by the chairman and ranking member? In other words,
the financial mandates and construct of your original work, is
it not still in place?
Senator Feingold. I am suggesting--a portion of it, of
course, is still there. We still have the same financial limits
that were there before, and I do not dispute what Senator Biden
has said on that. What I do dispute, however, is the notion
that we are not creating the scenario where it will happen
again. In fact, I think we are setting up the road map, with no
accountability, with a direct opportunity to plead for funding
directly with the OMB. What you are doing is essentially
creating a Federal Agency that cannot be eliminated.
And I think what will happen is that the very limits that
we have established will come off, just as I notice the
slippage of the commitment to consolidation on this very
committee that was so clearly identified a few years ago, when
we did require that this go under the USIA, on a 15 to 4 vote.
Senator Kerry. Mr. Chairman.
The Chairman. Senator Kerry.
Senator Kerry. Mr. Chairman, having chaired that component
of what happened 3 years ago, I must confess that I am somewhat
baffled, and I share the feelings of the Senator from
Wisconsin. This is the 1993 committee report on what we did. It
says the committee bill incorporates, with some modifications,
the administration's draft bill. This was the administration. I
mean, are they signing off on this? It is a reversal of 3 years
of policy if they are.
Because they said, the administration's draft bill, to
consolidate the broadcasting activities of USIA and the Board
for International Broadcasting. We consolidated Radio Free
Europe, Radio Liberty, Radio and TV Marti, Voice of America, et
cetera, for a lot of different reasons. One of the reasons was
that it was out of control. I mean we had spending abuses. We
had extraordinary salaries. We had lack of management. So we
brought it in to get control of it.
We mandated that. They did not do that because they were an
independent agency. It was because they were an independent
agency that we saw fit to rectify the problem. The consequences
of our action was the following. We created the board and we
put the board into USIA.
Now, that same board--I do not know what the
administration's consolidation plans are, but USIA is now going
into State. So what is all this malarkey about independence? I
mean you are going to have the USIA board now in State. The
board is going to be still appointed. They are still going to
seek money.
I mean if we are kidding ourselves that the United States
of America thinks that because we overtly set up some separate
entity, quote, but we are funding it every year, and they are
competing for appropriations with everything else in the
budget, that we have created independence of editorial, I mean
that is ridiculous. No more than you can guarantee it in its
current form, which is----
Senator Biden. Will the Senator yield on that point?
Senator Kerry. It is one of the things that we debated. Let
me just finish. It is what we debated 3 years ago. We all
worried about whether or not they could be independent within
the State Department. We set up a structure that, at that point
in time, we thought created sufficient independence, and the
committee signed off on it. We saved $240 million over 4 years
because we did that.
Now, all of a sudden we are coming back in an age where the
BBC is the most important and single best coverage in all of
Asia, where you have got faxes--the fastest-growing form of
communications in Asia today is wireless. They cannot control
that, and you have got satellite television and a host of other
things with dishes more available than ever before. Go over to
China, you will see them.
And we are sitting here worrying about setting up some kind
of cold war construct again to go back and expose ourselves to
all those abuses. I do not know what the rationale is, I
honestly do not.
Senator Biden. Mr. Chairman, let me just take 120 seconds
to respond to that. Number one, I think you make the best
argument, John. You do not think these radios are necessary,
whether they spend money or do not spend money, either funded
or not funded.
You make the argument about BBC, and satellite dishes, and
you may be right. That is what we have a fundamental
disagreement on. But the notion that they can maintain
independence and still be funded by the Federal Government,
there is a little thing called Radio Free Europe. It worked
that way for 50 years. For 50 years it was funded by the
Federal Government, and guess what, the rest of the world
treated it like it was. It had journalistic independence.
Senator Kerry. That is precisely my point, Senator. If you
have it, one way or the other they still know it comes from the
United States of America. It is not because of how it was
funded. It is because of either the integrity of the news, the
reliability--it is the only thing they get.
Senator Biden. It is the integrity of the process.
The Secretary of State cannot pick up the phone and could
not pick up the phone and tell the editorial board at Radio
Free Europe do not put out that editorial. Everybody in the
world knew that, and they still know that.
They cannot do it now, but if you put it within the State
Department, and let us make it clear, we set up this new board
within an existing independent agency called USIA, which was
not part of the State Department, so it was never part of the
State Department, and in the reorganization efforts it was
never intended to be part of the State Department.
Now we have stripped away all the stuff that it need not be
independent and put it inside the State Department and left the
part that should be.
Again, this is like beating a dead horse here, but the
bottom line here is, keep in mind, listen to what we all say
here. The question is, are these radios relevant and
independent? Does it make any sense, or do we not need them,
and count on--which is a legitimate argument--CNN World News
and BBC and the rest, and we do not need to be in the game.
I think we need to be in the game. I think they make sense.
Nothing changes. That is my answer to my friend from Georgia's
question about the mandates that we have in terms of
accountability for this board, any more than we did a year-and-
a-half ago. I still think they are relevant. If you do not
think they are relevant, then you should vote with my friend.
If you do, then I think you should vote with us.
Senator Kerry. Let me just say, Mr. Chairman, the vote is
not over relevance. They are relevant. That is why we kept
them. The vote is not over relevance. The vote is over control
with respect to spending, and whether or not you believe that
where it lands distances it sufficiently from the fact that we
are funding it.
If you think independence comes from creating a separate
agency that will compete for funds, but still gets funded by
us--if you think it gets independence from that, fine. In my
judgment, there is no difference, except that you are creating
an entity that will compete for funds and take us back to the
era of lack of control.
This is about Government efficiency. It is about size of
Government. It is about how we spend money. That is the vote.
Senator Feingold. Mr. Chairman, one quick other point, if I
may. Let me just remind my colleagues that in addition to this
notion that we are going to have RFE/RL and this board out
there for just a couple of years, when it is supposedly going
to be privatized, after we do all of this, the Voice of America
is going out there, too. The Voice of America has been under
the USIA.
Senator Biden. But not the State Department.
Senator Feingold. We are moving the USIA into the State
Department because we want consolidation. That is not what we
are doing here. We are taking not only Radio Free Europe, what
is left of it, but we are also taking the Voice of America and
just leaving it hanging out there without that.
Senator Biden. Senator, you are making the point, if I may.
You are making the point. Our reorganization effort, if we
wanted to do what you and the Senator from Massachusetts have
done, when we reorganized we would have put it in the State
Department.
We chose not to, and all I am doing is stripping away some
of the things that were part of USIA and putting them in the
State Department and keeping the radios where they were and
where the reorganization called for them to be, outside State.
Senator Feingold. That is inconsistent with the very
purpose of the agreement.
Senator Biden. You know, Mr. Chairman, there used to be an
expression that Ralph Waldo Emerson used. He said foolish
consistency is the hobgoblin of little minds. I just think
where we are now, this is getting to be foolish consistency.
The Chairman. We will leave the little minds out of it.
Senator Biden. I did not mean it that way. That sounded--
that came out the wrong way.
That is why I do not do radio.
The Chairman. Are we ready to vote? Would the Senator want
a roll call vote?
Senator Feingold. I sure do.
The Chairman. The clerk will call the roll.
The Clerk. Mr. Lugar.
Senator Lugar. No.
The Clerk. Mr. Coverdell.
Senator Coverdell. No.
The Clerk. Mr. Hagel.
Senator Hagel. No.
The Clerk. Mr. Smith.
Senator Smith. No.
The Clerk. Mr. Thomas.
Senator Thomas. No.
The Clerk. Mr. Grams.
Senator Grams. No.
The Clerk. Mr. Ashcroft.
Senator Ashcroft. No.
The Clerk. Mr. Frist.
Senator Frist. No.
The Clerk. Mr. Brownback.
Senator Brownback. No.
The Clerk. Mr. Biden.
Senator Biden. No.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. Present.
The Clerk. Mr. Dodd.
Senator Dodd. No.
The Clerk. Mr. Kerry.
Senator Kerry. Aye.
The Clerk. Mr. Robb.
Senator Biden. No by proxy.
The Clerk. Mr. Feingold.
Senator Feingold. Aye.
The Clerk. Mrs. Feinstein.
Senator Feinstein. No.
The Clerk. Mr. Wellstone.
Senator Wellstone. Aye.
The Clerk. Mr. Chairman.
The Chairman. No.
The Clerk. Mr. Chairman, the vote is 3 yeas, 14 nays, 1
present.
The Chairman. I thank the clerk. Are there further
amendments?
Senator Coverdell. I move the adoption of section A as
amended.
Senator Biden. I second that, Mr. Chairman.
Senator Sarbanes. Can I be heard on that? Are we going to
vote on each division as we go?
The Chairman. Yes, sir.
Senator Sarbanes. I am opposed to this division. I do not
think that a reorganization plan should be forced on an
administration which has indicated that it is willing to
undertake a reorganization and is very much in the throes now
of trying to plan it, and I think the administration ought to
have the opportunity to lay out its reorganization plan to the
Congress.
Now, if we differ with it, we may then find ourselves
imposing a reorganization of the executive branch, which the
executive branch does not want, particularly a reorganization
in the very area that is generally regarded as primarily an
important Presidential responsibility under the Constitution,
but I think an administration--and I took this attitude with
both the Reagan and the Bush administrations--ought to have the
opportunity to shape and frame their own reorganization, submit
that to the Congress.
I would give it great weight. I would not regard it
necessarily as definitive, but I would give it great weight,
and I think the Congress, if it is going to act on
reorganization of the foreign affairs agencies of the executive
branch of our Government at a minimum should have before it the
blueprint that the executive has proposed.
We are not at that point. Therefore I oppose this.
Senator Biden. Mr. Chairman, just a 30-second response. The
administration does not agree with every piece of this
reorganization, but the administration is aware of every aspect
of this reorganization. They have been consulted by me and by
the chairman.
There is only one place I am aware that the administration
does not and would rather there be change in it, and the truth
of the matter is that this is the bulk of everything they have
agreed to.
I have had private, personal, public discussions with the
Secretary, with the others in the State Department, with the
USIA, with AID, with ACDA, and all the leaders of each of those
organizations. They would all have a preferred view.
On principle they would rather not have us do anything, but
knowing that we are going to do something they have laid out an
outline the President sent to us. This is consistent with the
outline they sent to us.
One change that they would like is a change, and I on a
policy basis disagree with them on it, and it is whether or not
the Regional Assistant Secretaries, who are part of policy
decisions made by AID along with the Secretary, they would
rather not have that interjected in there. I disagree with them
on policy grounds, but let us make it clear, this is consistent
with the framework laid out by the President.
I have a letter here--you have a letter here, Mr. Chairman,
from the Secretary of State, and it says, internal
deliberations are underway to develop a detailed reorganization
plan--excuse me. Internal deliberations are underway to develop
a detailed reorganization plan consistent with the President's
decision, implementation of which will require action by the
Congress.
As a matter of principle, the administration supports
legislation which provides the President maximum flexibility
and does not prejudice the outcome of our internal
deliberations, and to that end has shared proposed language
with this committee.
The administration also supports a reorganization along the
lines of H.R. 1757, the foreign relations authorization bill
passed by the House of Representatives. The draft of the
committee bill most recently provided to the administration,
however, goes well beyond the President's plan in several
instances, and we cannot support where it goes well beyond, but
then they go on to point out that the essence of what we have
done is consistent.
But I want to make one other point. Even if it was not, the
administration has a very difficult decision. This is a
package. In order for me to get my good friend here to move
that number on the U.N. to where it is, this is part of the
deal. It is a policy standpoint. It makes sense in my view, but
beyond that, we all talk about ideally what we would like. This
is part of an overall package, three pieces here, and so--well,
anyway, I think it is a good reorganization plan, Mr. Chairman.
The Chairman. Senator Kerry.
Senator Kerry. Mr. Chairman, just very quickly--and I am
not going to delay the vote, but we worked long and hard
through the Arms Control and Disarmament Agency to buildup
expertise in the analysis of treaties and compliance with
treaty requirements as well as legal analysis and advice, which
has paid off on many occasions.
The risk of proliferation right now, though it does not get
the focus that many people think about, is as significant as it
has been in a long time, and I am talking about all kinds of
proliferation--mass destruction weapons, ballistic cruise
missiles, other threatening weaponry.
I am concerned that we do not lose that expertise in the
process of this reorganization, and I think our security
depends on that. Now, I explored through staff with you the
possibility of having some kind of an amendment to guarantee
that. You preferred--and I wanted to retain it, obviously,
within the Under Secretary for Arms Control and International
Security which we establish.
I would have preferred to have done that statutorily. You
want to do that in report language. I respect that, and I am
pleased that you are willing to accept fairly detailed report
language which will help make that happen.
I would like, once we go to conference on this, Mr.
Chairman, to at least have your support and help in trying to
guarantee that you would do all you can to make sure that it is
included in the conference report.
The Chairman. Very well.
Senator Sarbanes. Mr. Chairman.
Senator Kerry. By very well, does that mean very well, yes
you will, Mr. Chairman?
The Chairman. Yes.
Senator Sarbanes. Mr. Chairman, I just want to read again
from the letter that Senator Biden quoted, because I want to
pick up on the last sentence as well. The administration also
supports the reorganization provisions along the lines of H.R.
1757, the foreign relations authorization bill passed by the
House of Representatives yesterday.
A draft of the committee bill, meaning this committee, most
recently provided to the administration, however, goes well
beyond the President's plan in several instances which we
cannot support. We urge the Senate to adopt an approach similar
to the House, and it seems to me that in a matter of this sort
we should have the benefit of the administration worked-out
reorganization plan before we move to, in effect, impose a
reorganization plan. Therefore, I oppose division A.
The Chairman. The chair feels there ought to be a roll call
vote on this. If there is no further debate, the clerk will
call the roll.
Senator Dodd. Mr. Chairman, just a moment. I am going to
support Senator Sarbanes on his motion, not because I disagree
with reorganization, but I do agree with his underlying concept
that the executive branches, be it this administration or
others, need to be able to function without being micromanaged.
We hear this consistently in the context of our debate about
foreign aid generally.
I do not disagree, and I applaud the efforts being made
here, but I think a message about whether or not we are going
to do this all across the Federal Government runs a high risk
of mismanagement in the final analysis, but I applaud the
efforts of the chairman and the Ranking Member.
The Chairman. Very well. The clerk will call the roll.
The Clerk. Mr. Lugar.
Senator Lugar. Aye.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas.
Senator Thomas. Aye.
The Clerk. Mr. Grams.
Senator Grams. Aye.
The Clerk. Mr. Ashcroft.
Senator Ashcroft. Aye.
The Clerk. Mr. Frist.
Senator Frist. Aye.
The Clerk. Mr. Brownback.
Senator Brownback. Aye.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. No.
The Clerk. Mr. Dodd.
Senator Dodd. No.
The Clerk. Mr. Kerry.
Senator Kerry. Aye.
The Clerk. Mr. Robb.
Senator Biden. Aye by proxy.
The Clerk. Mr. Feingold.
Senator Feingold. No.
The Clerk. Mrs. Feinstein.
Senator Feinstein. Aye.
The Clerk. Mr. Wellstone.
Senator Wellstone. No.
The Clerk. Mr. Chairman.
The Chairman. Aye.
The Clerk. Mr. Chairman, there are 14 yeas and 4 nays.
The Chairman. We now move to division B, which is subject
to amendment. Tom Kleine tells me that several Members have
proposed changes on both sides which have been accommodated,
and he knows of no further amendments.
Senator Biden. Mr. Chairman, I think most of the concerns
raised by the Democrats have been incorporated. I am not aware
of any amendments on division B.
Senator Sarbanes. Mr. Chairman, could I ask some questions
about division B, the meaning of some of these sections.
The Chairman. Sure.
Senator Sarbanes. First of all, in section 1166 about
aliens who aid international child abductors, and it says that
no one shall be admissible who is a spouse or a relative of
such an alien.
Now, the question I have is, often the fight is between the
spouses. If one spouse takes a child and goes back to country
X, and the other spouse goes to country X in order to get the
child back, as I read this section that person would then be
inadmissible, since it says--there is no qualification on this,
is that correct?
The Chairman. I believe that is correct. This is Senator
Feinstein's contribution. I would like her response.
Senator Feinstein. Mr. Chairman, if I may try and respond
to the Senator from Maryland, this amendment would deny visas
to individuals who assisted in carrying out international child
abductions, who provide safe haven and material support to
child abductors overseas, or who are immediate family members
of a child abductor.
The bill was inspired by the case of one Patricia Roush,
whose two children were abducted by her ex-husband.
Senator Sarbanes. I am not really questioning the section,
except for what I perceive to be either a mistake or an
oversight, or if it is not I would like to be reassured on it,
and that is, go to paragraph 3, which says, a spouse of the
alien who is an abductor.
Now, often these abduction cases involve a conflict between
the spouses. Now, would that spouse then be inadmissible if he
or she left the country in order to claim their child?
Senator Feinstein. This is not intended to target American
spouses. It is intended to target the spouse in another country
who has stolen the child.
Senator Sarbanes. Let us say you have two people from
country X in the United States, resident aliens. One of them
takes the child and leaves the country and goes back to his
country. The wife then goes after the child to try to get the
child back. As I read this, the wife would then be inadmissible
to come back in.
Senator Feinstein. No, that is not correct. It is intended
to target the second spouse. This is a situation where there is
not a binding marriage, but the former spouse abducted the
child.
There is a court order. There is no extradition treaty with
the nation. The individual has tried--the woman has tried to
get her children back for 10 years, has not been able to do so.
Our Ambassador tried to do this informally, found it began to
bring pressure on the family, and worked, but could not
continue to do it because there was no law.
So we are now presenting a law whereby we could add some
pressure to people who abduct their children against court
orders and move to another country, remarry, and like to keep
coming back and forth to our country. They would not be able to
come back.
Senator Sarbanes. I want to try to get the focus on the
issue I am raising, because I do not disagree with the purpose
or the objective of the section. What I am concerned about is,
the section says on pages 33 and 34, any alien who, and then
paragraph 3 says, is a spouse, is a spouse of an alien
described in clause 1, that is the spouse who has engaged in
abduction, but any alien who is a spouse of such a person would
be inadmissible.
Senator Feinstein. I think this is a drafting error. Let us
see what we can do with it, if you will give us time. It should
exclude former spouses, and let us take care of that, if we
may.
Senator Dodd. Why do you not just leave it to the
discretion of the Secretary, and that might cover the kind of
cases you want.
Senator Feinstein. That is fine with me.
Senator Sarbanes. Well, I think we should try to work this
out.
Now, Mr. Chairman, if I could ask a further question about,
would someone tell me why we are withdrawing from the
Interparliamentary Union? I am not pressing that. I would just
like to know the reason. That is section 1213.
Senator Lugar. Can either a Senator or staff offer an
answer?
Mr. Kleine. Senator, this was a recommendation from the
Office of the Secretary of the Senate. I think it is a
reflection of the concern that there has not been a great deal
of participation in the Interparliamentary Union, and we have
been contributing over a number of years, and so the provision
would limit the contribution to $500,000 a year or withdrawal,
but it is language that is crafted on language that was
provided by the Secretary.
Senator Sarbanes. How much do we pay now, then?
Mr. Kleine. The request was $1 million, and the estimate
for 1997 was $740,000.
Senator Sarbanes. So we are just going to impose a flat
ceiling on this?
Mr. Kleine. Yes, sir.
Senator Sarbanes. I take it the IPU works it out on some
sort of rational basis, one assumes.
Mr. Kleine. Yes, sir. That is our understanding from the
Office of the Secretary.
Senator Sarbanes. We are not going to accede to that? We
are going to put it below that?
Mr. Kleine. That is right. It caps our contribution at
$500,000.
Senator Sarbanes. So this is an instance in which we are
part of an international organization which sets the dues but
we are in effect going to set our own dues, regardless, is that
correct?
Senator Lugar. Is there any other view from anyone involved
in the drafting?
Senator Sarbanes, have you concluded your questions?
Senator Sarbanes. I guess so. I cannot get the answer at
this point.
Senator Biden. Senator, I can give you an answer. This was
something insisted on by the Majority, and it is part of the
compromise. That is the answer.
Senator Sarbanes. Well, I do not think that is the answer,
or that ought not to be the answer. There ought to be some
rational reason.
Senator Biden. The rational reason, and I happen to agree
with you, but the rational reason is that there is a fairly
widely held view on the other side of the aisle that these
organizations are not of very much consequence or use, and the
practical matter is I think, if given the opportunity, they
probably would not exist.
The question comes down to whether or not----
Senator Sarbanes. You mean the U.S. participation would not
exist.
Senator Biden. Obviously, we cannot unilaterally cease and
desist, but I think the Senator is right. I do not think this
is a good idea, but this is a part of about 4,000 things that
were part of an overall compromise.
Senator Sarbanes. Could I ask about section 1164, on the
inadmissibility of members of former Soviet Union intelligence
services? My understanding is that there have been occasions
when these aliens have come in for conferences, or in a sense
almost debriefing when it serves our purposes that they come.
Now, this would be inadmissible?
The Chairman. State your name.
Mr. Biegun. My name is Steve Biegun. I am with the Senate
Foreign Relations Republican committee staff.
Senator Biden. The answer?
Mr. Biegun. I am sorry, I did not hear the question.
Senator Sarbanes. The question deals with section 1164, the
inadmissibility of members of former Soviet Union intelligence
serv-
ices. They are inadmissible to the country under the section,
correct?
Mr. Biegun. Correct, sir.
Senator Sarbanes. My understanding is, there have been
instances in which such former agents have come in to
participate in conferences.
In fact, I have here the cold war international history
project where they were brought in, and we have been able to
get out of them their version of what transpired, and that has
turned out to be helpful information and knowledge we would
like to have.
This section would preclude that from happening, right?
Mr. Biegun. What this does is, it puts reciprocal treatment
on Russian intelligence service former officers which is being
given to our intelligence services currently, our retired
officials from our intelligence services who are seeking to get
into Russia.
It basically is a reciprocal measure, and would prohibit
that kind of activity. The intention of this provision is to
elevate this to the State Department to hopefully find some
balanced approach.
Senator Lugar. Was the Intelligence Committee consulted on
this?
Mr. Biegun. Yes, and they had no objection.
Senator Lugar. I am surprised. My own view is that we have
utilized these people frequently in conferences, and, as
Senator Sarbanes mentioned, conceivably this is a unilateral
decision by the Foreign Relations Committee. But I am not
certain the precise origin of the idea and why it appears in
this particular text.
Senator Sarbanes. Is there any further explanation? There
is no exception or waiver authority, correct? Is that correct?
There is no waiver or exception authority?
Mr. Biegun. That is correct.
Senator Sarbanes. So they would just be precluded
altogether. All right.
Senator Biden. Mr. Chairman, I have a question. The points
raised by Senator Sarbanes and by Senator Lugar I think are
valid, as you know.
I wonder whether the chair--and I will stay with the
commitment of this bill, but I wonder whether the chair would
consider at least making it discretionary and maybe put the
discretion for allowing these folks in if, with the Director of
the Central Intelligence, or the State Department, to allow
those circumstances, because they do exist, as we all know. I
have served on the Intelligence Committee. They do exist where
there is efficacy and usefulness, and where our intelligence
people would like these people in.
I would like you to consider the possibility of language
that would allow an exception to be made by whomever you think
appropriate. I would think the Secretary of State, but with the
Director of Central Intelligence, or someone you had confidence
in, that would know whether it was in our national interest to
allow that to occur.
The Chairman. I have no problem with that.
Senator Biden. Well, I would so move, that it be made
discretionary, Mr. Chairman, and with the permission of the
Senator from Maryland, run the language by him to see if he
approves, and you approve, and otherwise bring it back to the
committee.
But if I understand it we would make it discretionary
subject to you seeing the language and approving the specific
language.
The Chairman. Very well.
Senator Sarbanes. I have one other question, or maybe two,
on the reporting of foreign travel by United States officials.
Now, as I understand this, no officer or employee of the
U.S. executive agencies can travel abroad unless prior to the
commencement of the travel the individual submits a report to
the director--I am not sure which director that is--that states
the purpose, duration, and estimated cost of the travel, is
that correct?
Mr. Kleine. Yes, sir, that is correct, and the director is
the Director of the Office of International Conferences of the
Department of State, and the purpose of this provision is to
capture overseas travel by U.S. executive branch officials, to
see what the cost is associated with that, but it also exempts
out travel for intelligence purposes, for purposes of military
deployment, it exempts travel by the President and Vice
President and people associated.
This was a result of a hearing that the chairman held
looking at international conference travel, and the realization
that there was no comprehensive data on the cost associated
with all overseas travel by U.S. executive branch officials.
Senator Sarbanes. Of course, this is not limited to
international conferences. It says, or engaging in any other
foreign travel.
Let me just try to be specific. I take it under this
provision, when Dennis Ross goes to the Middle East he has to
file such a report.
Mr. Kleine. Under this provision he would have to file a
report on the cost and duration, the purpose of the trip. If it
is an international emergency or if the President needs to
deploy him overseas there is a period during which he can file
that report after he returns as well.
Senator Sarbanes. Where is that stated? This says updated
report, not later than 30 days after the conclusion of any
travel for which a report is required they shall submit an
updated report. But this language says that they shall--prior
to the commencement of the travel shall submit a report.
When Kissinger as a national security advisor went from
Pakistan to China, I take it he would have had to submit a
report under this provision?
Mr. Kleine. No, sir. There is an emergency waiver there
which states--this is on line 1 of page 7, and it says, shall
not apply if the President determines an emergency or other
unforeseen event necessitates the travel and thus prevents a
timely filing of a report, in which case he would file the
report 30 days after returning.
Senator Sarbanes. Well now, suppose, you know, you are
going to do it. You just want to keep it as secret as you can.
Some of these visits--suppose Dennis Ross goes to Oslo, to use
an example. He would have to file a report before he went, is
that correct?
Mr. Kleine. He would file a report before he went, or
after he went if the President determined it was an
international emergency. If it was intelligence-related
travel--the intent of this is not to hamper diplomatic
activity, but rather to capture the expenses associated with
the executive branch travel.
Senator Sarbanes. I guess the point I want to make is, if
you want to get at international conferences, which was the
first answer I was given, then that is one thing, but to then
expand this to the point that it has been expanded it seems to
me is going to cause a tremendous amount of mischief.
Senator Kerry. Not to mention the paper addition act.
Senator Feinstein. Mr. Chairman, I think that is a good
point. Essentially what you are asking, or what the bill is
asking is everybody telescope their intent, which might be a
mistake. It may be enough just to have a report when the
individual returns.
Mr. Kleine. Senator, we can modify the language. The
objective is to capture the cost associated with all executive
branch travel.
Senator Kerry. Do you not capture that in the budget? You
have got accountability every year. If you do not like--I mean,
you are going to drown people.
Senator Dodd. Why don't we just have them check with the
Foreign Relations Committee?
Senator Kerry. After all, they come to us every year for a
budget.
My question is whether or not we do not have sufficient
capacity for oversight at the current moment with respect to
travel.
The Chairman. I do not think we do, and we have agreed to
modify it to the extent that it has been stated. I have no
problem about the executive branch, just as I have no problem
about the U.S. Senate and the travel that goes on in this
place, and I have some problems with the extent of how much it
is, and I think the American people do, and I think the same
thing applies to the executive branch.
If the Senator is suggesting it is too much to ask to have
a record made----
Senator Kerry. Mr. Chairman, I am absolutely not. I am all
for having a record made.
The Chairman. What is the Senator's objection to having it
made when he gets back?
Senator Kerry. I believe there are records of all trips,
and what we are creating is the reporting on top of the
reporting.
The Chairman. Well, we will modify to that extent, and I do
not want to go any further unless I am instructed to do it. We
will go to a roll call vote of this committee if we do not have
a specific suggestion.
Senator Kerry. Mr. Chairman, I certainly welcome, as does
Senator Sarbanes, the modification. I just think we might want
to, between now and going to the floor, relook at the issue of
what is accessible to us now, and I would respectfully suggest
we have the opportunity to have a report any day, any week, on
any travel, and we have obviously the overall budget at our
disposal.
The Chairman. I think we have agreed to that.
Senator Kerry. Mr. Chairman, with your permission, Mr.
Chairman, could I ask Secretary Larkin to just come to the
table for a moment? I wanted to ask a couple of questions
before we vote on section B, if I can, just to understand
myself.
The Chairman. We might want to ask her a question, too.
Senator Thomas. Mr. Chairman, what did we do with the
travel matter? I do not think I understood how it was disposed
of.
The Chairman. It has not been disposed of yet.
Senator Kerry. Mr. Chairman, my question is not with
respect to the travel issue.
Senator Biden. Mr. Chairman, on the travel matter, is it
appropriate to suggest that we ask the staff to sit down and
see whether or not we can reach the objective which you seek to
reach without doing the damage that potentially could be done?
The larger point is even if after the fact a travel voucher is
submitted on an emergency, it may be a travel voucher that the
administration would want anyone to know existed other than in
their internal records because they did not want anybody to
know they were there because they met with Yasser Arafat in
such and such, or they met with whomever. So I do not think
that is the Senator's intention.
The Chairman. No, it is not.
Senator Biden. I would respectfully suggest what we try to
do is before this goes to the floor see if we could accommodate
what I think we are kind of all in agreement on.
Senator Coverdell. Senator Biden, I think if we are going
to take the course of refinement here that the staff should
look at the fact that this data is collected already.
Senator Biden. That is my point.
Senator Coverdell. The data is collected. There is nobody
traveling in the executive branch for which there is not a
record of the travel. It is rather elaborate, so compilation is
what is missing. If you get a raw number, sometimes it is hard
for the appropriate oversight to occur, and so maybe the staff
could use existing data in a configuration that would solve the
chairman's goals here in the committee.
Senator Sarbanes. I am sure when you were Director of the
Peace Corps you did not have to meet this ahead of time.
Senator Coverdell. Actually, you did not have to do it in
advance, but everything is recorded and documented.
Senator Sarbanes. I think the problem here is doing it in
advance, although I do not think probably the Peace Corps had
to do some of the secret missions. Who knows? You may have.
Senator Coverdell. No, but there were emergencies. When we
came out of the Gulf we had to move very quickly. So you
sometimes have to move very quickly. But my point is that the
data exists, the compilation we are struggling with here, and
to the chairman and the ranking member, maybe that could be
finessed.
The Chairman. Sure. Let me assure you that I want to meet
you at least halfway on this and other issues that come up, and
I suggest that on the two issues that have been raised here
that your staffs and ours get together, and there is such a
thing as a technical amendment, and we will probably have 50 of
them before this bill is passed. So we will work with you. I
see no problem.
Senator Kerry. Thank you, Mr. Chairman.
Mr. Chairman, if I could, I just wanted to inquire. We have
a letter from you today which in the first page in the last
paragraph says we are strongly disappointed that the funding
levels associated with this bill, while in flux, appear to be
about $265 million below the President's request for 1998. Now,
I have got the chart that I think is a committee chart here
which shows those numbers, in fact, different. Now, is that the
in flux you are referring to?
Ms. Larkin. I presume so, yes, Senator.
Senator Kerry. Do you know where we are now?
Ms. Larkin. No, we do not, frankly. We got a mark when we
got here.
Senator Kerry. Can you therefore say whether you are happy
or unhappy?
Ms. Larkin. I can say one thing: Generally I am happy. On
funding, however, this, I think as you all know, has been a
major priority for Secretary Albright, and I think probably she
has spoken on this issue to every member of this committee and
a lot of other people, as well. She worked very hard. We have
got for the 150 account full funding under the budget
resolution which allows a balanced budget by the year 2002. The
whole counterpart of this bill includes full funding of the
President's request, and we would very much like to see full
funding of the request in this bill, as well.
Senator Kerry. Well, let me ask you this: When you were
referring to the 265 million, what were the areas of concern
that you were expressing? What was contained in the 265? I know
there has been some add-back. I just want to try to reconcile
this.
Ms. Larkin. I can tell you, Senator, the things that we
were aware of that had been cut in the bill that these were
prepared on were the peacekeeping account, the international
organization account. On our operating expenses there were
questions on MRBC's, which I understand involves a scoring
issue, though, with CBO, not with this bill.
Senator Kerry. Peacekeeping was how much below what you had
requested?
Ms. Larkin. Forty million.
Senator Kerry. Forty million. Is there any add-back to that
at this point, Mr. Chairman? No.
What else was below?
Ms. Larkin. The international organizations.
Senator Kerry. How much below?
Ms. Larkin. Sixty.
Senator Kerry. Sixty million below where you would like to
be on international organizations.
What would that specifically effect, that the
administration wants to achieve?
Ms. Larkin. Senator, overall the problem is arrears, and we
have gone through all this good work with the committee and the
staff on paying our arrears to the United Nations and other
international organizations, and if the accounts end up short
at the end of this process we would be accumulating more
arrears.
Senator Biden. Will the Senator yield for a point of
clarification?
Senator Kerry. Yes.
Senator Biden. They were 60 below. They are now 31 below.
Ms. Larkin. Right. That is what I meant, sir.
Senator Biden. We got back a total of 42 this morning. But
let me make two things clear. One of the big chunks here is 140
million that relates to the way in which we deal with visas. I
would like to ask Brian McKeon of my staff to explain this
budget scoring problem we have with a point of order on the
floor in the Budget Committee.
Mr. McKeon. In the 1995-97 authorization bill we authorized
the Secretary to collect fees for visas and spend up to $140
million. The Office of Management and Budget, in presenting the
budget appendix this year, has indicated that the money is
already there in the administration's baseline. In other words,
they have been collecting it, and we had a provision that would
essentially release that money. That is considered direct
spending, and it creates a pay-as-you-go problem, to use budget
jargon. We would face a budget point of order.
We are trying to rectify the problem working with OMB and
the Budget Committee, and we hope to fix it by the time we get
to the floor.
Senator Biden. And that is 140 million of this 200 million
we are talking about.
Now, the second point is in addition to that we restored
40. The chairman agreed to restore another 40 million today,
and so the really we are talking about now is close to what?
What is the total? $71 million difference between what the
administration asked in a $5-plus billion bill and what this
committee is voting for them now. It was as high, John, as 240,
it is now down to 71.
Now, again, if we cannot solve, we have got a Budget
Committee problem over here on this 140. That is a big deal,
and OMB, us, and the Budget Committee have to figure out how we
deal with that. But the intention of the chairman is that money
should be available to the State Department. So if we work that
out we are then $71 million difference in what was requested
and what is going forward.
I apologize for the jargon, but that is the complicating
factor.
Senator Kerry. If we do not work it out we are 211, right?
Senator Biden. Well, that is true, but there is nothing the
chairman can do about that unless we then come back and they
seek a supplemental or whatever. But that is a matter relating
to the way in which we score this thing. It is not the chairman
is trying to keep that out.
Senator Kerry. Fair enough. I understand. I understand. I
am just trying to get the picture because I want to understand
it before we vote.
Ms. Larkin. Senator Kerry, there are some other cuts in
other agencies that are included in this bill, as well. ACDA, I
know are concerned about their expenses. The last version that
we saw was cut $7.2 million, and USIA took cuts in salaries,
expenses, international broadcasting, and East-West and South
Centers.
Senator Biden. That is true. It was 39 million instead of
46 which was requested.
Senator Kerry. Well, 41.2 would leave it--I beg your
pardon--would at least be equivalent to this year.
Senator Biden. 41 was appropriated last year.
Senator Kerry. Correct. So it is a cut.
Senator Biden. And this is 2 million under that.
Senator Kerry. Now, can you just give me a breakdown on
that 71 million? Where will that come from? What will be not be
doing that you wanted to do, or nothing affected?
Ms. Larkin. Senator, I cannot because I do not have the
most recent numbers, so I am not sure where the money has been
taken out.
Senator Biden. I can help you in that, if you want. I think
the State Department will confirm as they learn the numbers; 40
million of that is in peacekeeping--40 million of that. So the
request for peacekeeping was 240 million. This includes 200
million for peacekeeping.
There is also--contributions to international
organizations. The request is--or what is authorized is 31
million below what is requested, and those are the two places,
assuming we solve the 140 million problem with the visas, those
are the two places where the bulk of these cuts, 95 percent of
the cuts, this is where 95 percent of the cuts come from.
Senator Kerry. Now, just with respect to rationale, we had
that big Blair House meeting and it was a bipartisan effort to
try to understand the how postcold war world and our
obligations in it, and the Secretary has been very outspoken
about her perception, and I think the administration's, of the
need to augment, not diminish, our presence in a number of
areas. Is the Secretary--I mean, Ms. Larkin, are we sort of--is
there a sign-off on this with the notion that this is sort of
the best we can get, or does this represent what the
administration wants?
Ms. Larkin. The administration would like full funding of
all the 150 accounts.
Senator Kerry. Is it possible for the administration to
submit to us--I mean, we are not going to obviously do it
today, but between now and the floor, what the difference is in
terms of these things that matter to the administration, the
difference in performance or efficiency or presence or whatever
it is?
Ms. Larkin. Yes.
Senator Biden. Mr. Chairman, if I can respond to the
Senator on two points, because I had the same concern about the
arrearages and we had a little bit of a disagreement here on
how to deal with the peacekeeping piece, which is one of the
big cuts. The peacekeeping account, the way in which--even
though it is funded at 200 million, should not create any
arrearages, and I have had this discussion with the State
Department. The budget estimate, for example, the
administration's, includes $15 million for a possible
peacekeeping mission in Afghanistan. Given nearly total control
of that country, there is no reasonable observer who expects
there will be a deployment of any U.N. force there. If there
was, we would be $15 million short.
Additionally, the budget includes $50 million for an
African crisis fund, which I support. But this is not a U.N.
operation, but part of the U.S. initiative to build this
peacekeeping capacity in the region. So there will be no
arrearages here relative to the U.N.
So there is no reason why there will be any U.N.
arrearages, even though we are at 200 instead of 240 which the
administration asked for. I support the 240. I think the
Senator supports a lot less. With regard to whether this meets
the request, the total money request of that meeting we had at
the Blair House, I would make, I think, a cogent observation.
The chairman was not there.
And so this is, I think, in my discussions with the
Secretary as recently as last night sitting next to her for
dinner for 2 hours was I think she acknowledges this is the
best she can possibly get, and to be blunt about it, you have
got the House fully funding it, we funding now $71 million
short and a 2-year budget plan of $6 billion.
Now, I have been here a long time. Administrations who come
in that close to what they request usually in their heart are
not disappointed. So we are talking about an important amount.
I would like to fully fund it, but I think it is fair to say,
based on the information I have gotten from the administration,
because of Afghanistan and because of this African crisis fund
not being a U.N. operation, the idea that we are going to
create new arrearages as we are cleaning up old ones is a
nonexistent concern.
Senator Sarbanes. The money for the international account
is in division C, not division B, is that correct?
Senator Biden. I believe that is correct, yes.
Senator Sarbanes. I think this is a very important point.
Senator Biden. Well, he raised the question on this point.
Senator Kerry. I raised it in the overall context because
there is money in this division for the consulates and the
missions and the protection and all the other, the maintenance
of our embassies and all of that projection. That is why I
wanted to get at the money now just to make certain that with
respect to those things, because there was some discussion
about the state of some of our buildings, our properties, our
security, living conditions of many of our Foreign Service, and
so forth, and I want to make sure that, since that is in this
title, that we are reflecting accurately what the
administration felt.
Senator Biden. All those are fully funded, Senator.
Senator Kerry. I understand.
The Chairman. Can we move on? I would like to finish up
tonight.
Senator Lugar. Let me just mention that in division C I
will offer an amendment that will make it possible for full
funding of the international organization account, but let me
say in section B I would like your opinion, Ms. Larkin, about
the foreign policy changes your letter indicates the
administration does not support. There are too many to mention
or have debates today, but how serious is the objection? Is
this serious enough that the administration is not going to
support the bill all of these initiatives are adopted?
Ms. Larkin. If they are all adopted? Senator, there are
foreign policy provisions in both this bill and the bill as it
came out of the House of Representatives, and there are a
number of them that we need to work on. I think for the
President ultimately to sign this bill they would have to be at
least modified and some deleted.
But I think at this point what we would like to do is try
to work these issues through the process. So we are not
opposing the bill on that basis at this time, but a number of
them are serious and need to be worked on.
Senator Lugar. Thank you.
Senator Sarbanes. A number of the foreign policy provisions
that are in this section, in this division B?
Ms. Larkin. Yes, Senator.
Senator Sarbanes. Did you indicate which ones in your
letter, or did you just make a general point?
Ms. Larkin. Senator, we have indicated some of them in our
letter. It is difficult to refer to sections because I think
the bill that came out for markup is different than the last
version that we had.
Senator Sarbanes. It is a moving target, no question.
Ms. Larkin. One that I am aware of is the Jerusalem
provision. There are some related to Asia and Taiwan.
Senator Biden. We dropped the Taiwan. They are now dropped.
Mr. Chairman, if I may respond, and in fairness to the
administration there is no way they would know this. The
provisions referred to are related to provisions relating to
Jerusalem. For example, one of them was the U.S. consulate in
Jerusalem would be placed under the supervision of the Embassy
in Tel Aviv. The U.S. Government publications must identify
Jerusalem as the capital of Israel. $100 million is available
for building the U.S. Embassy in Jerusalem in the next 2 years,
et cetera, all of which the administration opposes, all of
which every time we vote on them on the floor vote
overwhelmingly, and I will bet if you vote in this committee
they would all pass.
One of them has been deleted this morning. U.S. officials
will not be allowed to meet with Palestinian officials in
Jerusalem. That had been in the mark. That is out of the mark.
That is what I refer to when I say the Jerusalem provisions.
That is what the administration means by the Jerusalem
provision.
Now, you are looking at me with a funny look. Correct me if
I am wrong. They are the portions of the bill that relate to
Jerusalem that you do not like, right?
Ms. Larkin. Yes, sir. They are a little bit more serious
than that. There is one that withholds a substantial amount of
funds unless an Embassy is built in Jerusalem and involves
contractual obligations in the last version that we saw.
Senator Biden. No. That has been deleted. There is no
specific earmark any longer. This says that the U.S.
consulate--excuse me--that the 100 million is available--
available. There is not a mandate it be built within 2 years.
There is no mandate at all. So that is deleted, as well.
OK? I mean, just so you know. That was giving you great
heartburn. That has been deleted through the leadership of
Senator Feinstein and her importuning the chairman. The Taiwan
provisions are deleted, as well.
Now, what is left, though, there is still in here the
provisions on Jerusalem that you do not like, the ones I named.
The ones that remain are, so everybody knows what we are
talking about, are U.S. consulate in Jerusalem will be placed
under the supervision of the Embassy in Tel Aviv; U.S.
Government publications must identify Jerusalem as the capital
of Israel; 100 million is available for building a U.S.
Embassy--available; U.S. citizens born in Jerusalem can have
Israel listed as their place of birth on U.S. passports, which
is not the case now. Now, they remain in the bill.
I share the administration's view that it would be better
for us not to dictate that in this bill, but the truth of the
matter is every time we go to the floor and we vote on these
things the chairman wins and others win on these items. But
they are the ones that remain that will continue to give you
heartburn. There may be others on Israel that I am unaware of.
Senator Feinstein. Can I ask a question?
It is my understanding that, for example, the one that you
have very graciously deleted that I was concerned with----
Senator Biden. Well, the chairman did. I did not want it
in, in the first place.
Senator Feinstein. Excuse me, that the chairman deleted. It
is my understanding that placing the consulate under the
jurisdiction of the Ambassador now, does not preclude any
meetings in the consulate in Tel Aviv?
Senator Biden. Absolutely right. The big provision that was
deleted--the two big provisions that the chairman accommodated
were, one--and we have been talking about this and trying to
get them moved, and he agreed to do that today--one is there
was a provision--so no one has an old draft and they do not get
confused--there was a provision where U.S. officials would not
be allowed to meet with Palestinian officials in Jerusalem,
period. That is deleted.
The second provision was that we must build the U.S.
embassy in Jerusalem within--what was it, a 2-year timeframe?
The $100 million was available only for the purpose of building
that embassy--you follow me--in Jerusalem. That is no longer in
the bill. Only that provision. They are the two things that
have been deleted.
As you well know, Senator, it has been U.S. policy under
five Presidents that we were going to stay neutral on
Jerusalem. It has been a fight we have on the floor every year.
The Senate always votes against every President. It relates to
whether or not the consulate in Jerusalem is just a consulate
to Jerusalem or it is part of the U.S. embassy in Tel Aviv. The
symbolic importance of that obviously is, if it is part of the
U.S. Embassy in Tel Aviv, we are recognizing, in effect,
Jerusalem officially as the capital. That is the concern. That
is in the bill. That is in this bill.
The administration, understandably, and the last one and
the one before that and the one before that, they do not like
that. I happen to think they are probably right that we should
not insist that they do that. But the point is, when we vote on
that on the floor, I do not know about you, but I think almost
every Member goes ahead and votes for that.
So the things that are these big foreign policy concerns on
Jerusalem are things they are not going to win on anyway on the
floor. You are going to flat lose on those anyway. So the
question is, do we not go ahead and do this because of things
that I would rather not be in the bill, but the chairman is
going to win on anyway.
The most noxious provisions, as I see it, the chairman has
accommodated and taken out. Notwithstanding the fact, I would
argue, take them all out--but he has gone a long way.
The Taiwan provisions you raised today, the chairman,
because of your request--it did not work for me when I tried to
get it out--you have got it out today. Now, the only thing left
is--what is the other area, Taiwan, Jerusalem, what is the
other one?
Ms. Larkin. Iraqi claims, Belarus.
Senator Biden. Oh, yes, this creates a special envoy to
Tibet. You all do not like that, right?
Ms. Larkin. Right.
Senator Biden. Right. Now, let me ask you a question. On
the floor and in this committee, we are going to vote on a
special envoy to Tibet. What do you think wins? I love the
administration, but I mean these great foreign policy concerns
they are talking about, in a $6 billion bill, quite frankly, I
understand their concerns and they are legitimate concerns, but
if the President were to veto the bill over this, I will eat
this microphone, OK.
Senator Feinstein. May I ask a question on the Tibet issue
and the special envoy?
The Chairman. Senator Feinstein.
Senator Feinstein. Thank you, Mr. Chairman.
Let me ask Ms. Larkin. It is my understanding that the
Secretary of State is considering appointing a coordinator, who
will coordinate United States policy vis-a-vis issues that are
Tibetan. And I would hope that those who put this in the bill,
with the rank of Ambassador, would remove it as soon as that
appointment is made. I would like to corroborate that, because
I think the State Department is proceeding along the right
lines here, and I wish we could get that coordinator position
appointed.
The problem in this is the Ambassadorial status. It is my
hope that the chairman of this committee and the chairman of
the House committee would be willing to remove that in
conference if the appointment is made in the interim.
The Chairman. Did you get that information from Barbara? I
did not give you that.
Senator Feinstein. No, you did not give that information to
me, Mr. Chairman. My staff gave that information to me.
Senator Coverdell. Mr. Chairman.
The Chairman. Let me say parenthetically, we have a vote on
the Senate floor at 4:45, and I hope that we will not have to
come back here.
Senator Coverdell. Yes, I was going to address that point,
Mr. Chairman. Hearing the opening statements from the chairman
and the ranking member, it sounded like a peace treaty that had
been difficult to work out, but that had been, including the
administration. Now, if that is the case, I think are we
reopening all the negotiations here?
Senator Biden. Not really.
Senator Coverdell. But there was an implicit agreement that
we are not at the total end of the road yet and through with
the process, that other things might happen and this is still a
work in progress. But I am beginning to lose the sense of that
here.
Now, is that where we are? And if it is, I think we can
facilitate the points.
Ms. Larkin. Senator, I think that is correct. There are
things in this bill that we would like to see changed, and we
will continue to work to do that.
Senator Coverdell. But essentially, you have the Helms-
Biden proposal, and it is something that you are not here to
try to defeat or block?
Ms. Larkin. That is correct.
Senator Coverdell. Thank you.
The Chairman. Very well.
May we vote on provision B now?
Senator Sarbanes. Mr. Chairman, could I ask a question?
I am curious and I do not know, I would like to know who
Mr. Pierre Telenti is, who gets two pages in the bill to deal
with his confiscation of property case. That is on pages 19 and
20.
Mr. Kleine. Sir, Mr. Telenti is an American citizen who
was living in Rome at a period of time in which certain
properties were confiscated from him. There is currently a
friendship agreement between the United States and Italy that
outlines provisions for receiving compensation for properties
that have been compensated. Mr. Telenti had approached us--it
has now been several years. The Department of State has
determined that they would officially espouse his claim with
respect to the Government of Italy. That provision is just
expressing the sense that that confiscation claim should be
resolved.
Senator Sarbanes. Well, who is he and how did this--I mean
what is the factual basis? I mean this fellow is getting two
pages out of this bill.
The Chairman. Well, he probably gave a million dollars to
the Democratic Committee.
You know we could pull threads from the fabric all
afternoon here. Are you opposed to this? Is the State
Department opposed to this?
Ms. Larkin. This particular provision?
The Chairman. Yes.
Ms. Larkin. Senator Helms, we have not seen the provision.
It was not in the last draft that we saw.
The Chairman. Oh, yes, you have. Yes, you have. We worked
with you on it.
Ms. Larkin. OK, but I think that it was added after the
letter was prepared.
The Chairman. Well, somebody go call the Secretary and ask
her if she had not talked about it. I mean I do not want to get
the suspicion that there is an effort to delay the
consideration of this.
Ms. Larkin. Senator, I misspoke. We do have them.
The Chairman. Pardon me?
Ms. Larkin. We do have them.
Senator Biden. And they have had it.
The Chairman. Yes.
Ms. Larkin. This is the sense of the Congress provision?
The Chairman. Yes.
Senator Biden. Yes.
Senator Dodd. Can I find out who he is? I am just curious.
The Chairman. Well, I think we are being a little flippant
now. Let us move ahead.
Senator Kerry. Mr. Chairman.
The Chairman. Yes, sir.
Senator Kerry. When you said move ahead, are you preparing
to vote right now?
The Chairman. Yes, sir.
Senator Kerry. I just wanted to make a comment, then, and
it will not upset anything. In fact, I wanted to thank you for
working with me to deal with some of the concerns that we had
with respect to section 1610 on the greenhouse gas emissions
agreement.
And I just wanted to mention, Mr. Chairman, the Kyoto
meeting is of enormous importance on this subject. I share your
concern for the need for the administration to share with us
the economic analysis that is critical to developing a
position. I want to emphasize that if I can to Ms. Larkin and
the administration today. I think it is very important for this
committee now, soon, to begin to have those economic
assumptions and the analysis which will develop our position. I
am disappointed that we do not have it yet. I hope we are going
to have that soon. I think it is terribly important to us.
But, Mr. Chairman, I just want to call your attention to
one thing. The Justice Department has let me know today that
they believe this section of the reorganization bill could
conceivably affect the ability of the President to be able to
actually sign an agreement in Kyoto because of the potential
for judicial review and litigation. I do not think that is your
intention. I do not think that is what you are setting out to
do.
So what I would like to simply do is agree that we will
flag this, work on it between now and going to the floor, and
see if we can work it out.
The Chairman. Absolutely. This is not the end-all, be-all.
There is going to be a lot of technical amendments.
Senator Kerry. I understand.
The Chairman. There are going to be a lot of other kinds of
amendments.
The Clerk will call the roll on division B.
The Clerk. Mr. Lugar.
Senator Lugar. No.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas. [No response.]
The Clerk. Mr. Grams. [No response.]
The Clerk. Mr. Ashcroft.
Senator Ashcroft. Aye.
The Clerk. Mr. Frist. [No response.]
The Clerk. Mr. Brownback.
Senator Brownback. Aye.
The Chairman. Mr. Frist votes aye, by proxy. Mr. Thomas
votes aye, by proxy.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. No.
The Clerk. Mr. Dodd.
Senator Dodd. Aye.
The Clerk. Mr. Kerry.
Senator Kerry. Aye.
The Clerk. Mr. Robb.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Feingold.
Senator Feingold. Aye.
The Clerk. Mrs. Feinstein.
Senator Feinstein. Aye.
The Clerk. Mr. Wellstone. [No response.]
The Clerk. Mr. Chairman.
The Chairman. Aye.
The Clerk. Mr. Chairman, the vote is 14 yeas to 2 nays.
The Chairman. I thank the Clerk.
Now, we proceed to division C. The floor is open for
amendments.
Senator Biden. Mr. Chairman, I have an amendment that
relates in part to what Senator Lugar is going to do. It may
make it easier or harder--I do not even think we need a roll
call vote on it. But right now, in division C, which is the
U.N. arrearages, there is $819 million in arrearages to the
U.N. related to the committee mark. Division C, on page C-25,
lays out the schedule on which this payment would take place:
$100 million in fiscal year 1998, which is accommodated in the
budget agreement, and it says 419 in fiscal year 1999, and 300
million in fiscal year 2000.
In my discussions with Ambassador Richardson and with the
Secretary of State--but precisely with Ambassador Richardson--
he strongly, strongly believes he needs, in order to
accommodate the intention of this legislation, which he thinks
he can, and the mandates, he needs 475 in the second year. So I
would move--and if we can do it by voice or you want a roll
call, Mr. Chairman--by voice vote that we amend that section,
instead of reading 100, 419 and 300 in successive years, to
100, 475 and 244. In other words, we are loading up another--
well, it is obvious.
So I would move that amendment, Mr. Chairman.
The Chairman. Without objection, it is approved.
Senator Biden. I thank the chair.
Senator Kerry. Mr. Chairman.
Oh, I am sorry, I apologize to Senator Lugar.
The Chairman. Senator Lugar.
Senator Lugar. Mr. Chairman, let me begin a discussion of
two amendments. I will ask staff to distribute two amendments
that I would like to discuss together. One deals with the
potential new arrearages or current dues. We discussed this a
little bit during our division B debate. The other is a more
serious problem with regard to the arrears of the past.
I would cite for the attention of Senators, and I
distributed yesterday in a Dear Colleague letter, polling data
from the Wirthlin Group which indicate that American citizens
find membership and participation in the United Nations to be
very important, 54 percent; somewhat important, 28 percent. And
with regard to the following statement, we should cooperate
fully, the Times-Mirror Group says 65 percent in favor of doing
that and 29 opposed.
Coming down to getting out of the United Nations, 72 are
opposed and only 22 favored. But when it comes to paying our
dues, it is a somewhat closer issue: 30 favor strongly paying
up; 28 percent somewhat favor, 13 were somewhat against, and 16
opposed. So it is roughly 58/29 in terms of paying our dues.
Americans believe by 78 to 13 that we should always pay as a
matter of general principle. But in a Wirthlin poll, by 64 to
28, Americans believe that the United States should pay its
dues notwithstanding what other nations do.
Now, I cite this because it seems to me there is a general
view, as we have discussed the United Nations, that the United
Nations is an unpopular group, imposing its will upon us. In
essence, the American people, by 2 to 1, like the United
Nations. They feel we ought to be vitally a part of it and pay
our dues. It goes at variance with the nature of this debate.
Just at the outset, it seems to me, and each Member must make a
judgment of his or her own constituency, but there is sentiment
that the United Nations is useful for our foreign policy. I
believe that.
And the reason I offer an amendment, in spite of the
remarkable work by the chairman and the Ranking Member to
negotiate a very difficult situation--and I acknowledge their
work and that of the administration--is that I truly believe
the adoption of division 6 as we now see it is likely to lead
to a severe weakening of the United Nations, to a point that it
will face, if not bankruptcy, then continuous short-term
borrowing requiring a shuffling between accounts.
And that is simply the basic organizational structure. But
the nature of my amendment and the explanation for it goes much
deeper than this. The arrearage account--I call for the payment
of the $819 million in a 2-year period of time, during the
period of this Congress, so we can take responsibility for it,
to be paid in equal amounts. We will have to finally check the
Budget Act and the appropriation process to be doable.
I would like to pay our arrears in 2 years, in equal
installments. I would like to do it without conditions. In
short, about 18 pages of division C are devoted to conditions--
the hoops through which various entities must go in order to
get the money.
Now, the facts are that 65 percent of this money is not
devoted to the Secretary-General or the bureaucracy of the U.N.
or any of the problems we find with it. The money is money we
owe to other countries--mostly to our allies for peacekeeping.
And to state it very candidly: They sent troops, we sent
money. We both pledged to do that. We voted for every single
dollar of that money, as well as for sending their people into
harm's way. We owe them that money. Now, I think it is
indisputable that we owe them that money.
Now, these are countries, such as--as I cited in a letter
to colleagues yesterday--Great Britain, 41 million; France, 60
million; the Netherlands, 21 million; Pakistan, 20; Germany,
18; Belgium, 17; Italy, 17, Canada, 14 million. We owe them the
money. The United Nations is simply a pass-through for this
money. It is not administering or keeping that money, it is a
pass-through.
Now, the proponents of division C say if we withhold this
money from our allies and from those that we voted to send into
harm's way, we will have leverage to force them to vote for our
reduction of dues from 25 percent to 20, or our peacekeeping
dues from 31 to 25 percent. These are also arrangements that we
negotiated with other countries, and we shall have to continue
to do so.
But I think it is fair to say the proponents of division C
say that, even though we owe them the money, this thing has got
so confused that somehow the U.N. is an organization running
out of style and a bureaucracy running amok. By continually
attacking that situation, which is only 5 percent of the
arrears problem, we obscure 65 percent--namely, payment for the
peacekeeping operations to countries we owe.
Now, the proponents may be right. If they pass this
legislation, history will record whether they were or not
correct. My own judgment, very frankly, is that we have a lot
at stake beyond these sums. We are negotiating now and will be
for some time, about NATO reorganization. There are very large
obligations involved--burden sharing, as to who will be
included in an expanded NATO. Some of the same nations on this
list now are among the nations with whom we will be
negotiating.
We have very high stakes in agricultural negotiations with
the European Community, and large dollars are involved. Our
success in negotiating with Europeans in particular is going to
be related to the good faith effort we have on obligations that
are contractually clear.
How Senators can believe that somehow an argument on the
United Nations, with all the pejorative references there, does
not ricochet with other issues escapes me. This has been a fun
game for a long while, to attack the U.N.--much like the
billboards in my home State that used to say get us out of the
U.N. But I am saying that 70-some percent of Americans do not
want to get out; 22 percent do, and I acknowledge that fact.
But the 22 percent are not the majority.
If we do not settle the arrears in a way comparable to the
way I have suggested, and that is promptly and without
conditions, I predict that the United Nations, structurally,
will be weak and much less use to us. Second, I predict very
great problems of negotiations with our allies and with others
who have had some faith in us.
I would say to those who believe, well, fair enough, if all
of the qualifications of division C are met, these countries
get their money. But, this is disingenuous to suggest that they
go through all the hoops to get the money we have already
contracted to pay. I would suggest anybody making a thoughtful
reading of those 18 pages will be hard-pressed to understand
how any country will ever get all the money owed them.
As a matter of fact, I do not believe it is doable.
Therefore, I think the real question before us is division C,
an attempt simply to say take it or leave it to the President,
and to the rest of the world. It really is not a take it or
leave it, because the possibilities of taking it are not there.
I would simply say that, as Senators read through this, they
had better be thoughtful about all of the hoops that are there.
Now, having said this, I appreciate there is a certain Don
Quixote effort going on here, and it is self-imposed by myself.
I would say that it is clear that this has been negotiated
carefully by the chairman and the distinguished ranking member,
and normally I would defer to their judgment. But I think this
is so serious I believe this could very well be the end of the
line for the United Nations, and we are still in very difficult
circumstances for the United States vis-a-vis our allies and
our contractual relationships.
Therefore, Mr. Chairman, I respectfully propose the
amendment that deals with this issue in a very straightforward
fashion: Pay our arrears in 2 years, equal amounts, no strings
attached, on the logic that our ability to negotiate at the
U.N. is likely to be enhanced by the good faith with which we
approach this problem.
Make no mistake about it, there is no enthusiasm at the
U.N. for giving us a dues reduction. There might be in the
event that there is some good faith as we take a look at our
responsibility in Europe, in NATO particularly, and with our
trade relations, to take a look in the total American foreign
policy picture.
Senator Biden. Mr. Chairman, I think Don is doing the right
thing. Senator, you are correct in this regard, in my view,
that it would be much better if we fully funded this and there
are no strings. But as they say both in domestic and
international politics, politics is the art of the practical.
Let us talk about where we started from.
We start from zero. We start from no money, and we start
from the inability over the last several years to get any
movement on doing this. We start from the premise that in the
House there is nothing.
Now, you are correct in what most people do not understand
is the vast majority of the arrearages we owe we owe to our
allies: France, Great Britain, the Netherlands, Pakistan,
Germany, Belgium, Italy, India, Canada, all friends and/or NATO
allies. You are correct that at the very time we are expanding
NATO that we are going to go out and try to get them to take on
a larger burden, we are going to be telling them we are not
going to give them all that we owe them.
But the fact of the matter is this: I sat at length--hours
and hours--with the Ambassador to the United Nations, with our
Secretary, and I basically asked at the front end, I said, what
is the bottom line drop-dead number you need to get the job
done? Now, my good friend here was not enthusiastic about any
of this, and the highest number we got up until 4 days ago was
600 million. He is taking a lot of heat, I expect--I am sure he
can take it--from a constituency and a part of your party that
he is probably the most well known figure. The bottom line came
down to what was the drop-dead number, and the drop-dead number
was 819.
Now, let me make two other points: I met with the President
of the General Assembly, as you probably did. I met with five
of his associates, Ambassadors from other countries. This
notion of can we get down from 25 percent, the answer is yes,
we can. The constant refrain they kept telling me was but you
have got to show good faith. Movement now is urgent. Movement
now is urgent. Urgent. If this goes on for another year,
Senator, they think you are right, things will fall apart.
So here we are faced with a dilemma. I cannot agree with my
colleague, Richardson cannot agree with the chairman, and say
we want it all, that we think we have to have and should have.
This is going to go on for another year. We are going to end
up, I respectfully suggest, Senator, right where you are
fearful we will be.
The flip side of that is if we pass this, if it becomes
law, and I want to make it clear, and the chairman knows this,
this is not something I am prepared to negotiate down in
conference; 819 is a drop-dead number. So I am not prepared to
vote for anything less than that in the conference. The
chairman knows that, we have never misled each other, he knows
where I am, and I am expecting this is the number or no number.
But the truth of the matter is if we are able to get within
this next fiscal year 100 million bucks, if the U.N.
understands we have appropriated the money, everything is in
terms of what is realistic. They know where we have been. They
know the numbers. I have to rely on Ambassador Richardson--me
personally--and I have to rely upon the State Department when I
ask them can you do the job with this money.
Now, they could be wrong. I could be wrong for listening to
them. I want to make it clear, they love your amendment. If you
recall, I called you when the Senator was at 600 to say--and I
called several others on the committee saying hey, we should do
an amendment to fully fund this. I did. You know that, Mr.
Chairman. Then the chairman came back and said look, this
overall deal is more important to me than it all falling apart.
I assume that was the rationale.
So I want to emphasize this is going to be the hardest no-
vote I have cast. I made an agreement. I stick by my agreement.
I made the agreement though not merely to get a deal. I made an
agreement conditioned upon my being assured by our Ambassador
that this can get the job done for him. I think it can, but I
do not know nearly as much about it as he does or many of you
here who have spent more time with regard to United Nations.
I conclude, Mr. Chairman, by saying you are right about the
U.N. It is important, it is relevant the American people,
notwithstanding the disagreement my friend from North Carolina
and I have occasionally on this. Support it. It makes sense. I
would argue there is one significant benefit for if we pass
this and it eventually becomes law and is signed by the
President, and that is for the first time in the time that I
have been here--maybe I should not say this, but I am going to
say it anyway--since I have been here, we may begin to put an
end to the polemic debate about the United Nations, because
when Mr. Conservative in the United States of America, and I
challenge anybody to name anybody in America who is a better
known conservative and a better known person in terms of his
opinion about the U.N. than the chairman, the fact that he is
willing, reluctantly, to sign on $819 million in arrearages is
a political statement of consequence that I do not think we
should underestimate. I would love, like the Senator from
Indiana, to put behind us this polemic debate that has
dominated us in the Senate for the last 7 or 8 years.
A guy ran against me who is a wonderful man. His whole
campaign was blue helmets and sovereignty. I mean, you know?
All I have to do next time--this is really going to get the
chairman in trouble--is say Helms supported it. Woah.
Now, I am not kidding, folks. Understand the political
significance of this, what it says for the United Nations. I
think this compromise, in addition to being able to get the job
done, will send a message and put on an even keel the notion
that the U.N. is relevant, important, and we are going to be
players in it. There is no one I respect more, and you know
this, in the Senate; no one I think knows more about foreign
policy than you do, Senator; but I am going to, with great
reluctance, but for the reasons I stated, vote against you
because I think this total package is the only thing to avoid
what you most fear.
Senator Sarbanes. Mr. Chairman.
The Chairman. Senator Sarbanes.
Senator Sarbanes. Mr. Chairman, I want to commend Senator
Lugar for offering these amendments. I think this is an
extremely serious matter. If another country came to the U.N.
in arrearages as we are, and laid out all of these conditions
for meeting its obligations, we owe this money. We undertook
this obligation. None of those peacekeeping efforts could have
happened without the support of the United States. They all
required the approval of the Security Council, on which we sit
and where we have a veto. So presumably it was our judgment
that they served our interest to move forward.
I am telling you, if another country showed up with these
kinds of demands we would be enraged. Just kind of turn it
around and put yourself in the other person's shoes. They come
on, they have not paid their dues, they are delinquent, they
assert they are paying too much. Well, are we? I do not know.
Here is the U.N. scale versus the share of world income. The
U.S.'s share of the U.N. is less than our share of world
income. The European share is higher than their share of world
income.
Senator Coverdell. Could you respond to a question?
Senator Sarbanes. Certainly.
Senator Coverdell. When does the chart begin?
Senator Sarbanes. This is at the 25 percent figure for the
regular budget contribution.
Senator Coverdell. Today. But if you took the period of
time from the beginning of the U.N.----
Senator Sarbanes. Oh, when we began the United Nations, the
U.S. paid 39 percent in 1946 to 1949, and that figure has come
down. Since 1974 it has been 25 percent. I do not have the
figure for what the U.S. share of world income was in 1946, but
I daresay it probably approximated the 40 percent that we were
paying of the U.N. dues. I mean, we came out of World War II
with an intact economy.
We are paying 25 percent, Japan is paying--how much do
people think Japan is paying? Let me ask that question. Who can
give me a figure on this committee? What do you think Japan
pays, its percentage share of the U.N. dues; 15.4 percent.
Germany is at 9 percent. Germany and Japan together pay as much
as the United States, and their share of world income is
significantly less than ours.
Senator Biden. Senator, can I make a point on that point?
Senator Sarbanes. Sure.
Senator Biden. Also, we pay for their defense. We do more
in terms of basic world security with our military that never
even gets calculated any place, any way, any circumstance, in
terms of us carrying our weight around the world.
You are absolutely right on the principle that this is
wrong to go and try to change the game after we made a deal. I
agree with that. You are right about that. But on its overall
argument or the United States share of its income is relative
to the United Nations, name me another country--name me another
country--that essentially underwrites the security of the rest
of the world irrespective of the U.N. We carry more than our
weight.
Senator Sarbanes. Well, we do that because we perceive that
we have important national interests.
Senator Biden. Bingo. But would not it be nice to have the
rest of the world stop pillorying us about why we do not carry
our weight?
Senator Sarbanes. Well, I think Senator Lugar has made a
very strong argument why clearing up these arrearages would
improve our position in a number of different bargaining arenas
in terms of sharing responsibility.
Senator Biden. You are correct on that. But I do not think
the argument, Senator, about this notion about share of world
income versus carrying our weight relates to that. You are
right. We made a deal, we should pay for the deal.
Senator Sarbanes. We should keep the deal.
Senator Biden. Keep the deal, you are right.
Senator Sarbanes. That is right.
Senator Biden. Now, the other alternative is let us figure
out if we do not do this deal how we pay any of the deal. Does
anybody have an idea how you do that? I would like to know,
because the last 4 years we have gotten zip, zero, nothing.
Senator Sarbanes. Well, it is a wonderful process. We
negotiate amongst ourselves in the Congress and with the
administration. The U.N. is up there. I mean, they are not in
this process.
Senator Biden. No, they are not in the process.
Senator Sarbanes. Then an understanding is reached, and
then that is going to be presented to the U.N. and they are
going to be told look, take this or leave it.
Let me tell you, look, we have got a provision in this
division C, let me just read it to you, I mean, and let the
snake out on the floor in itself. The total amount of funds
made available for all United States memberships in
international organizations for which contributions are
assessed may not exceed $900 million.
Senator Kerry. What page are you on, Senator?
Senator Sarbanes. Page 6. Notwithstanding any other
provision of law, the United States shall withdraw from an
international organization or other wise reduce assessments in
the following budget cycle of that organization, et cetera.
I think any proposal here that puts out on the table this
snake of withdrawal, and the rest of this section goes on at
great length to discuss withdrawal, consultation with the
Congress, the deadline, the report, where are we going?
I think the United Nations has served very important
American interests. People undertake these peacekeeping
operations, and we do not have to send our own troops in. Every
time one of these things happens people say, well, let us get
the U.N. to do something about it.
Senator Biden. Senator, you are right, but how long do you
think it would last if we would come up another year without
any funding for the arrearages?
Senator Sarbanes. I think we should pay off these
arrearages.
Senator Biden. I do, but are you going to write a check,
get John Rockefeller to do it, or are you going to get 51
votes?
Senator Sarbanes. I think we should have a clear issue, as
this amendment poses, on meeting in full our obligations to the
United Nations. These are past obligations. These are past
obligations.
Senator Biden. You are right. We have got to get 51 votes.
Senator Sarbanes. These are things we failed to do.
Therefore, I very strongly support these amendments.
This, in many respects, may be an historic vote, I think.
The Chairman. We are going to have a vote on the Senate
floor, and I would like to get this matter settled before we
go.
Senator Kerry. Yes, sir. I understand that. I will try to
be very brief, and I know I am not going to change the vote. I
kind of come out in between a little bit, Senator Sarbanes, but
I am very, very supportive of what Senator Lugar is asserting
here. I understand what Senator Biden is saying.
This has been a struggle. When I was serving as chair of
the subcommittee I worked with Senator Pressler. We were very
tough on the United Nations, with Senator Coverdell. We put in
a lot of restrictions, and in effect we brought about a
significant change, Mr. Chairman, a new Secretary General,
commitments to reform, a very significant attitude shift, I
think, and we have a new Ambassador there, and so forth.
I believe this will work, unlike maybe some of my
colleagues. But I do not think it is the right thing to do. I
think we are going to pay a longer-term price for it. I mean,
diplomacy and relations with other countries are not just
always bludgeoning and waving the big stick and achieving your
short-term goal. There are longer-term goals. We have got major
long-term interests in Europe, with former Yugoslavia, Bosnia,
the emergence of the new NATO, and so forth. I must say as I
have talked to people in New York, and I met with the
Ambassador, too, and others, while this may work and we have
been put in a position of accepting it, it does not mean we
have to like it or vote for it or support it. It certainly does
not mean we should not lay out for colleagues and others what
the price is.
Now, I believe we have put ourselves in a position where
private diplomacy, Mr. Chairman, could have achieved a
commitment from Kofi Anon and others to proceed forward and get
a reduction in the level. I happen to think we deserve it. I
disagree with my colleague there. I do not think that
particular measurement is the accurate measurement of today.
But nevertheless, I am convinced we could have achieved a
reduction without this bludgeoning. In my judgment, the result
of this is going to be to lose votes down the road on countless
different occasions where we might have won them.
We would not have been hurt one iota to ante up 1 year's
payment on a 2-year schedule or 3-year schedule without
condition. We certainly would have been prejudiced on 2 years.
There is nothing to stop the Congress after that from coming
back and saying OK, we gave you every chance in the world, you
made your commitments, you did not change, nothing has
transitioned, and so we are going to proceed.
But it seems to me that when you do it retroactively rather
than prospectively on the money yet to come, you are really
behaving in a way that I think invites a lot more mischief than
the short-term gain is going to produce, and in the long run I
think we will pay a price for that.
The Chairman. Thank you, Senator.
All the Senators have made good points. What has not been
expressed here is who on this committee and who in the Senate
was responsible for the arrearages in the first place: Liberals
and conservatives, Democrats and Republicans, and I remember
Nancy Kassebaum was a leader because she was fed up with the
conditions in the United Nations.
Now, all these platitudes that I am hearing, I am just
about to get sick at my stomach. I move to table the amendment
and the clerk will call the role.
Senator Biden. Which one are we moving.
Senator Lugar. Let us vote first of all on the arrearages
amendment.
The Chairman. Which one did you offer first?
Senator Lugar. The arrearage. Then second the money for
FY98, the 71 million.
The Chairman. The clerk will call the role.
Senator Coverdell. The motion is to table the amendment?
The Chairman. Yes.
The Clerk. Mr. Lugar.
Senator Lugar. Nay.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas.
Senator Thomas. Aye.
The Clerk. Mr. Grams.
Senator Grams. Aye.
The Clerk. Mr. Ashcroft.
The Chairman. Aye, by proxy.
The Clerk. Mr Frist.
Senator Frist. Aye.
The Clerk. Mr. Brownback.
The Chairman. Aye, by proxy.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. Nay.
The Clerk. Mr. Dodd.
Senator Biden. Nay, by proxy.
The Clerk. Mr. Kerry.
Senator Kerry. Nay.
The Clerk. Mr. Robb.
Senator Robb. Aye, reluctantly.
The Clerk. Mr. Feingold.
Senator Feingold. Nay.
The Clerk. Mrs. Feinstein.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Wellstone.
Senator Biden. Wellstone, nay, by proxy.
The Clerk. Mr. Chairman.
The Chairman. Aye.
The Clerk. Mr. Chairman, the vote is 12 ayes, six nays.
The Chairman. I move to table the other Lugar amendment.
Senator Lugar. This is the 71 million for this year.
Senator Sarbanes. This is so we do not get further behind
than we already are.
Senator Biden. Mr. Chairman, on that point, let me make it
clear we will not get behind because it does not cover just the
U.N. This $40 million difference does not cover just the U.N.
It is the African special thing and Afghanistan. One is United
Nations, the other is not.
The Clerk. Mr. Lugar.
Senator Lugar. Nay.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas.
Senator Thomas. Aye.
The Clerk. Mr. Grams.
Senator Grams. Aye.
The Clerk. Mr. Ashcroft.
The Chairman. Aye, by proxy.
The Clerk. Mr Frist.
Senator Frist. Aye.
The Clerk. Mr. Brownback.
The Chairman. Aye, by proxy.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. Nay.
The Clerk. Mr. Dodd.
Senator Biden. Nay, by proxy.
The Clerk. Mr. Kerry.
Senator Kerry. Nay.
The Clerk. Mr. Robb.
Senator Robb. Nay.
The Clerk. Mr. Feingold.
Senator Feingold. Aye.
The Clerk. Mrs. Feinstein.
Senator Biden. Nay, by proxy.
The Clerk. Mr. Wellstone. [No response.]
The Clerk. Mr. Chairman.
The Chairman. Aye.
Senator Biden. I am sorry. I beg your pardon. Senator
Wellstone, no to tabling, by proxy.
The Clerk. Mr. Chairman, the vote is 11 ayes to 6 nays.
The Chairman. Very good.
Senator Grams. Mr. Chairman, can I ask unanimous consent to
be recorded on the previous vote on division B as voting aye? I
missed that vote.
The Chairman. Very good.
Senator Sarbanes. Mr. Chairman, I thought the vote was 11
to 7. It was announced as 11 to 6.
The Chairman. We have one en bloc amendment proposed by
Senator Biden and me. It has been checked on both sides.
Senator Coverdell. I move the adoption.
Senator Biden. I second.
The Clerk. Mr. Chairman, correction: The vote was 11 ayes
to 7 nays.
Senator Biden. Can we just vote?
The Chairman. On division C, the clerk will call the role.
The Clerk. Mr. Lugar.
Senator Lugar. Nay.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas.
Senator Thomas. Aye.
The Clerk. Mr. Grams.
Senator Grams. Aye.
The Clerk. Mr. Ashcroft.
The Chairman. Aye, by proxy.
The Clerk. Mr Frist.
Senator Frist. Aye.
The Clerk. Mr. Brownback.
The Chairman. Aye, by proxy.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. Nay.
The Clerk. Mr. Dodd.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Kerry.
Senator Kerry. Aye.
The Clerk. Mr. Robb.
Senator Robb. Aye.
The Clerk. Mr. Feingold.
Senator Feingold. Aye.
The Clerk. Mrs. Feinstein.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Wellstone.
Senator Biden. Nay, by proxy.
The Clerk. Mr. Chairman.
The Chairman. Aye.
The Clerk. The vote is 15 ayes, 3 nays.
The Chairman. I ask that the staff be allowed to make
technical and conforming amendments to the bill, as reported,
to ensure that it accurately reflects the modifications made by
the committee today.
Senator Biden. May I amend that to include the agreements
we made as to what we were going to try to work out.
The Chairman. The clerk will call the role.
The Clerk. The vote on division C was 15 ayes, 3 nays. The
vote now will be on final passage.
The Chairman. Now on final passage.
The Clerk. Mr. Lugar.
Senator Lugar. Nay.
The Clerk. Mr. Coverdell.
Senator Coverdell. Aye.
The Clerk. Mr. Hagel.
Senator Hagel. Aye.
The Clerk. Mr. Smith.
Senator Smith. Aye.
The Clerk. Mr. Thomas.
Senator Thomas. Aye.
The Clerk. Mr. Grams.
Senator Grams. Aye.
The Clerk. Mr. Ashcroft.
The Chairman. Aye, by proxy.
The Clerk. Mr. Frist.
Senator Frist. Aye.
The Clerk. Mr. Brownback.
The Chairman. Aye, by proxy.
The Clerk. Mr. Biden.
Senator Biden. Aye.
The Clerk. Mr. Sarbanes.
Senator Sarbanes. Nay.
The Clerk. Mr. Dodd.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Kerry.
Senator Kerry. Aye.
The Clerk. Mr. Robb.
Senator Robb. Aye.
The Clerk. Mr. Feingold.
Senator Feingold. Nay.
The Clerk. Mrs. Feinstein.
Senator Biden. Aye, by proxy.
The Clerk. Mr. Wellstone.
Senator Biden. Nay, by proxy.
The Clerk. Mr. Chairman.
The Chairman. Aye.
The Clerk. The final vote is 14 ayes to 4 nays.
The Chairman. Thank you very much. We stand in recess.
[Whereupon, at 4:50 p.m., the hearing was adjourned.]
A P P E N D I C E S
Appendix 1
Hearing of February 26, 1997
----------
U.S. Agency for
International Development
Congressional Presentation
SUMMARY TABLES
Fiscal Year 1998
?
U.S. Agency for International Development
FY 1998 Congressional Presentation
Summary Tables
Table of Contents
----------
Page
Explanation of Tables............................................ 321
International Affairs Budget Authority Tracker--FYs 1996-1998
Budget Function 150 Summary (Table 1)........................ 325
Budget Authority by Account (Table 2)........................ 326
USAID Program Trends: FYs 1995-1998 (Table 3).................... 329
U.S. Economic and Military Assistance--Appropriations
(``All Spigots'' Tables)
FY 1996 (Table 4A)............................................... 330
FY 1997 (Table 4B)............................................... 338
FY 1998 (Table 4C)............................................... 346
U.S. Economic and Military Assistance--Obligations
(``All Spigots'' Tables)
FY 1996 Actuals (Table 5A)....................................... 353
FY 1997 Estimates (Table 5B)..................................... 362
International Organizations and Programs (Table 6)............... 370
P.L. 480 Food for Peace--FYs 1996-1998
Title III (Table 7A)............................................. 371
Title II (Table 7B).............................................. 372
(319)
EXPLANATION OF TABLES
overview
The tables in this booklet illustrate the foreign
assistance budget request for FY 1998, which is a part of the
President's Budget. The tables also include budget levels for
FY 1996 and FY 1997 for comparison and, in Table 3, FY 1995.
The levels for FYs 1996 and 1997 are based on the FY 1996 and
FY 1997 appropriations acts and also reflect enacted
rescissions for FY 1996 (except in the country ``spigots''
tables), as well as supplementals in FY 1996.
The U.S. Agency for International Development (USAID)
administers certain U.S. bilateral assistance programs
including Development Assistance (DA), which includes the
Development Assistance Fund, the Development Fund for Africa,
other specialized DA accounts for credit programs and disaster
assistance; the Economic Support Fund (ESF); programs for
Central and Eastern Europe under the Support for East European
Democracy Act (SEED); the New Independent States of the former
Soviet Union (NIS) under the Freedom Support Act; and Food For
Peace Titles II and III (P.L. 480). The tables follow USAID
funding from the overall account summaries to the individual
country program levels. There are differences between some of
the tables because of the alternative budget concepts being
presented.
Each table describes funding from one of several
approaches. New budget authority (also referred to as new
obligational authority or NOA) refers to the funding levels
appropriated by Congress in a given year after certain
legislatively mandated transfers or rescissions. For the actual
results of the prior year, total budget authority (BA) refers
to the new budget authority plus reappropriations (such as
deobligations and reobligations) and transfers. The program
level (or obligation level) is the same as the total BA plus
obligations of unobligated balances carried over from prior
years less unobligated balances carried into subsequent years.
Funds appropriated are not always obligated within the same
year if they are available for more than one year.
Tables 1, 2A, 2B, 4A and 4B reflect actual budget authority
for FYs 1996 and 1997. Table 3 and tables 5A and 5B reflect
program or obligation levels for FYs 1996 and 1997.
On all tables amounts shown for FY 1998 represent proposed
new budget authority (or the request level), which assumes no
obligated balances from prior years.
Country ``spigots'' levels for FY 1998 do not reflect
pending closures or downsizing still under review by the State
Department and USAID.
International Affairs Budget Authority Tracker--FYs 1996-1998
Budget Function 150 Summary (Table 1)
The International Affairs budget function ``150 Account''
is the portion of the President's Budget which pertains to
International Affairs. Table 1 shows the total budget authority
for subfunctions of the 150 account for FY 1996 and FY 1997,
and the request for FY 1998. Subfunction 151, International
Development and Humanitarian Assistance, includes multilateral
and bilateral assistance for Development Assistance and P.L.
480 food assistance. Programs under subfunction 152,
International Security Assistance, help countries of strategic
importance to the United States through Military Assistance and
the Economic Support Fund (ESF). Subfunction 153, Conduct of
Foreign Affairs, relates principally the operations of the
State Department. Subfunction 154, Foreign Information and
Exchange Activities, pertains to the operations of the U.S.
Information Agency, the Board for International Broadcasting,
and other public information activities. Subfunction 155,
International Financial Programs, provides funding for the
Export-Import Bank and the Foreign Military Sales Trust Fund.
The 150 account is under the direction of the Secretary of
State.
Budget Authority by Account (Tables 2A and 2B)
Table 2A reflects USAID programs only, in thousands of
dollars. Table 2B covers the full 150 Account in thousands of
dollars.
Programs and activities within the International Affairs
150 Account fall under the jurisdiction of three appropriation
subcommittees. Table 2B shows the 150 account subdivided
according to subcommittee jurisdiction (Foreign Operations,
Agriculture, and Commerce/Justice/State) for FYs 1996 through
1998.
Foreign Operations contains most of the programs under
subfunction 151 (International Development and Humanitarian
Assistance) including USAID-administered DA and humanitarian
assistance, and subfunction 152 (International Security
Assistance) including USAID-administered ESF programs. Other
programs in the Foreign Operations classification include
multilateral assistance, other bilateral assistance agencies
such as the Trade and Development Agency, the Peace Corps, and
the African Development Foundation, plus Military Assistance,
and Export-Import Bank contributions.
The Agriculture portion of the 150 Account refers
principally to the food assistance provided under P.L. 480
(subfunction 151) which is appropriated to the U.S. Department
of Agriculture (USDA), but, in the case of Title II and III
programs, is managed by USAID.
The Commerce/Justice/State portion of the budget
reflects Department of State administrative operations
(Subfunction 153), the operations of the United States
Information Agency (USIA) and other public information
programs, and assessed contributions to international
organizations (Subfunction 154).
The Mandatory portion of the budget includes receipts
and certain reconciling items such as trust funds which are
outside the responsibility of the appropriations committees.
Tables 2A and 2B show total budget authority levels for
both FYs 1996 and 1997 and the request level for FY 1998. The
totals for the 150 account in each year are the same as that
shown on Table 1.
USAID Program Trends: FYS 1995-1998 (Table 3)
This table compares obligations (program levels) for all
USAID-administered accounts for FYs 1995 through FY 1998. In
any given year the program level varies from the new budget
authority shown on other budget tables (see explanation in
overview). The FY 1998 request once again represents new
obligational authority.
``All Spigots''--U.S. Economic and Military Assistance--Appropriated
Levels: FYs 1996-1998 (Tables 4A, 4B and 4C).
There are two sets of ``all spigots'' tables: One set
(Tables 4A, 4B and 4C) shows appropriated levels for FYs 1996
and 1997 and the requested appropriations for FY 1998; the
other set (Tables 5A and 5B) reflects the program level for FYs
1996 and 1997.
The appropriations tables show the levels by bureau and
country for DA, ESF, SEED, NIS, Peace Corps, Narcotics, P.L.
480, and Military Assistance accounts.
Appropriated levels are those enacted by the Congress and
do not include carryover amounts, transfers or funds available
under the deobligation/reobligation authority.
NOTE: For FYs 1997 and 1998, country totals include, for
USAID managed-programs, funding from regional or central funds
for programs that can be directly attributed to a particular
country. Affected regional or central programs will show a
decrease from prior year funds due to these attributions.
``All Spigots''--U.S. Economic and Military Assistance Levels--Program
(Obligation) Levels: FY 1996 (actuals) and FY 1997
(estimates)--(Tables 5A and 5B)
These ``All-Spigots'' tables show the program level
(obligations) by bureau and country for DA, ESF, SEED, and NIS.
The Peace Corps, Narcotics, PL 480, and Military Assistance
data, however, is the same as in the appropriation spigots.
The FY 1997 program level for Table 5 equals the funds
available for obligation in FY 1997 noted on the Program
Trends, Table 3. Table 5 represents new budget authority plus
any country allocations of prior year funds which are known at
this time. (Not all of the unobligated prior year funds are
allocated to specific countries at this time). Table 5 FY 1997
allocations change until the year's obligations are finalized
at the end of the fiscal year.
The program level tables for FY 1996 and FY 1997 are
included because the obligated level is considered to be the
most complete picture of assistance actually provided to a
particular recipient in a given year.
NOTE: Country totals for FYs 1997-1998 in this set of
tables include, for USAID-managed programs, attributions from
regional or central funds for programs that can be directly
attributed to a particular country. Affected regional or
central programs will show a decrease from prior years due to
these attributions.
international organizations and programs (io&p) (table 6)
USAID cooperates with the Department of State on the
planning and monitoring of voluntary contributions to the
United Nations and other international organizations. Table 6
shows the BA funding levels for FYs 1996-1997 and the request
level for FY 1998 for the International Organizations and
Programs. The table, which is also presented in the FY 1998
Department of State Congressional Presentation, breaks out IO&P
funding by the categories of Building Democracy and the four
sustainable development themes. These contributions are
different from the assessed contributions to the United Nations
which are included under subfunction 153.
p.l. 480 spigots--titles ii and iii program levels (tables 7a and 7b)
USAID is responsible for the administration and
implementation of P.L. 480 Titles II and III. Table 7A (Title
III) and Table 7B (Title II) show actual program levels for FY
1996, estimated levels for FY 1997 and the FY 1998 request for
transport, voluntary agencies (Volags), the World Food Program
(WFP), and the International Emergency Food Reserve (IEFR).
Tables for Title II programs are broken out into two sections.
The first section reflects funding at the country level. The
second section reflects tonnage amounts.
TABLE 1.--INTERNATIONAL AFFAIRS
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year--
Budget authority --------------------------------------------------
1996 actual 1997 estimate 1998 request
----------------------------------------------------------------------------------------------------------------
Function 151................................................. 6,396,413 6,309,679 7,188,488
--------------------------------------------------
MDB's/IO&P............................................... 1,384,514 1,288,855 1,851,191
A.I.D.................................................... 3,324,659 3,422,550 3,819,047
Debt restructuring....................................... 63,750 54,500 64,000
P.L. 480................................................. 1,133,912 1,017,774 877,250
Other.................................................... 503,578 540,000 591,000
Receipts................................................. (14,000) (14,000) (14,000)
==================================================
Function 152................................................. 5,038,926 5,027,075 5,285,850
--------------------------------------------------
ESF...................................................... 2,341,000 2,362,600 2,497,600
FMF...................................................... 3,351,743 3,315,000 3,340,250
FMF liquidating account.................................. (229,000) (203,000) (191,000)
Other.................................................... 236,183 189,475 174,000
Receipts................................................. (661,000) (637,000) (535,000)
==================================================
Subtotal 151+152....................................... 11,435,339 11,336,754 12,474,338
==================================================
Function 153................................................. 3,833,497 3,895,329 4,167,576
--------------------------------------------------
A.I.D. FSRDF............................................. 43,914 43,826 44,208
Other.................................................... 3,789,583 3,851,503 4,123,368
==================================================
Function 154................................................. 1,127,295 1,101,110 1,133,788
Function 155................................................. 309,359 1,200,714 613,614
Ex-Im.................................................... 814,359 714,714 629,614
Other.................................................... (505,000) 486,000 (16,000)
==================================================
Total 150.............................................. 16,705,490 17,533,907 18,389,316
----------------------------------------------------------------------------------------------------------------
TABLE 2.--INTERNATIONAL AFFAIRS
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year--
Budget authority --------------------------------------------------
1996 actual 1997 estimate 1998 request
----------------------------------------------------------------------------------------------------------------
Multilateral assistance:
Inter-American Dev. Bank................................. 25,952 25,611 25,611
Fund for Special Operations.......................... 10,000 10,000 20,576
Inter-American Investment Corp....................... ............... ............... ...............
--------------------------------------------------
Subtotal: IADB..................................... 35,952 35,611 46,187
==================================================
World Bank (IBRD)........................................ 28,190 ............... ...............
Global Environment Facility.............................. 35,000 35,000 100,000
International Finance Corp............................... 60,900 6,656 ...............
International Development Association.................... 700,000 700,000 1,034,503
Asian Development Fund/Bank.............................. 113,222 113,222 163,222
African Development Fund................................. ............... ............... 50,000
African Development Bank................................. ............... ............... ...............
North American Development Bank.......................... 56,250 56,000 56,500
European Development Bank................................ 70,000 11,916 35,779
Middle East Development Bank............................. ............... ............... (52,500)
Subtotal: MDBs......................................... 1,099,514 958,405 1,486,191
--------------------------------------------------
IO&P (Voluntary Contrib.)................................ 285,000 330,450 365,000
==================================================
Total: Multilateral Assistance......................... 1,384,514 1,288,855 1,851,191
==================================================
Bilateral assistance--USAID:
Development Programs..................................... 1,617,306 1,132,500 998,000
Child Survival and Diseases Programs..................... ............... 500,000 ...............
Development Fund for Africa.............................. ............... ............... 700,000
--------------------------------------------------
Subtotal--Sustainable Development...................... 1,617,306 1,632,500 1,698,000
==================================================
International Disaster Assistance........................ 180,951 190,000 190,000
Micro & Sm. Enterprise Dvlpt. Prog. Subsidy.............. 1,500 1,500 1,500
Micro & Sm. Enterprise Dvlpt. Prog. Admin................ 500 500 500
Urban/Environment Credit Subsidy......................... 4,000 3,500 3,000
Urban/Environment Credit Administration.................. 7,000 6,000 6,000
Foreign Service Retirement & Dis......................... 43,914 43,826 44,208
Operating Expenses....................................... 494,317 488,250 473,000
Operating Expenses--IG................................... 30,163 30,000 29,047
--------------------------------------------------
Subtotal: Development Assistance....................... 2,379,651 2,396,076 2,445,255
==================================================
Economic Support Fund.................................... 2,321,400 2,343,000 2,497,600
International Fund for Ireland........................... 19,600 19,600 ...............
--------------------------------------------------
Economic Support Fund Total............................ 2,341,000 2,362,600 2,497,600
==================================================
Assistance for Eastern Europe and the Baltic States.......... 522,000 475,000 492,000
Less Transfers............................................... 59,039 ............... ...............
--------------------------------------------------
Total SEED............................................... 462,961 475,000 492,000
==================================================
Assistance for the New Independent States of the Former
Soviet Union................................................ 640,444 625,000 900,000
Less Transfers............................................... 122,483 48,700 ...............
--------------------------------------------------
Total NIS................................................ 517,961 576,300 900,000
==================================================
Subtotal: USAID after transfers.......................... 5,701,573 5,809,976 6,334,855
==================================================
Bilateral assistance:
Trade & Development Agency............................... 48,994 45,000 43,000
Peacekeeping Operations.................................. 96,200 65,000 90,000
Non-Proliferation & Disarmament Fund..................... 35,000 15,000 15,000
International Narcotics Control.......................... 134,955 213,000 230,000
Inter-American Foundation................................ 19,986 20,000 22,000
African Development Foundation........................... 11,496 11,500 14,000
Peace Corps.............................................. 217,704 220,000 222,000
Migration & Refugee Assistance........................... 670,983 650,000 650,000
Emergency Refugee & Migration Fund....................... 50,000 50,000 50,000
Anti-Terrorism Assistance................................ 15,983 18,000 19,000
Overseas Priv. Invest. Corp (OPIC)....................... ............... ............... ...............
Loan Subsidy & Admin Expenses (non-add).................. 98,000 104,500 92,000
Non-credit activities.................................... (92,540) (130,500) (158,000)
--------------------------------------------------
Total: Bilateral assistance............................ 6,910,334 6,986,976 7,531,855
==================================================
Military assistance:
Military to Military Contact............................. ............... ............... ...............
Int'l Military Education & Training...................... 39,000 43,475 50,000
Counter-terrorism Assistance to Israel................... 50,000 50,000 ...............
Relocation of facilities in Israel....................... ............... (2,000) ...............
Special Defense Acquisition Fund......................... (173,000) (166,000) (106,000)
Foreign Military Financing............................... 3,351,743 3,315,000 3,340,250
--------------------------------------------------
Total: Military assistance BA.......................... 3,267,743 3,240,475 3,284,250
==================================================
Export-Import Bank, subsidy and admin........................ 763,359 714,714 629,614
IMF, Structural Adjustment Facility.......................... ............... ............... 7,000
(IMF-New Arrangement to Borrow).............................. ............... ............... (3,521,000)
Debt restructuring:
Debt Restructuring....................................... 10,000 12,000 22,000
Jordan Military Debt Forgiveness......................... ............... 15,000 12,000
Multilateral Investment Fund-Enterprise for Americas..... 53,750 27,500 30,000
--------------------------------------------------
Total: Foreign Operations Subcommittee................. 12,389,700 12,285,520 13,367,910
==================================================
Agriculture Subcommittee:
P.L. 480
Title I cargo preference................................. 262,812 151,274 10,250
Title II grants.......................................... 821,100 837,000 837,000
Title III grants......................................... 50,000 29,500 30,000
--------------------------------------------------
Total: Agriculture Subcommittee........................ 1,133,912 1,017,774 877,250
==================================================
Conduct of Foreign Affairs (153)............................. 3,789,583 3,851,503 4,123,368
(Unassigned to Approp Committee)............................. (280,914) (289,826) (297,208)
Foreign Info & Exchange Act (154)............................ 1,127,295 1,101,110 1,133,788
(Unassigned to Approp Committee)............................. 1,000 2,000 48,000
--------------------------------------------------
Total: Appropriations Committee.......................... 18,720,404 18,543,733 19,751,524
--------------------------------------------------
Total: Appropriations-discretionary...................... 18,427,490 18,254,907 19,451,316
==================================================
Subfunctions 151, 152, 155 mandatories....................... (1,735,000) (722,000) (1,106,000)
Economic Asst Loan Liquidating Acct...................... ............... ............... ...............
Misc. Trust Funds--A.I.D................................. ............... ............... ...............
North American Development Bank.......................... ............... ............... ...............
Housing Guaranty & other credit liquidating accounts..... 8,000 19,000 26,000
Housing Guaranty subsidy reestimate...................... ............... ............... ...............
PSIP subsidy reestimate.................................. ............... ............... ...............
Debt Restructuring subsidy reestimate.................... 22,000 ............... ...............
Israeli loan guaranty pmt to OE.......................... ............... ............... ...............
Miscellaneous credit reform.............................. (9,000) ............... ...............
Misc. Trust Funds Receipts--DOT.......................... ............... ............... ...............
Misc. Trust Funds Receipts--A.I.D........................ (1,000) (1,000) (1,000)
A.I.D. Loan Repayments................................... ............... ............... ...............
Foreign Currency Loan Repayments......................... (13,000) (13,000) (13,000)
Peace Corps Miscellaneous Trust Fund..................... 1,000 1,000 1,000
OPIC liquidating account................................. ............... ............... ...............
P.L. 480 Liquidating Acct................................ (572,000) (540,000) (483,000)
P.L. 480 Food for Progress............................... ............... ............... ...............
P.L. 480 loans subsidy reestimate........................ ............... ............... ...............
FMF Receipts............................................. (661,000) (637,000) (535,000)
FMF liquidating account (pre-92, GRF).................... (229,000) (203,000) (191,000)
FMF--Contract Authority.................................. 15,299,000 14,520,000 13,490,000
FMF--Liquidation of contract auth........................ (14,747,000) (13,760,000) (13,400,000)
IMF quota................................................ ............... ............... ...............
Exchange stabilization fund.............................. (778,000) ............... ...............
Ex-Im Liquidating Account................................ ............... ............... ...............
Ex-Im subsidy reestimate................................. 51,000 ............... ...............
Treasury Loan Repayment (U.K.)........................... (106,000) (108,000) ...............
--------------------------------------------------
Total International Affairs............................ 16,705,490 17,533,907 18,396,316
----------------------------------------------------------------------------------------------------------------
NOTE: Totals for all years exclude debt restructuring located elsewhere in this table.
FY 1996 Notes: Africa and Child Survival Programs included in Development Programs; Development Programs and
SEED account levels exclude a total of $31 million transferred to the African Development Foundation and Inter-
American Foundation and $28.5 million used for Operating Expenses. Levels also reflect rescissions.
FY 1997 Notes: Development Program level excludes $31 million transferred to the African Development Foundation
and Inter-American Foundation and $17.5 million transferred to Operating Expenses.
TABLE 3.--AGENCY FOR INTERNATIONAL DEVELOPMENT PROGRAM TRENDS: FY 1995-FY 1998
[Obligations in thousands of dollars]
----------------------------------------------------------------------------------------------------------------
1995 actual 1996 actual \1\ 1997 estimate 1998 request
----------------------------------------------------------------------------------------------------------------
Development Programs........................ 1,310,713 1,386,807 1,577,164 998,000
Child Survival and Disease Program.......... ............... ............... \2\ 500,000 ...............
-------------------------------------------------------------------
Total Development Assistance................ 1,310,713 1,386,807 2,077,164 998,000
===================================================================
Sahel Development Program................... 1,295 535 ............... ...............
Development Fund for Africa................. 828,127 123,814 30,775 700,000
-------------------------------------------------------------------
Subtotal, Geographic & Central Programs. 2,140,135 1,511,156 2,107,939 1,698,000
===================================================================
American Schools & Hospitals Abroad......... ............... ............... ............... ...............
International Disaster Assistance........... 205,105 165,552 235,111 190,000
African Disaster Assistance................. 163 ............... ............... ...............
Private Sector Revolving Fund Liquidating... ............... ............... ............... ...............
MSED Subsidy/Admin Expenses................. 1,910 1,557 2,000 2,000
Housing Guaranties Subsidy/Admin............ 26,921 10,657 9,666 9,000
Housing Guaranties Loan Limitation.......... ............... ............... ............... ...............
Housing Guaranties Liquidating Account...... 67,785 63,927 66,267 66,000
Advanced Acq. of Property................... 100 100 100 ...............
-------------------------------------------------------------------
Subtotal, DA Program Funds.............. 2,442.119 1,752,949 2,421,083 1,965,000
===================================================================
Operating Expenses.......................... 530,982 \3\ 487,270 530,485 473,000
Oper. Exp.--Inspector General............... 36,064 30.548 34,000 29,047
Foreign Service Retirement & Dis............ 45,118 43,914 43,826 44,208
-------------------------------------------------------------------
Total, A.I.D. Development Assistance.... 3,054,283 2,314,681 3,029,394 2,511,255
===================================================================
Economic Support Fund....................... 2,728,655 2,307,073 2,587,290 2,497,000
Total Economic Support Fund................. 2,728,655 2,307,073 2,587,290 2,497,000
Special Assistant Initiatives............... 404,467 412,335 589,338 492,000
Philippines............................. ............... ............... ............... ...............
Eastern Europe (SEED).................. (404,467) (412,335) (589,338) (492,000)
Of which-Bosnia Supplemental........ ............... \4\ (198,000) ............... ...............
Assistance of the New Independent States of
the Former Soviet Union.................... 731,467 546,482 875,235 900,000
Ukraine Trade Credit Program................ 16,605 ............... ............... ...............
Central American Reconciliation Asst........ ............... ............... ............... ...............
Demobilization and Transition Fund.......... 13,907 3,000 ............... ...............
===================================================================
Total, A.I.D. Economic Assistance....... 6,949,384 5,583,571 7,081,257 6,400,255
----------------------------------------------------------------------------------------------------------------
\1\ FY 1996 levels have been adjusted to include rescissions required in P.L. 104-134. DA, ESF and NIS levels
exclude a total of $284 million (of $355 million planned) in population programs using `96 appropriations
require by law to be obligated at the rate of no more than 6.67% a month between July 1996 and September 1997.
\2\ Excludes $100 million transferred to UNICEF.
\3\ Excludes $25.5 million in Development assistance used for operating expenses.
\4\ Includes $3 million to be used for USAID operating expenses and $3 million to be used for debt
restructuring.
TABLE 4A.--FY 1996 U.S. ECONOMIC & MILITARY ASSISTANCE--ACTUAL APPROPRIATIONS--P.L. 480
[In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Peace FMF
DA \1\ ESF SAI/NIS Title II Title III NARCS Corps Other \2\ FMF loans grants IMET Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bilateral assistance:
Africa...................................... 541,312 12,000 .......... 399,451 25,000 .......... 51,775 ........... .......... 5,030 6,016 1,040,584
Asia & Near East............................ 205,013 2,616,200 .......... 207,580 7,500 10,492 19,902 ........... .......... 3,201,000 10,611 5,823,298
Europe & NIS................................ 1,492 68,100 895,844 98,344 .......... 400 24,405 ........... .......... 53,850 13,256 1,155,691
Latin America & Caribbean................... 200,192 113,300 .......... 152,526 19,000 57,098 31,107 ........... .......... 2,000 8,717 583,940
Central PL 480 \2\.......................... .......... .......... .......... (36,801) (1,500) .......... ......... ........... .......... .......... ........ (38,301)
Global Programs, Field Spt. & Res........... 594,286 .......... 8,265 ........... .......... .......... ......... ........... .......... .......... ........ 602,551
Humanitarian Response....................... 61,268 .......... 14,500 ........... .......... .......... ......... ........... .......... .......... ........ 75,768
Program & Policy Coordination............... 7,703 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,703
Other \2\................................... 63,734 5,000 244,391 ........... .......... 46,965 90,515 ........... 59,400 30,463 400 540,868
Geographic & Central Programs............... 1,675,000 2,359,600 1,163,000 821,100 50,000 114,955 217,704 ........... 59,400 3,292,343 39,000 9,792,102
[Eastern Europe]........................ .......... .......... (522,000) ........... .......... .......... ......... ........... .......... .......... ........ (522,000)
[N.I.S.]................................ .......... .......... (641,000) ........... .......... .......... ......... ........... .......... .......... ........ (641,000)
Rescissions................................. (1,209) .......... (807) ........... .......... .......... ......... ........... .......... .......... ........ (2,016)
Reappropriation............................. 500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 500
Transfers................................... (31,918) (18,600) (200,003) ........... .......... 18,200 ......... ........... .......... .......... ........ (232,321)
-----------------------------------------------------------------------------------------------------------------------------------------------
Subtotal.................................. 1,642,373 2,341,000 962,190 821,100 50,000 133,155 217,704 ........... 59,400 3,292,343 39,000 9,558,265
International Disaster Assistance........... 180,951 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 180,951
Urban & Environmental Credit Subs........... 4,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 4,000
Urban & Environmental Admin................. 7,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,000
Micro & Small Ent Dev Credit Subsidy........ 1,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,500
Micro & Small Ent Dev Admin................. 500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 500
Operating Expenses.......................... 468,750 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 468,750
Operating Expenses--I.G..................... 30,163 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 30,163
Foreign Service Retirement.................. 43,914 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 43,914
-----------------------------------------------------------------------------------------------------------------------------------------------
Total USAID............................... 2,379,151 2,341,000 962,190 821,100 50,000 .......... ......... ........... .......... .......... ........ 6,553,441
Other Bilateral Assistance.................. .......... .......... .......... ........... .......... 133,155 217,704 1,226,917 59,400 3,292,343 39,000 4,968,519
-----------------------------------------------------------------------------------------------------------------------------------------------
Total: Bilateral.......................... 2,379,151 2,341,000 962,190 821,100 50,000 133,155 217,704 1,226,917 59,400 3,292,343 39,000 11,521,960
===============================================================================================================================================
Multilateral Assistance:
MDB's....................................... .......... .......... .......... ........... .......... .......... ......... 1,099,513 .......... .......... ........ 1,099,513
IO & P...................................... .......... .......... .......... ........... .......... .......... ......... 285,000 .......... .......... ........ 285,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total: Multilateral....................... .......... .......... .......... ........... .......... .......... ......... 1,384,513 .......... .......... ........ 1,384,513
===============================================================================================================================================
Total Economic Assistance................. 2,379,151 2,341,000 962,190 821,100 50,000 133,155 217,704 2,611,430 .......... .......... ........ 9,515,730
Total Military Assistance................. .......... .......... .......... ........... .......... .......... ......... (123,000) 59,400 3,292,343 39,000 3,390,743
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Econ. & Mil. Assist................. 2,379,151 2,341,000 962,190 821,100 50,000 133,155 217,704 2,488,430 59,400 3,292,343 39,000 12,906,473
===============================================================================================================================================
Africa:
Angola...................................... 10,999 .......... .......... 44,077 .......... .......... ......... ........... .......... .......... ........ 55,076
Benin....................................... 9,716 .......... .......... 3,468 .......... .......... 1,679 ........... .......... .......... 281 15,144
Botswana.................................... .......... .......... .......... ........... .......... .......... 1,776 ........... .......... .......... 454 2,230
Burkina..................................... .......... .......... .......... 12,429 .......... .......... 965 ........... .......... .......... ........ 13,394
Burundi..................................... 2,498 .......... .......... ........... .......... .......... ......... ........... .......... .......... 71 2,569
Cameroon.................................... .......... .......... .......... 349 .......... .......... 3,189 ........... .......... .......... 83 3,621
Cape Verde.................................. .......... .......... .......... 6,208 .......... .......... 1,008 ........... .......... .......... 64 7,280
Central African Republic.................... 150 .......... .......... ........... .......... .......... 946 ........... .......... .......... 110 1,206
Chad........................................ .......... .......... .......... 4,795 .......... .......... 1,101 ........... .......... .......... ........ 5,896
Comoros..................................... .......... .......... .......... ........... .......... .......... 54 ........... .......... .......... 64 118
Congo....................................... .......... .......... .......... ........... .......... .......... 899 ........... .......... .......... 162 1,061
Cote d'lvoire............................... .......... .......... .......... ........... .......... .......... 1,465 ........... .......... .......... 151 1,616
Djibouti.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 150 150
Eritrea..................................... 7,700 .......... .......... 4,275 .......... .......... 888 ........... .......... .......... 261 13,124
Ethiopia.................................... 28,724 .......... .......... 50,253 25,000 .......... 1,069 ........... .......... .......... 327 105,373
Gabon....................................... .......... .......... .......... ........... .......... .......... 2,493 ........... .......... .......... ........ 2,493
Gambia...................................... 600 .......... .......... 2,995 .......... .......... 1,200 ........... .......... .......... ........ 4,795
Ghana....................................... 33,199 .......... .......... 12,475 .......... .......... 2,345 ........... .......... .......... 257 48,276
Guinea...................................... 11,569 .......... .......... 2,069 .......... .......... 1,928 ........... .......... .......... 35 15,601
Buinea-Bissau............................... 4,392 .......... .......... 1,733 .......... .......... 1,110 ........... .......... .......... 88 7,323
Kenya....................................... 10,832 .......... .......... 2,260 .......... .......... 2,329 ........... .......... .......... 297 15,718
Lesotho..................................... .......... .......... .......... ........... .......... .......... 2,005 ........... .......... .......... 72 2,077
Liberia..................................... 3,494 .......... .......... 55,662 .......... .......... ......... ........... .......... .......... ........ 59,156
Madagascar.................................. 15,937 .......... .......... 3,670 .......... .......... 880 ........... .......... .......... 102 20,589
Malawi...................................... 29,399 .......... .......... ........... .......... .......... 1,744 ........... .......... .......... 154 31,297
Mali........................................ 28,041 .......... .......... ........... .......... .......... 3,101 ........... .......... .......... 155 31,297
Mauritania.................................. .......... .......... .......... 835 .......... .......... 1,359 ........... .......... .......... ........ 2,194
Mozambique.................................. 31,909 .......... .......... 13,316 .......... .......... ......... ........... .......... .......... 203 45,428
Namibia..................................... 5,000 .......... .......... ........... .......... .......... 1,691 ........... .......... .......... 190 6,881
Niger....................................... 3,280 .......... .......... 690 .......... .......... 2,334 ........... .......... .......... 11 6,315
Nigeria..................................... 1,670 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,670
Rwanda...................................... 4,034 .......... .......... 114,085 .......... .......... ......... ........... .......... .......... 243 118,362
Sao Tome.................................... .......... .......... .......... 733 .......... .......... 435 ........... .......... .......... 75 1,243
Senegal..................................... 17,260 .......... .......... 1,213 .......... .......... 3,040 ........... .......... .......... 637 22,150
Seychelles.................................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 31 31
Sierra Leone................................ .......... .......... .......... 26,614 .......... .......... ......... ........... .......... .......... 134 26,748
Somalia..................................... 3,750 .......... .......... 5,361 .......... .......... ......... ........... .......... .......... ........ 9,111
South Africa................................ 117,539 .......... .......... ........... .......... .......... 505 ........... .......... .......... 466 118,510
Sudan....................................... .......... .......... .......... 23,521 .......... .......... ......... ........... .......... .......... ........ 23,521
Swaziland................................... .......... .......... .......... ........... .......... .......... 782 ........... .......... .......... 50 832
Tanzania.................................... 7,436 .......... .......... ........... .......... .......... 1,677 ........... .......... .......... 126 9,239
Togo........................................ .......... .......... .......... ........... .......... .......... 1,861 ........... .......... .......... ........ 1,861
Uganda...................................... 31,928 .......... .......... 6,365 .......... .......... 1,267 ........... .......... .......... 189 39,749
Zambia...................................... 11,719 .......... .......... ........... .......... .......... 1,339 ........... .......... .......... 99 13,156
Zimbabwe.................................... 14,556 .......... .......... ........... .......... .......... 1,312 ........... .......... .......... 224 16,092
Africa Regional............................. 56,379 12,000 .......... ........... .......... .......... ......... ........... .......... 5,030 ........ 73,409
Initiative for Southern Africa.............. 24,925 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 24,925
Redso/E..................................... 4,900 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 4,900
Redso/W..................................... 7,775 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,775
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 541,312 12,000 .......... 399,451 25,000 .......... 51,775 ........... .......... 5,030 6,016 1,040,584
===============================================================================================================================================
Asia & Near East:
Afghanistan................................. .......... .......... .......... 15,200 .......... .......... ......... ........... .......... .......... ........ 15,200
Algeria..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Bahrain..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 108 108
Bangladesh.................................. 34,105 .......... .......... 34,190 7,500 .......... ......... ........... .......... .......... 326 76,121
Cambodia.................................... 500 29,500 .......... ........... .......... .......... ......... ........... .......... 1,000 403 31,403
China....................................... .......... .......... .......... ........... .......... .......... 696 ........... .......... .......... ........ 696
Egypt....................................... .......... 815,000 .......... 603 .......... .......... ......... ........... .......... 1,300,000 1,009 2,116,612
Fiji........................................ .......... .......... .......... ........... .......... .......... 1,457 ........... .......... .......... ........ 1,457
India....................................... 29,775 .......... .......... 131,380 .......... .......... ......... ........... .......... .......... 357 161,512
Indonesia................................... 36,890 .......... .......... ........... .......... .......... ......... ........... .......... .......... 577 37,467
Iraq (Northern)............................. .......... .......... .......... 7,212 .......... .......... ......... ........... .......... .......... ........ 7,212
Israel...................................... .......... 1,200,000 .......... ........... .......... .......... ......... ........... .......... 1,800,000 ........ 3,000,000
Jordan...................................... 1,600 7,200 .......... ........... .......... .......... ......... ........... .......... 100,000 1,202 110,002
Kiribati.................................... .......... .......... .......... ........... .......... .......... 507 ........... .......... .......... ........ 507
Laos........................................ .......... 2,000 .......... ........... .......... 2,000 ......... ........... .......... .......... ........ 4,000
Lebanon..................................... .......... 2,000 .......... ........... .......... .......... ......... ........... .......... .......... 474 2,474
Malaysia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 613 613
Maldives.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 80 80
Micronesia.................................. .......... .......... .......... ........... .......... .......... 1,631 ........... .......... .......... ........ 1,631
Mongolia.................................... .......... 4,000 .......... ........... .......... .......... 993 ........... .......... .......... 70 5,063
Morocco..................................... 14,758 .......... .......... ........... .......... .......... 2,063 ........... .......... .......... 830 17,651
Nepal....................................... 13,883 .......... .......... 2,542 .......... .......... 2,237 ........... .......... .......... 140 18,802
North Korea................................. .......... .......... .......... 6,287 .......... .......... ......... ........... .......... .......... ........ 6,287
Oman........................................ .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 119 119
Pakistan.................................... .......... .......... .......... 3,993 .......... 2,500 ......... ........... .......... .......... ........ 6,493
Papua New Guinea............................ .......... .......... .......... ........... .......... .......... 1,491 ........... .......... .......... 162 1,653
Phillippines................................ 38,225 .......... .......... 4,846 .......... .......... 1,712 ........... .......... .......... 1,210 45,993
Singapore................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 20 20
Solomon Islands............................. .......... .......... .......... ........... .......... .......... 1,105 ........... .......... .......... 85 1,190
South Korea................................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 9 9
South Pacific............................... .......... 14,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,000
Sri Lanka................................... 11,705 .......... .......... ........... .......... .......... 595 ........... .......... .......... 179 12,479
Thailand.................................... .......... .......... .......... ........... .......... 1,500 1,919 ........... .......... .......... 1,445 4,864
Tonga....................................... .......... .......... .......... ........... .......... .......... 923 ........... .......... .......... 85 1,008
Tunisia..................................... .......... .......... .......... ........... .......... .......... 853 ........... .......... .......... 816 1,669
Vanuatu..................................... .......... .......... .......... ........... .......... .......... 655 ........... .......... .......... 88 743
West Bank/Gaza.............................. .......... 75,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 75,000
Western Somoa............................... .......... .......... .......... ........... .......... .......... 1,065 ........... .......... .......... 79 1,144
Yemen....................................... .......... .......... .......... 1,327 .......... .......... ......... ........... .......... .......... 50 1,377
Asia/Near East Regional..................... 20,572 12,500 .......... ........... .......... 4,492 ......... ........... .......... .......... ........ 37,564
East Asia Regional.......................... 3,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 3,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 205,013 2,161,200 .......... 207,580 7,500 10,492 19,902 ........... .......... 3,201,000 10,611 5,823,298
===============================================================================================================================================
Europe & Nis:
Albania..................................... .......... .......... 19,900 ........... .......... .......... 1,245 ........... .......... .......... 432 21,577
Armenia..................................... .......... .......... 75,525 ........... .......... .......... 1,006 ........... .......... .......... ........ 76,531
Azerbaijan.................................. .......... .......... 11,000 ........... .......... .......... ......... ........... .......... .......... ........ 11,000
Baltics..................................... .......... .......... .......... ........... .......... .......... 2,183 ........... .......... 750 ........ 2,933
Belarus..................................... .......... .......... 4,600 ........... .......... .......... ......... ........... .......... .......... 279 4,879
Bosnia-Hercegovina.......................... .......... .......... 146,950 98,344 .......... .......... ......... ........... .......... .......... 259 245,553
Bulgaria.................................... .......... .......... 27,865 ........... .......... .......... 1,155 ........... .......... .......... 708 29,728
Croatia..................................... .......... .......... 14,295 ........... .......... .......... ......... ........... .......... .......... 218 14,513
Czech Republic.............................. .......... .......... 3,687 ........... .......... .......... 1,060 ........... .......... .......... 795 5,542
Cyprus...................................... .......... 15,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 15,000
Estonia..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 386 386
Georgia..................................... .......... .......... 21,180 ........... .......... .......... ......... ........... .......... .......... 302 21,482
Greece...................................... .......... .......... .......... ........... .......... .......... ......... ........... (224,000) .......... 54 54
Hungary..................................... .......... .......... 15,096 ........... .......... .......... 1,219 ........... .......... .......... 1,034 17,349
Ireland..................................... .......... 19,600 .......... ........... .......... .......... ......... ........... .......... .......... ........ 19,600
Kazakhstan.................................. .......... .......... 19,433 ........... .......... .......... 1,544 ........... .......... .......... 388 21,365
Kirghizstan................................. .......... .......... 11,570 ........... .......... .......... 1,073 ........... .......... .......... 231 12,874
Lativa...................................... .......... .......... 3,380 ........... .......... .......... ......... ........... .......... .......... 388 3,768
Lithuania................................... .......... .......... 7,590 ........... .......... .......... ......... ........... .......... .......... 498 8,088
Macedonia................................... .......... .......... 13,160 ........... .......... .......... ......... ........... .......... .......... 249 13,409
Malta....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 30 30
Moldova..................................... .......... .......... 20,740 ........... .......... .......... 974 ........... .......... .......... 273 21,987
Poland...................................... .......... .......... 44,445 ........... .......... .......... 2,721 ........... .......... .......... 1,021 48,187
Portugal.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 769 769
Romania..................................... .......... .......... 28,680 ........... .......... .......... 1,271 ........... .......... .......... 758 30,709
Russia...................................... .......... .......... 108,140 ........... .......... .......... 3,406 ........... .......... .......... 760 112,306
Slovak Republic............................. .......... .......... 15,294 ........... .......... .......... 1,374 ........... .......... .......... 473 17,141
Slovenia.................................... .......... .......... 763 ........... .......... .......... ......... ........... .......... .......... 253 1,016
Spain....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 49 49
Tajikistan.................................. .......... .......... 3,370 ........... .......... .......... ......... ........... .......... .......... ........ 3,370
Turkey...................................... .......... 33,500 .......... ........... .......... 400 ......... ........... (320,000) .......... 1,095 34,995
Turkmenistan................................ .......... .......... 2,245 ........... .......... .......... 943 ........... .......... .......... 213 3,401
Ukraine..................................... .......... .......... 141,100 ........... .......... .......... 2,136 ........... .......... .......... 1,019 144,255
Uzbekistan.................................. .......... .......... 8,905 ........... .......... .......... 1,095 ........... .......... .......... 293 10,293
Eastern Europe Regional..................... 1,300 .......... 53,828 ........... .......... .......... ......... ........... .......... .......... ........ 55,128
Western Europe.............................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 29 29
N.I.S. Regional............................. 192 .......... 73,103 ........... .......... .......... ......... ........... .......... .......... ........ 73,295
Partnership for Peace....................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 53,100 ........ 53,100
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 1,492 68,100 895,844 98,344 .......... 400 24,405 ........... (554,000) 53,850 13,256 1,155,691
===============================================================================================================================================
Latin America & Caribbean:
Argentina................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 588 588
The Bahamas................................. .......... .......... .......... ........... .......... 700 ......... ........... .......... .......... 116 816
Belize...................................... .......... .......... .......... ........... .......... .......... 1,022 ........... .......... .......... 217 1,239
Bolivia..................................... 20,555 15,000 .......... 27,277 .......... 15,000 2,095 ........... .......... .......... 547 80,474
Brazil...................................... 4,677 .......... .......... ........... .......... 290 ......... ........... .......... .......... 200 5,167
Chile....................................... .......... .......... .......... ........... .......... .......... 1,654 ........... .......... .......... 301 1,955
Columbia.................................... 118 .......... .......... ........... .......... 16,000 ......... ........... .......... .......... 95 16,213
Costa Rica.................................. .......... .......... .......... 270 .......... .......... 1,671 ........... .......... .......... 196 2,137
Dominican Republic.......................... 7,163 .......... .......... 4,732 .......... .......... 2,706 ........... .......... .......... 507 15,108
Eastern Caribbean........................... 1,080 .......... .......... ........... .......... .......... 2,516 ........... .......... 2,000 507 6,103
Ecuador..................................... 9,002 .......... .......... 727 .......... 500 2,409 ........... .......... .......... 547 13,185
El Salvador................................. 21,773 .......... .......... 4,456 .......... .......... 993 ........... .......... .......... 535 27,757
Guatemala................................... 9,917 .......... .......... 16,781 .......... 2,000 2,818 ........... .......... .......... ........ 31,516
Guyana...................................... 2,198 .......... .......... 316 .......... .......... 471 ........... .......... .......... 220 3,205
Haiti....................................... 23,765 60,000 .......... 29,275 10,000 .......... 458 ........... .......... .......... 169 123,667
Honduras.................................... 12,895 .......... .......... 6,848 5,000 .......... 2,628 ........... .......... .......... 500 27,871
Jamaica..................................... 9,152 .......... .......... 2,200 .......... 700 1,886 ........... .......... .......... 469 14,407
Mexico...................................... 2,241 .......... .......... ........... .......... 2,200 ......... ........... .......... .......... 992 5,433
Nicaragua................................... 14,034 .......... .......... 2,474 4,000 .......... 1,568 ........... .......... .......... ........ 22,076
Panama...................................... 3,210 .......... .......... 588 .......... .......... 1,184 ........... .......... .......... ........ 4,982
Paraguay.................................... 1,050 .......... .......... ........... .......... .......... 3,096 ........... .......... .......... 155 4,301
Peru........................................ 17,045 3,000 .......... 56,582 .......... 15,500 ......... ........... .......... .......... 380 92,507
Suriname.................................... .......... .......... .......... ........... .......... .......... 732 ........... .......... .......... 85 817
Uruguay..................................... .......... .......... .......... ........... .......... .......... 1,200 ........... .......... .......... 380 1,580
Venezuela................................... .......... .......... .......... ........... .......... 500 ......... ........... .......... .......... 428 928
Caribbean Regional.......................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 83 83
PACAMS...................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 500 500
ROCAP....................................... 10,914 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 10,914
LAC Regional................................ 29,404 28,300 .......... ........... .......... 3,708 ......... ........... .......... .......... ........ 61,412
ICITAP/AOJ.................................. .......... 7,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 200,192 113,300 .......... 152,526 19,000 57,098 31,107 ........... .......... 2,000 8,717 583,940
===============================================================================================================================================
Other:
Administrative Costs........................ .......... .......... .......... ........... .......... .......... 90,515 ........... .......... 23,250 400 114,165
Loan subsidy................................ .......... .......... .......... ........... .......... .......... ......... ........... 59,400 .......... ........ 59,400
International Criminal Justice.............. .......... 5,000 13,200 ........... .......... (18,200) ......... ........... .......... .......... ........ 18,200
Law Enforcement Training.................... .......... .......... .......... ........... .......... 7,000 ......... ........... .......... .......... ........ 7,000
International Organizations................. .......... .......... .......... ........... .......... 7,710 ......... ........... .......... .......... ........ 7,710
Interregional Aviation Support.............. .......... .......... .......... ........... .......... 25,755 ......... ........... .......... .......... ........ 25,755
FMF: Demining............................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 7,213 ........ 7,213
Inter-American Foundation................... 20,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 20,000
African Development Foundation.............. 11,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 11,500
Operating Expenses.......................... 25,067 .......... 3,500 ........... .......... .......... ......... ........... .......... .......... ........ 28,567
Debt Reduction.............................. .......... .......... 3,000 ........... .......... .......... ......... ........... .......... .......... ........ 3,000
Unallocated \3\............................. 7,167 .......... 224,691 ........... .......... .......... ......... ........... .......... .......... ........ 231,858
Program Development & Support............... .......... .......... .......... ........... .......... 6,500 ......... ........... .......... .......... ........ 6,500
Central P.L. 480:
Stock Adjustment............................ .......... .......... .......... (17,998) .......... .......... ......... ........... .......... .......... ........ (17,998)
PVO Fallout................................. .......... .......... .......... (13,500) .......... .......... ......... ........... .......... .......... ........ (13,500)
Transport Costs............................. .......... .......... .......... (328,078) .......... .......... ......... ........... .......... .......... ........ (328,078)
Carryin..................................... .......... .......... .......... (18,576) (11,700) .......... ......... ........... .......... .......... ........ (30,276)
PVO Administration.......................... .......... .......... .......... 25,000 .......... .......... ......... ........... .......... .......... ........ 25,000
Transfer from Title I....................... .......... .......... .......... (11,600) .......... .......... ......... ........... .......... .......... ........ (11,600)
Transfer to Title II........................ .......... .......... .......... ........... 10,100 .......... ......... ........... .......... .......... ........ 10,100
Transfer from Title III..................... .......... .......... .......... (10,127) .......... .......... ......... ........... .......... .......... ........ (10,127)
Farmer to Farmer............................ .......... .......... .......... 10,000 100 .......... ......... ........... .......... .......... ........ 10,100
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Central P.L. 480.................... .......... .......... .......... (36,801) (1,500) .......... ......... ........... .......... .......... ........ (38,301)
===============================================================================================================================================
Other Bilateral Assistance:
Debt Restructuring.......................... .......... .......... .......... ........... .......... .......... ......... 10,000 .......... .......... ........ 10,000
Trade & Development Agency.................. .......... .......... .......... ........... .......... .......... ......... 48,994 .......... .......... ........ 48,994
Inter-American Foundation................... .......... .......... .......... ........... .......... .......... ......... 19,986 .......... .......... ........ 19,986
African Development Foundation.............. .......... .......... .......... ........... .......... .......... ......... 11,496 .......... .......... ........ 11,496
Migration & Refugee Assistance.............. .......... .......... .......... ........... .......... .......... ......... 670,983 .......... .......... ........ 670,983
Emergency Refugee & Migration Fund.......... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Anti-Terrorism Assistance................... .......... .......... .......... ........... .......... .......... ......... 15,983 .......... .......... ........ 15,983
Peacekeeping Operations..................... .......... .......... .......... ........... .......... .......... ......... 96,200 .......... .......... ........ 96,200
Non-Proliferation & Disarmament............. .......... .......... .......... ........... .......... .......... ......... 35,000 .......... .......... ........ 35,000
P.L. 480 Title I............................ .......... .......... .......... ........... .......... .......... ......... 262,815 .......... .......... ........ 262,815
OPIC loan subsidy & admin exp............... .......... .......... .......... ........... .......... .......... ......... 98,000 .......... .......... ........ 98,000
OPIC Insurance activities................... .......... .......... .......... ........... .......... .......... ......... (92,540) .......... .......... ........ (92,540)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Bilateral..................... .......... .......... .......... ........... .......... .......... ......... 1,226,917 .......... .......... ........ 1,226,917
===============================================================================================================================================
Other Military Assistance:
Special Defense Acquisition Fund............ .......... .......... .......... ........... .......... .......... ......... (173,000) .......... .......... ........ (173,000)
Counter-terrorism Asst. to Israel........... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Military...................... .......... .......... .......... ........... .......... .......... ......... (123,000) .......... .......... ........ (123,000)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DA bureau and country levels in this series of tables exclude attributions of central programs
\2\ See last page of this table for details
\3\ Unallocated DA funds are for special programs such as Dairy Development and Polio Eradication.
TABLE 4B.--FY 1997 U.S. ECONOMIC & MILITARY ASSISTANCE--ACTUAL APPROPRIATIONS--P.L. 480
[In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Peace FMF
DA \1\ ESF SAI/NIS Title II Title III NARCS Corps Other \2\ FMF loans grants IMET Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bilateral Assistance Summary:
Africa...................................... 665,064 14,000 .......... 204,357 28,400 .......... 53,443 ........... .......... 7,750 7,325 980,339
Asia & Near East............................ 252,887 2,188,500 3,000 130,673 .......... 10,000 20,745 ........... .......... 3,131,000 11,775 5,748,580
Europe & NIS................................ 4,400 57,900 1,093,500 27,007 .......... 500 24,980 ........... .......... 60,000 14,750 1,283,037
Latin America & Caribbean................... 273,488 102,200 .......... 104,363 10,000 116,200 30,942 ........... .......... 2,000 9,350 648,543
Central PL 480.............................. .......... .......... .......... 370,600 (8,900) .......... ......... ........... .......... .......... ........ 361,700
Global Programs, Field Spt. & Res........... 344,873 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 344,873
Humanitarian Response....................... 65,439 .......... 3,500 ........... .......... .......... ......... ........... .......... .......... ........ 68,939
Program & Policy Coordination............... 6,739 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,739
Other \2\................................... 19,610 .......... .......... ........... .......... 86,300 89,890 ........... 60,000 23,250 275 279,325
Geographic & Central Programs............... 1,632,500 2,362,600 1,100,000 837,000 29,500 213,000 220,000 ........... 60,000 3,224,000 43,475 9,722,075
(Eastern Europe)........................ .......... .......... (475,000) ........... .......... .......... ......... ........... .......... .......... ........ (475,000)
(N.I.S.)................................ .......... .......... (625,000) ........... .......... .......... ......... ........... .......... .......... ........ (625,000)
Transfers...................................
Inter-American Foundation............... 20,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 20,000
African Development Foundation.......... 11,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 11,500
Operating Expenses...................... 17,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 17,500
UNICEF.................................. 100,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 100,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Subtotal.............................. 1,781,500 2,362,600 1,100,000 837,000 29,500 213,000 220,000 ........... 60,000 3,224,000 43,475 9,871,075
===============================================================================================================================================
International Disaster Assistance........... 190,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 190,000
Urban & Environmental Credit Subs........... 3,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 3,500
Urban & Environmental Admin................. 6,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,000
Micro & Small Ent Dev Credit Subs........... 1,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,500
Micro & Small Ent Dev Admin................. 500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 500
Operating Expenses.......................... 488,250 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 488,250
Operating Expenses--I.G..................... 30,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 30,000
Foreign Service Retirement.................. 43,826 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 43,826
-----------------------------------------------------------------------------------------------------------------------------------------------
Total USAID (Excludes Transfers).......... 2,396,076 2,362,600 1,100,000 837,000 29,500 .......... ......... ........... .......... .......... ........ 6,725,176
===============================================================================================================================================
Other Bilateral Assistance.................. .......... .......... .......... ........... .......... 213,000 220,000 1,026,774 60,000 3,224,000 43,475 4,787,249
Total: Bilateral.......................... 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 1,026,774 60,000 3,224,000 43,475 11,512,425
===============================================================================================================================================
Multilateral Assistance:
MDB's....................................... .......... .......... .......... ........... .......... .......... ......... 958,405 .......... .......... ........ 958,405
IO & P...................................... .......... .......... .......... ........... .......... .......... ......... 333,450 .......... .......... ........ 333,450
-----------------------------------------------------------------------------------------------------------------------------------------------
Total: Multilateral....................... .......... .......... .......... ........... .......... .......... ......... 1,291,855 .......... .......... ........ 1,291,855
===============================================================================================================================================
Total Economic Assistance................. 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 2,318,629 .......... .......... ........ 9,476,805
Total Military Assistance................. .......... .......... .......... ........... .......... .......... ......... (118,000) 60,000 3,224,000 43,475 3,209,475
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Econ. & Mil. Assist................. 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 2,200,629 60,000 3,224,000 43,475 12,686,280
===============================================================================================================================================
Africa:
Angola...................................... 11,500 5,000 .......... 18,521 .......... .......... ......... ........... .......... .......... 125 35,146
Benin....................................... 13,800 .......... .......... 1,962 .......... .......... 1,662 ........... .......... .......... 350 17,774
Botswana.................................... .......... .......... .......... ........... .......... .......... 1,101 ........... .......... .......... 450 1,551
Burkina Faso................................ .......... .......... .......... 13,225 .......... .......... 1,464 ........... .......... .......... ........ 14,689
Burundi..................................... 1,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,500
Cameroon.................................... .......... .......... .......... ........... .......... .......... 3,085 ........... .......... .......... 100 3,185
Cape Verde.................................. .......... .......... .......... 2,626 .......... .......... 923 ........... .......... .......... 100 3,649
Central African Republic.................... .......... .......... .......... ........... .......... .......... 10 ........... .......... .......... 150 160
Chad........................................ .......... .......... .......... ........... .......... .......... 984 ........... .......... .......... 25 1,009
Comoros..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Congo....................................... .......... .......... .......... ........... .......... .......... 1,103 ........... .......... .......... 175 1,278
Cote d'lvoire............................... .......... .......... .......... ........... .......... .......... 1,703 ........... .......... .......... 150 1,853
Djibouti.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Eritrea..................................... 9,500 .......... .......... 478 15,000 .......... 1,176 ........... .......... .......... 375 26,529
Ethiopia.................................... 37,300 .......... .......... 25,524 9,400 .......... 1,250 ........... .......... .......... 400 73,874
Gabon....................................... .......... .......... .......... ........... .......... .......... 2,614 ........... .......... .......... ........ 2,614
Gambia...................................... 265 .......... .......... 2,024 .......... .......... 1,252 ........... .......... .......... ........ 3,541
Ghana....................................... 36,000 .......... .......... 12,047 .......... .......... 2,529 ........... .......... .......... 260 50,836
Guinea...................................... 12,500 .......... .......... 441 .......... .......... 2,050 ........... .......... .......... 150 15,141
Guinea-Bissau............................... 4,100 .......... .......... ........... .......... .......... 1,079 ........... .......... .......... 125 5,304
Kenya....................................... 19,500 .......... .......... ........... .......... .......... 3,119 ........... .......... .......... 300 22,919
Lesotho..................................... .......... .......... .......... 432 .......... .......... 2,237 ........... .......... .......... 75 2,744
Liberia..................................... 7,500 .......... .......... 8,710 .......... .......... ......... ........... .......... .......... ........ 16,210
Madagascar.................................. 16,250 .......... .......... 3,454 .......... .......... 1,047 ........... .......... .......... 100 20,851
Malawi...................................... 33,562 .......... .......... ........... .......... .......... 1,841 ........... .......... .......... 225 35,628
Mali........................................ 30,050 .......... .......... 173 .......... .......... 3,002 ........... .......... .......... 150 33,375
Mauritania.................................. .......... .......... .......... 1,611 .......... .......... 1,428 ........... .......... .......... ........ 3,039
Mauritius................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 25 25
Mozambique.................................. 31,000 .......... .......... 17,983 4,000 .......... ......... ........... .......... .......... 175 53,158
Namibia..................................... 8,000 .......... .......... ........... .......... .......... 1,706 ........... .......... .......... 200 9,906
Niger....................................... 3,300 .......... .......... ........... .......... .......... 2,476 ........... .......... .......... ........ 5,776
Nigeria..................................... 7,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,000
Rwanda...................................... 4,500 .......... .......... 66,721 .......... .......... ......... ........... .......... .......... 300 71,521
Sao Tome.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Senegal..................................... 21,200 .......... .......... ........... .......... .......... 3,138 ........... .......... .......... 650 24,988
Seychelles.................................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Sierra Leone................................ .......... .......... .......... 6,174 .......... .......... ......... ........... .......... .......... 115 6,289
Somalia..................................... 4,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 4,000
South Africa................................ 77,500 .......... .......... ........... .......... .......... 1,257 ........... .......... .......... 700 79,457
Sudan....................................... .......... .......... .......... 9,689 .......... .......... ......... ........... .......... .......... ........ 9,689
Swaziland................................... .......... .......... .......... ........... .......... .......... 177 ........... .......... .......... 75 252
Tanzania.................................... 18,700 .......... .......... ........... .......... .......... 1,719 ........... .......... .......... 225 20,644
Togo........................................ .......... .......... .......... ........... .......... .......... 1,867 ........... .......... .......... 25 1,892
Uganda...................................... 40,400 .......... .......... 12,562 .......... .......... 1,353 ........... .......... .......... 300 54,615
Zambia...................................... 16,600 .......... .......... ........... .......... .......... 1,724 ........... .......... .......... 150 18,474
Zimbabwe.................................... 16,900 .......... .......... ........... .......... .......... 1,368 ........... .......... .......... 275 18,543
Greater Horn of Africa Initiative (GHAI).... 15,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Initiative for Southern Africa (ISA)........ 38,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 38,000
Africa Regional............................. 63,485 9,000 .......... ........... .......... .......... ......... ........... .......... 4,750 ........ 77,235
REDSO/E..................................... 4,800 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 4,800
REDSO/W..................................... 14,595 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,595
Africa Crisis Response Force................ .......... .......... .......... ........... .......... .......... ......... ........... .......... 3,000 ........ 3,000
Special Concerns............................ 46,757 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 46,757
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 665,064 14,000 .......... 204,357 28,400 .......... 53,443 ........... .......... 7,750 7,325 ???,339
===============================================================================================================================================
Asia & Near East:
Afghanistan................................. .......... .......... .......... 13,600 .......... .......... ......... ........... .......... .......... ........ 13,600
Algeria..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Bahrain..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 125 125
Bangladesh.................................. 47,413 .......... .......... 20,609 .......... .......... ......... ........... .......... .......... 300 68,322
Cambodia.................................... .......... 35,000 .......... ........... .......... .......... ......... ........... .......... 1,000 500 36,500
China....................................... .......... .......... .......... ........... .......... .......... 891 ........... .......... .......... ........ 891
Egypt....................................... .......... 815,000 .......... ........... .......... .......... ......... ........... .......... 1,300,000 1,000 2,116,000
Fiji........................................ .......... .......... .......... ........... .......... .......... 804 ........... .......... .......... ........ 804
India....................................... 49,350 .......... .......... 89,868 .......... .......... ......... ........... .......... .......... 400 139,618
Indonesia................................... 41,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 42,100
Iraq (Northern)............................. .......... 1,500 .......... 6,596 .......... .......... ......... ........... .......... .......... ........ 8,096
Israel...................................... .......... 1,200,000 .......... ........... .......... .......... ......... ........... .......... 1,800,000 ........ 3,000,000
Jordan...................................... 4,500 10,000 .......... ........... .......... .......... 1,038 ........... .......... 30,000 1,600 47,138
Kiribati.................................... .......... .......... .......... ........... .......... .......... 589 ........... .......... .......... ........ 589
Laos........................................ .......... .......... .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 2,500
Lebanon..................................... .......... 12,000 .......... ........... .......... .......... ......... ........... .......... .......... 550 12,550
Malaysia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
Maldives.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Micronesia.................................. .......... .......... .......... ........... .......... .......... 1,587 ........... .......... .......... ........ 1,587
Mongolia.................................... .......... 7,000 3,000 ........... .......... .......... 1,056 ........... .......... .......... 325 11,381
Morocco..................................... 15,200 .......... .......... ........... .......... .......... 2,244 ........... .......... .......... 800 18,244
Nepal....................................... 19,600 .......... .......... ........... .......... .......... 2,368 ........... .......... .......... 200 22,168
Oman........................................ .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 150 150
Pakistan.................................... .......... .......... .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 2,500
Papua New Guinea............................ .......... .......... .......... ........... .......... .......... 1,937 ........... .......... .......... 200 2,137
Philippines................................. 48,450 .......... .......... ........... .......... .......... 2,184 ........... .......... .......... 1,250 51,884
Solomon Islands............................. .......... .......... .......... ........... .......... .......... 1,245 ........... .......... .......... 150 1,395
South Pacific............................... .......... 14,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,000
Sri Lanka................................... 3,000 .......... .......... ........... .......... .......... 420 ........... .......... .......... 200 3,620
Thailand.................................... .......... .......... .......... ........... .......... 3,000 1,443 ........... .......... .......... 1,500 5,943
Tonga....................................... .......... .......... .......... ........... .......... .......... 1,087 ........... .......... .......... 100 1,187
Tunisia..................................... .......... .......... .......... ........... .......... .......... 5 ........... .......... .......... 800 805
Vanuatu..................................... .......... .......... .......... ........... .......... .......... 812 ........... .......... .......... 100 912
West Bank/Gaza.............................. .......... 75,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 75,000
Western Somoa............................... .......... .......... .......... ........... .......... .......... 1,036 ........... .......... .......... 100 1,136
Yemen....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 50 50
Asia/Near East Regional..................... 23,874 19,000 .......... ........... .......... 2,000 ......... ........... .......... .......... ........ 44,874
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 252,887 2,188,500 3,000 130,673 .......... 10,000 20,745 ........... .......... 3,131,000 11,775 5,748,580
===============================================================================================================================================
Europe & NIS:
Albania..................................... .......... .......... 27,000 ........... .......... .......... 1,378 ........... .......... .......... 600 28,978
Armenia..................................... .......... .......... 95,000 ........... .......... .......... 1,104 ........... .......... .......... ........ 96,104
Azerbaijan.................................. .......... .......... 16,430 ........... .......... .......... ......... ........... .......... .......... ........ 16,430
Baltics..................................... .......... .......... .......... ........... .......... .......... 2,115 ........... .......... .......... ........ 2,115
Belarus..................................... .......... .......... 5,010 ........... .......... .......... ......... ........... .......... .......... 300 5,310
Bosnia...................................... .......... 1,300 216,300 22,425 .......... .......... ......... ........... .......... .......... 500 240,525
Bulgaria.................................... .......... .......... 31,000 ........... .......... .......... 1,652 ........... .......... .......... 800 33,452
Croatia..................................... .......... .......... 11,000 ........... .......... .......... ......... ........... .......... .......... 350 11,350
Cyprus...................................... .......... 15,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 15,000
Czech Republic.............................. .......... .......... .......... ........... .......... .......... 481 ........... .......... .......... 800 1,281
Estonia..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 500 500
Georgia..................................... .......... .......... 25,770 ........... .......... .......... ......... ........... .......... .......... 275 26,045
Greece...................................... .......... .......... .......... ........... .......... .......... ......... ........... (122,500) .......... 25 25
Hungary..................................... .......... .......... 15,000 ........... .......... .......... 428 ........... .......... .......... 1,000 16,428
Ireland..................................... .......... 19,600 .......... ........... .......... .......... ......... ........... .......... .......... ........ 19,600
Kazakhstan.................................. .......... .......... 35,745 ........... .......... .......... 1,651 ........... .......... .......... 400 37,796
Kirghizstan................................. .......... .......... 20,050 ........... .......... .......... 1,116 ........... .......... .......... 250 21,416
Latvia...................................... .......... .......... 3,000 ........... .......... .......... ......... ........... .......... .......... 500 3,500
Lithuania................................... .......... .......... 7,000 ........... .......... .......... ......... ........... .......... .......... 500 7,500
Macedonia (FYR)............................. .......... .......... 16,000 ........... .......... .......... ......... ........... .......... .......... 300 16,300
Malta....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Moldova..................................... .......... .......... 23,140 ........... .......... .......... 1,167 ........... .......... .......... 250 24,557
Poland...................................... .......... .......... 40,000 ........... .......... .......... 2,608 ........... .......... .......... 1,000 43,608
Portugal.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 800 800
Romania..................................... .......... .......... 33,000 ........... .......... .......... 1,286 ........... .......... .......... 800 35,086
Russia...................................... .......... .......... 95,440 ........... .......... .......... 3,898 ........... .......... .......... 800 100,138
Slovak Republic............................. .......... .......... 15,000 ........... .......... .......... 1,535 ........... .......... .......... 600 17,135
Slovenia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 400 400
Tajikistan.................................. .......... .......... 4,445 4,582 .......... .......... ......... ........... .......... .......... ........ 9,027
Turkey...................................... 4,400 22,000 .......... ........... .......... 500 ......... ........... (175,000) .......... 1,400 28,300
Turkmenistan................................ .......... .......... 4,460 ........... .......... .......... 930 ........... .......... .......... 250 5,640
Ukraine..................................... .......... .......... 225,000 ........... .......... .......... 2,411 ........... .......... .......... 1,000 228,411
Uzbekistan.................................. .......... .......... 21,410 ........... .......... .......... 1,220 ........... .......... .......... 250 22,880
Eastern Europe Regional..................... .......... .......... 60,700 ........... .......... .......... ......... ........... (242,500) .......... ........ 60,700
Partnership for Peace....................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 60,000 ........ 60,000
N.I.S. Regional............................. .......... .......... 46,600 ........... .......... .......... ......... ........... .......... .......... ........ 46,600
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 4,400 57,900 1,093,500 27,007 .......... 500 24,980 ........... .......... 60,000 14,750 1,283,037
===============================================================================================================================================
Latin America & Caribbean
Argentina................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
The Bahamas................................. .......... .......... .......... ........... .......... 1,000 ......... ........... .......... .......... 100 1,100
Belize...................................... .......... .......... .......... ........... .......... .......... 998 ........... .......... .......... 250 1,248
Bolivia..................................... 28,541 .......... .......... 21,390 .......... 45,000 2,259 ........... .......... .......... 500 97,690
Brazil...................................... 12,880 .......... .......... ........... .......... 500 ......... ........... .......... .......... 225 13,605
Chile....................................... .......... .......... .......... ........... .......... .......... 1,284 ........... .......... .......... 400 1,684
Colombia.................................... .......... .......... .......... ........... .......... 30,000 ......... ........... .......... .......... 600 30,600
Costa Rica.................................. .......... .......... .......... ........... .......... .......... 977 ........... .......... .......... 150 1,127
Dominican Republic.......................... 11,028 .......... .......... ........... .......... .......... 2,498 ........... .......... .......... 500 14,026
Ecuador..................................... 12,082 .......... .......... ........... .......... 350 2,676 ........... .......... .......... 425 15,533
El Salvador................................. 29,013 .......... .......... ........... .......... .......... 1,275 ........... .......... .......... 450 30,738
Guatemala................................... 21,589 .......... .......... 11,902 .......... 2,000 2,460 ........... .......... .......... 225 38,176
Guyana...................................... 2,763 .......... .......... ........... .......... .......... 734 ........... .......... .......... 175 3,672
Haiti....................................... .......... 72,000 .......... 14,129 10,000 .......... 944 ........... .......... .......... 300 97,373
Honduras.................................... 21,151 .......... .......... 4,673 .......... .......... 2,540 ........... .......... .......... 425 28,789
Jamaica..................................... 11,248 .......... .......... ........... .......... 750 1,873 ........... .......... .......... 500 14,371
Mexico...................................... 15,216 .......... .......... ........... .......... 8,000 ......... ........... .......... .......... 1,000 24,216
Nicaragua................................... 20,260 .......... .......... 1,215 .......... .......... 1,633 ........... .......... .......... 150 23,258
Panama...................................... 2,740 .......... .......... ........... .......... .......... 1,519 ........... .......... .......... ........ 4,259
Paraguay.................................... 5,035 .......... .......... ........... .......... .......... 2,997 ........... .......... .......... 200 8,232
Peru........................................ 25,329 .......... .......... 51,054 .......... 23,000 ......... ........... .......... .......... 450 99,833
Suriname.................................... .......... .......... .......... ........... .......... .......... 917 ........... .......... .......... 100 1,017
Trinidad/Tobago............................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Uruguay..................................... .......... .......... .......... ........... .......... .......... 821 ........... .......... .......... 275 1,096
Venezuela................................... .......... .......... .......... ........... .......... 600 ......... ........... .......... .......... 350 950
Caribbean Regional.......................... .......... .......... .......... ........... .......... .......... 2,535 ........... .......... 2,000 400 4,935
PACAMS...................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 500 500
ROCAP....................................... 10,660 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 10,660
LAC Regional................................ 43,953 22,700 .......... ........... .......... 5,000 ......... ........... .......... .......... ........ 71,653
ADJ/ICITAP.................................. .......... 7,500 .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,500
Andean Narcotics initiative................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 273,488 102,200 .......... 104,363 10,000 116,200 30,942 ........... .......... 2,000 9,350 648,543
===============================================================================================================================================
Other:
Administrative Costs........................ .......... .......... .......... ........... .......... .......... 89,890 ........... .......... 23,250 275 113,415
Loan subsidy................................ .......... .......... .......... ........... .......... .......... ......... ........... 60,000 .......... ........ 60,000
International Criminal Justice.............. .......... .......... .......... ........... .......... 20,000 ......... ........... .......... .......... ........ 20,000
Law Enforcement Training.................... .......... .......... .......... ........... .......... 9,000 ......... ........... .......... .......... ........ 9,000
Systems Support and Upgrades................ .......... .......... .......... ........... .......... 6,000 ......... ........... .......... .......... ........ 6,000
International Organizations................. .......... .......... .......... ........... .......... 12,000 ......... ........... .......... .......... ........ 12,000
Interregional Aviation Support.............. .......... .......... .......... ........... .......... 31,500 ......... ........... .......... .......... ........ 31,500
Special Concerns\3\......................... 17,110 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 17,110
International Fund for Agr. Dev. (IFAD)..... 2,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 2,500
Program Dev. and Support.................... .......... .......... .......... ........... .......... 7,800 ......... ........... .......... .......... ........ 7,800
Central P.L. 480:
Reserve..................................... .......... .......... .......... 342,427 .......... .......... ......... ........... .......... .......... ........ 342,427
Stock Adjustment............................ .......... .......... .......... (18,827) .......... .......... ......... ........... .......... .......... ........ (18,827)
Farmer to Farmer............................ .......... .......... .......... 10,798 100 .......... ......... ........... .......... .......... ........ 10,898
PVO Administration.......................... .......... .......... .......... 28,000 .......... .......... ......... ........... .......... .......... ........ 28,000
Transport Costs............................. .......... .......... .......... (309,019) .......... .......... ......... ........... .......... .......... ........ (309,019)
Transfer to Title III....................... .......... .......... .......... 9,000 .......... .......... ......... ........... .......... .......... ........ 9,000
Transfer from Title II...................... .......... .......... .......... ........... (9,000) .......... ......... ........... .......... .......... ........ (9,000)
Transfer from Title I....................... .......... .......... .......... (798) .......... .......... ......... ........... .......... .......... ........ (798)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Central P.L. 480.................... .......... .......... .......... 370,600 (8,900) .......... ......... ........... .......... .......... ........ 361,700
===============================================================================================================================================
Other Bilateral Assistance:
Debt Restructuring.......................... .......... .......... .......... ........... .......... .......... ......... 27,000 .......... .......... ........ 27,000
Trade & Development Agency.................. .......... .......... .......... ........... .......... .......... ......... 45,000 .......... .......... ........ 45,000
Inter-American Foundation................... .......... .......... .......... ........... .......... .......... ......... 20,000 .......... .......... ........ 20,000
African Development Foundation.............. .......... .......... .......... ........... .......... .......... ......... 11,500 .......... .......... ........ 11,500
Migration & Refugee Assistance.............. .......... .......... .......... ........... .......... .......... ......... 650,000 .......... .......... ........ 650,000
Emergency Refugee & Migration Fund.......... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Anti-Terrorism Assistance................... .......... .......... .......... ........... .......... .......... ......... 18,000 .......... .......... ........ 18,000
Peacekeeping Operations..................... .......... .......... .......... ........... .......... .......... ......... 65,000 .......... .......... ........ 65,000
Non-Proliferation & Disarmament............. .......... .......... .......... ........... .......... .......... ......... 15,000 .......... .......... ........ 15,000
P.L 480 Tile I.............................. .......... .......... .......... ........... .......... .......... ......... 151,274 .......... .......... ........ 151,274
OPIC loan subsidy & admin exp............... .......... .......... .......... ........... .......... .......... ......... 104,500 .......... .......... ........ 104,500
OPIC Insurance activities................... .......... .......... .......... ........... .......... .......... ......... (130,500) .......... .......... ........ (130,500)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Bilateral..................... .......... .......... .......... ........... .......... .......... ......... 1,026,774 .......... .......... ........ 1,026,774
===============================================================================================================================================
Other Military Assistance:
Relocation of Facilities in Israel.......... .......... .......... .......... ........... .......... .......... ......... (2,000) .......... .......... ........ (2,000)
Counter-terrorism Assistance to Israel...... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Special Defense Acquisition Fund............ .......... .......... .......... ........... .......... .......... ......... (166,000) .......... .......... ........ (166,000)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Military...................... .......... .......... .......... ........... .......... .......... ......... (118,000) .......... .......... ........ (118,000)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DA bureau and country levels in this series of tables include attributions of central programs
\2\ See last page of this table for details
\3\ Special Concerns Includes funds yet to be allocated for special program areas such as Vitamin A, orphans, victims of war, etc.
TABLE 4C.--FY 1998 U.S. ECONOMIC & MILITARY ASSISTANCE--REQUEST--P.L. 480
[In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Peace
DA \1\ ESF SAI/NIS Title II Title III NARCS Corps Other \2\ FMF loans FMF grants IMET Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bilateral Assistance Summary:
Africa...................................... 700,000 25,000 .......... 262,147 19,900 .......... 52,951 ........... .......... 10,000 8,015 1,078,013
Asia & Near East............................ 310,000 2,211,500 .......... 104,522 .......... 10,000 20,887 ........... .......... 3,146,000 13,100 5,816,009
Europe & NIS................................ 4,000 84,600 1,392,000 11,407 .......... 500 24,673 ........... .......... 70,000 18,300 1,605,480
Latin America & Caribbean................... 273,500 116,000 .......... 101,143 10,000 132,700 29,903 ........... .......... 3,000 10,250 676,496
Central PL 480.............................. .......... .......... .......... 357,781 100 .......... ......... ........... .......... .......... ........ 357,881
Global Programs, Field Spt. & Res........... 343,800 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 343,800
Humanitarian Response....................... 57,700 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 57,700
Program & Policy Coordination............... 6,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,500
Other \2\................................... 2,500 60,500 .......... ........... .......... 86,800 93,586 ........... 66,000 45,250 335 354,971
Geographic & Central Programs............... 1,698,000 2,497,600 1,392,000 837,000 30,000 230,000 222,000 ........... 66,000 3,274,250 50,000 10,296,850
(Africa Fund)........................... (700,000) .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ (700,000)
(Eastern Europe)........................ .......... .......... (492,000) ........... .......... .......... ......... ........... .......... .......... ........ (492,000)
(N.I.S.)................................ .......... .......... (900,000) ........... .......... .......... ......... ........... .......... .......... ........ (900,000)
International Disaster Assistance........... 190,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 190,000
Urban & Environmental Credit Subsidy........ 3,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 3,000
Urban & Environmental Admin................. 6,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,000
Micro & Small Ent Dev Credit Subs........... 1,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,500
Micro & Small Ent Dev Admin................. 500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 500
Operating Expenses.......................... 473,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 473,000
Operating Expenses--I.G..................... 29,047 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 29,047
Foreign Service Retirement.................. 44,208 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 44,208
-----------------------------------------------------------------------------------------------------------------------------------------------
Total USAID............................... 2,445,255 2,497,600 1,392,000 837,000 30,000 .......... ......... ........... .......... .......... ........ 7,201,855
===============================================================================================================================================
Other Bilateral Assistance.................. .......... .......... .......... ........... .......... 230,000 222,000 911,250 66,000 3,274,250 50,000 4,753,500
Total: Bilteral........................... 2,445,255 2,497,600 1,392,000 837,000 30,000 230,000 222,000 911,250 66,000 3,274,250 50,000 11,955,355
===============================================================================================================================================
Multilateral Assistance:
MDB's....................................... .......... .......... .......... ........... .......... .......... ......... 1,486,191 .......... .......... ........ 1,486,191
IO & P...................................... .......... .......... .......... ........... .......... .......... ......... 365,000 .......... .......... ........ 365,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total: Multilateral....................... .......... .......... .......... ........... .......... .......... ......... 1,851,191 .......... .......... ........ 1.851,191
===============================================================================================================================================
Total Economic Assistance................. 2,445,255 2,497,600 1,392,000 837,000 30,000 230,000 222,000 2,762,441 .......... .......... ........ 10,416,296
Total Military Assistance................. .......... .......... .......... ........... .......... .......... ......... (106,000) 66,000 3,274,250 50,000 3,390,250
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Econ. & Mil. Assist................. 2,445,255 2,497,600 1,392,000 837,000 30,000 230,000 222,000 2,656,441 66,000 3,274,250 50,000 13,806,546
===============================================================================================================================================
Africa:
Angola...................................... 12,800 10,000 .......... 22,594 .......... .......... ......... ........... .......... .......... 200 45,594
Benin....................................... 16,200 .......... .......... 1,904 .......... .......... 1,682 ........... .......... .......... 350 20,136
Botswana.................................... .......... .......... .......... ........... .......... .......... 664 ........... .......... .......... 500 1,164
Burkina Faso................................ .......... .......... .......... 9,689 .......... .......... 1,576 ........... .......... .......... ........ 11,265
Burundi..................................... 2,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 2,000
Cameroon.................................... .......... .......... .......... ........... .......... .......... 2,809 ........... .......... .......... 125 2,934
Cape Verde.................................. .......... .......... .......... 2,805 .......... .......... 844 ........... .......... .......... 100 3,749
Central African Republic.................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 150 150
Chad........................................ .......... .......... .......... ........... .......... .......... 997 ........... .......... .......... 50 1,047
Comoros..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Congo....................................... .......... .......... .......... ........... .......... .......... 1,122 ........... .......... .......... 175 1,297
Cote d'Ivoire............................... .......... .......... .......... ........... .......... .......... 1,715 ........... .......... .......... 150 1,865
Djibouti.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
East Africa Regional........................ .......... .......... .......... ........... .......... .......... ......... ........... .......... 5,000 ........ 5,000
Eritrea..................................... 10,500 .......... .......... 3,178 5,000 .......... 1,311 ........... .......... .......... 400 20,389
Ethiopia.................................... 48,285 .......... .......... 24,453 9,900 .......... 1,389 ........... .......... .......... 450 84,477
Gabon....................................... .......... .......... .......... ........... .......... .......... 2,450 ........... .......... .......... ........ 2,450
Gambia...................................... .......... .......... .......... ........... .......... .......... 1,196 ........... .......... .......... ........ 1,196
Ghana....................................... 38,400 .......... .......... 12,672 .......... .......... 2,411 ........... .......... .......... 285 53,768
Guinea...................................... 14,000 .......... .......... 986 .......... .......... 2,173 ........... .......... .......... 150 17,309
Guinea-Bissau............................... 2,500 .......... .......... 562 .......... .......... 1,087 ........... .......... .......... 125 4,274
Kenya....................................... 20,000 .......... .......... 5,000 .......... .......... 3,020 ........... .......... .......... 400 28,420
Lesotho..................................... .......... .......... .......... ........... .......... .......... 2,255 ........... .......... .......... 75 2,330
Libera...................................... 7,500 .......... .......... 72,403 .......... .......... ......... ........... .......... .......... ........ 79,903
Madagascar.................................. 16,500 .......... .......... 3,086 .......... .......... 1,054 ........... .......... .......... 100 20,740
Malawi...................................... 37,400 .......... .......... ........... .......... .......... 1,744 ........... .......... .......... 225 39,369
Mali........................................ 36,000 .......... .......... ........... .......... .......... 2,927 ........... .......... .......... 175 39,102
Mauritania.................................. .......... .......... .......... 699 .......... .......... 1,477 ........... .......... .......... ........ 2,176
Mauritius................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 50 50
Mozambique.................................. 39,200 .......... .......... 14,511 5,000 .......... ......... ........... .......... .......... 175 58,886
Nambia...................................... 8,000 .......... .......... ........... .......... .......... 1,708 ........... .......... .......... 200 9,908
Niger....................................... 3,500 .......... .......... ........... .......... .......... 2,476 ........... .......... .......... ........ 5,976
Nigeria..................................... 7,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,000
Rwanda...................................... 7,500 .......... .......... 44,808 .......... .......... ......... ........... .......... .......... 300 52,608
Sao Tome.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Senegal..................................... 27,100 .......... .......... ........... .......... .......... 3,153 ........... .......... .......... 675 30,928
Seychelles.................................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Sierra Leone................................ .......... .......... .......... 17,716 .......... .......... ......... ........... .......... .......... 115 17,831
Somalia..................................... 4,000 .......... .......... 4,936 .......... .......... ......... ........... .......... .......... ........ 8,936
South Africa................................ 70,000 .......... .......... ........... .......... .......... 1,695 ........... .......... .......... 800 72,495
Sudan....................................... .......... .......... .......... 14,861 .......... .......... ......... ........... .......... .......... ........ 14,861
Swaziland................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Tanzania.................................... 20,000 .......... .......... ........... .......... .......... 1,752 ........... .......... .......... 225 21,977
Togo........................................ .......... .......... .......... ........... .......... .......... 1,735 ........... .......... .......... 40 1,775
Uganda...................................... 49,550 .......... .......... 5,284 .......... .......... 1,359 ........... .......... .......... 350 56,543
Zambia...................................... 17,600 .......... .......... ........... .......... .......... 1,797 ........... .......... .......... 150 19,547
Zimbabwe.................................... 15,300 .......... .......... ........... .......... .......... 1,371 ........... .......... .......... 350 17,021
Great Horn of Africa Initiative (GHAI)...... 15,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 15,000
Initiative for Southern Africa (ISA)........ 47,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 47,000
Africa Crisis Response Force................ .......... .......... .......... ........... .......... .......... ......... ........... .......... 5,000 ........ 5,000
Africa Regional............................. 84,904 15,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 99,904
Redsole..................................... 5,225 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 5,225
Redso/W..................................... 17,036 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 17,036
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 700,000 25,000 .......... 262,147 19,900 .......... 52,951 ........... .......... 10,000 8,015 1,078,013
===============================================================================================================================================
Asia & Near East:
Afghanistan................................. .......... .......... .......... 4,880 .......... .......... ......... ........... .......... .......... ........ 4,880
Algeria..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Bahrain..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 175 175
Bangladesh.................................. 56,305 .......... .......... 19,520 .......... .......... ......... ........... .......... .......... 375 76,200
Cambodia.................................... .......... 37,000 .......... ........... .......... .......... ......... ........... .......... 1,000 600 38,600
China....................................... .......... .......... .......... ........... .......... .......... 1,015 ........... .......... .......... ........ 1,015
Egypt....................................... .......... 815,000 .......... ........... .......... .......... ......... ........... .......... 1,300,000 1,050 2,116,050
Fiji & Tuvalu............................... .......... .......... .......... ........... .......... .......... 448 ........... .......... .......... ........ 448
India....................................... 55,700 .......... .......... 80,122 .......... .......... ......... ........... .......... .......... 475 136,297
Indonesia................................... 46,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... 800 47,300
Israel...................................... .......... 1,200,000 .......... ........... .......... .......... ......... ........... .......... 1,800,000 ........ 3,000,000
Jordan...................................... 2,500 25,000 .......... ........... .......... .......... 1,392 ........... .......... 45,000 1,700 75,592
Kiribati.................................... .......... .......... .......... ........... .......... .......... 645 ........... .......... .......... ........ 645
Laos........................................ .......... .......... .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 2,500
Lebanon..................................... .......... 12,000 .......... ........... .......... .......... ......... ........... .......... .......... 600 12,600
Malaysia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 700 700
Maldives.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Micronesia.................................. .......... .......... .......... ........... .......... .......... 1,694 ........... .......... .......... ........ 1,694
Mongolia.................................... .......... 7,000 .......... ........... .......... .......... 1,090 ........... .......... .......... 325 8,415
Morocco..................................... 15,672 .......... .......... ........... .......... .......... 2,287 ........... .......... .......... 900 18,859
Nepal....................................... 23,115 .......... .......... ........... .......... .......... 2,351 ........... .......... .......... 225 25,691
Oman........................................ .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 200 200
Pakistan.................................... .......... .......... .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 2,500
Papua New Guinea............................ .......... .......... .......... ........... .......... .......... 2,027 ........... .......... .......... 200 2,227
Philippines................................. 50,561 .......... .......... ........... .......... .......... 2,138 ........... .......... .......... 1,350 54,049
Soloman Islands............................. .......... .......... .......... ........... .......... .......... 1,339 ........... .......... .......... 150 1,489
South Pacific............................... .......... 14,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,000
Sri Lanka................................... 7,000 .......... .......... ........... .......... .......... 539 ........... .......... .......... 225 7,764
Thailand.................................... .......... .......... .......... ........... .......... 3,000 833 ........... .......... .......... 1,600 5,433
Tonga....................................... .......... .......... .......... ........... .......... .......... 1,156 ........... .......... .......... 100 1,256
Tunisia..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 900 900
Vanuatu..................................... .......... .......... .......... ........... .......... .......... 885 ........... .......... .......... 100 985
West Bank/Gaza.............................. .......... 75,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 75,000
Western Somoa............................... .......... .......... .......... ........... .......... .......... 1,048 ........... .......... .......... 100 1,148
Yemen....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Asia/Near East Regional..................... 52,647 26,500 .......... ........... .......... 2,000 ......... ........... .......... .......... ........ 81,147
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 310,000 2,211,500 .......... 104,522 .......... 10,000 20,887 ........... .......... 3,146,000 13,100 5,816,009
===============================================================================================================================================
Europe & NIS:
Albania..................................... .......... .......... 30,000 ........... .......... .......... 1,383 ........... .......... .......... 600 31,983
Armenia..................................... .......... .......... 80,000 ........... .......... .......... 1,108 ........... .......... .......... ........ 81,108
Azerbaijan.................................. .......... .......... 31,500 ........... .......... .......... ......... ........... .......... .......... ........ 31,500
Baltics..................................... .......... .......... .......... ........... .......... .......... 2,131 ........... .......... .......... ........ 2,131
Belarus..................................... .......... .......... 4,900 ........... .......... .......... ......... ........... .......... .......... 300 5,200
Bosnia...................................... .......... .......... 225,000 6,569 .......... .......... ......... ........... .......... .......... 600 232,169
Bulgaria.................................... .......... .......... 25,000 ........... .......... .......... 1,817 ........... .......... .......... 900 27,717
Croatia..................................... .......... .......... 24,000 ........... .......... .......... ......... ........... .......... .......... 425 24,425
Cyprus...................................... .......... 15,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 15,000
Czech Republic.............................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 1,300 1,300
Estonia..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 650 650
Georgia..................................... .......... .......... 41,900 ........... .......... .......... ......... ........... .......... .......... 375 42,275
Greece...................................... .......... .......... .......... ........... .......... .......... ......... ........... (122,500) .......... 25 25
Hungary..................................... .......... .......... 7,000 ........... .......... .......... ......... ........... .......... .......... 1,500 8,500
Ireland..................................... .......... 19,600 .......... ........... .......... .......... ......... ........... .......... .......... ........ 19,600
Kazakhstan.................................. .......... .......... 52,000 ........... .......... .......... 1,708 ........... .......... .......... 550 54,258
Kirghizstan................................. .......... .......... 36,500 ........... .......... .......... 1,145 ........... .......... .......... 325 37,970
Latvia...................................... .......... .......... 3,000 ........... .......... .......... ......... ........... .......... .......... 650 3,650
Lithuania................................... .......... .......... 3,000 ........... .......... .......... ......... ........... .......... .......... 650 3,650
Macedonia (FYR)............................. .......... .......... 16,000 ........... .......... .......... ......... ........... .......... .......... 400 16,400
Malta....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Moldova..................................... .......... .......... 32,800 ........... .......... .......... 1,264 ........... .......... .......... 350 34,414
Poland...................................... .......... .......... 35,000 ........... .......... .......... 2,784 ........... .......... .......... 1,500 39,284
Portugal.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 800 800
Romania..................................... .......... .......... 33,000 ........... .......... .......... 1,311 ........... .......... .......... 900 35,211
Russia...................................... .......... .......... 241,500 ........... .......... .......... 3,892 ........... .......... .......... 850 246,242
Slovak Republic............................. .......... .......... 8,000 ........... .......... .......... 1,540 ........... .......... .......... 600 10,140
Slovenia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
Tajikistan.................................. .......... .......... 15,400 ........... .......... .......... ......... ........... .......... .......... ........ 15,400
Turkey...................................... 4,000 50,000 .......... ........... .......... 500 ......... ........... (175,000) .......... 1,500 56,000
Turkmenistan................................ .......... .......... 6,000 ........... .......... .......... 873 ........... .......... .......... 300 7,173
Ukraine..................................... .......... .......... 225,500 ........... .......... .......... 2,416 ........... .......... .......... 1,200 229,116
Uzbekistan.................................. .......... .......... 32,500 ........... .......... .......... 1,301 ........... .......... .......... 350 34,151
Eastern Europe Regional..................... .......... .......... 83,000 ........... .......... .......... ......... ........... (402,000) .......... ........ 83,000
Partnership for Peace....................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 70,000 ........ 70,000
N.I.S. Regional............................. .......... .......... 99,500 4,838 .......... .......... ......... ........... .......... .......... ........ 104,338
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 4,000 84,600 1,392,000 11,407 .......... 500 24,673 ........... .......... 70,000 18,300 1,605,480
===============================================================================================================================================
Latin America & Caribbean:
Argentina................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
The Bahamas................................. .......... .......... .......... ........... .......... 1,000 ......... ........... .......... .......... 100 1,100
Belize...................................... .......... .......... .......... ........... .......... .......... 958 ........... .......... .......... 250 1,208
Bolivia..................................... 30,124 .......... .......... 20,291 .......... 45,000 2,290 ........... .......... .......... 550 98,255
Brazil...................................... 11,150 .......... .......... ........... .......... 1,000 ......... ........... .......... .......... 225 12,375
Chile....................................... .......... .......... .......... ........... .......... .......... 808 ........... .......... .......... 450 1,258
Colombia.................................... .......... .......... .......... ........... .......... 30,000 ......... ........... .......... .......... 900 30,900
Costa Rica.................................. .......... .......... .......... ........... .......... .......... 610 ........... .......... .......... 200 810
Dominican Republic.......................... 9,370 .......... .......... ........... .......... .......... 2,501 ........... .......... .......... 500 12,371
Eastern Caribbean........................... .......... .......... .......... ........... .......... .......... 2,360 ........... .......... .......... 450 2,810
Ecuador..................................... 9,000 .......... .......... ........... .......... 350 2,755 ........... .......... .......... 500 12,605
El Salvador................................. 33,235 .......... .......... ........... .......... .......... 1,348 ........... .......... .......... 500 35,083
Guatemala................................... 23,338 .......... .......... 12,122 .......... 2,000 2,476 ........... .......... .......... 225 40,161
Guyana...................................... 2,200 .......... .......... ........... .......... .......... 757 ........... .......... .......... 175 3,132
Haiti....................................... .......... 70,000 .......... 14,314 10,000 .......... 1,352 ........... .......... .......... 300 95,966
Honduras.................................... 18,350 .......... .......... 4,735 .......... .......... 2,556 ........... .......... .......... 500 26,141
Jamaica..................................... 11,100 .......... .......... ........... .......... 750 1,851 ........... .......... .......... 500 14,201
Mexico...................................... 9,250 .......... .......... ........... .......... 8,000 ......... ........... .......... .......... 1,000 18,250
Nicaragua................................... 21,340 .......... .......... 764 .......... .......... 1,695 ........... .......... .......... 200 23,999
Panama...................................... 3,300 .......... .......... ........... .......... .......... 1,573 ........... .......... .......... ........ 4,873
Paraguay.................................... 5,325 .......... .......... ........... .......... .......... 2,902 ........... .......... .......... 200 8,427
Peru........................................ 34,493 .......... .......... 48,917 .......... 40,000 ......... ........... .......... .......... 450 123,860
Suriname.................................... .......... .......... .......... ........... .......... .......... 1,113 ........... .......... .......... 100 1,213
Trinidad/Tobago............................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 125 125
Uruguay..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 300 300
Venezuela................................... .......... .......... .......... ........... .......... 600 ......... ........... .......... .......... 400 1,000
Caribbean Regional.......................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 3,000 ........ 3,000
PACAMS...................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 550 550
ROCAP....................................... 14,025 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,025
LAC Regional................................ 37,900 31,000 .......... ........... .......... 4,000 ......... ........... .......... .......... ........ 72,900
Peru/Ecuador Peace.......................... .......... 5,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 5,000
AOJ/ICITAP.................................. .......... 10,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 10,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 273,500 116,000 .......... 101,143 10,000 132,700 29,903 ........... .......... 3,000 10,250 676,496
===============================================================================================================================================
Other:
Administrative Costs........................ .......... .......... .......... ........... .......... .......... 93,586 ........... .......... 23,250 335 117,171
Loan subsidy................................ .......... .......... .......... ........... .......... .......... ......... ........... 66,000 .......... ........ 66,000
International Criminal Justice.............. .......... .......... .......... ........... .......... 16,000 ......... ........... .......... .......... ........ 16,000
Law Enforcement Training.................... .......... .......... .......... ........... .......... 7,000 ......... ........... .......... .......... ........ 7,000
Systems Support and Upgrades................ .......... .......... .......... ........... .......... 17,000 ......... ........... .......... .......... ........ 17,000
ME Development Bank......................... .......... 52,500 .......... ........... .......... .......... ......... ........... .......... .......... ........ 52,500
International Organizations................. .......... .......... .......... ........... .......... 7,000 ......... ........... .......... .......... ........ 7,000
Interregional Aviation Support.............. .......... .......... .......... ........... .......... 32,000 ......... ........... .......... .......... ........ 32,000
FMF: Demining............................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 15,000 ........ 15,000
FMF: Enhanced Int'l Peacekeeping............ .......... .......... .......... ........... .......... .......... ......... ........... .......... 7,000 ........ 7,000
International Fund for Agr. Dev. (IFAD)..... 2,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 2,500
Human Rights................................ .......... 8,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 8,000
Program Dev. and Support.................... .......... .......... .......... ........... .......... 7,800 ......... ........... .......... .......... ........ 7,800
Central P.L. 480:
Reserve..................................... .......... .......... .......... 320,233 .......... .......... ......... ........... .......... .......... ........ 320,233
Stock Adjustment............................ .......... .......... .......... (1,800) .......... .......... ......... ........... .......... .......... ........ (1,800)
Transport Costs............................. .......... .......... .......... (302,462) .......... .......... ......... ........... .......... .......... ........ (335,926)
Farmer to Farmer............................ .......... .......... .......... 11,348 100 .......... ......... ........... .......... .......... ........ 11,448
PVO Administration.......................... .......... .......... .......... 28,000 .......... .......... ......... ........... .......... .......... ........ 28,000
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Central P.L. 480.................... .......... .......... .......... 357,781 100 .......... ......... ........... .......... .......... ........ 357,881
Other Bilateral Assistance:
Debt Restructuring.......................... .......... .......... .......... ........... .......... .......... ......... 34,000 .......... .......... ........ 34,000
Multilateral Investment Fund................ .......... .......... .......... ........... .......... .......... ......... 30,000 .......... .......... ........ 30,000
Trade & Development Agency.................. .......... .......... .......... ........... .......... .......... ......... 43,000 .......... .......... ........ 43,000
Inter-American Foundation................... .......... .......... .......... ........... .......... .......... ......... 22,000 .......... .......... ........ 22,000
African Development Foundation.............. .......... .......... .......... ........... .......... .......... ......... 14,000 .......... .......... ........ 14,000
Migration & Refugee Assistance.............. .......... .......... .......... ........... .......... .......... ......... 650,000 .......... .......... ........ 650,000
Emergency Refugee & Migration Fund.......... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Anti-Terrorism Assistance................... .......... .......... .......... ........... .......... .......... ......... 19,000 .......... .......... ........ 19,000
Peacekeeping Operations..................... .......... .......... .......... ........... .......... .......... ......... 90,000 .......... .......... ........ 90,000
Non-Proliferation & Disarmament............. .......... .......... .......... ........... .......... .......... ......... 15,000 .......... .......... ........ 15,000
P.L. 480 Title I Cargo Preference........... .......... .......... .......... ........... .......... .......... ......... 10,250 .......... .......... ........ 10,250
OPIC loan subsidy & admin exp............... .......... .......... .......... ........... .......... .......... ......... 92,000 .......... .......... ........ 92,000
OPIC Insurance activities................... .......... .......... .......... ........... .......... .......... ......... (158,000) .......... .......... ........ (158,000)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Bilateral..................... .......... .......... .......... ........... .......... .......... ......... 911,250 .......... .......... ........ 911,250
===============================================================================================================================================
Other Military Assistance: Special Defense
Acquisition Fund...............................
.......... .......... .......... ........... .......... .......... ......... (106,000) .......... .......... ........ (106,000)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DA bureau and country levels in this series of tables include attributions of central programs.
\2\ See last page of this table for details.
TABLE 5A.--FY 1996 U.S. ECONOMIC & MILITARY ASSISTANCE--ACTUAL OBLIGATIONS--P.L. 480
[In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Peace FMF
DA \1\ ESF SAI/NIS Title II Title III NARCS Corps Other \2\ FMF loans grants IMET Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bilateral Assistance:
Africa..................................... 569,246 700 .......... 399,451 25,000 .......... 51,775 ........... ........... 5,030 6,016 1,057,218
Asia & Near East........................... 164,963 2,134,703 .......... 207,580 7,500 10,492 19,902 ........... ........... 3,201,000 10,611 5,756,751
Europe & NIS............................... 1,785 42,870 935,092 98,344 .......... 400 24,405 ........... ........... 53,850 13,256 1,170,002
Latin America & Caribbean.................. 183,468 120,449 .......... 152,526 19,000 57,098 31,107 3,000 ........... 2,000 8,717 577,365
Central PL 480............................. .......... .......... .......... (36,801) (1,500) .......... ......... ........... ........... .......... ........ (38,301)
Global Programs, Field Spt. & Res.......... 492,749 7,903 8,080 ........... .......... .......... ......... ........... ........... .......... ........ 508,732
Humanitarian Response...................... 65,201 .......... 15,144 ........... .......... .......... ......... ........... ........... .......... ........ 80,345
Program & Policy Coordination.............. 8,196 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 8,196
Other \2\.................................. 25,547 1,306 500 ........... .......... 65,165 90,515 ........... 59,400 30,463 400 273,296
Geographic & Central Programs.............. 1,511,156 2,307,073 958,817 821,100 50,000 133,155 217,704 3,000 59,400 3,292,343 39,000 9,392,748
(Africa Fund).......................... .......... .......... (123,814) ........... .......... .......... ......... ........... ........... .......... ........ (123,814)
(Eastern Europe)....................... .......... .......... (412,335) ........... .......... .......... ......... ........... ........... .......... ........ (412,335)
(N.I.S.)............................... .......... .......... (546,482) ........... .......... .......... ......... ........... ........... .......... ........ (546,482)
International Disaster Assistance.......... 165,552 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 165,552
Housing Credit Subsidy..................... 3,856 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 3,856
Housing Admin.............................. 6,824 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 6,824
Micro & Small Ent Dev Credit Subsidy....... 1,098 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 1,098
Micro & Small Ent Dev Admin................ 459 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 459
Operating Expenses......................... 487,268 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 487,268
Operating Expenses--I.G.................... 30,548 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 30,548
Foreign Service Retirement................. 43,914 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 43,914
Adjustments................................ 128,476 33,928 3,373 ........... .......... .......... ......... (3,000) ........... .......... ........ 166,150
------------------------------------------------------------------------------------------------------------------------------------------------
Total USAID.............................. 2,379,151 2,341,001 962,190 821,100 50,000 .......... ......... ........... ........... .......... ........ 6,553,441
================================================================================================================================================
Other Bilateral Assistance................. .......... .......... .......... ........... .......... 133,155 217,704 1,226,917 59,400 3,292,343 39,000 4,968,519
Total Bilateral.......................... 2,379,151 2,341,001 962,190 821,100 50,000 133,155 217,704 1,226,917 59,400 3,292,343 39,000 11,521,960
================================================================================================================================================
Multilateral Assistance:
MDB's...................................... .......... .......... .......... ........... .......... .......... ......... 1,099,513 ........... .......... ........ 1,099,513
IO & P................................... .......... .......... .......... ........... .......... .......... ......... 285,000 ........... .......... ........ 285,000
------------------------------------------------------------------------------------------------------------------------------------------------
Total: Multilateral...................... .......... .......... .......... ........... .......... .......... ......... 1,384,513 ........... .......... ........ 1,384,513
Total Economic Assistance................ 2,379,151 2,341,001 962,190 821,100 50,000 133,155 217,704 2,611,430 ........... .......... ........ 9,515,730
Total Military Assistance................ .......... .......... .......... ........... .......... .......... ......... (123,000) 59,400 3,292,343 39,000 3,390,743
------------------------------------------------------------------------------------------------------------------------------------------------
Total Econ. & Mil. Assist................ 2,379,151 2,341,001 962,190 821,100 50,000 133,155 217,704 2,488,430 59,400 3,292,343 39,000 12,906,473
================================================================================================================================================
Africa:
Angola..................................... 18,413 .......... .......... 44,077 .......... .......... ......... ........... ........... .......... ........ 62,490
Benin...................................... 10,166 .......... .......... 3,468 .......... .......... 1,679 ........... ........... .......... 281 15,594
Botswana................................... .......... .......... .......... ........... .......... .......... 1,776 ........... ........... .......... 454 2,230
Burkina.................................... .......... .......... .......... 12,429 .......... .......... 965 ........... ........... .......... ........ 13,394
Burundi.................................... 1,041 .......... .......... ........... .......... .......... ......... ........... ........... .......... 71 1,112
Cameroon................................... .......... .......... .......... 349 .......... .......... 3,189 ........... ........... .......... 83 3,621
Cape Verde................................. .......... .......... .......... 6,208 .......... .......... 1,008 ........... ........... .......... 64 7,280
Central African Republic................... 150 .......... .......... ........... .......... .......... 946 ........... ........... .......... 110 1,206
Chad....................................... .......... .......... .......... 4,795 .......... .......... 1,101 ........... ........... .......... ........ 5,896
Comoros.................................... .......... .......... .......... ........... .......... .......... 54 ........... ........... .......... 64 118
Congo...................................... .......... .......... .......... ........... .......... .......... 899 ........... ........... .......... 162 1,061
Cote d'lvoire.............................. .......... .......... .......... ........... .......... .......... 1,465 ........... ........... .......... 151 1,616
Djibouti................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 150 150
Eritrea.................................... 8,387 .......... .......... 4,275 .......... .......... 888 ........... ........... .......... 261 13,811
Ethiopia................................... 34,114 .......... .......... 50,253 25,000 .......... 1,069 ........... ........... .......... 327 110,763
Gabon...................................... .......... .......... .......... ........... .......... .......... 2,493 ........... ........... .......... ........ 2,493
Gambia..................................... 335 .......... .......... 2,995 .......... .......... 1,200 ........... ........... .......... ........ 4,530
Ghana...................................... 27,880 .......... .......... 12,475 .......... .......... 2,345 ........... ........... .......... 257 42,957
Guinea..................................... 10,710 .......... .......... 2,069 .......... .......... 1,928 ........... ........... .......... 35 14,742
Guinea-Bissau.............................. 4,392 .......... .......... 1,733 .......... .......... 1,110 ........... ........... .......... 88 7,323
Kenya...................................... 11,533 .......... .......... 2,260 .......... .......... 2,329 ........... ........... .......... 297 16,419
Lesotho.................................... .......... .......... .......... ........... .......... .......... 2,005 ........... ........... .......... 72 2,077
Liberia.................................... 2,250 .......... .......... 55,662 .......... .......... ......... ........... ........... .......... ........ 57,912
Madagascar................................. 14,897 .......... .......... 3,670 .......... .......... 880 ........... ........... .......... 102 19,549
Malawi..................................... 29,359 .......... .......... ........... .......... .......... 1,744 ........... ........... .......... 154 31,257
Mali....................................... 27,112 .......... .......... ........... .......... .......... 3,101 ........... ........... .......... 155 30,368
Mauritania................................. .......... .......... .......... 835 .......... .......... 1,359 ........... ........... .......... ........ 2,194
Mozambique................................. 45,509 .......... .......... 13,316 .......... .......... ......... ........... ........... .......... 203 59,028
Namibia.................................... 5,000 .......... .......... ........... .......... .......... 1,691 ........... ........... .......... 190 6,881
Niger...................................... 1,340 .......... .......... 690 .......... .......... 2,334 ........... ........... .......... 11 4,375
Nigeria.................................... 1,843 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 1,843
Rwanda..................................... 5,742 700 .......... 114,085 .......... .......... ......... ........... ........... .......... 243 120,770
Sao Tome................................... .......... .......... .......... 733 .......... .......... 435 ........... ........... .......... 75 1,243
Senegal.................................... 15,523 .......... .......... 1,213 .......... .......... 3,040 ........... ........... .......... 637 20,413
Seychelles................................. .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 31 31
Sierra Leone............................... 450 .......... .......... 26,614 .......... .......... ......... ........... ........... .......... 134 27,198
Somalia.................................... 3,750 .......... .......... 5,361 .......... .......... ......... ........... ........... .......... ........ 9,111
South Africa............................... 116,204 .......... .......... ........... .......... .......... 505 ........... ........... .......... 466 117,175
Sudan...................................... .......... .......... .......... 23,521 .......... .......... ......... ........... ........... .......... ........ 23,521
Swaziland.................................. .......... .......... .......... ........... .......... .......... 782 ........... ........... .......... 50 832
Tanzania................................... 9,436 .......... .......... ........... .......... .......... 1,677 ........... ........... .......... 126 11,239
Togo....................................... .......... .......... .......... ........... .......... .......... 1,861 ........... ........... .......... ........ 1,861
Uganda..................................... 30,954 .......... .......... 6,365 .......... .......... 1,267 ........... ........... .......... 189 38,775
Zambia..................................... 9,639 .......... .......... ........... .......... .......... 1,339 ........... ........... .......... 99 11,077
Zimbabwe................................... 14,360 .......... .......... ........... .......... .......... 1,312 ........... ........... .......... 224 15,896
Africa Regional............................ 62,090 .......... .......... ........... .......... .......... ......... ........... ........... 5,030 ........ 67,120
Southern Africa Reg.1/SADCC................ 37,925 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 37,925
REDSO/E.................................... 4,900 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 4,900
REDSO/W.................................... 3,842 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 3,842
------------------------------------------------------------------------------------------------------------------------------------------------
Total.................................... 569,246 700 .......... 399,451 25,000 .......... 51,775 ........... ........... 5,030 6,016 1,057,218
================================================================================================================================================
Asia & Near East:
Afghanistan................................ .......... .......... .......... 15,200 .......... .......... ......... ........... ........... .......... ........ 15,200
Algeria.................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 75 75
Bahrain.................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 108 108
Bangladesh................................. 12,924 .......... .......... 34,190 7,500 .......... ......... ........... ........... .......... 326 54,940
Cambodia................................... 500 27,000 .......... ........... .......... .......... ......... ........... ........... 1,000 403 28,903
China...................................... .......... .......... .......... ........... .......... .......... 696 ........... ........... .......... ........ 696
Egypt...................................... .......... 816,842 .......... 603 .......... .......... ......... ........... ........... 1,300,000 1,009 2,118,454
Fiji....................................... .......... .......... .......... ........... .......... .......... 1,457 ........... ........... .......... ........ 1,457
India...................................... 25,795 .......... .......... 13,1380 .......... .......... ......... ........... ........... .......... 357 157,532
Indonesia.................................. 32,535 .......... .......... ........... .......... .......... ......... ........... ........... .......... 577 33,112
Iraq (Northern)............................ .......... .......... .......... 7,212 .......... .......... ......... ........... ........... .......... ........ 7,212
Isreal..................................... .......... 1,200,000 .......... ........... .......... .......... ......... ........... ........... 1,800,000 ........ 3,000,000
Jordan..................................... .......... 7,199 .......... ........... .......... .......... ......... ........... ........... 100,000 1,202 108,401
Kiribati................................... .......... .......... .......... ........... .......... .......... 507 ........... ........... .......... ........ 507
Laos....................................... .......... .......... .......... ........... .......... 2,000 ......... ........... ........... .......... ........ 2,000
Lebanon.................................... .......... 620 .......... ........... .......... .......... ......... ........... ........... .......... 474 1,094
Malaysia................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 613 613
Maldives................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 80 80
Micronesia................................. .......... .......... .......... ........... .......... .......... 1,631 ........... ........... .......... ........ 1,631
Mongolia................................... .......... 3,999 .......... ........... .......... .......... 993 ........... ........... .......... 70 5,062
Morocco.................................... 13,758 .......... .......... ........... .......... .......... 2,063 ........... ........... .......... 830 16,651
Nepal...................................... 10,888 .......... .......... 2,542 .......... .......... 2,237 ........... ........... .......... 140 15,807
North Korea................................ .......... .......... .......... 6,287 .......... .......... ......... ........... ........... .......... ........ 6,287
Oman....................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 119 119
Pakistan................................... .......... .......... .......... 3,993 .......... 2,500 ......... ........... ........... .......... ........ 6,493
Papua New Guinea........................... .......... .......... .......... ........... .......... .......... 1,491 ........... ........... .......... 162 1,653
Philippines................................ 35,484 .......... .......... 4,846 .......... .......... 1,712 ........... ........... .......... 1,210 43,252
Singapore.................................. .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 20 20
Solomon Islands............................ .......... .......... .......... ........... .......... .......... 1,105 ........... ........... .......... 85 1,190
South Korea................................ .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 9 9
South Pacific.............................. .......... 14,000 .......... ........... .......... .......... ......... ........... ........... .......... ........ 14,000
Sir Lanka.................................. 11,705 .......... .......... ........... .......... .......... 595 ........... ........... .......... 179 12,479
Thailand................................... 1,500 .......... .......... ........... .......... 1,500 1,919 ........... ........... .......... 1,445 6,364
Tonga...................................... .......... .......... .......... ........... .......... .......... 923 ........... ........... .......... 85 1,008
Tunisia.................................... .......... .......... .......... ........... .......... .......... 853 ........... ........... .......... 816 1,669
Vanuatu.................................... .......... .......... .......... ........... .......... .......... 655 ........... ........... .......... 88 743
West Bank/Gaza............................. 295 64,011 .......... ........... .......... .......... ......... ........... ........... .......... ........ 64,306
Western Somoa.............................. .......... .......... .......... ........... .......... .......... 1,065 ........... ........... .......... 79 1,144
Yemen...................................... .......... .......... .......... 1,327 .......... .......... ......... ........... ........... .......... 50 1,377
Asia/Near East Regional.................... 16,933 1,032 .......... ........... .......... 4,492 ......... ........... ........... .......... ........ 22,457
East Asia Regional......................... 2,240 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 2,240
------------------------------------------------------------------------------------------------------------------------------------------------
Total.................................... 164,557 2,134,703 .......... 207,580 7,500 10,492 19,902 ........... ........... 3,201,000 10,611 5,756,345
================================================================================================================================================
Europe & NIS:
Albania.................................... .......... .......... 20,166 ........... .......... .......... 1,245 ........... ........... .......... 432 21,843
Armenia.................................... .......... .......... 69,718 ........... .......... .......... 1,006 ........... ........... .......... ........ 70,724
Azerbaijan................................. .......... .......... 5,625 ........... .......... .......... ......... ........... ........... .......... ........ 5,625
Baltics.................................... .......... .......... .......... ........... .......... .......... 2,183 ........... ........... 750 ........ 2,933
Belarus.................................... .......... .......... 3,634 ........... .......... .......... ......... ........... ........... .......... 279 3,913
Bosnia-Hercegovina......................... .......... .......... 146,981 98,344 .......... .......... ......... ........... ........... .......... 259 245,584
Bulgaria................................... .......... .......... 31,478 ........... .......... .......... 1,155 ........... ........... .......... 708 33,341
Croatia.................................... .......... .......... 10,630 ........... .......... .......... ......... ........... ........... .......... 218 10,848
Czech Republic............................. .......... .......... 5,423 ........... .......... .......... 1,060 ........... ........... .......... 795 7,278
Cyprus..................................... .......... 9,376 .......... ........... .......... .......... ......... ........... ........... .......... ........ 9,376
Estonia.................................... .......... .......... 50 ........... .......... .......... ......... ........... ........... .......... 386 436
Georgia.................................... .......... .......... 20,023 ........... .......... .......... ......... ........... ........... .......... 302 20,325
Greece..................................... .......... .......... .......... ........... .......... .......... ......... ........... (224,000) .......... 54 54
Hungary.................................... .......... .......... 18,345 ........... .......... .......... 1,219 ........... ........... .......... 1,034 20,598
Ireland.................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ ...........
Kazakhstan................................. .......... .......... 28,181 ........... .......... .......... 1,544 ........... ........... .......... 388 30,113
Kirghizstan................................ .......... .......... 15,961 ........... .......... .......... 1,073 ........... ........... .......... 231 17,265
Latvia..................................... .......... .......... 3,907 ........... .......... .......... ......... ........... ........... .......... 388 4,295
Lithuania.................................. .......... .......... 7,989 ........... .......... .......... ......... ........... ........... .......... 498 8,487
Macedonia.................................. .......... .......... 9,655 ........... .......... .......... ......... ........... ........... .......... 249 9,904
Malta...................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 30 30
Moldova.................................... .......... .......... 24,295 ........... .......... .......... 974 ........... ........... .......... 273 25,542
Poland..................................... .......... .......... 47,287 ........... .......... .......... 2,721 ........... ........... .......... 1,021 51,029
Portugal................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 769 769
Romania.................................... 485 .......... 27,276 ........... .......... .......... 1,271 ........... ........... .......... 758 29,790
Russia..................................... .......... .......... 174,654 ........... .......... .......... 3,406 ........... ........... .......... 760 178,820
Slovak Republic............................ .......... .......... 16,459 ........... .......... .......... 1,374 ........... ........... .......... 473 18,306
Slovenia................................... .......... .......... 2,926 ........... .......... .......... ......... ........... ........... .......... 253 3,179
Spain...................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 49 49
Tajikistan................................. .......... .......... 3,368 ........... .......... .......... ......... ........... ........... .......... ........ 3,368
Turkey..................................... .......... 33,494 .......... ........... .......... 400 ......... ........... (320,000) .......... 1,095 34,989
Turkmenistan............................... .......... .......... 3,009 ........... .......... .......... 943 ........... ........... .......... 213 4,165
Ukraine.................................... .......... .......... 98,635 ........... .......... .......... 2,136 ........... ........... .......... 1,019 101,790
Uzbekistan................................. .......... .......... 9,779 ........... .......... .......... 1,095 ........... ........... .......... 293 11,167
Eastern Europe Regional.................... 1,300 .......... 45,124 ........... .......... .......... ......... ........... ........... .......... ........ 46,424
Western Europe............................. .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 29 29
N.I.S. Regional............................ .......... .......... 84,514 ........... .......... .......... ......... ........... ........... .......... ........ 84,514
Partnership for Peace...................... .......... .......... .......... ........... .......... .......... ......... ........... ........... 53,100 ........ 53,100
------------------------------------------------------------------------------------------------------------------------------------------------
Total.................................... 1,785 42,870 935,092 98,344 .......... 400 24,405 ........... ........... 53,850 13,256 1,170,002
================================================================================================================================================
Latin America & Caribbean:
Argentina.................................. .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 588 588
The Bahamas................................ .......... .......... .......... ........... .......... 700 ......... ........... ........... .......... 116 816
Belize..................................... .......... .......... .......... ........... .......... .......... 1,022 ........... ........... .......... 217 1,239
Bolivia.................................... 15,070 15,400 .......... 27,277 .......... 15,000 2,095 ........... ........... .......... 547 75,389
Brazil..................................... 4,671 .......... .......... ........... .......... 290 ......... ........... ........... .......... 200 5,161
Chile...................................... .......... .......... .......... ........... .......... .......... 1,654 ........... ........... .......... 301 1,955
Colombia................................... 118 .......... .......... ........... .......... 16,000 ......... ........... ........... .......... 95 16,213
Cost Rica.................................. .......... .......... .......... 270 .......... .......... 1,671 ........... ........... .......... 196 2,137
Dominican Republic......................... 5,508 200 .......... 4,732 .......... .......... 2,706 ........... ........... .......... 507 13,653
Eastern Caribbean.......................... .......... .......... .......... ........... .......... .......... 2,516 ........... ........... 2,000 507 5,023
Ecuador.................................... 9,002 .......... .......... 727 .......... 500 2,409 ........... ........... .......... 547 13,185
El Salvador................................ 19,972 28,015 .......... 4,456 .......... .......... 993 3,000 ........... .......... 535 56,971
Guatemala.................................. 7,027 6,547 .......... 16,781 .......... 2,000 2,818 ........... ........... .......... ........ 35,173
Guyana..................................... 2,198 .......... .......... 316 .......... .......... 471 ........... ........... .......... 220 3,205
Haiti...................................... 14,116 45,263 .......... 29,275 10,000 .......... 458 ........... ........... .......... 169 99,281
Honduras................................... 10,770 .......... .......... 6,848 5,000 .......... 2,628 ........... ........... .......... 500 25,746
Jamaica.................................... 7,811 .......... .......... 2,200 .......... 700 1,886 ........... ........... .......... 469 13,066
Mexico..................................... 20,792 .......... .......... ........... .......... 2,200 ......... ........... ........... .......... 992 23,984
Nicaragua.................................. 12,519 6,689 .......... 2,474 4,000 .......... 1,568 ........... ........... .......... ........ 27,250
Panama..................................... 3,210 2,000 .......... 588 .......... .......... 1,184 ........... ........... .......... ........ 6,982
Paraguay................................... 1,050 725 .......... ........... .......... .......... 3,096 ........... ........... .......... 155 5,026
Peru....................................... 9,860 3,000 .......... 56,582 .......... 15,500 ......... ........... ........... .......... 380 85,322
Suriname................................... .......... .......... .......... ........... .......... .......... 732 ........... ........... .......... 85 817
Uruguay.................................... .......... .......... .......... ........... .......... .......... 1,200 ........... ........... .......... 380 1,580
Venezuela.................................. .......... .......... .......... ........... .......... 500 ......... ........... ........... .......... 428 928
Caribbean Regional......................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 83 83
PACAMS..................................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... 500 500
ROCAP...................................... 10,914 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 10,914
LAC Regional............................... 28,860 12,610 .......... ........... .......... 3,708 ......... ........... ........... .......... ........ 45,178
------------------------------------------------------------------------------------------------------------------------------------------------
Total.................................... 183,468 120,449 .......... 152,526 19,000 57,098 31,107 3,000 ........... 2,000 8,717 577,365
================================================================================================================================================
Other:
Administrative Costs....................... .......... .......... .......... ........... .......... .......... 90,515 ........... ........... 23,250 400 114,165
Loan subsidy............................... .......... .......... .......... ........... .......... .......... ......... ........... 59,400 .......... ........ 59,400
International Criminal Justice............. .......... .......... .......... ........... .......... 18,200 ......... ........... ........... .......... ........ 18,200
Law Enforcement Training................... .......... .......... .......... ........... .......... 7,000 ......... ........... ........... .......... ........ 7,000
International Organizations................ .......... .......... .......... ........... .......... 7,710 ......... ........... ........... .......... ........ 7,710
Interregional Aviation Support............. .......... .......... .......... ........... .......... 25,755 ......... ........... ........... .......... ........ 25,755
Haiti Peacekeeping......................... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ ...........
FMF: Demining.............................. .......... .......... .......... ........... .......... .......... ......... ........... ........... 7,213 ........ 7,213
Other...................................... 25, 547 1,306 .......... ........... .......... 6,500 ......... ........... ........... .......... ........ 33,853
Central P.L. 480:
Stock Adjustment........................... .......... .......... .......... (17,998) .......... .......... ......... ........... ........... .......... ........ (17,998)
PVO Fallout................................ .......... .......... .......... (13,500) .......... .......... ......... ........... ........... .......... ........ (13,500)
Transport Costs............................ .......... .......... .......... (328,078) .......... .......... ......... ........... ........... .......... ........ (328,078)
Carryin.................................... .......... .......... .......... (18,576) (11,700) .......... ......... ........... ........... .......... ........ (30,276)
PVO Administration......................... .......... .......... .......... 25,000 .......... .......... ......... ........... ........... .......... ........ 25,000
Transfer from Title I...................... .......... .......... .......... (11,600) .......... .......... ......... ........... ........... .......... ........ (11,600)
Transfer to Title II....................... .......... .......... .......... ........... 10,100 .......... ......... ........... ........... .......... ........ 10,100
Transfer from Title III.................... .......... .......... .......... (10,127) .......... .......... ......... ........... ........... .......... ........ (10,127)
Farmer to Farmer........................... .......... .......... .......... 10,000 100 .......... ......... ........... ........... .......... ........ 10,100
------------------------------------------------------------------------------------------------------------------------------------------------
Total Central P.L. 480................... .......... .......... .......... (36,801) (1,500) .......... ......... ........... ........... .......... ........ (38,301)
================================================================================================================================================
Other Bilateral Assistance:
Debt Restructuring......................... .......... .......... .......... ........... .......... .......... ......... 10,000 ........... .......... ........ 10,000
Trade & Development Agency................. .......... .......... .......... ........... .......... .......... ......... 48,994 ........... .......... ........ 48,994
Inter-American Foundation.................. .......... .......... .......... ........... .......... .......... ......... 19,986 ........... .......... ........ 19,986
African Development Foundation............. .......... .......... .......... ........... .......... .......... ......... 11,496 ........... .......... ........ 11,496
Migration & Refugee Assistance............. .......... .......... .......... ........... .......... .......... ......... 670,983 ........... .......... ........ 670,983
Emergency Refugee & Migration Fund......... .......... .......... .......... ........... .......... .......... ......... 50,000 ........... .......... ........ 50,000
Anti-Terrorism Assistance.................. .......... .......... .......... ........... .......... .......... ......... 15,983 ........... .......... ........ 15,983
Peacekeeping Operations.................... .......... .......... .......... ........... .......... .......... ......... 96,200 ........... .......... ........ 96,200
Non-Proliferation & Disarmament............ .......... .......... .......... ........... .......... .......... ......... 35,000 ........... .......... ........ 35,000
P.L. 480 Title I........................... .......... .......... .......... ........... .......... .......... ......... 262,815 ........... .......... ........ 262,815
OPIC loan subsidy & admin exp.............. .......... .......... .......... ........... .......... .......... ......... 98,000 ........... .......... ........ 98,000
OPIC Insurance activities.................. .......... .......... .......... ........... .......... .......... ......... (92,540) ........... .......... ........ (92,540)
Total Other Bilateral.................... .......... .......... .......... ........... .......... .......... ......... 1,226,917 ........... .......... ........ 1,226,917
Other Military Assistance:
Special Defense Acquisition Fund........... .......... .......... .......... ........... .......... .......... ......... (173,000) ........... .......... ........ (173,000)
Counter-terrorism Asst. to Israel.......... .......... .......... .......... ........... .......... .......... ......... 50,000 ........... .......... ........ 50,000
------------------------------------------------------------------------------------------------------------------------------------------------
Total Other Military..................... .......... .......... .......... ........... .......... .......... ......... (123,000) ........... .......... ........ (123,000)
================================================================================================================================================
Carry in from prior FY:
Development Assistance Fund................ (110,019) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (110,019)
Development Fund for Africa................ (140,532) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (140,532)
Sahel Development Program.................. (1,164) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (1,164)
International Disaster Assistance.......... (23,369) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (23,369)
Africa Disaster Assistance................. (456) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (456)
Economic Support Fund...................... .......... (207,792) .......... ........... .......... .......... ......... ........... ........... .......... ........ (207,792)
SAI........................................ .......... .......... (63,189) ........... .......... .......... ......... ........... ........... .......... ........ (126,378)
NIS........................................ .......... .......... (231,813) ........... .......... .......... ......... ........... ........... .......... ........ (463,626)
Operating Expenses......................... (27,195) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (27,195)
Operating Expenses--IG..................... (7,762) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (7,762)
Demobilization & Transition Fund........... .......... .......... .......... ........... .......... .......... ......... ........... (3,000) .......... ........ (3,000)
Centr. Amer. Reconciliation................ .......... .......... .......... ........... .......... .......... ......... ........... (534) .......... ........ (534)
Carry over into next fiscal year:
Development Assistance Fund................ 404,125 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 404,125
Development Fund for Africa................ 70,360 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 70,360
Sahel Development Program.................. 773 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 773
International Disaster Assistance.......... 45,111 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 45,111
MSED Program............................... 443 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 443
Africa Disaster Assistance................. 1,970 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 1,970
Economic Support Fund...................... .......... 286,893 .......... ........... .......... .......... ......... ........... ........... .......... ........ 286,893
SAI........................................ .......... .......... 119,517 ........... .......... .......... ......... ........... ........... .......... ........ 239,034
NIS........................................ .......... .......... 262,003 ........... .......... .......... ......... ........... ........... .......... ........ 524,006
Operating Expenses......................... 39,935 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 39,935
Operating Expenses)--IG.................... 7,743 .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ 7,743
Demobilization & Transition Fund........... .......... .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ ...........
Centr. Amer. Reconciliation................ .......... .......... .......... ........... .......... .......... ......... ........... 995 .......... ........ 995
Reimbursements................................. (10,740) (801) .......... ........... .......... .......... ......... ........... ........... .......... ........ (11,541)
Recoveries:
Development Assistance Fund................ (33,685) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (33,685)
Development Fund for Africa................ (53,844) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (53,844)
Sahel Development Program.................. (144) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (144)
International Disaster Assistance.......... (6,201) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (6,201)
Africa Disaster Assistance................. (1,514) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (1,514)
Economic Support Fund...................... .......... (44,812) .......... ........... .......... .......... ......... ........... ........... .......... ........ (44,812)
SAI........................................ .......... .......... (8,494) ........... .......... .......... ......... ........... ........... .......... ........ (16,988)
NIS........................................ .......... .......... (74,651) ........... .......... .......... ......... ........... ........... .......... ........ (149,302)
Operating Expenses......................... (25,939) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (25,939)
Operating Expenses)--IG.................... (1,844) .......... .......... ........... .......... .......... ......... ........... ........... .......... ........ (1,844)
Centr. Amer. Reconciliation................ .......... .......... .......... ........... .......... .......... ......... ........... (461) .......... ........ (461)
Returned to Treasury........................... 2,424 440 .......... ........... .......... .......... ......... ........... ........... .......... ........ 2,864
------------------------------------------------------------------------------------------------------------------------------------------------
Total Adjustments.......................... 128,476 33,928 3,373 ........... .......... .......... ......... ........... (3,000) .......... ........ 166,150
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DA bureau and country levels in this series of tables exclude attributions of central programs.
\2\ See last page of this table for details.
TABLE 5B.--FY 1997 U.S. ECONOMIC & MILITARY ASSISTANCE--ESTIMATED OBLIGATIONS--PL 480
[In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Peace FMF
DA \1\ ESF SAI/NIS Title II Title III NARCS Corps Other \2\ FMF loans grants IMET Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bilateral Assistance Summary:
Africa...................................... 729,358 17,222 .......... 204,357 28,400 .......... 53,443 ........... .......... 7,750 7,325 1,047,855
Asia & Near East............................ 319,228 2,360,047 3,000 130,673 .......... 10,000 20,745 ........... .......... 3,131,000 11,775 5,986,468
Europe & NIS................................ 4,592 87,506 1,455,002 27,007 .......... 500 24,980 ........... .......... 60,000 14,750 1,674,337
Latin America & Caribbean................... 316,518 118,120 .......... 104,363 10,000 116,200 30,942 ........... .......... 2,000 9,350 707,493
Central PL 480.............................. .......... .......... .......... 370,600 (8,900) .......... ......... ........... .......... .......... ........ 361,700
Global Programs, Field Spt. & Res........... 580,663 4,394 2,789 ........... .......... .......... ......... ........... .......... .......... ........ 587,846
Humanitarian Response....................... 74,952 .......... 3,781 ........... .......... .......... ......... ........... .......... .......... ........ 78,733
Program & Policy Coordination............... 8,654 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 8,654
Other\2\.................................... 73,793 62,204 16,948 ........... .......... 86,300 89,890 ........... 60,000 23,250 275 412,660
Geographic & Central Programs............... 2,107,758 2,649,493 1,481,520 837,000 29,500 213,000 220,000 ........... 60,000 3,224,000 43,475 10,865,746
(Eastern Europe)............................ .......... .......... (594,517) ........... .......... .......... ......... ........... .......... .......... ........ (594,517)
(N.I.S.).................................... .......... .......... (887,003) ........... .......... .......... ......... ........... .......... .......... ........ (887,003)
International Disaster Assistance........... 235,111 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 235,111
Africa Disaster Assistance.................. 1,970 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,970
Urban & Environmental Credit Subs........... 3,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 3,500
Urban & Environmental Admin................. 6,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,000
Micro & Small Ent Dev Credit Subs........... 1,500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,500
Micro & Small Ent Dev Admin................. 500 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 500
Operating Expenses.......................... 528,185 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 528,185
Operating Expenses--I.G..................... 37,743 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 37,743
Foreign Service Retirement.................. 43,826 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 43,826
Unobligated Balances from prior year........ (570,017) (286,893) (381,520) ........... .......... .......... ......... ........... .......... .......... ........ (1,238,430)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total USAID (Excludes Transfers).......... 2,396,076 2,362,600 1,100,000 837,000 29,500 .......... ......... ........... .......... .......... ........ 6,725,176
Other Bilateral Assistance.................. .......... .......... .......... ........... .......... 213,000 220,000 1,026,774 60,000 3,224,000 43,475 4,787,249
-----------------------------------------------------------------------------------------------------------------------------------------------
Total: Bilateral.......................... 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 1,026,774 60,000 3,224,000 43,475 11,512,425
===============================================================================================================================================
Multilateral Assistance:
MDB's....................................... .......... .......... .......... ........... .......... .......... ......... 958,405 .......... .......... ........ 958,405
IO & P...................................... .......... .......... .......... ........... .......... .......... ......... 333,450 .......... .......... ........ 333,450
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Multilateral........................ .......... .......... .......... ........... .......... .......... ......... 1,291,855 .......... .......... ........ 1,291,855
===============================================================================================================================================
Total Economic Assistance................. 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 2,318,629 .......... .......... ........ 9,476,805
Total Military Assistance................. .......... .......... .......... ........... .......... .......... ......... (118,000) 60,000 3,224,000 43,475 3,209,475
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Econ. & Mil. Assist................... 2,396,076 2,362,600 1,100,000 837,000 29,500 213,000 220,000 2,200,629 60,000 3,224,000 43,475 12,686,280
===============================================================================================================================================
Africa:
Angola...................................... 11,500 5,000 .......... 18,521 .......... .......... ......... ........... .......... .......... 125 35,146
Benin....................................... 13,900 .......... .......... 1,962 .......... .......... 1,662 ........... .......... .......... 350 17,874
Botswana.................................... .......... .......... .......... ........... .......... .......... 1,101 ........... .......... .......... 450 1,551
Burkina Faso................................ .......... .......... .......... 13,225 .......... .......... 1,464 ........... .......... .......... ........ 14,689
Burundi..................................... 1,776 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,776
Cameroon.................................... .......... .......... .......... ........... .......... .......... 3,085 ........... .......... .......... 100 3,185
Cape Verde.................................. .......... .......... .......... 2,626 .......... .......... 923 ........... .......... .......... 100 3,649
Central African Republic.................... .......... .......... .......... ........... .......... .......... 10 ........... .......... .......... 150 160
Chad........................................ .......... .......... .......... ........... .......... .......... 984 ........... .......... .......... 25 1,009
Comoros..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Congo....................................... .......... .......... .......... ........... .......... .......... 1,103 ........... .......... .......... 175 1,278
Cote d'Ivoire............................... .......... .......... .......... ........... .......... .......... 1,703 ........... .......... .......... 150 1,853
Djibouti.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Eritrea..................................... 9,813 .......... .......... 478 15,000 .......... 1,176 ........... .......... .......... 375 26,842
Ethiopia.................................... 38,263 .......... .......... 25,524 9,400 .......... 1,250 ........... .......... .......... 400 74,837
Gabon....................................... .......... .......... .......... ........... .......... .......... 2,614 ........... .......... .......... ........ 2,614
Gambia...................................... 265 .......... .......... 2,024 .......... .......... 1,252 ........... .......... .......... ........ 3,541
Ghana....................................... 41,319 .......... .......... 12,047 .......... .......... 2,529 ........... .......... .......... 260 56,155
Guinea...................................... 13,814 .......... .......... 441 .......... .......... 2,050 ........... .......... .......... 150 16,455
Guinea-Bissau............................... 4,100 .......... .......... ........... .......... .......... 1,079 ........... .......... .......... 125 5,304
Kenya....................................... 20,237 .......... .......... ........... .......... .......... 3,119 ........... .......... .......... 300 23,656
Lesotho..................................... .......... .......... .......... 432 .......... .......... 2,237 ........... .......... .......... 75 2,744
Liberia..................................... 8,244 2,900 .......... 8,710 .......... .......... ......... ........... .......... .......... ........ 19,854
Madagascar.................................. 18,290 .......... .......... 3,454 .......... .......... 1,047 ........... .......... .......... 100 22,891
Malawi...................................... 36,088 .......... .......... ........... .......... .......... 1,841 ........... .......... .......... 225 38,154
Mali........................................ 31,979 .......... .......... 173 .......... .......... 3,002 ........... .......... .......... 150 35,304
Mauritania.................................. .......... .......... .......... 1,611 .......... .......... 1,428 ........... .......... .......... ........ 3,039
Mauritius................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 25 25
Mozambique.................................. 31,000 .......... .......... 17,983 4,000 .......... ......... ........... .......... .......... 175 53,158
Namibia..................................... 8,000 .......... .......... ........... .......... .......... 1,706 ........... .......... .......... 200 9,906
Niger....................................... 3,300 .......... .......... ........... .......... .......... 2,476 ........... .......... .......... ........ 5,776
Nigeria..................................... 7,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,000
Rwanda...................................... 14,552 .......... .......... 66,721 .......... .......... ......... ........... .......... .......... 300 81,573
Sao Tome.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Senegal..................................... 23,306 .......... .......... ........... .......... .......... 3,138 ........... .......... .......... 650 27,094
Seychelles.................................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Sierra Leone................................ .......... .......... .......... 6,174 .......... .......... ......... ........... .......... .......... 115 6,289
Somalia..................................... 4,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 4,000
South Africa................................ 89,725 .......... .......... ........... .......... .......... 1,257 ........... .......... .......... 700 91,682
Sudan....................................... .......... .......... .......... 9,689 .......... .......... ......... ........... .......... .......... ........ 9,689
Swaziland................................... .......... .......... .......... ........... .......... .......... 177 ........... .......... .......... 75 252
Tanzania.................................... 18,700 .......... .......... ........... .......... .......... 1,719 ........... .......... .......... 225 20,644
Togo........................................ .......... .......... .......... ........... .......... .......... 1,867 ........... .......... .......... 25 1,892
Uganda...................................... 41,374 .......... .......... 12,562 .......... .......... 1,353 ........... .......... .......... 300 55,589
Zambia...................................... 17,156 .......... .......... ........... .......... .......... 1,724 ........... .......... .......... 150 19,030
Zimbabwe.................................... 18,116 .......... .......... ........... .......... .......... 1,368 ........... .......... .......... 275 19,759
Greater Horn of Africa Initiative (GHAI).... 17,140 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Initiative for Southern Africa (ISA)........ 38,000 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 38,000
Africa Regional............................. 75,675 9,322 .......... ........... .......... .......... ......... ........... .......... 4,750 ........ 89,747
REDSO/E..................................... 6,800 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 6,800
REDSO/W..................................... 19,170 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 19,170
Africa Crisis Response Force................ .......... .......... .......... ........... .......... .......... ......... ........... .......... 3,000 ........ 3,000
Special Concerns............................ 46,757 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 46,757
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 729,358 17,222 .......... 204,357 28,400 .......... 53,443 ........... .......... 7,750 7,325 1,030,715
===============================================================================================================================================
Asia & Near East:
Afghanistan................................. .......... .......... .......... 13,600 .......... .......... ......... ........... .......... .......... ........ 13,600
Algeria..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 75 75
Bahrain..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 125 125
Bangladesh.................................. 71,937 .......... .......... 20,609 .......... .......... ......... ........... .......... .......... 300 92,846
Burma....................................... .......... 1,995 .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,995
Cambodia.................................... .......... 35,000 .......... ........... .......... .......... ......... ........... .......... 1,000 500 36,500
China....................................... .......... .......... .......... ........... .......... .......... 891 ........... .......... .......... ........ 891
Egypt....................................... .......... 967,274 .......... ........... .......... .......... ......... ........... .......... 1,300,000 1,000 2,268,274
Fiji........................................ .......... .......... .......... ........... .......... .......... 804 ........... .......... .......... ........ 804
India....................................... 55,180 .......... .......... 89,868 .......... .......... ......... ........... .......... .......... 400 145,448
Indonesia................................... 50,072 .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 50,672
Iraq (Northern)............................. .......... 1,500 .......... 6,596 .......... .......... ......... ........... .......... .......... ........ 8,096
Israel...................................... .......... 1,200,000 .......... ........... .......... .......... ......... ........... .......... 1,800,000 ........ 3,000,000
Jordan...................................... 6,100 10,000 .......... ........... .......... .......... 1,038 ........... .......... 30,000 1,600 48,738
Kiribati.................................... .......... .......... .......... ........... .......... .......... 589 ........... .......... .......... ........ 589
Laos........................................ .......... 2,000 .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 4,500
Lebanon..................................... .......... 13,794 .......... ........... .......... .......... ......... ........... .......... .......... 550 14,344
Malaysia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
Maldives.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Micronesia.................................. .......... .......... .......... ........... .......... .......... 1,587 ........... .......... .......... ........ 1,587
Mongolia.................................... .......... 7,500 3,000 ........... .......... .......... 1,056 ........... .......... .......... 325 11,881
Morocco..................................... 18,200 .......... .......... ........... .......... .......... 2,244 ........... .......... .......... 800 21,244
Nepal....................................... 26,560 .......... .......... ........... .......... .......... 2,368 ........... .......... .......... 200 29,128
Oman........................................ .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 150 150
Pakistan.................................... .......... .......... .......... ........... .......... 2,500 ......... ........... .......... .......... ........ 2,500
Papua New Guinea............................ .......... .......... .......... ........... .......... .......... 1,937 ........... .......... .......... 200 2,137
Philippines................................. 56,840 .......... .......... ........... .......... .......... 2,184 ........... .......... .......... 1,250 60,274
Solomon Islands............................. .......... .......... .......... ........... .......... .......... 1,245 ........... .......... .......... 150 1,395
South Pacific............................... .......... 14,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 14,000
Sri Lanka................................... 3,000 .......... .......... ........... .......... .......... 420 ........... .......... .......... 200 3,620
Thailand.................................... .......... .......... .......... ........... .......... 3,000 1,443 ........... .......... .......... 1,500 5,943
Tonga....................................... .......... .......... .......... ........... .......... .......... 1,087 ........... .......... .......... 100 1,187
Tunisia..................................... .......... .......... .......... ........... .......... .......... 5 ........... .......... .......... 800 805
Vanuatu..................................... .......... .......... .......... ........... .......... .......... 812 ........... .......... .......... 100 912
West Bank/Gaza.............................. .......... 86,988 .......... ........... .......... .......... ......... ........... .......... .......... ........ 86,988
Western Somoa............................... .......... .......... .......... ........... .......... .......... 1,036 ........... .......... .......... 100 1,136
Yemen....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 50 50
RSM/East Asia Regional...................... 1,310 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 1,310
Asia/Near East Regional..................... 30,029 19,996 .......... ........... .......... 2,000 ......... ........... .......... .......... ........ 52,025
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 319,228 2,360,047 3,000 130,673 .......... 10,000 20,745 ........... .......... 3,131,000 11,775 5,986,468
===============================================================================================================================================
Europe & NIS:
Albania..................................... .......... .......... 27,468 ........... .......... .......... 1,378 ........... .......... .......... 600 29,446
Armenia..................................... .......... .......... 111,201 ........... .......... .......... 1,104 ........... .......... .......... ........ 112,305
Azerbaijan.................................. .......... .......... 21,510 ........... .......... .......... ......... ........... .......... .......... ........ 21,510
Baltics..................................... .......... .......... .......... ........... .......... .......... 2,115 ........... .......... .......... ........ 2,115
Belarus..................................... .......... .......... 6,186 ........... .......... .......... ......... ........... .......... .......... 300 6,486
Bosnia...................................... .......... 1,300 266,740 22,425 .......... .......... ......... ........... .......... .......... 500 290,965
Bulgaria.................................... .......... .......... 33,000 ........... .......... .......... 1,652 ........... .......... .......... 800 35,452
Croatia..................................... .......... .......... 15,500 ........... .......... .......... ......... ........... .......... .......... 350 15,850
Cyprus...................................... .......... 25,000 .......... ........... .......... .......... ......... ........... .......... .......... ........ 25,000
Czech Republic.............................. .......... .......... .......... ........... .......... .......... 481 ........... .......... .......... 800 1,281
Estonia..................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 500 500
Georgia..................................... .......... .......... 31,510 ........... .......... .......... ......... ........... .......... .......... 275 31,785
Greece...................................... .......... .......... .......... ........... .......... .......... ......... ........... (122,500) .......... 25 25
Hungary..................................... .......... .......... 15,194 ........... .......... .......... 428 ........... .......... .......... 1,000 16,622
Ireland..................................... .......... 39,200 .......... ........... .......... .......... ......... ........... .......... .......... ........ 39,200
Kazakhstan.................................. .......... .......... 42,079 ........... .......... .......... 1,651 ........... .......... .......... 400 44,130
Kirghizstan................................. .......... .......... 21,625 ........... .......... .......... 1,116 ........... .......... .......... 250 22,991
Latvia...................................... .......... .......... 3,000 ........... .......... .......... ......... ........... .......... .......... 500 3,500
Lithuania................................... .......... .......... 7,000 ........... .......... .......... ......... ........... .......... .......... 500 7,500
Macedonia (FYR)............................. .......... .......... 20,043 ........... .......... .......... ......... ........... .......... .......... 300 20,343
Malta....................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Moldova..................................... .......... .......... 32,321 ........... .......... .......... 1,167 ........... .......... .......... 250 33,738
Poland...................................... .......... .......... 43,210 ........... .......... .......... 2,608 ........... .......... .......... 1,000 46,818
Portugal.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 800 800
Romania..................................... .......... .......... 35,120 ........... .......... .......... 1,286 ........... .......... .......... 800 37,206
Russia...................................... .......... .......... 188,042 ........... .......... .......... 3,898 ........... .......... .......... 800 192,740
Slovak Republic............................. .......... .......... 15,759 ........... .......... .......... 1,535 ........... .......... .......... 600 17,894
Slovenia.................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 400 400
Tajikistan.................................. .......... .......... 5,225 4,582 .......... .......... ......... ........... .......... .......... ........ 9,807
Turkey...................................... 4,400 22,006 .......... ........... .......... 500 ......... ........... (175,000) .......... 1,400 28,306
Turkmenistan................................ .......... .......... 6,566 ........... .......... .......... 930 ........... .......... .......... 250 7,746
Ukraine..................................... .......... .......... 281,275 ........... .......... .......... 2,411 ........... .......... .......... 1,000 284,686
Uzbekistan.................................. .......... .......... 23,737 ........... .......... .......... 1,220 ........... .......... .......... 250 25,207
Eastern Europe Regional..................... 192 .......... 106,913 ........... .......... .......... ......... ........... (242,500) .......... ........ 107,105
Partnership for Peace....................... .......... .......... .......... ........... .......... .......... ......... ........... .......... 60,000 ........ 60,000
N.I.S. Regional............................. .......... .......... 94,778 ........... .......... .......... ......... ........... .......... .......... ........ 94,778
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 4,592 87,506 1,455,002 27,007 .......... 500 24,980 ........... .......... 60,000 14,750 1,674,337
===============================================================================================================================================
Latin America & Caribbean:
Argentina................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 600 600
The Bahamas................................. .......... .......... .......... ........... .......... 1,000 ......... ........... .......... .......... 100 1,100
Belize...................................... .......... .......... .......... ........... .......... .......... 998 ........... .......... .......... 250 1,248
Bolivia..................................... 34,521 .......... .......... 21,390 .......... 45,000 2,259 ........... .......... .......... 500 103,670
Brazil...................................... 12,880 .......... .......... ........... .......... 500 ......... ........... .......... .......... 225 13,605
Chile....................................... .......... .......... .......... ........... .......... .......... 1,284 ........... .......... .......... 400 1,684
Colombia.................................... .......... .......... .......... ........... .......... 30,000 ......... ........... .......... .......... 600 30,600
Costa Rica.................................. .......... .......... .......... ........... .......... .......... 977 ........... .......... .......... 150 1,127
Dominican Republic.......................... 12,683 .......... .......... ........... .......... .......... 2,498 ........... .......... .......... 500 15,681
Ecuador..................................... 13,162 .......... .......... ........... .......... 350 2,676 ........... .......... .......... 425 16,613
El Salvador................................. 31,313 .......... .......... ........... .......... .......... 1,275 ........... .......... .......... 450 33,038
Guatemala................................... 25,079 .......... .......... 11,902 .......... 2,000 2,460 ........... .......... .......... 225 41,666
Guyana...................................... 2,763 .......... .......... ........... .......... .......... 734 ........... .......... .......... 175 3,672
Haiti....................................... 10,949 87,147 .......... 14,129 10,000 .......... 944 ........... .......... .......... 300 123,469
Honduras.................................... 23,776 .......... .......... 4,673 .......... .......... 2,540 ........... .......... .......... 425 31,414
Jamaica..................................... 12,588 .......... .......... ........... .......... 750 1,873 ........... .......... .......... 500 15,711
Mexico...................................... 15,972 .......... .......... ........... .......... 8,000 ......... ........... .......... .......... 1,000 24,972
Nicaragua................................... 22,475 .......... .......... 1,215 .......... .......... 1,633 ........... .......... .......... 150 25,473
Panama...................................... 2,740 .......... .......... ........... .......... .......... 1,519 ........... .......... .......... ........ 4,259
Paraguay.................................... 5,035 .......... .......... ........... .......... .......... 2,997 ........... .......... .......... 200 8,232
Peru........................................ 33,443 .......... .......... 51,054 .......... 23,000 ......... ........... .......... .......... 450 107,947
Suriname.................................... .......... .......... .......... ........... .......... .......... 917 ........... .......... .......... 100 1,017
Trinidad/Tobago............................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 100 100
Uruguay..................................... .......... .......... .......... ........... .......... .......... 821 ........... .......... .......... 275 1,096
Venezuela................................... .......... .......... .......... ........... .......... 600 ......... ........... .......... .......... 350 950
Caribbean Regional.......................... .......... .......... .......... ........... .......... .......... 2,535 ........... .......... 2,000 400 4,935
PACAMS...................................... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... 500 500
ROCAP....................................... 10,660 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ 10,660
LAC Regional................................ 46,479 23,473 .......... ........... .......... 5,000 ......... ........... .......... .......... ........ 74,952
AOJ/CITAP................................... .......... 7,500 .......... ........... .......... .......... ......... ........... .......... .......... ........ 7,500
Andean Narcotics Initiative................. .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 316,518 118,120 .......... 104,363 10,000 116,200 30,942 ........... .......... 2,000 9,350 707,493
===============================================================================================================================================
Other:
Administrative Costs........................ .......... .......... .......... ........... .......... .......... 89,890 ........... .......... 23,250 275 113,415
Loan subsidy................................ .......... .......... .......... ........... .......... .......... ......... ........... 60,000 .......... ........ 60,000
International Criminal Justice.............. .......... .......... .......... ........... .......... 20,000 ......... ........... .......... .......... ........ 20,000
Law Enforcement Training.................... .......... .......... .......... ........... .......... 9,000 ......... ........... .......... .......... ........ 9,000
Systems Support and Upgrades................ .......... .......... .......... ........... .......... 6,000 ......... ........... .......... .......... ........ 6,000
International Organizations................. .......... .......... .......... ........... .......... 12,000 ......... ........... .......... .......... ........ 12,000
Interregional Aviation Support.............. .......... .......... .......... ........... .......... 31,500 ......... ........... .......... .......... ........ 31,500
Special Concerns \3\........................ 73,793 62,204 16,948 ........... .......... .......... ......... ........... .......... .......... ........ 152,945
International Fund for Agr. Dev. (IFAD)..... .......... .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Program Dev. and Support.................... .......... .......... .......... ........... .......... 7,800 ......... ........... .......... .......... ........ 7,800
Central P.L. 480:
Reserve..................................... .......... .......... .......... 342,427 .......... .......... ......... ........... .......... .......... ........ 342,427
Stock Adjustment............................ .......... .......... .......... (18,827) .......... .......... ......... ........... .......... .......... ........ (18,827)
Farmer to Farmer............................ .......... .......... .......... 10,798 100 .......... ......... ........... .......... .......... ........ 10,898
PVO Administration.......................... .......... .......... .......... 28,000 .......... .......... ......... ........... .......... .......... ........ 28,000
Transport Costs............................. .......... .......... .......... (309,019) .......... .......... ......... ........... .......... .......... ........ (309,019)
Transfer to Title III....................... .......... .......... .......... 9,000 .......... .......... ......... ........... .......... .......... ........ 9,000
Transfer from Title II...................... .......... .......... .......... ........... (9,000) .......... ......... ........... .......... .......... ........ (9,000)
Transfer from Title I....................... .......... .......... .......... (798) .......... .......... ......... ........... .......... .......... ........ (798)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Central P.L. 480.................... .......... .......... .......... 370,600 (8,900) .......... ......... ........... .......... .......... ........ 361,700
===============================================================================================================================================
Other Bilateral Assistance:
Debt Restructuring.......................... .......... .......... .......... ........... .......... .......... ......... 27,000 .......... .......... ........ 27,000
Trade & Development Agency.................. .......... .......... .......... ........... .......... .......... ......... 45,000 .......... .......... ........ 45,000
Inter-American Foundation................... .......... .......... .......... ........... .......... .......... ......... 20,000 .......... .......... ........ 20,000
African Development Foundation.............. .......... .......... .......... ........... .......... .......... ......... 11,500 .......... .......... ........ 11,500
Migration & Refugee Assistance.............. .......... .......... .......... ........... .......... .......... ......... 650,000 .......... .......... ........ 650,000
Emergency Refugee & Migration Fund.......... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Anti-Terrorism Assistance................... .......... .......... .......... ........... .......... .......... ......... 18,000 .......... .......... ........ 18,000
Peacekeeping Operations..................... .......... .......... .......... ........... .......... .......... ......... 65,000 .......... .......... ........ 65,000
Non-Proliferation & Disarmament............. .......... .......... .......... ........... .......... .......... ......... 15,000 .......... .......... ........ 15,000
P.L. 480 Title I............................ .......... .......... .......... ........... .......... .......... ......... 151,274 .......... .......... ........ 151,274
OPIC loan subsidy & admin exp............... .......... .......... .......... ........... .......... .......... ......... 104,500 .......... .......... ........ 104,500
OPIC Insurance activities................... .......... .......... .......... ........... .......... .......... ......... (130,500) .......... .......... ........ (130,500)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Bilateral..................... .......... .......... .......... ........... .......... .......... ......... 1,026,774 .......... .......... ........ 1,026,774
===============================================================================================================================================
Other Military Assistance:
Relocation of Facilities in Israel.......... .......... .......... .......... ........... .......... .......... ......... (2,000) .......... .......... ........ (2,000)
Counter-terrorism Assistance to Israel...... .......... .......... .......... ........... .......... .......... ......... 50,000 .......... .......... ........ 50,000
Special Defense Acquisition Fund............ .......... .......... .......... ........... .......... .......... ......... (166,000) .......... .......... ........ (166,000)
-----------------------------------------------------------------------------------------------------------------------------------------------
Total Other Military...................... .......... .......... .......... ........... .......... .......... ......... (118,000) .......... .......... ........ (118,000)
===============================================================================================================================================
Unobligated balances from prior year by account:
Development Assistance Fund................. 404,125 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Development Fund for Africa................. 70,360 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Sahel Development Program................... 773 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
International Disaster Assistance........... 45,111 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
African Disaster Assistance................. 1,970 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Economic Support Fund....................... .......... 286,893 .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
SAI......................................... .......... .......... 119,517 ........... .......... .......... ......... ........... .......... .......... ........ ...........
NIS......................................... .......... .......... 262,003 ........... .......... .......... ......... ........... .......... .......... ........ ...........
Operating Expenses.......................... 39,935 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
Operating Expenses-I.G...................... 7,743 .......... .......... ........... .......... .......... ......... ........... .......... .......... ........ ...........
-----------------------------------------------------------------------------------------------------------------------------------------------
Total..................................... 570,017 286,893 381,520 ........... .......... .......... ......... ........... .......... .......... ........ 1,238,430
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DA bureau and country levels in this series of tables include attributions of central programs.
\2\ See last page of this table for details.
\3\ Special Concerns includes funds yet to be allocated for special program areas such as Vitamin A, orphans, victims of war, etc.
TABLE 6.--FY 1998 BUDGET REQUEST
INTERNATIONAL ORGANIZATIONS AND PROGRAMS
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year--
-----------------------------------------------
1996 actual 1997 estimate 1998 request
----------------------------------------------------------------------------------------------------------------
Building democracy.............................................. 2,500 4,900 4,900
-----------------------------------------------
UN Voluntary Fund for Tech Coop in Field of Human Rights.... 0 900 900
UN Vol Fund for Victims of Torture.......................... 1,500 1,500 1,500
OAS Fund for Strengthening Democracy........................ 1,000 2,500 2,500
===============================================
Promoting sustainable development............................... 224,500 267,550 294,100
===============================================
Broad-Based Economic Growth................................. 156,450 185,950 206,100
-----------------------------------------------
UN Development Program (UNDP)........................... 52,000 76,350 100,000
UN Development Fund for Women (UNIFEM).................. 1,000 1,000 1,000
UN Children's Fund (UNICEF)............................. 100,000 \1\ 100,000 100,000
World Food Program...................................... 3,000 3,000 2,000
Afghanistan Emergency Trust Fund........................ 250 500 500
International Fund for Agricultural Development (IFAD).. 0 \2\ 5,000 2,500
UN Fellowship Program................................... 100 0 0
ICAO Aviation Security Fund............................. 100 100 100
===============================================
Stabilization of World Population Growth.................... 22,750 25,000 30,000
-----------------------------------------------
UN Population Fund (UNFPA).............................. 22,750 25,000 30,000
===============================================
Protection of Global Environment............................ 37,300 50,100 51,500
-----------------------------------------------
UNEP Environment Program (UNEP Fund/UNEP-related)....... 8,000 11,000 11,000
Montreal Protocol Multilateral Fund..................... 22,000 27,500 28,000
Habitat................................................. 250 0 0
Int'l Conservation Programs (CITES/ITTO/IUCN/Ramsar..... 2,050 4,050 3,750
Climate Stabilization Fund (IPCC/UNFCCC)................ 2,500 3,225 5,000
Int'l Contribtuns for Scntfc, Educal & Cultural Actvts.. 1,200 2,325 2,250
World Meteorological Org/Voluntary Cooperation Program.. 1,300 2,000 1,500
===============================================
Support for Democratic Participation........................ 8,000 6,500 6,500
-----------------------------------------------
OAS Development Assistance Program...................... 8,000 6,500 6,500
===============================================
Promoting Peace................................................. 58,000 61,000 66,000
-----------------------------------------------
Int'l Atomic Energy Agency (IAEA) Voluntary Programs........ 36,000 \1\ 36,000 36,000
Korean Energy Development Organization (KEDO)............... 22,000 \1\ 25,000 30,000
-----------------------------------------------
Grand Total............................................... 285,000 \3\ 333,450 365,000
----------------------------------------------------------------------------------------------------------------
\1\ For FY 1997, UNICEF, IAEA and KEDO have been transferred into other accounts.
\2\ Of which $2.5 million has been transferred into IO&P.
\3\ IO&P appropriation totals $169.95 million.
TABLE 7A.--FY 1998 CONGRESSIONAL PRESENTATION--P.L. 480 TITLE III
[By fiscal year]
----------------------------------------------------------------------------------------------------------------
1996 actual program 1997 current program 1998 proposed
levels levels program levels
Region/Country -------------------------------------------------------------------
($MIL) MTN(000) ($MIL) MTN(000) ($MIL) MTN(000)
----------------------------------------------------------------------------------------------------------------
Asia--total................................. 7.5 30.0 .......... ......... ......... .........
-------------------------------------------------------------------
Bangladesh.............................. 7.5 30.0 .......... ......... ......... .........
===================================================================
Latin America--total........................ 19.0 59.7 10.0 20.0 10.0 20.0
-------------------------------------------------------------------
Haiti................................... 10.0 21.5 10.0 20.0 10.0 20.0
Honduras................................ 5.0 22.2 .......... ......... ......... .........
Nicaragua............................... 4.0 16.0 .......... ......... ......... .........
===================================================================
Africa--total............................... 25.0 56.8 28.4 121.0 19.9 86.0
-------------------------------------------------------------------
Eritrea................................. .......... ......... 15.0 62.0 5.0 20.0
Ethiopia................................ 25.0 56.8 9.4 39.0 9.9 40.0
Mozambique.............................. .......... ......... 4.0 20.0 5.0 26.0
===================================================================
Program total......................... 51.5 146.5 38.4 141.0 29.9 106.0
----------------------------------------------------------------------------------------------------------------
Farmer-To-Farmer............................ 0.1 ......... 0.1 ......... 0.1 .........
Carryin..................................... (11.7) ......... .......... ......... ......... .........
Transfer to Title II........................ 10.1 ......... .......... ......... ......... .........
Transfer from Title II...................... .......... ......... 9.0 ......... ......... .........
Appropriation............................... 50.0 ......... 29.5 ......... 30.0 .........
Includes estimated freight costs of......... 16.5 ......... 9.7 ......... 9.9 .........
----------------------------------------------------------------------------------------------------------------
TABLE 7B-1.--FY 1998 CONGRESSIONAL PRESENTATION--P.L. 480 TITLE II
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FY 1996 final program levels FY 1997 current program levels \1\ FY 1998 congressional presentation
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Region/Country Commodity Commodity Commodity
Total Transport --------------------------------- Total Transport --------------------------------- Total Transport --------------------------------
PVO/CDO WFP \3\ IEFR \4\ PVO/CDO WFP \3\ IEFR \4\ PVO/CDO WFP \3\ IEFR \4\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Asia/Near East..................................................... 207,580 57,035 103,366 38,315 8,864 130,673 41,952 76,638 8,417 3,666 104,522 31,809 69,333 3,380 .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Afghanistan \6\................................................ 15,200 7,200 ......... 8,000 ......... 13,600 7,000 ......... 6,600 ......... 4,880 1,500 ......... 3,380 .........
Bangladesh \6\................................................. 34,190 8,924 11,000 14,266 ......... 20,609 6,440 13,200 969 ......... 19,520 6,000 13,520 ......... .........
Egypt.......................................................... 603 171 ......... 432 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
India.......................................................... 131,380 32,447 88,939 9,994 ......... 89,868 25,582 63,438 848 ......... 80,122 24,309 55,813 ......... .........
Iraq (Northern) \6\............................................ 7,212 2,735 ......... ......... 4,477 6,596 2,930 ......... ......... 3,666 ......... ......... ......... ......... .........
Nepal \6\...................................................... 2,542 863 ......... 1,679 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
North Korea \6\................................................ 6,287 1,900 ......... ......... 4,387 ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Pakistan \6\................................................... 3,993 1,089 ......... 2,904 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Philippines.................................................... 4,846 1,419 3,427 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Yemen.......................................................... 1,327 287 ......... 1,040 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Eni................................................................ 98,344 44,009 3,911 ......... 50,424 27,007 12,651 2,302 ......... 12,054 11,407 4,879 847 ......... 5,681
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bosnia \6\..................................................... 98,344 44,009 3,911 ......... 50,424 22,425 10,351 2,302 ......... 9,772 6,569 3,168 847 ......... 2,554
NIS \6\........................................................ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 4,838 1,711 ......... ......... 3,127
Tajikistan \6\................................................. ......... ......... ......... ......... ......... 4,582 2,300 ......... ......... 2,282 ......... ......... ......... ......... .........
====================================================================================================================================================================
Latin America...................................................... 152,526 41,170 97,994 13,362 ......... 104,363 29,854 73,884 625 ......... 101,143 29,661 71,482 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bolivia........................................................ 27,277 11,087 15,807 383 ......... 21,390 9,808 11,582 ......... ......... 20,291 9,618 10,673 ......... .........
Costa Rica..................................................... 270 49 ......... 221 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Dominican Rep.................................................. 4,732 889 3,203 640 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Ecuador........................................................ 727 195 ......... 532 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
El Salvador.................................................... 4,456 1,236 ......... 3,220 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Guatemala...................................................... 16,781 4,504 9,574 2,703 ......... 11,902 3,044 8,446 412 ......... 12,122 3,275 8,847 ......... .........
Guyana......................................................... 316 74 ......... 242 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Haiti \6\...................................................... 29,275 8,040 20,754 481 ......... 14,129 4,029 9,887 213 ......... 14,314 4,101 10,213 ......... .........
Honduras....................................................... 6,848 1,531 3,931 1,386 ......... 4,673 1,161 3,512 ......... ......... 4,735 1,162 3,573 ......... .........
Jamaica........................................................ 2,200 600 ......... 1,600 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Nicaragua...................................................... 2,474 525 373 1,576 ......... 1,215 351 864 ......... ......... 764 233 531 ......... .........
Panama......................................................... 588 210 ......... 378 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Peru........................................................... 56,582 12,230 44,352 ......... ......... 51,054 11,461 39,593 ......... ......... 48,917 11,272 37,645 ......... .........
====================================================================================================================================================================
Africa............................................................. 399,451 185,863 109,205 43,894 60,489 204,357 89,650 67,892 12,932 33,883 262,147 113,542 91,028 28,075 29,502
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Angola \6\..................................................... 44,077 20,333 16,528 1,200 6,016 18,521 8,869 4,255 3,358 2,039 22,594 11,392 6,045 1,673 3,484
Benin.......................................................... 3,468 803 1,995 670 ......... 1,962 520 1,442 ......... ......... 1,904 501 1,403 ......... .........
Burkina Faso................................................... 12,429 4,726 7,193 510 ......... 13,225 5,188 8,037 ......... ......... 9,689 4,112 5,577 ......... .........
Cameroon....................................................... 349 80 ......... 269 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Cape Verde..................................................... 6,208 1,823 3,403 982 ......... 2,626 601 2,025 ......... ......... 2,805 1,125 1,680 ......... .........
Chad........................................................... 4,795 2,056 ......... 2,739 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Eritrea........................................................ 4,275 961 3,314 ......... ......... 478 65 413 ......... ......... 3,178 435 2,743 ......... .........
Ethiopia \6\................................................... 50,253 19,684 21,571 8,998 ......... 25,524 9,945 15,579 ......... ......... 24,453 9,457 14,996 ......... .........
Gambia......................................................... 2,995 645 2,350 ......... ......... 2,024 517 1,507 ......... ......... ......... ......... ......... ......... .........
Ghana.......................................................... 12,475 3,405 8,287 783 ......... 12,047 3,663 8,289 95 ......... 12,672 3,815 8,857 ......... .........
Guinea......................................................... 2,069 263 1,806 ......... ......... 441 60 381 ......... ......... 986 135 851 ......... .........
Guinea Bissau \5\.............................................. 1,733 322 1,411 ......... ......... ......... ......... ......... ......... ......... 562 106 456 ......... .........
Kenya \6\...................................................... 2,260 1,000 ......... 1,260 ......... ......... ......... ......... ......... ......... 5,000 1,650 3,350 ......... .........
Lesotho........................................................ ......... ......... ......... ......... ......... 432 113 ......... 319 ......... ......... ......... ......... ......... .........
Liberia \6\.................................................... 55,662 22,975 9,297 23,390 ......... 8,710 3,802 ......... 4,908 ......... 72,403 33,409 13,962 25,032 .........
Madagascar \6\................................................. 3,670 892 2,778 ......... ......... 3,454 872 2,582 ......... ......... 3,086 789 2,297 ......... .........
Mali........................................................... ......... ......... ......... ......... ......... 173 38 ......... 135 ......... ......... ......... ......... ......... .........
Mauritania..................................................... 835 200 635 ......... ......... 1,611 395 507 709 ......... 699 200 499 ......... .........
Mozambique \6\................................................. 13,316 6,620 6,696 ......... ......... 17,983 5,194 11,509 1,280 ......... 14,511 2,772 11,739 ......... .........
Niger.......................................................... 690 310 ......... 380 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Rwanda \6\..................................................... 114,085 68,788 ......... ......... 45,297 66,721 34,643 234 ......... 31,844 44,808 21,334 282 ......... 23,192
Sao Tome....................................................... 733 210 ......... 523 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Senegal........................................................ 1,213 331 ......... 882 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Sierra Leone \6\............................................... 26,614 11,067 9,509 592 5,446 6,174 2,731 3,443 ......... ......... 17,716 8,902 7,444 1,370 .........
Somalia \6\.................................................... 5,361 2,701 ......... ......... 2,660 ......... ......... ......... ......... ......... 4,936 2,446 ......... ......... 2,490
Sudan \6\...................................................... 23,521 13,099 9,352 ......... 1,070 9,689 5,923 3,766 ......... ......... 14,861 9,435 5,090 ......... 336
Uganda \6\..................................................... 6,365 2,569 3,080 716 ......... 12,562 6,511 3,923 2,128 ......... 5,284 1,527 3,757 ......... .........
====================================================================================================================================================================
Worldwide total.............................................. 857,901 328,078 314,476 95,571 119,777 466,400 174,107 220,716 21,974 49,603 479,219 179,891 232,690 31,455 35,183
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Programs
Asia............................................................... 33,502 13,185 ......... 11,454 8,864 20,196 9,930 ......... 6,600 3,666 4,880 1,500 ......... 3,380 .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Afghanistan.................................................... 15,200 7,200 ......... 8,000 ......... 13,600 7,000 ......... 6,600 ......... 4,880 1,500 ......... 3,380 .........
Bangladesh..................................................... 811 187 ......... 625 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Iraq (Northern)................................................ 7,212 2,735 ......... ......... 4,477 6,596 2,930 ......... ......... 3,666 ......... ......... ......... ......... .........
Nepal.......................................................... 1,242 413 ......... 829 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
North Korea.................................................... 6,287 1,900 ......... ......... 4,387 ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Pakistan....................................................... 2,750 750 ......... 2,000 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Eni................................................................ 98,344 44,009 3,911 ......... 50,424 27,007 12,651 2,302 ......... 12,054 11,407 4,879 847 ......... 5,681
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bosnia-Hercegovina............................................. 98,344 44,009 3,911 ......... 50,424 22,425 10,351 2,302 ......... 9,772 6,569 3,168 847 ......... 2,554
NIS............................................................ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 4,838 1,711 ......... ......... 3,127
Tajikistan..................................................... ......... ......... ......... ......... ......... 4,582 2,300 ......... ......... 2,282 ......... ......... ......... ......... .........
====================================================================================================================================================================
Latin America...................................................... 3,635 1,297 2,338 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Haiti.......................................................... 3,635 1,297 2,338 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Africa............................................................. 302,480 156,195 51,416 34,380 60,489 116,025 60,408 11,698 10,036 33,883 177,318 86,918 32,823 28,075 29,502
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Angola......................................................... 44,077 20,333 16,528 1,200 6,016 18,521 8,869 4,255 3,358 2,039 22,594 11,392 6,045 1,673 3,484
Ethiopia....................................................... 16,018 8,088 ......... 7,930 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Kenya.......................................................... 2,260 1,000 ......... 1,260 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Liberia........................................................ 55,662 22,975 9,297 23,390 ......... 8,710 3,802 ......... 4,908 ......... 72,403 33,409 13,962 25,032 .........
Madagascar..................................................... 81 47 34 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Mozambique..................................................... 13,316 6,620 6,696 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Rwanda......................................................... 114,085 68,788 ......... ......... 45,297 66,721 34,642 234 ......... 31,844 44,808 21,,334 282 ......... 23,192
Sierra Leone................................................... 25,794 10,839 9,509 ......... 5,446 6,174 2,731 3,443 ......... ......... 17,716 8,902 7,444 1,370 .........
Somalia........................................................ 5,361 2,701 ......... ......... 2,660 ......... ......... ......... ......... ......... 4,936 2,446 ......... ......... 2,490
Sudan.......................................................... 23,521 13,099 9,352 ......... 1,070 9,689 5,923 3,766 ......... ......... 14,861 9,435 5,090 ......... 336
Uganda......................................................... 2,305 1,705 ......... 600 ......... 6,210 4,440 ......... 1,770 ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Worldwide.......................................................... 857,901 328,078 314,476 95,571 119,777 808,827 309,019 327,129 70,786 101,893 799,452 302,462 359,350 89,186 48,454
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Regular........................................................ 419,940 113,392 256,811 49,737 ......... 303,172 91,118 206,716 5,338 ......... 285,614 86,594 199,020 ......... .........
Emergency...................................................... 437,961 214,686 57,665 45,834 119,777 163,228 82,989 14,000 16,636 49,603 193,605 93,297 33,670 31,455 35,183
Unallocated Balance............................................ ......... ......... ......... ......... ......... 342,427 134,912 106,413 48,812 52,290 320,233 122,571 126,660 57,731 13,271
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Asia............................................................... 207,580 57,035 103,366 38,315 8,864 130,673 41,952 76,638 8,417 3,666 104,522 31,809 69,333 3,380 .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Regular........................................................ 174,078 43,851 103,366 26,861 ......... 110,477 32,022 76,638 1,817 ......... 99,642 30,309 69,333 ......... .........
Emergency...................................................... 33,502 13,185 ......... 11,454 8,864 20,196 9,930 ......... 6,600 3,666 4,880 1,500 ......... 3,380 .........
====================================================================================================================================================================
Eni................................................................ 98,344 44,009 3,911 ......... 50,424 27,007 12,651 2,302 ......... 12,054 11,407 4,879 847 ......... 5,681
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Regular........................................................ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Emergency...................................................... 98,344 44,009 3,911 ......... 50,424 27,007 12,651 2,302 ......... 12,054 11,407 4,879 847 ......... 5,681
====================================================================================================================================================================
Latin America...................................................... 152,526 41,170 97,994 13,362 ......... 104,364 29,854 73,884 625 ......... 101,143 29,661 71,482 ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Regular........................................................ 148,891 39,873 95,656 13,362 ......... 104,363 29,854 73,884 625 ......... 101,143 29,661 71,482 ......... .........
Emergency...................................................... 3,635 1,297 2,338 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Africa............................................................. 399,451 185,863 109,205 43,894 60,489 204,357 89,650 67,892 12,932 33,883 262,147 113,542 91,028 28,075 29,502
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
Regular........................................................ 96,971 29,668 57,789 9,514 ......... 88,332 29,242 56,194 2,896 ......... 84,829 26,624 58,205 ......... .........
Emergency...................................................... 302,480 156,195 51,416 34,380 60,489 116,025 60,408 11,698 10,036 33,883 177,318 86,918 32,823 28,075 29,502
====================================================================================================================================================================
Unallocated balance:
Total.............................................................. ......... ......... ......... ......... ......... 342,427 134,912 106,413 48,812 52,290 320,233 122,571 126,660 57,731 13,271
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
PVO Non-Emergency.............................................. ......... ......... ......... ......... ......... 101,904 33,480 68,424 ......... ......... 123,364 40,888 82,476 ......... .........
WFP Pledge..................................................... ......... ......... ......... ......... ......... 88,750 39,938 ......... 48,812 ......... 104,966 47,235 ......... 57,731 .........
Emergency...................................................... ......... ......... ......... ......... ......... 95,073 42,783 ......... ......... 52,290 23,928 10,657 ......... ......... 13,271
Overall Title II............................................... ......... ......... ......... ......... ......... 56,700 18,711 37,989 ......... ......... 67,975 23,791 44,184 ......... .........
Stock Adjustment............................................... (17,998) ......... ......... ......... ......... (18,827) ......... ......... ......... ......... (1,800) ......... ......... ......... .........
PVO Fallout.................................................... (13,500) ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Carryin........................................................ (18,576) ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Section 202(e)................................................. 25,000 ......... ......... ......... ......... 28,000 ......... ......... ......... ......... 28,000 ......... ......... ......... .........
Farmer To Farmer............................................... 10,000 ......... ......... ......... ......... 10,798 ......... ......... ......... ......... 11,348 ......... ......... ......... .........
Transfer from Title I.......................................... (11,600) ......... ......... ......... ......... (798) ......... ......... ......... ......... ......... ......... ......... ......... .........
Transfer from Title III........................................ (10,127) ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .........
Transfer To Title III.......................................... ......... ......... ......... ......... ......... 9,000 ......... ......... ......... ......... ......... ......... ......... ......... .........
====================================================================================================================================================================
Program total................................................ 821,100 ......... ......... ......... ......... 837,000 ......... ......... ......... ......... 837,000 ......... ......... ......... .........
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Approved programs as of January 1997.
\2\ Based on season average prices provided by USDA/FAS November 1996. Current purchases indicate that season average prices may be substantially understated.
\3\ USAID approves World Food Program (WFP) distribution to assure compliance with all laws and provides broad financial overview to ensure U.S. funds are appropriately accounted for. FY 1998 request includes pledge components at
$50M for development and $112.5M for protracted relief operations.
\4\ International Emergency Food Reserve (IEFR), implemented by WFP.
\5\ Title II activity continues in FY97 at no cost to fiscal year budget.
\6\ Includes emergency program. Emergency levels are detailed in separate table (EMERGENCY PROGRAMS) on following page.
TABLE 7B-2.--FY 1998 CONGRESSIONAL PRESENTATION--P.L. 480 TITLE II
[In metric tons]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FY 1996 final program levels FY 1997 current program levels FY 1998 congressional presentation
Region/Country ------------------------------------------------------------------------------------------------------------------------------------------
Total PVO/CDO WFP \2\ IEFR \3\ Total PVO/CDO WFP \2\ IEFR \3\ Total PVO/CDO WFP \2\ IEFR \3\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Asia/Near East....................................... 479,874 299,676 150,498 29,700 350,424 281,274 49,250 19,900 294,474 274,474 20,000 ........
------------------------------------------------------------------------------------------------------------------------------------------
Afghanistan \6\.................................. 40,000 ........ 40,000 ........ 40,000 .......... 40,000 ........ 20,000 .......... 20,000 ........
Bangladesh \6\................................... 115,900 55,000 60,900 ........ 85,870 80,000 5,870 ........ 80,000 80,000 .......... ........
Egypt............................................ 1,370 ........ 1,370 ........ ........... .......... .......... ........ ........... .......... .......... ........
India............................................ 259,579 233,321 26,258 ........ 204,654 201,274 3,380 ........ 194,474 194,474 .......... ........
Iraq (Northern) \6\.............................. 16,600 ........ .......... 16,600 19,900 .......... .......... 19,900 ........... .......... .......... ........
Nepal \6\........................................ 3,950 ........ 3,950 ........ ........... .......... .......... ........ ........... .......... .......... ........
North Korea \6\.................................. 13,100 ........ .......... 13,100 ........... .......... .......... ........ ........... .......... .......... ........
Pakistan \6\..................................... 14,520 ........ 14,520 ........ ........... .......... .......... ........ ........... .......... .......... ........
Philippines...................................... 11,355 11,355 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
Yemen............................................ 3,500 ........ 3,500 ........ ........... .......... .......... ........ ........... .......... .......... ........
==========================================================================================================================================
Eni.................................................. 187,750 9,750 .......... 178,000 55,760 6,560 .......... 49,200 31,500 2,000 .......... 29,500
------------------------------------------------------------------------------------------------------------------------------------------
Bosnia \6\....................................... 187,750 9,750 .......... 178,000 46,560 6,560 .......... 40,000 13,000 2,000 .......... 11,000
NIS \6\.......................................... ........... ........ .......... ........ ........... .......... .......... ........ 18,500 .......... .......... 18,500
Tajikistan \6\................................... ........... ........ .......... ........ 9,200 .......... .......... 9,200 ........... .......... .......... ........
==========================================================================================================================================
Latin America........................................ 307,173 251,693 55,480 ........ 207,507 205,847 1,660 ........ 206,948 206,948 .......... ........
------------------------------------------------------------------------------------------------------------------------------------------
Bolivia.......................................... 49,236 48,816 420 ........ 43,590 43,590 .......... ........ 42,743 42,743 .......... ........
Costa Rica....................................... 390 ........ 390 ........ ........... .......... .......... ........ ........... .......... .......... ........
Dominican Rep.................................... 6,942 5,852 1,090 ........ ........... .......... .......... ........ ........... .......... .......... ........
Ecuador.......................................... 1,390 ........ 1,390 ........ ........... .......... .......... ........ ........... .......... .......... ........
El Salvador...................................... 12,210 ........ 12,210 ........ ........... .......... .......... ........ ........... .......... .......... ........
Guatemala........................................ 43,556 27,256 16,300 ........ 24,770 24,250 520 ........ 27,095 27,095 .......... ........
Guyana........................................... 700 ........ 700 ........ ........... .......... .......... ........ ........... .......... .......... ........
Haiti \6\........................................ 60,235 58,695 1,540 ........ 32,671 31,531 1,140 ........ 32,808 32,808 .......... ........
Honduras......................................... 19,809 12,289 7,520 ........ 11,983 11,983 .......... ........ 12,000 12,000 .......... ........
Jamaica.......................................... 8,000 ........ 8,000 ........ ........... .......... .......... ........ ........... .......... .......... ........
Nicaragua........................................ 4,804 944 3,860 ........ 2,806 2,806 .......... ........ 1,866 1,866 .......... ........
Panama........................................... 2,060 ........ 2,060 ........ ........... .......... .......... ........ ........... .......... .......... ........
Peru............................................. 97,841 97,841 .......... ........ 91,687 91,687 .......... ........ 90,436 90,436 .......... ........
==========================================================================================================================================
Africa............................................... 758,523 355,213 170,810 232,500 415,224 252,214 58,130 104,880 508,331 320,641 105,490 82,200
------------------------------------------------------------------------------------------------------------------------------------------
Angola \6\....................................... 87,440 54,280 10,000 23,160 43,100 22,720 11,500 8,880 38,120 23,820 2,600 11,700
Benin............................................ 7,427 5,427 2,000 ........ 4,883 4,883 .......... ........ 4,651 4,651 .......... ........
Burkina Faso..................................... 21,673 21,093 580 ........ 23,058 23,058 .......... ........ 19,453 19,453 .......... ........
Cameroon......................................... 800 ........ 800 ........ ........... .......... .......... ........ ........... .......... .......... ........
Cape Verde....................................... 17,670 14,220 3,450 ........ 4,810 4,810 .......... ........ 15,000 15,000 .......... ........
Chad............................................. 9,140 ........ 9,140 ........ ........... .......... .......... ........ ........... .......... .......... ........
Eritrea.......................................... 11,683 11,683 .......... ........ 520 520 .......... ........ 3,481 3,481 .......... ........
Ethiopia \6\..................................... 106,125 64,535 41,590 ........ 51,249 51,249 .......... ........ 48,319 48,319 .......... ........
Gambia........................................... 5,163 5,163 .......... ........ 4,138 4,138 .......... ........ ........... .......... .......... ........
Ghana............................................ 40,084 37,364 2,720 ........ 43,493 43,373 120 ........ 45,251 45,251 .......... ........
Guinea........................................... 2,100 2,100 .......... ........ 480 480 .......... ........ 1,080 1,080 .......... ........
Guinea Bissau \4\................................ 2,580 2,580 .......... ........ ........... .......... .......... ........ 850 850 .......... ........
Kenya \6\........................................ 4,000 ........ 4,000 ........ ........... .......... .......... ........ 20,492 20,492 .......... ........
Lesotho.......................................... ........... ........ .......... ........ 500 .......... 500 ........ ........... .......... .......... ........
Liberia \6\...................................... 111,010 28,920 82,090 ........ 17,600 .......... 17,600 ........ 146,530 47,640 98,890 ........
Madagascar \6\................................... 6,855 6,855 .......... ........ 6,976 6.976 .......... ........ 6,307 6,307 .......... ........
Mali............................................. ........... ........ .......... ........ 170 .......... 170 ........ ........... .......... .......... ........
Mauritania....................................... 1,603 1,603 .......... ........ 3,160 1,600 1,560 ........ 1,603 1,603 .......... ........
Mozambique \6\................................... 37,370 37,370 .......... ........ 65,082 55,572 9,510 ........ 33,714 33,714 .......... ........
Niger............................................ 1,380 ........ 1,380 ........ ........... .......... .......... ........ ........... .......... .......... ........
Rwanda \6\....................................... 176,310 ........ .......... 176,310 96,650 650 .......... 96,000 59,260 760 .......... 58,500
Sao Tome......................................... 1,550 ........ 1,550 ........ ........... .......... .......... ........ ........... .......... .......... ........
Senegal.......................................... 4,410 ........ 4,410 ........ ........... .......... .......... ........ ........... .......... .......... ........
Sierra Leone \6\................................. 49,280 29,490 1,760 18,030 11,770 11,770 .......... ........ 28,840 24,840 4,000 ........
Somalia \6\...................................... 10,000 ........ .......... 10,000 ........... .......... .......... ........ 9,000 .......... .......... 9,000
Sudan \6\........................................ 34,030 29,030 .......... 5,000 11,890 11,890 .......... ........ 18,800 15,800 .......... 3,000
Uganda \6\....................................... 8,840 3,500 5,340 ........ 25,695 8,525 17,170 ........ 7,580 7,580 .......... ........
==========================================================================================================================================
Worldwide Total................................ 1,733,320 916,332 376,788 440,200 1,028,915 745,895 109,040 173,980 1,041,253 804,063 125,490 111,700
Emergency Programs
Asia................................................. 82,670 ........ 52,970 29,700 59,900 .......... 40,000 19,900 20,000 .......... 20,000 ........
------------------------------------------------------------------------------------------------------------------------------------------
Afghanistan...................................... 40,000 ........ 40,000 ........ 40,000 .......... 40,000 ........ 20,000 .......... 20,000 ........
Bangladesh....................................... 1,020 ........ 1,020 ........ ........... .......... .......... ........ ........... .......... .......... ........
Iraq (Northern).................................. 16,600 ........ .......... 16,600 19,900 .......... .......... 19,900 ........... .......... .......... ........
Nepal............................................ 1,950 ........ 1,950 ........ ........... .......... .......... ........ ........... .......... .......... ........
North Korea...................................... 13,100 ........ .......... 13,100 ........... .......... .......... ........ ........... .......... .......... ........
Pakistan......................................... 10,000 ........ 10,000 ........ ........... .......... .......... ........ ........... .......... .......... ........
==========================================================================================================================================
Eni.................................................. 187,750 9,750 .......... 178,000 55,760 6,560 .......... 49,200 31,500 2,000 .......... 29,500
------------------------------------------------------------------------------------------------------------------------------------------
Bosnia-Hercegovina............................... 187,750 9,750 .......... 178,000 46,560 6,560 .......... 40,000 13,000 2,000 .......... 11,000
NIS.............................................. ........... ........ .......... ........ ........... .......... .......... ........ 18,500 .......... .......... 18,500
Tajikistan....................................... ........... ........ .......... ........ 9,200 .......... .......... 9,200 ........... .......... .......... ........
==========================================================================================================================================
Latin America........................................ 6,300 6,300 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
------------------------------------------------------------------------------------------------------------------------------------------
Haiti............................................ 6,300 6,300 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
==========================================================================================================================================
Africa............................................... 549,030 179,190 137,340 232,500 196,010 47,030 44,100 104,880 300,550 112,860 105,490 82,200
------------------------------------------------------------------------------------------------------------------------------------------
Angola........................................... 87,440 54,280 10,000 23,160 43,100 22,720 11,500 8,880 38,120 23,820 2,600 11,700
Ethiopia......................................... 36,250 ........ 36,250 ........ ........... .......... .......... ........ ........... .......... .......... ........
Kenya............................................ 4,000 ........ 4,000 ........ ........... .......... .......... ........ ........... .......... .......... ........
Liberia.......................................... 111,010 28,920 82,090 ........ 17,600 .......... 17,600 ........ 146,530 47,640 98,890 ........
Madagascar....................................... 100 100 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
Mozambique....................................... 37,370 37,370 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
Rwanda........................................... 176,310 ........ .......... 176,310 96,650 650 .......... 96,000 59,260 760 .......... 58,500
Sierra Leone..................................... 47,520 29,490 .......... 18,030 11,770 11,770 .......... ........ 28,840 24,840 4,000 ........
Somalia.......................................... 10,000 ........ .......... 10,000 ........... .......... .......... ........ 9,000 .......... .......... 9,000
Sudan............................................ 34,030 29,030 .......... 5,000 11,890 11,890 .......... ........ 18,800 15,800 .......... 3,000
Uganda........................................... 5,000 ........ 5,000 ........ 15,000 .......... 15,000 ........ ........... .......... .......... ........
==========================================================================================================================================
Worldwide............................................ 1,733,320 916,332 376,788 440,200 1,803,915 1,115,895 309,040 378,980 1,707,343 1,213,663 329,780 163,900
------------------------------------------------------------------------------------------------------------------------------------------
Regular.......................................... 907,570 721,092 186,478 ........ 717,245 692,305 24,940 ........ 689,203 689,203 .......... ........
Emergency........................................ 825,750 195,240 190,310 440,200 311,670 53.590 84,100 173,980 352,050 114,860 125,490 111,700
Unallocated Balance.............................. ........... ........ .......... ........ 775,000 370,000 200,000 205,000 666,090 409,600 204,290 52,200
==========================================================================================================================================
Asia................................................. 479,874 299,676 150,498 29,700 350,424 281,274 49,250 19,900 294,474 274,474 20,000 ........
------------------------------------------------------------------------------------------------------------------------------------------
Regular.......................................... 397,204 299,676 97,528 ........ 290,524 281,274 9,250 ........ 274,474 274,474 .......... ........
Emergency........................................ 82,670 ........ 52,970 29,700 59,900 .......... 40,000 19,900 20,000 .......... 20,000 ........
==========================================================================================================================================
Eni.................................................. 187,750 9,750 .......... 178,000 55,760 6,560 .......... 49,200 31,500 2,000 .......... 29,500
------------------------------------------------------------------------------------------------------------------------------------------
Regular.......................................... ........... ........ .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
Emergency........................................ 187,750 9,750 .......... 178,000 55,760 6,560 .......... 49,200 31,500 2,000 .......... 29,500
==========================================================================================================================================
Latin America........................................ 307,173 251,693 55,480 ........ 207,507 205,847 1,660 ........ 206,948 206,948 .......... ........
------------------------------------------------------------------------------------------------------------------------------------------
Regular.............................................. 300,873 245,393 55,480 ........ 207,507 205,847 1,660 ........ 206,948 206,948 .......... ........
Emergency........................................ 6,300 6,300 .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
==========================================================================================================================================
Africa............................................... 758,523 355,213 170,810 232,500 415,224 252,214 58,130 104,880 508,331 320,641 105,490 82,200
------------------------------------------------------------------------------------------------------------------------------------------
Regular.......................................... 209,493 176,023 33,470 ........ 219,214 205,184 14,030 ........ 207,781 207,781 .......... ........
Emergency........................................ 549.030 179,190 137,340 232,500 196,010 47,030 44,100 104,800 300,550 12,860 105,490 82,200
==========================================================================================================================================
Unallocated Balance:................................. ........... ........ .......... ........ ........... .......... .......... ........ ........... .......... .......... ........
Total................................................ ........... ........ .......... ........ 775,000 370,000 200,000 205,000 666,090 409,600 204,290 52,200
------------------------------------------------------------------------------------------------------------------------------------------
PVO Non-Emergency................................ ........... ........ .......... ........ 270,000 270,000 .......... ........ 283,000 283,000 .......... ........
WFP Pledge....................................... ........... ........ .......... ........ 200,000 .......... 200,000 ........ 204,290 .......... 204,290 ........
Emergency........................................ ........... ........ .......... ........ 205,000 .......... .......... 205,000 52,200 .......... .......... 52,200
Overall Title II................................. ........... ........ .......... ........ 100,000 100,000 .......... ........ 126,600 126,600 .......... ........
Stock Adjustment................................. (34,057) ........ .......... ........ (41,595) .......... .......... ........ (4,500) .......... .......... ........
==========================================================================================================================================
Program Total.................................. 1,699,263 ........ 1,937,628 ........ 1,762,320 .......... 2,026,668 ........ 1,702,843 .......... 2,025,215 ........
........... ........ MTGE \5\ ........ ........... .......... MGTE ........ ........... .......... MTGE ........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Approved programs as of January 1997.
\2\ USAID approves World Food Program (WFP) distribution to assure compliance with all laws and provides broad financial overview to ensure U.S. funds are appropriately accounted for.
\3\ International Emergency Food Reserve (IEFR), implemented by WFP.
\4\ Title II activity continues in FY97 at no cost to fiscal year budget.
\5\ MTGE=Metric Ton Grain Equivalent.
\6\ Includes emergency programs. Emergency levels are detailed in separate table (EMERGENCY PROGRAMS) on following page.
May 1, 1997
TO: Betty Alonso
Committee on Foreign Relations
Room SD 450, Dirksen Building
Washington, D.C. 20510
FM: Veronica T. Young
Bureau for Legislative and Public Affairs
U.S. Agency for International Development
Washington, D.C. 20523-0016
SUBJECT: USAID BUDGET REQUEST AND OVERSIGHT
Attached are the responses for the record and edited transcript
from USAID Administrator J. Brian Atwood's testimony before the Senate
Foreign Relations Committee on February 26, 1997 on USAID's Budget
Request and Oversight. The response to Senator Biden's question on
Congressional Notifications is not included in this package, but will
be forwarded separately.
If you have any questions or if I can be of further assistance,
please feel free to call me on 202-647-9144. Thank you.
Attachments: a/s
__________
Responses of Mr. Atwood to Questions Asked by Senator Grams
Question. Do you agree that U.S. support for foreign treatment
centers for victims of torture could be an important instrument to
advance human rights and democracy abroad and, if so, what initiatives
might you propose for assisting these treatment centers?
Answer. The advancement of democracy and human rights is a
principal concern of USAID foreign assistance programs overseas.
Programs which promote the protection of human rights are paramount in
those countries which have been victimized by harsh dictatorships and/
or civil strife. However, these programs vary widely. In some cases,
USAID supports local human rights organizations which monitor human
rights abuses, provide legal services, or conduct public education
campaigns; or we may directly support the creation of governmental
organizations such as human rights ombudsman offices, prison
registries, etc. In other cases, such as with Turkey, specific grants
are provided to augment the capacity of human rights organizations and
the medical profession to track and identify cases of torture and to
ultimately improve treatment. These programming decisions are made on a
case by case basis. Unfortunately, USAID does not have the resources
necessary to create or replicate international centers for the
treatment of torture victims. This is something that the international
community including other donors, non governmental organizations, and
private voluntary groups need to address. USAID may be supportive of an
international conference on this topic in the future.
Question. Has the assistance for war victims fund been used to
support torture victims? How much funding has been appropriated and why
has the program been terminated?
Answer. The War Victims Fund began in 1989 initiated by Senator
Patrick Leahy and has been implemented by USAID. It continues to this
day and its purpose is to provide prosthetics and orthotics to civilian
victims of war. Each year $5 million is made available for the Fund.
The Fund currently operates in Angola, Cambodia, El Salvador, Laos,
Liberia, Mozambique, Sri Lanka and Vietnam. Especially in Angola,
Cambodia and Mozambique, the War Victims Fund is primarily and
effectively treating people injured by landmines accidents.
There is no specific targeting of torture victims. However, many of
the beneficiaries of the fund are ex-combatants and may have been
subject to torture.
Question. To what extent is AID funding programs or making grants
to assist victims of torture?
Answer. USAID is funding a grant to the Center for the Victims of
Torture to carry out a program in Turkey to provide training and
technical assistance to the Human Rights Foundation of Turkey (HRFT)
and the Turkish Medical Association to build clinical capacity in
treatment centers operated by the HRFT and to strengthen forensic
skills and support for human rights within Turkey's medical
professions. The grant is almost complete and may lead to a major
international conference on the treatment of torture victims.
Under the Trauma, Social Welfare, and Humanitarian Assistance
project, USAID has also provided support for NGO programs that
addressed issues of community health and training activities for mental
health providers, teachers, volunteers and doctors working with
traumatized refugees and displaced populations in the former
Yugoslavia.
Catholic Relief Services is working with local psychological
associations to provide training on post-traumatic stress syndrome and
other psychosocial treatments. In FY 1994, $1.9 million was provided in
support of this effort. CRS has used private resources to continue the
program.
The International Rescue Committee received funding to develop
local organizations' capacity to meet the psychosocial needs of war-
traumatized women, children and other vulnerable groups. IRC estimates
that roughly 80 percent of its program targets women and children. A
total of $9.5 million has been proved since FY 1993.
Question. There is reportedly a belief by some USAID officials that
USAID programs should focus on building local public economies in order
to generate economic wealth and prosperity and that this approach would
have special applicability in Africa. Groups that work in this area
have found that effective and well-structured local public economies
are key to economic growth and policy reform. Is USAID willing to
support projects that work with local institutions and organizations to
create self-governing systems?
Answer. USAID is indeed willing to support projects that work with
local institutions and organizations to create self-governing systems.
USAID's ``New Partnership Initiative'' explicitly promotes
partnerships among local businesses, NGOs, and local governments at the
community level with just this goal in mind.
In Kazakstan, USAID helped residents form homeowners associations
to take control over the management and maintenance of their buildings.
The demonstrated benefits of homeowners associations created a
grassroots movement and increased demand for technical assistance.
Within a year, 3600 associations had formed across the country, and the
national government adopted policies to make it easier for them to
register.
Over the past ten years, USAID-supported Community-Based Natural
Resource Management programs have enabled communities in a half-dozen
African countries to manage natural resource-based enterprises that
increase incomes, diversify local economies, and reduce degradation
rates.
Question. There have reportedly been complaints both within and
outside of USAID, that although there is an Economic Growth Center in
the Global Bureau, the agency pays very little attention to such
critical issues as economic growth, decentralization, and self-
governance. Organizations (such as the International Center for Self-
Governance, IRIS, and the Institute for Policy Reform) that have been
working on these critical issues are losing their funding or finding it
severely reduced. If USAID is indeed interested in promoting economic
reform, why is it not putting more funds into these projects.
Answer. Funding available to support activities in economic policy
reform, both in the Economic Growth Center and elsewhere in the USAID,
has diminished sharply owing to two factors.
First, overall funding levels have declined substantially,
particularly development assistance.
Second, within this shrinking account, a number of activities have
been protected from cuts, or even increased, reflecting Congressional
directives, Administration priorities, and our own concerns. This has
imposed much sharper than proportional cuts on unprotected activities
such as economic policy reform.
The development record of recent decades has demonstrated that a
country's economic policy and institutional frameworks are key
determinants of its development performance. Organizations such as
those mentioned above have played, and must continue to play an
important role in reinforcing the efforts of AID staff to improve
economic policies and strengthen institutions.
__________
Responses of Mr. Atwood to Questions Asked by Senator Helms
Question. Mr. Atwood, one criticism made of A.I.D. projects is that
they never seem to end. And many believe that the reason projects
continue on in perpetuity is that without A.I.D. support the project
will fall apart.
You have seen the article in last Tuesday's Washington Post about
A.I.D.'s $28 million project in Zimbabwe, known as ``CAMPFIRE.''
Regardless of how one feels about the philosophy of the project, there
appear to be quite a few management problems with it. I am distressed
to read that according to A.I.D.'s own internal evaluation, the project
is ``subject to collapse once donor financing is withdrawn.''
Why does it appear that so many A.I.D. projects are not sustainable
and how do you intend to ensure that they do continue forward after
U.S. taxpayer support has ended?
Answer. Elsewhere, Mr. Chairman, you draw a useful distinction
between project inputs and outputs. When we talk about sustainability,
we mean the results of the project continue beyond its existence; that
is, the conditions which made the project necessary have been changed
by the project's outputs.
This is not a simple or easy task. For example, in Bangladesh where
increased rice production was essential for food security, we worked on
fertilizer distribution for approximately 15 years. Initially, there
was little fertilizer and not much of a distribution system, but we
helped build a marketing system of private sector importers, dealers
and distributors so that fertilizer is now available throughout the
country at a reasonable cost. Simultaneously, other donors helped
establish markets for irrigation equipment and improved seeds. None of
these programs were finished with a single project nor did they go
forward smoothly given the conditions of the country and a bias for big
government. In the end, however, rice production has reached historic
highs and farmers recognize markets meet their needs better than
government distribution of fertilizer. Although some backsliding has
occurred since completion of the USAID fertilizer projects, the scale
and vitality of the current fertilizer markets will deter a reversion
to public sector distribution. The condition we sought to change has
changed.
We have taken several steps to increase the sustainability of our
project results. First, we now encourage greater participation by those
whom the project is intended to benefit in its design to ensure that we
target achievable results and have the commitment of those who must
change to ensure the results are sustainable.
Second, we now encourage project officers and mission directors to
focus on the results the project is designed to achieve, rather than
inputs alone, and to adjust project activities to ensure our best
efforts go into achieving the desired result. It is in this context
that project evaluations, such as the CAMPFIRE Project evaluation you
refer to, are important. They help the project management team identify
new or modify existing activities to better achieve the result.
To address the concerns of the January 1994 CAMPFIRE evaluation,
project management has given increased attention to environmental
education in the schools, expanded the scientific basis on which
recommendations for improved environmental management are made, and
provide increased management support to the CAMPFIRE Association
itself. We believe such changes will contribute to the sustainability
of the project's planned results.
It is worth noting that the evaluation you cite, in addition to
noting problems with the project, also concluded that it was delivering
meaningful benefits to the residents of the project area. Finally,
performance is now the single most important factor we use in making
budget and resource allocation decisions. Each year, all of the
objectives of our missions and Washington offices will be identified as
a top, average or bottom performer. The bottom performers will be
scrutinized to see if actions can or have been taken to improve their
performance and future funding adjusted accordingly.
We continue to be concerned with the sustainability of our project
results and will continue to make adjustments to our management systems
to produce more sustainable results.
Question. Mr. Atwood, you have attempted to change USAID's mode of
operation from focusing on ``inputs'' to focusing on real results. That
is an important change. But it can only be successful if USAID
personnel fully understand the difference between the two.
Let me cite one example from USAID's 1997 Congressional
Presentation Document. USAID is carrying out a population program in
Ethiopia which is expected to cost American taxpayers $17 million over
8 years. According to USAID, one of the major ``results'' of this
project is to increase the number of condoms distributed by USAID
annually from 5.8 million to 9 million in 2002. That hardly appears to
be a ``result''. The fact that more condoms are distributed is an input
rather than an output.
How does USAID intend to develop real results, so that we can
effectively monitor the success or failure of USAID's programs?
Answer. USAID's reengineered systems ensure that managers at all
levels plan, manage, monitor, and report on real results. All operating
units set and manage to-
ward multi-year strategic objectives. These delineate specific results
which will be achieved over the period of the strategy. Annually, each
unit reports on progress toward the achievement of these results.
These new USAID systems enabled us to monitor and report this year
to the Congress on such important real results in Africa as increased
food production in Senegal and Mali; primary school enrollment,
particularly for girls, in Malawi and Guinea; child survival
particularly in Eastern and Southern Africa; and use of voluntary
family planning in Kenya, Ghana, and Senegal.
The case, that you cite, in Ethiopia, provides a good example of
how regular tracking of early results can give us confidence that we
are on the right track for achieving the more significant long term
results we expect to achieve by end of the strategic planning period.
In Ethiopia, which recently began the difficult transition from
crisis to development, few citizens have access to and use essential
primary and preventive health care services. In the new health
assistance program initiated in the fall of 1995, our objective is to
increase access to and use of essential services. We are focusing in
particular on the delivery of essential health services to rural women
and children living in one of the largest and historically-
disadvantaged regions of Ethiopia, the Southern Nations and
Nationalities Region (SNNPR). We expect to increase by 20% the number
of women and children using such services. Achieving this result will
mean that USAID-assisted rural health systems will have provided life
saving services to about 1.6 million children and two million women.
Nationwide, we expect to contribute to increased access for at least
twice as many women and children.
USAID's results tracking system monitors increases in the use of
important child survival, maternal health, family planning and HIV/AIDS
preventive services or practices. Many indicators rely on data from
national or regional surveys which are only available on a periodic
basis. To monitor annual progress, we use other indicators which are
available more frequently, such as the indicator you cited condom
sales, as proxy measures.
Increases in condom sales tell us not only that Ethiopians have
increased access to family planning and HIV/AIDS prevention and control
information and products but that they are using that information and
their own resources to protect themselves and their families.
USAID contributes to increased access through social marketing
programs which use commercial systems to provide information and
supplies. In 1996, the social marketing project results exceeded
everyone's expectations in marketing over 20 million condoms. Now that
USAID has baseline data, which were not available last year, it has
increased the life of program target for condom sales to 132 million.
Question. Mr. Atwood, the President's 1998 budget request includes
$528 million for a new initiative for Russia, to be known as the
Partnership for Freedom. The President's budget is short on details
about how this new program will operate, but it appears that increasing
U.S. private sector investment is one of its major goals. Over the
years, there has been considerable tension between USAID and other
federal agencies in the implementation of U.S. foreign aid programs for
the New Independent States.
How do you envision this new Partnership of Freedom
operating? Who will have ultimate control -- USAID or the NIS
Coordinator's office in the State Department?
Given that this new program focuses on investment and trade,
should USAID have any role in it whatsoever?
Answer. The President's 1998 budget request includes $900 million
for the New Independent States of the former Soviet Union. $241.5
million of that amount is designated for Russia.
The Partnership for Freedom (budgeted at $516 of this request for
the NIS region) will focus on promoting economic growth and the
development of democratic institutions. The roles of the NIS
Coordinator and USAID will remain as they are now. The Coordinator, in
consultation with the implementing agencies, will determine budget
allocations among the NIS recipient countries and among the USG
agencies charged with developing and implementing assistance
activities. USAID will remain the single largest implementing agency
for assistance to the NIS.
USAID will continue to play a crucial role in promoting economic
growth in the NIS through increased trade and investment. Many of the
technical assistance efforts that USAID conducts -- tax reform,
development of capital markets and commercial banking, reform of the
policy/legal/regulatory regime facing businesses -- will remain central
to promoting increased trade and investment in the region. In addition,
USAID will continue to support the Enterprise Funds and the growth of
small and micro enterprises, increasingly in partnership with U.S.
businesses and NGOs.
Question. Mr. Atwood, the Congressional Budget Office recently
completed its study of the effectiveness of foreign aid. It concludes,
basically, that the linkage between foreign aid and a country's
development is dubious at best. Let me quote from CBO testimony:
``Foreign aid may allow a country's economy to get beyond the point
where it is eating its seed corn. However, as pointed out in the World
Bank's 1990 World Development Report, most aid to the poorest countries
does not even do that -- it just helps their economies reach the
subsistence level of consumption.''
More to the point, CBO stated that, ``Foreign aid may help or hurt
[emphasis added] the development process if it is given to countries
that adopt policies that are not conducive to growth.''
How do you counter the Congressional budget Office's claim
that foreign aid, in many instances, has not shown to make a
difference in a country's development?
In what country has USAID made a quantifiable difference
over the long-term?
The U.S. has provided foreign aid to many of the poorest
nations for more than 50 years. what leads you to believe that
in some cases, U.S. aid will not be needed for at least 50 more
years?
Answer. Getting the policies ``right'' is clearly a key determinant
in the development process. We have looked at the record of ninety
countries that currently account for 3 billion people and which
comprised most of the developing world in 1965 (excluding China).
Today, 80 per cent of these people live in countries that have made or
are making clear, significant progress. Indeed, some are already
graduates (and in some cases have become aid donors), and others can be
expected to graduate within a decade or so.
The remainder, less than 20 per cent of the overall 3 billion, live
in roughly 40 countries, mostly in sub-Saharan Africa, that have made
less or intermittent progress. This includes a subgroup -- Sudan,
Zaire, Somalia, Liberia, Rwanda, Burma, and Afghanistan, comprising
about 160 million people -- that are in crisis or stalemate. These
countries represent the core remaining development challenge over the
next several decades.
There has been significant progress in almost all of these
countries in terms of human resource development. However, they started
from an extremely low base. For instance, life expectancy at birth in
1960 in many African countries was less than 35 years. Consequently,
even with significant improvements many have barely reached the level
(e.g. life expectancy around 50 years) that today's middle-income
countries (e.g. Philippines, Ecuador, El Salvador) had attained in
1960. They clearly still have a long way to go.
Several considerations warrant optimism that progress in many of
these countries will be steadier and more rapid in the future than in
the past.
First, based on the lessons of success and failure, we have a much
better appreciation of what's required for development progress. In
particular, there is a fairly widespread consensus on what works and
what doesn't work. For instance there is now widespread acceptance of
the importance of market-friendly policies and institutions, and
investments in human resources. With more open political systems,
political leaders in poor countries will be judged based on what an
increasing number of developmentally successful countries have
achieved.
Second, the record of experience suggests that successful countries
often pass through a period of ``accumulation'' -- during which human
resources develop, institutions strengthen, and national cohesion
increases -- before reaching a period of rapid or at least steady
economic and social progress. It is important to recall that at various
times countries such as Korea, Indonesia, Bangladesh, and Uganda were
regarded as developmentally hopeless, and subsequently achieved
dramatic improvements in development performance
Third, the development community is no longer hampered by
constraints imposed by the Cold War. This should make us freer to
allocate aid based on developmental rather than near-term political and
security considerations, both among and within countries, thereby
enhancing the effectiveness of aid.
Finally, there has already been a great deal of progress in terms
of graduation, and more is clearly on the horizon, both in developing
and transitional countries. This should enable us to focus scarce
resources more clearly and effectively on a diminishing number of needy
countries, particularly those making reasonable self-help efforts.
Question. Mr. Atwood, Let me ask about A.I.D.'s results-based
budgeting A.I.D.'s Congressional Presentation Document, which was just
submitted on Monday Feb-
ruary 24, 1997, lists specific projects that A.I.D. is carrying out
around the world. For each project, A.I.D. is supposed to list the
amount of money to be spent and the goals to be achieved. Yet, many
A.I.D. projects appear to be undertaken before the proposed goals are
determined. Let me cite just a few examples:
In Ghana, a $1.5 million democracy program for which no
results have yet been determined;
In Brazil, a $750 thousand energy project which began in
1995, yet today still has no baseline or results that can be
measured;
In Mongolia, a $2 million power production project that
began in 1992 and still has no established baseline or targeted
results.
How can A.I.D. justify spending money on projects for which it has
not identified its goals?
When will baseline and targets for these projects be determined?
Answer. Mr. Chairman, USAID does not obligate funds for specific
activities until it has approved objectives, indicators and performance
targets in place. USAID under its results oriented management system
does in fact require that all strategic objectives have objectives and
verifiable indicators and specific targets of progress in accomplishing
these objectives.
In the case of Mongolia, the mission's approved objective in the
energy sector has been to provide--``emergency support to the Mongolian
power production system.'' As stated on page 170 of the CP, this
objective was to be achieved through the provision of spare parts,
commodities and limited technical assistance. USAID undertook this
emergency energy assistance project in 1992 at the urgent request of
the Mongolian government. At that time, the Mongolians were faced with
the very real prospect of catastrophic failure of their Soviet built
power plants. Increasing the reliability of these systems has required
efforts focused initially on the emergency needs of an antiquated
infrastructure, and subsequently, on the longer term viability of the
energy sector.
As indicated on page 171 of the CP results indicators have been
identified for this activity. The first (``Disruption averted to the
energy production system'') addresses Mongolia's need to maintain year-
to-year reliability of the electricity and heating systems. Through the
efforts described in the CP, there have been no major disruption in
energy service. In short, the Mission's objective has been achieved.
The mission plans to initiate work on a new objective in the energy
sector. This objective entitled ``Sustainable improvements to the
energy sector,'' has not been fully designed. As such, the baseline and
targets for this strategic objective have not yet been approved.
Accordingly, no funds have been obligated.
The energy activity in Brazil was designed to accomplish four
specific objectives: a) policy changes that result in increased
participation of the private sector in the electricity subsector; b)
greater the use of commercially proven renewable energy technologies,
c) the adoption of energy efficiency measures; and d) train individuals
in the various areas of sustainable energy production. Because this
program was approved before USAID's current results tracking system was
in place, pre-existing work plans and contracts are being amended to
establish baseline and performance targets. This does not mean the
project has not achieved significant progress to date. For example,
As a result of work with Brazilian decision makers,
regulators, congressmen, and other, the Government of Brazil
(GoB) has decided to permanently earmark federal investment
funds to energy efficiency, rural electrification and support
loans and programs for low income consumers, including
approximately $60 million of GoB funds will be assigned to new
energy efficiency projects in 1997.
Also as a result of the project's technical assistance
efforts to the GoB, a $150 million energy efficiency loan
request to the World Bank along with an accompanying grant
proposal to the World Bank's Global Environment Facility is
being prepared by the GoB. It is expected that the loan and
grant will be leveraged with another $130 million provided by
the GoB and power utilities. This will be the first major loan
by the World Bank in which funds will be dedicated entirely to
improving the efficiency of electricity supply and end use.
Technical assistance was also instrumental in encouraging the
regional power utility in Manaus to adopt and implement policies based
on commercial power management.
Finally, the CrediBanco of Brazil also benefited from the project
through technical assistance which assisted in identifying and creating
a commercial fund to finance energy efficiency and renewable energy
projects.
In the case of the Democracy strategic objective in Ghana, we have
not spent any funds. Our field mission is still working on finalizing
the design of the strategic objective. The results framework, including
baseline indicators, will be reviewed in Washington later this spring.
If it is approved then, and only then, under the guidelines of the
Agency's new management system can funds can be for implementation.
Question. Mr. Atwood, the U.S. free enterprise system has proven
itself to be the most powerful engine for creating wealth, jobs, higher
standards of living, and every other material measure of success any
people have ever known. Indeed, our successful private enterprise
economy is the defining element of the American nation. Because we have
a free economy we have free and democratic institutions. All these
things make America the envy of the world.
I want to explore with you your thinking about how the United
States foreign economic development assistance programs, which are
directed to developing countries and emerging market democracies, can
harness the virtues of our free enterprise economy.
Tell me, what is your thinking about the most appropriate role for
the U.S. private business sector in our Foreign Development Assistance
programs?
Answer. Mr. Chairman, I share your vision and understanding of the
pivotal role of the U.S. private sector in fomenting and sustaining
economic development around the globe. Our development experience has
taught us that private sector-driven and -supported development is key
to creating lasting, beneficial change.
U.S. private business plays many roles in our foreign development
assistance programs. They are our partners in development, our
customers and our contractors. For example, the U.S. private sector
objectives of generating new and sustained markets parallel our own
objectives of creating favorable business environments in developing
countries. Such environments encourage free capital flows, investment
opportunities and ``rules of the game'' which are reasonable,
understood and enforceable.
Similarly, USAID depends on the networks of NGOs and PVOs involved
in creating economic growth in developing countries to help advise and
focus our development assistance. Organizations ranging from the World
Organization of Cooperative Credit Unions to American Chambers of
Commerce help us to set our agenda in emerging market economies.
Finally, and perhaps most directly, U.S. private businesses are
USAID's contractors, implementors, service providers and equipment
providers. Nearly 80% of all appropriated Development Assistance flows
back to the U.S. More significantly, many of our private sector
partners help identify opportunities in the countries where they are
working and invest their own capital in small business development.
There are many examples of USAID contractors pioneering innovative
services in developing countries to the mutual benefit of the U.S.
private sector and developing market economies around the globe. If you
wish, I can provide you and your staff with specific examples and
information.
If USAID is to successfully help create new and dependable markets,
we must continue to harness the talents and energy of U.S. business in
fostering economic growth. U.S. businesses and the standards and
practices they export are critical in helping to develop and create the
conditions for sustained economic growth. Our partnership with, and
reliance on, U.S. business and its expertise helps spread the values of
free enterprise, good corporate governance and responsible citizenry
around the globe, while providing new markets for U.S. goods and
services.
Question. Mr. Atwood, I appreciate the contributions of many non-
government, private sector organizations which have collaborated in
public-private partnerships with USAID over the years to help
accomplish developmental and humanitarian objectives. These
organizations are certainly a vibrant part of the Washington, D.C.
beltway economy.
But I want to focus your thinking right now on the U.S. private
enterprise sector. That is, those U.S. business firms whose principal
reasons for existence are to manufacture things or provide goods and
services to industry or the consuming public - and which are willing to
invest their own resources in a development project. I'm talking about
companies from Maine Street all across America than comprise the U.S.
private business sector.
Tell me, what measures of success has USAID had in engaging U.S.
business firms as agents for development change in developing countries
and emerging democracies?
Answer. We believe that U.S. private sector companies and non-
governmental organizations are critical to real developmental change.
Government-to-government assistance programs are effective in beginning
the change process and providing the institutional foundation for
private sector activity, but sustainable programs must also be nurtured
through private sector interest and involvement.
Currently, we are trying to encourage the involvement of private
sector resources through several means. For example, our Office of
Business Development provides business outreach, counseling and
opportunity services to over 14,000 U.S. compa-
nies registered by USAID sectors of interest. In our Environmental
Technology Network for Asia and the Americas (ETNA), we have over 2,000
U.S. environmental companies registered according to 485 sub-sectors
within the environment area. Thus, when we receive environmental trade
leads from field representatives in Asia and the Americas, we are able
to make very targeted matches of U.S. firms having the appropriate
technology to address the particular business or trade opportunity. We
then electronically disseminate the business lead to all the matched
files. This program has been active for the past four years.
We are now expanding the targeted services that we provide in the
environmental sector to other USAID developmental interest areas. When
we couple these services with partnering programs in developing
countries, we will be able to promote precisely the kinds of long-term
and sustainable relationships that will exploit the many strengths of
the U.S. private sector.
Question. Mr. Atwood, I am familiar with instances in which U.S.
business firms - including small, medium and large companies, from
groups and cooperatives, entrepreneurs and others - have entered into
joint ventures with counterpart companies in developing countries and
emerging democracies. Companies from Nebraska like ConAgra and Valmont
Industries and from North Carolina like House of Raeford Farms have
participated in such projects in Russia and Ukraine for instance.
When a U.S., private enterprise company makes this kind of
financial and operational commitment in the hopes of establishing a
private, profit-making new enterprise, it can serve as a catalyst for
change, growth, development and extension of democratic institutions
and procedures essential for the success of the new enterprise.
When USAID uses economic assistance funds as an inducement to U.S.
private enterprise in this way they leverage many things. For instance,
they leverage more money. With a 2 to 1 ratio, USAID's one dollar is
added to the private firm's two dollars, to create 3 dollars of
economic investment where there would have been one, or none, without
the private sector leveraged amount.
But perhaps more important, the USAID increment induces the U.S.
firms to establish joint-ventures with an indigenous firm in the target
country. That is, the USAID funds leverage the U.S. company to build
economic institutions in the target country, rather than just set up
shop as a U.S. company. This engages the U.S. private business sector
to use its creativity to solve development problems, train people,
build distribution systems, and establish real private enterprises
which have long-lasting significant benefit to the people in the target
company.
Do you believe there is a role for USAID to work with such private
U.S. business firms to participate with joint-venture projects in
developing countries and emerging democracies?
Answer. We most certainly do. Partnerships and joint-ventures can
be effective wherever they are utilized, but they are particularly
appropriate for those countries where USAID is scaling down or closing
its operations. We believe that many of the U.S. developmental
objectives can be maintained by sustainable business relationships that
are targeted on those areas where we have a particular interest:
agriculture, health, the environment, energy, and building democratic
institutions. In this manner, USAID helps develop the institutional
framework and business climate necessary for private sector activity to
operate and thrive.
One such program is the Environmental Technology Network for Asia
(ETNA), a successful example of how USAID can work with U.S. business
firms and promote the use of U.S. private sector solutions in
developing countries. In this program, USAID facilitates the transfer
of U.S. technology to address development needs in the environment by
matching U.S. companies registered in the ETNA database with specific
international environmental opportunities.
Question. Do you believe that USAID or an aid agency can
effectively use its available funds to leverage such private enterprise
investments in the target countries?
Answer. We believe it is possible and we are currently doing that
kind of targeting - both with regard to countries and sectors. In our
U.S.-Asian Environmental Partnership (USAEP), we are working with the
countries of the Association of South East Asian Nations (ASEAN), to
identify and develop joint-venture opportunities for U.S. companies in
the environment area. USAID's Environmental Technology Network for Asia
(ETNA) then sorts these trade leads by sub-sector interest and forwards
them to U.S. companies with the skills to compete effectively for the
potential business opportunity. Thus, by utilizing small amounts of
USAID funding, we are able to leverage large joint-venture investments
that work in areas of high development interest.
Question. How do you believe that this leveraging can best work?
Answer. There are several ways to encourage this kind of
leveraging. We can identify business opportunities and inform U.S.
firms directly, such as we do with the Environmental Technology
Networks for Asia and the Americas (ETNA). In addition, we can expand
our working relationships with organizations which represent, or engage
in, business development efforts for U.S. businesses, such as the
Department of Commerce, the U.S. Chambers of Commerce, state
development agencies, or World Trade Centers. Or, we can take a more
direct approach, as we did in the Agribusiness Partnership program in
the former Soviet Union. In this Program, sub-grants have been and
continue to be made to U.S. businesses forming joint ventures or
establishing contractual relationships with local companies on a
minimum 2.5:1 leveraging ratio basis. These sub-grants, made through
U.S. non-governmental organizations, cover incremental costs such as
training and technical assistance.
Question. One project with which I am familiar requires that for
every dollar of USAID funds made available, the private sector must
provide at least $2.50 of its own at-risk resources. Is this 2.5 to 1
ratio effective in engaging the U.S. private sector as a catalyst for
change in the target countries?
Answer. We believe that there should be a matching minimum or
threshold where private sector funding triggers U.S. government seed
funds. However, in our experience, the ratios of total economic impact
to seed capital vary greatly and have been much higher than 2.5:1. The
leverage ratio depends significantly on individual circumstances.
In Thailand, for example, the amounts of U.S. seed money devoted to
any single private sector company were minimal, usually on the order of
$10,000 or less. Some efforts we supported resulted in no deals, as the
factors used to indicate probable success were not compelling. In other
efforts, however, we were able to use very minimal amounts of funding
to ignite private sector interests that resulted in multi-million
dollar contracts.
Question. Mr. Atwood, as you know, agriculture is important to
North Carolina. A considerable amount of the economic activity there --
whether it is in finance, construction, manufacturing, transportation,
or research -- is linked to your agricultural economy.
This is true in much of the developing world and in the emerging
democracies. The fact is most people on this planet are engaged in
livelihoods involving the food and agricultural sectors.
This is true in even the developing economies and emerging
democracies with the greatest amount of manufacturing industry. For
instance, up to 50% of the people in Russia are involved with the food
and agriculture sector, and agriculture is 60% of the GDP of Ukraine.
Do you believe the U.S. economic development assistance
programs should give greatest priority to the opportunities for
growth and investment in the food and agriculture sectors where
most of the people are, or not?
Answer. I believe that we need to focus greater priority on the
food and agriculture sectors. Our economists, and those of the
university community and other research institutions, have long been
convinced that development of agriculture is the key to economic
growth, especially in the poorer countries. The links between
agriculture and other sectors are extensive. Growth in productivity
within agriculture greatly affects productivity in other economic
sectors; the reverse is not necessarily true. Recent studies, such as
in Kenya in 1994, revealed that the growth multiplier for agriculture
was three times the multiplier for other sectors.
A number of years ago, USAID assistance to the agricultural sector
was our single largest sectoral assistance budget category. There was,
however, a growing concern among many groups that we needed to do more
in the social sectors, i.e. health and primary education as well as in
promoting reduced population growth. Over the past few years, USAID has
faithfully implemented Congressional desires to increase the relative
share of social sectors in USAID funding. Because this programmatic
shift has occurred at a time of overall Federal government budget
stringency, many other valuable programs have suffered
Question. Explain to me what USAID is doing to strengthen private
sector, free enterprise agriculture in the emerging democracies of the
former communist countries where state farms and collectives were the
dominant farming activities.
Answer. The problem is not just a function of state and collective
farms, but of the communist top-down, production oriented,
monopolistic, state agroindustrial structure. Thus, merely privatizing
farms, which is a major undertaking in itself, will often not suffice.
In many cases, farmers are still dependent on the vestiges of the state
structure for inputs, credit, and marketing of produce. The challenge,
therefore, is to privatize farming at the same time that alternatives
are created for the supply of production inputs and the storage,
shipping, processing and marketing of products.
In line with this, there are many things which USAID is doing with
some degree of success:
support for the privatization and restructuring of farms,
combined with necessary land titling, survey and registration
(Albania, Moldova, Ukraine, Russia);
development of private, alternative sources of agricultural
and small business finance (Poland Cooperative Banks, Macedonia
village-based savings and credit societies, private farm
finance company in Ukraine);
development of alternative distribution systems for farm
produce (Ukraine)
promotion of agribusiness joint trade and/or investment
ventures between U.S. and local enterprises, as a means of both
demonstrating and disseminating new technologies and opening or
expanding U.S. markets (Ukraine, Georgia, Hungary, Poland);
development of professional and trade associations that can
both represent and provide services to members (e.g.,
agricultural input dealers in Albania, dairy processors in
Bulgaria, millers and meat processors in Romania, farmers'
union in Georgia).
Question. How can the U.S. private sector best be engaged to serve
as a catalyst for change from the communist systems to private
enterprise agriculture?
Answer. USAID has a unique and proven capability to provide
technical assistance to develop transparent and fair enabling
environments in developing countries. Examples include tax, financial
and regulatory reform and improved and uniform implementation of the
rules and regulations necessary for the conducting of business.
Businesses naturally shun arbitrary and unpredictable commercial
environments, and this is probably the major impediment that we are
addressing at present.
Other examples of our assistance include: (1) the -- promotion of
joint sharing of information; (2) incentives for U.S. agribusiness to
provide technical assistance; and (3) agribusiness ventures, with
closely-associated policy and financial sector reforms (One example of
the later is the agribusiness partnership program in the Ukraine). What
is important to remember is that USAID brings concrete technical
assistance to the table in response to the needs of local
entrepreneurs.
Question. What percentage of the USAID economic assistance budget
is specifically allocated for agricultural development programs?
Answer. USAID funding for agriculture programs has dropped from
$802 million in 1990 to $308 million (estimated) in 1996. In addition
there are a number of agriculture-related activities being funded in
other sectors such as environment, which would bring the 1996 total
funding to $433 million.
Question. Mr. Atwood, are you familiar with the recent 4-part
series in the Washington Post which detailed instance after instance in
which the world's poorest people are being advantaged by new foreign
business investments in their countries?
The Post writers have emphasized the importance of private business
investments in bringing millions of people in developing economies out
of abject poverty, but they also emphasize the remaining large numbers
of poor people who are ``left behind.'' Despite this somewhat negative
``the glass is only half-full'' bias, the Post articles are a powerful
lesson for us.
One of the attractive aspects of the kinds of programs USAID can
use to leverage U.S. private sector investments is to create lasting,
self-sustaining joint ventures with indigenous enterprises in the
target countries. This leveraged, joint-venture approach will overcome
some of the ``left behind'' problems which worry the Post and will
build business and democratic institutions in the target countries.
Please give me your assessment of the impact of the Post series on
your thinking (and if you are not familiar with the series, you may
review the copy provided).
Answer. Senator Helms, I found the series in the Post as
interesting as you, and was pleased that it paralleled much of my own
thinking on the subject.
Although USAID has largely focused on government-to-government
assistance, we are finding that interventions made through the private
sector, in many cases, have a lasting and profound impact. One
particularly compelling example is the partnership agreements we
launched in Thailand prior to closing the mission. These agreements
utilized $20 million in U.S., Government of Thailand, and private
sector funding to stimulate $600 million in U.S.-Thai business
partnerships focused on the health and environmental sectors.
In light of that success, we are exploring additional private
sector partnering initiatives which would join U.S. companies with
entrepreneurs in other USAID recipient countries. By focusing on USAID
sectoral interests, we believe we can move our developmental objectives
forward while, at the same time, building sustainable mechanisms for
long-term change.
__________
Responses of Mr. Atwood to Questions Asked by Senator Helms and Senator
Brownback
Question. Mr. Atwood, let me ask you about microenterprise programs
and USAID's commitment to fund these programs in Fiscal Year 1998.
USAID's Distribution of resources for microenterprise appears to be
somewhat out of balance. For example, I know that USAID has attempted
to make significant strides in support of microenterprise and other
poverty lending programs in Latin America and in Asia. But is appears
that USAID has devoted less attention to these types of programs in
Africa.
What percent of USAID's microenterprise activities are expected to
occur in Africa in Fiscal Year 1998?
Answer. For Fiscal Year 1998, USAID expects that nearly one fourth
of its microenterprise funding will support programs in Africa. This is
in keeping with past trends in regional allocation of microenterprise
funding, which have always included substantial activities in Africa.
Question. Given the enormous problems that face African nations -
poverty, disease, lack of adequate education, and others - in which
countries in Africa are the conditions right for increased resources
for microenterprise?
Answer. The conditions under which it is suitable to fund
microenterprise programs exist now in many countries in Africa.
Certainly, there is a great need to develop financial services that
reach the vast informal sectors in most African nations. The major
exceptions are those countries currently undergoing serious political
or economic instability, where microfinance programs are unable to
work. In countries where a reasonable degree of stability exists,
including countries solidly into a post-conflict period (e.g.,
Mozambique), the ability to increase funding for microenterprise is
determined mainly by the level of institutional capacity among
microfinance organizations. Many African countries have few
microfinance organizations. In those countries, USAID supports
strengthening of nascent organizations, as well as start-up of new
ones. For these situations, of course, the absorptive capacity of these
fledgling organizations tends to limit the amount of funding they can
effectively use.
Question. Mr. Atwood, according to RESULTS, a grass roots
organization which supports microenterprise lending, A.I.D. in FY 1995
committed $140 million to micro-lending activities. Yet in FY 96 and FY
97, A.I.D. reduced its support by $20 million. I understand that for FY
98 the President is proposing about $120 million for these activities.
I recognize that A.I.D.'s overall budget has been reduced -- I have
supported those cuts -- but why has A.I.D. chosen to reduce funding to
microenterprise when it has proven to be a program under your
jurisdiction for which there is bipartisan support?
Answer. As you indicate, the overall budget for USAID was reduced
considerably in FY 1996 and FY 1997 from the level provided in FY 1995.
The Development Assistance (DA) program -- which provides half the
microenterprise funding -- was especially hard hit, having been cut by
more than 20 percent in FY 1996 from the FY 1995 level. There was no
restoration of those DA cuts in FY 1997 and the FY 1998 DA request
proposes only a slight increase (about 4 percent) above the FY 1997
appropriation
Under those circumstances, it simply was not possible for us to
continue to fund microenterprise activities at the level provided in FY
1995, even though I agree that microenterprise programs are effective
and enjoy broad support -- including within the Administration.
Nevertheless, FY 1998 microenterprise funding remains at roughly the
same proportion of the total budget as in FY 1995 -- still a little
over 2 percent -- and it is possible that, if we gain Congressional
approval for the flexibility to budget our funds as we have proposed,
we ultimately may be able to do a bit more than the $120 million
planned.
Question. Mr. Atwood, in 1994, your agency launched a new
Microenterprise Initiative which set a goal to assure that by the end
of 1996 half of all funds committed by USAID for microenterprise would
be supporting programs that make loans of $300 or less. I understand
that today about one-third of USAID's program is devoted to those most
in need.
Do you still believe the goal of ensuring that half of all
resources for microenterprise are dedicated to loans of $300 or less?
Answer. USAID has just renewed its microenterprise initiative for
two more years. We have pledged to devote half of all microcredit
funding to poverty lending, defined as loans below $300.
Question. Could you update the Committee as to how USAID is working
to achieve that?
Answer. Our centrally-funded microenterprise programs are strongly
focused on poverty lending, with two-thirds of their funding supporting
such activities:
The Microenterprise Implementation Grant Program has awarded
$30 million to 17 US PVOs and international organizations,
expected to be serving over 400,000 clients by the end of the
grants.
The Prime Fund provided $17 million to USAID missions in 20
countries for institution-building, promoting an enabling
environment for microfinance, and providing credit and savings
services to over 300,000 clients.
The Matching Grant and Cooperative Development Programs have
provided $25 million to 16 US PVOs and Cooperative Development
Organizations for microenterprise development in 29 countries.
In addition, missions also manage substantial poverty-lending
programs, including missions in Mali, Uganda, Nepal, El Salvador,
Honduras, and others.
__________
Responses of Mr. Atwood to Questions Asked by Senator Feingold
Question.The President's FY 1998 budget for the U.S. Agency for
International Development includes $700 million in a separate account
for the Development Fund for Africa. Please highlight the major program
initiatives to be included in this account. Is this a priority for the
Administration?
Answer. The Administration is requesting reinstatement of a
separate Development Fund for Africa (DFA) appropriation to underscore
the United States' commitment to tackling Africa's complex development
challenges. Though modest in scope, the resources requested for the DFA
are a sound and critical investment for improving millions of lives in
sub-Saharan Africa and will enable the United States to meet the
challenges and opportunities for sustainable development in that
region.
As with the Sustainable Development Assistance (DA) account, DFA
programming incorporates the four Agency goals of promoting broad-based
and sustainable economic growth; stabilization of population growth
rates and protecting human health; protection of the environment; and
increased democratic participation in open governments. These DFA
resources are concentrated in those countries which are committed to
sound economic policies and democratic governance. USAID is also making
investments which reduce the likelihood of costly future humanitarian
and disaster relief requirements and foster growing new markets for
American trade and investment. Our efforts to promote market-based
economic policies and stimulate economic growth in Africa also helps
fuel demand for U.S. goods and services from these countries.
Three major initiatives for which we have requested funding under
the FY 1998 DFA appropriation demonstrate the diversity of response
needed to address the complex development challenges in Africa:
Continued funding is requested for the Greater Horn of Africa
Initiative (GHAI). Nowhere do crises threaten to overwhelm the
international community as in the Greater Horn of Africa (GHA). And
nowhere is the United States Government attempting to deal with causes
rather than symptoms as in the GHA. Under GHAI, the U.S. Government is
striving to make its development and crisis prevention work in the
region conform to five operating principles: (1) African ownership of
the approaches we implement in partnership with them (2) strategic
coordination across bureaucratic boundaries; (3) linkage of relief
programs with development programs; (4) regional approaches to regional
problems; and (5) promotion of stability through change. The aim of
GHAI is very ambitious: to change the way the U.S. Government operates
in the region, as well as the way our partners operate. In Africa, the
new approaches of GHAI are indeed producing results.
Our approach for helping the southern African region to achieve
equitable, sustainable economic growth and successful democracies is
embodied in the Initiative for Southern Africa (15A). The 15A
complements bilateral programs in the region with programs that address
development constraints needing a coordinated region-wide response or
which help to build links among countries in support of regional
economic growth and democratic governance objectives. The 15A focuses
in particular on addressing regional constraints to development in the
areas of infrastructure, small and medium-scale business development,
civic society and democratic govern-
ance, and agriculture and natural resource management. The members of
the Southern Africa Development Community are anxious to expand trade,
and the USAID Regional Center for Southern Africa located in Gaborone,
Botswana is strategically placed to foster more and closer links
between the countries in the region and the United States. In
particular, through 15A regional funding, USAID's investments in rail
and road infrastructure over the past decade, and current support for
privatization and restructuring of telecommunications and railroads,
are putting in place the key arteries along which trade and information
critical to private sector development will flow.
Finally, we have proposed a significant new initiative for FY 1998,
the Africa Food Security Initiative (FSI). Recognizing the increasing
threat to food security in the region posed by trends in agricultural
production and population growth, the FSI will underscore policy,
technology and infrastructure constraints to enhancing food production
and marketing. Specifically, FSI will focus directly on enhancing
Africa regional food security by addressing (1) major bottlenecks in
agricultural policies, technology and rural infrastructure in several
key African countries to support rural growth; (2) the need for tighter
linkage between food aid and development assistance resources; and (3)
the linkages between better nutrition and agricultural growth.
Question. The budget also assumes a new, $30 million initiative
related to food security in Africa. What types of activities will be
included in this initiative? How are these activities related to the
commitments made by the United States at the 1996 World Food Summit in
Rome?
Answer. The $30 million budgeted in FY 1998 is the first pilot year
of a ten year activity to stem the erosion in food security in Africa.
It will provide supplemental resources to address a growing food and
poverty crisis in Africa which, if unchecked, could require emergency
response costs of an additional $900 million per year beginning eight
years from today. By addressing food security and poverty more broadly
today, and preventing growing problems in the future, hungry children
will be better nourished, enhanced food security will help to avert
costly crises like Rwanda and Somalia, and the U.S. economy will
directly benefit.
The food security initiative will supplement ongoing USAID programs
in five African countries, where policies are already conducive to food
security, in the first pilot year. In Uganda and Mozambique it will
work with PVOs and the private sector to improve access to food,
agricultural markets, and processing technologies. In Malawi,
Mozambique, Mali, Uganda and Ethiopia, and through a range of regional
and global activities, it will support an environment of improved
policy and information to promote agricultural growth and food
security. In Malawi, Mozambique, Uganda, Ethiopia, and through support
to African regional institutions, U.S. universities, and the
International Agricultural Research System, it will support the access
of rural people to better technologies to improve agricultural
production and food security.
The goal of the Food Security Initiative is to stem the tide of
growing food insecurity in Africa by building on and making more
sustainable the policies and technology generation of those several
African countries that have started moving in the right direction, and
by expanding those trends to other countries during the next decade.
The Food Security Initiative aims to reduce what will otherwise be an
explosive growth in malnutrition. In this goal, it is right in line
with U.S. commitments, along with much of the rest of the world, at the
World Food Summit to reduce the number of malnourished people in the
world by half by the year 2015. The specific undertakings of the World
Food Summit are entirely consistent with the focus of the Food Security
Initiative on technologies, policies, and infrastructure to promote
food security and reduce malnutrition among the world's poorest people.
Recent research shows that half of all childhood deaths in the
developing world are attributable to malnutrition, so the goal of the
World Food Summit and the Food Security Initiative to reduce
malnutrition will have a direct impact in reducing childhood death and
promoting child survival.
Specifically, three of the USG commitments along with the rest of
the world at the World Food Summit are particularly a part of the Food
Security Initiative. These are:
Sharing U.S. expertise with selected countries wishing to
review and change national policies affecting food security
Enhancing U.S. government support for research and
technology development in agriculture and related sectors, at
home and abroad
Continuing to support food security through agricultural programs,
development assistance and food aid in an integrated approach, with
strong emphasis on those countries showing good faith willingness to
adopt necessary policy reform.
Question. In addition to the food security initiative, what else is
the U.S. Agency for International Development doing to honor U.S.
commitments at the Food Summit? What is the status of the inter-agency
working group on food security?
Answer. The USAID follow-up to the World Food Summit is being
pursued aggressively on four fronts: 1) inter-agency collaboration on a
U.S. government-wide action plan; 2) outreach to the U.S. public and
key agricultural groups; 3) donor coordination and collaboration; and
4) a new budgetary balance struck within the context of very limited
budgetary flexibility.
There is a growing awareness within the Executive Branch, and
across the country -- for example, as in the National Center for Food
and Agriculture Policy's report: ``U.S. Interests in Economic Growth,
Trade, and Stability in the Developing World'' -- that international
food security is one of the critical strategic issues facing the U.S.
today. We, therefore, take the U.S. commitments very seriously, and are
looking at a range of ways in which USAID can contribute to the action
plan. Among our first steps will be to propose to Congress a
restructuring of the Board on International Food and Agricultural
Development (BIFAD) with representatives from a wider range of domestic
constituencies so that it can advise appropriate agencies on the full
range of food security issues.
In addition to the Africa Food Security Initiative, we have begun
to increase our investments in agricultural research and are looking at
ways to engage the private sector more broadly in international
development work. In addition, we are giving food security top priority
in our dialogue with other donors, including in the Common Agenda with
Japan, and the Trans-Atlantic Agenda fora.
Finally, through the Inter-agency Working Group (IWG) context, we
have begun a dialogue with various groups, such as the PVO community,
the private sector, and foundations regarding the Action Plan. This
dialogue also seeks to build awareness of U.S. strategic interests in
international food security.
The IWG on Food Security continues to work actively in support of
the U.S. follow-up to the World Food Summit. Based on its productivity
and success leading up to the Summit, the IWG members voted immediately
after the Summit to continue its operations. As a result, the IWG
continues its tri-partite leadership of Under Secretary of State Wirth,
the Under Secretary of Agriculture, and myself. The staff-level
committees have been expanded, now encompassing two sub-committees -
one with a domestic focus (chaired jointly by Department of Agriculture
and Health and Human Services), and one with an international focus
(chaired by State, with technical staff support from USAID). As a
symbol of the IWG's importance, it is worth pointing out that the
Department of State has created a new senior position, Special
Representative for Food Security, to act as chair of the international
sub-committee.
Question. The budget request also assumes an increase from $123
million to $135 million in the democracy and governance account. Please
highlight the major components assumed in this increase. What is the
difference between these programs and the democracy programs carried
out through the Department of States's budget?
Answer. USAID's work in democracy and governance advances U.S.
foreign policy interests as well as contributing to USAID's overall
development objectives. Democracy and governance assistance is an
essential part of sustainable development because it facilitates the
protection of human rights, informed participation, and government
accountability. The development work USAID undertakes in other sectors
will not be sustained without simultaneously working to establish a
representative political system, which is accountable to and allows the
active participation of its citizens in decision-making.
In recent years, including in FY 1998, USAID has allocated
approximately 8 percent of its overall development assistance budget to
democracy and governance programs. Working with U.S. non-governmental
organizations and other USG agencies in particular, the Agency provides
grants and technical assistance to meet critical needs in four main
areas: elections, rule of law and human rights, civil society and
governance. The requested level of development assistance provides for
relatively greater allocations to Asia and Latin America over what was
allocated in FY 1997. Of the total request, the proposed regional
allocation is follows: $64.2 million to Africa; $22.7 million to Asia
and Near East; and, $33.3 million to Latin America. The remaining
balance of $15.3 million is requested for centrally managed programs.
USAID's approach to promoting democracy abroad occurs within the
context of stated U.S. foreign policy objectives and the development
priorities of the specific country situation. USAID coordinates closely
with the Department of State in undertaking democracy assistance
initiatives, especially at the country level, where the U.S. Ambassador
takes an active role. The State Department has an important role to
play in promoting democracy through its diplomatic efforts. When funds
are appropriated through the Support for Eastern European Democracy
(SEED) Act, the Freedom Support Act and Economic Support Funds, the
Department of State as-
sumes a more active decision-making role in setting country funding
levels, in close collaboration with USAID. USAID is responsible for
management and technical oversight of agreed to activities funded by
those accounts.
__________
Responses of Mr. Atwood to Questions Asked by Senator Biden
Question. Enhanced Credit Authority: The Congressional Presentation
states that the $10 million in authority sought for the enhanced credit
would leverage approximately $67 million in loans and guarantees. You
stated, during the hearing, the expectation that it could leverage up
to $100 million in loans.
Which figure is the correct one?
Answer. Ultimately, the leverage achieved under the Enhanced Credit
Authority (ECA) will depend on the factors relating to a particular
transaction: e.g., country risk, the sector involved, and the
experience and sophistication of the borrowers. Generally, we have been
using a conservative average subsidy rate of 15% to project the
leverage ratio for projects financed under the ECA initiative. These
figures reflect the assumption that we will do a blend of high-risk,
medium-risk, and lower-risk project financing under ECA. Using a $10
million of credit subsidy as an example, this would translate into
approximately $67 million in loans and guarantees. However, under both
the Agency's Micro and Small Enterprise Development (MSED) Program and
its Housing Guarantee (HG) program, recent experience has demonstrated
consistent leverage ratios of at least $17 of loans or guarantees for
every $1 spent for subsidy. Accordingly, I believe that it is realistic
to think that we can leverage $10 million of subsidy into $100 million
in capital for many ECA-funded projects. In no event, however, will ECA
be used to fund projects where the credit subsidy would exceed 30% of
the transaction amount.
Question. Enhanced Credit Authority: The Congressional Presentation
further states that the OMB approved the request for this authority
contingent on USAID ``improving the management of its current credit
programs.''
Please elaborate. What steps are being taken to improve the
management of the current credit programs? Will OMB again have
to approve the program, once USAID meets the objective of
improving management of its loan portfolio?
Answer. The Agency has recently developed an action plan to
strengthen the way USAID manages its credit programs. This credit
management action plan, which has just been approved and is now being
implemented, addresses the seven areas for improvement for each of the
Agency's current credit programs, including the Direct Loan portfolio,
the Urban and Environment Credit (formerly Housing Guarantee) Program
portfolio, the Israel Special Loan Program portfolio, the Micro and
Small Enterprise Development Program portfolio and the Ukraine Export
Credit Facility portfolio, as well as for the Enhanced Credit Authority
initiative.
These seven areas targeted by the action plan include: (a) ensuring
accurate and timely provision of loan data; (b) establishing
information control systems for loan data; (c) reassessing staffing
needs; (d) improving budgeting for credit programs; (e) reviewing and
monitoring USAID's entire loan portfolio; (f) developing financial
performance indicators; and (g) making the USAID Credit Review Board an
active, functioning group. USAID would begin implementing the requested
ECA transfer authorities when the action plan is substantially
implemented.
Question. Enhanced Credit Authority: The Congressional Presentation
states that the Enhanced Credit Authority will only provide financing
``where other funding is not available.''
Does this mean that ECA will be used only if there are no
other U.S. governmental resources available to fund the
proposed project? Or does the term ``other funding'' encompass
all sources of funding, public or private? In other words, is
the ECA to be the ``lender of last resort''?
Answer. Other funding means all sources of funding, public or
private. That USAID will only be the ``lender of last resort'' is a
fundamental part of the criteria that we will apply in determining
whether ECA is the appropriate means of funding a development activity.
Under those criteria, USAID will require proof that a proposed project
is unable to receive credit from private sources. In making this
determination, USAID will examine all other potential sources of
financing, including regional and multilateral donors, as well as
reasonably ascertainable commercial sources of financing.
For example, as part of the formal approval process for ECA-funded
transactions, the final submission to the USAID Credit Board will have
to specifically identify: (i) the commercial and multilateral
institutions surveyed, (ii) the financing available from these sources,
if any, and (iii) the need for USAID financing. Review and approval of
such a submission will be a prerequisite to approval of any ECA-funded
project.
Question. Please provide a list of the missions you have closed
since 1992, and the posts that you plan to close in FY 1997 and FY
1998. What criteria do you use in making decisions to close missions.
Answer. USAID had U.S. direct-hire staff in 93 countries in 1993.
At the end of 1996 there were U.S. direct-hire staff in 73 countries,
not including countries with staff for the purpose of donor
coordination (e.g., Paris) and where the Inspector General has staff.
In 1993, the Agency announced twenty-one mission close-outs. Since
then, six new country programs, e.g., Bosnia, West Bank/Gaza, and
Eritrea, have begun. Subsequently the decision was made to close
additional missions. As a result twenty-six posts have been closed;
including:
FY 1994
Afghanistan
Cote d'Ivoire
South Pacific Regional
Togo
Zaire
FY 1995
Argentina
Botswana
Burkina Faso
Cameroon
Chad
Lesotho
Pakistan
Thailand
Tunisia
Uruguay
FY 1996
Barbados (RDO/Caribbean)
Belize
Cape Verde
Chile
Costa Rica
Estonia
The Gambia
Oman
Swaziland
Thailand Regional Support Mission
Yemen
In FY 1997 USAID has firm plans to close the Czech Republic and
Slovenia. The planned FY 1998 close-outs cannot be publicly announced
at this time; however, depending on the outcome of the appropriations
process, USAID now plans to close about three additional posts.
In FY 1996 USAID was faced with additional budget cuts and
therefore had to consider additional downsizing and close-outs. In
making the difficult decision concerning which country programs to
reduce, close or graduate, USAID considered four criteria:
Need and Level of Development - this was assessed based on
an index that considered standard indicators such as per capita
income measured in purchasing power terms, infant mortality,
and fertility.
Global Problems - the importance of a country in addressing
global issues such as population growth, AIDS, climate change,
bio-diversity and democracy was assessed and key countries were
identified.
Quality of Partnership, Commitment and Performance - while a
much more subjective criterion, the current list of USAID
countries was reviewed to assure that countries were making a
best effort to help themselves.
Foreign Policy - this factor sometimes becomes an over-
arching consideration if, for example, the country might
otherwise be ranked low in need relative to others.
Population was not directly factored into these analyses. If,
however a country had a population of less than five million but ranked
high based on need, careful consideration was given to whether the
impact of U.S. assistance was of a magnitude to warrant continuation of
a program.
The result of these analyses informed the Administrator's decisions
concerning the proposed near-term closure of additional missions
between FY 1996 and 1998, the establishment of a ``graduation-track''
for eight countries beginning in 1999 and continuing through 2005, and
the down-sizing and narrowing of the program in another six countries.
These figures do not include the planned close-outs in the ENI
countries; however overall the Agency has scheduled graduation planning
dates for about 25 countries over the next decade.
Question. Partnership for Freedom. The CPD talks in general terms
about ``partnerships, exchanges, joint ventures, endowments, and
cooperative projects'' as part of the Partnership for Freedom.
What sort of projects and partnerships are envisioned?
What will be the focus of these efforts - in terms of your
four strategic objectives?
Which department will manage the program?
Answer. We envision a variety of implementation mechanisms in
support of our strategic objectives under the Partnership For Freedom
(PFF). The mix will continue to include technical assistance, training,
exchanges, NGO support grants, partnerships, etc. But under the PFF
that mix will shift, particularly for the countries like Russia that
have come the furthest in restructuring their economies, to reduce
significantly the proportion of technical assistance and increase the
proportion of supporting institutional and community-based
partnerships.
We foresee a wide range of potential partnerships between
organizations in the NIS and their counterparts in the United States,
all of which would act as conduits for knowledge, improved policies,
management practices, and technologies, while developing lasting
relationships between our societies. While the kinds of partnerships
need to be tailored to the situation in each NIS country, some examples
might include:
a partnership between counterpart tax authorities in the
U.S. and the NIS;
partnerships between U.S. state bar associations and
professional legal associations in the NIS;
partnerships between condominium associations;
partnerships between American and NIS professional
associations, like associations of accountants or journalists
or medical associations;
partnerships between power utilities in the U.S. and the
NIS;
university or hospital partnerships;
agribusiness partnerships;
a partnership between a U.S. stock exchange and NIS
exchange;
partnerships between mayor's associations or associations of
municipalities.
The PFF will have a heavy emphasis on economic growth and building
democratic civil societies, hence there will be a close link between
partnerships and our strategic areas of emphasis, which include
economic growth and transition, democracy building, and social
transformation.
Under the Partnership for Freedom, the role of the NIS Coordinator
will remain the same: the establishment of strategic priorities and
resource allocation among NIS recipient countries and among USG
implementing agencies. A number of USG agencies will continue to
implement the program, and USAID will continue to manage the single
largest share.
Question. Aid to Central Europe and Russia and the NIS. Estonia has
already ``graduated'' from our assistance programs, and the Czech
Republic and Slovenia will do so in FY 97.
Do you have a projected timeline on when other nations of
the region will graduate?
Answer. We plan to end assistance as soon as each country has
achieved enough momentum in its economic and political transition from
communism to market-based democracy to complete that process without
further help from the United States. Last year, as you note, USAID
graduated Estonia from SEED Act assistance. This year, we expect to
graduate the Czech Republic and Slovenia, both of which have completed
the most important parts of their transitions and are now able to
compete in Western markets and guarantee democratic participation to
their citizens.
Over the next three years, we hope to end our assistance in
Hungary, Latvia, Poland, Slovakia and perhaps Lithuania (if progress
there continues as anticipated). The southern tier of Central Europe
has further to go, probably until the early years of the next decade.
In the New Independent States of the former Soviet Union, our
close-out plans are less definite. As a region, the NIS has further to
go than Central Europe. While Russia may be ready for graduation early
in the next decade, in most of the NIS we have to be willing to stay
the course a little longer -- perhaps another decade -- before these
countries have restructured their economies, developed democratic
institutions, and oriented their business, political, and cultural ties
more toward the West.
However, in the NIS we are transitioning to a second phase of
assistance, the Partnership for Freedom, which will focus on economic
growth, trade and investment, and partnerships to sustain the economic
and democratic institutions which are developing across the region. As
the Partnership for Freedom progresses, many of the earlier technical
assistance efforts will phase out in favor of these new mechanisms.
__________
May 12, 1997
TO: Betty Alonso
Committee on Foreign Relations
Room SD 450, Dirksen Building
Washington, D.C. 20510
FM: Veronica T. Young
Bureau for Legislative and Public Affairs
U.S. Agency for International Development
Washington, D.C. 20523-0016
SUBJECT: USAID BUDGET REQUEST AND OVERSIGHT
Attached as promised, is the response to Senator Biden's question
to USAID Administrator J. Brian Atwood on Congressional Notifications
from the SFRC hearing of February 26, 1997.
If you have any questions or if I can be of further assistance,
please feel free to call me on 202-647-9144. Thank you.
Attachments: a/s
__________
Responses of Mr. Atwood to Question Asked by Senator Biden
CONGRESSIONAL NOTIFICATIONS
Question. There is a barrage of paper that is submitted to the
committee in the notification process. I don't have any specific
thoughts today on how to reduce the paperwork here, but I suspect
you've thought about it, and I'd like to get your input on two issues.
First, how many man hours do you estimate you expend on the
notification process? In other words, could we achieve a
meaningful reduction in your operating expenses if we
streamlined the process?
Second, do you have any specific ideas on streamlining the
process?
Answer. Two years ago, the Agency shifted its program management
from a project/input focus to a strategic objective/results emphasis,
both to better manage its programs and to comply with the Government
Performance and Results Act. Concurrently, the Agency began to present
its budget by strategic objectives and results. However, we have been
unable to convince our oversight committees to permit the Agency to
shift its notification on Agency programs from a project basis to one
of strategic objectives. If the Agency and the Congress could reach
agreement on this change, the Agency's annual congressional
presentation document would serve as the primary notification for all
programs. This would greatly reduce the number of separate
notifications (approximately 900 in FY 1996) submitted to the Congress
throughout the year.
While this streamlined procedure would save staff time, it would be
difficult to estimate the cost savings because the preparation of both
the congressional presentation and notifications are an integral part
of the Agency's program process both in Washington and in our overseas
missions.
Appendix 2
Hearing of February 27, 1997
Responses of Mr. Kennedy to Questions Asked by Senator Lugar
Question. 1. Personnel in the U. S. and Abroad. The size of the
State Department, measured in number of personnel, has declined in
recent years suggesting that our diplomatic representation has declined
along with that.
Could you provide details on the proportion of State
Department personnel--Foreign Service and others--who serve in
the United States, in Washington and elsewhere, relative to
those who serve overseas?
How does this profile compare to those over the past ten
years, say in 1985 and 1990? Please provide some explanatory
information for this pattern.
Answer. Personnel Profile:
----------------------------------------------------------------------------------------------------------------
September 1985 September 1990 September 1996
Personnel -----------------------------------------------------------------
Domestic Overseas Domestic Overseas Domestic Overseas
----------------------------------------------------------------------------------------------------------------
Americans..................................... 8,057 6,186 8,796 5,729 8,055 5,027
Foreign Nationals............................. 9,605 8,933 7,889
Sub-Totals.................................. 8,057 15,791 8,796 14,662 8,055 12,916
Totals...................................... 23,848 23,458 20,971
----------------------------------------------------------------------------------------------------------------
As shown above, the Department's domestic workforce increased from 1985
to 1990 and decreased back to the 1985 level from 1990 to 1996. The
increase was largely due to the build-up under the Inman Appropriations
in the 1980's and the decrease since 1990 is due to cutbacks mandated
by the administration.
Question 2. U.S. Diplomatic Missions Abroad. For many years, the
United States has followed the principle of universality in having U.S.
diplomatic missions in virtually every country with which we have
formal relations. This may be a laudable principle and worth
preserving.
What is the practice today? How close does the United States
come to this principle of having at least one diplomatic post,
embassy, consulate or other diplomatic post, in all countries
with whom we-have formal ties?
Is it desirable and/or feasible to consider U.S. regional
missions in which U.S. facilities and personnel would be
located in one country but representing U.S. interests in
several countries?
What are the trade-offs involved?
Answer. With the exception of a few small island states (in
Micronesia and the Caribbean, and off the coast of Africa), the United
States currently follows the principle of universality by having a
diplomatic mission in every country with which we have diplomatic
relations. Even with modern communications, there is no effective
substitute for having a physical presence throughout the world. We
still need em-
bassies and consulates to assist American citizens, support U.S.
business, and develop the extensive local contacts that are essential
to effective diplomacy.
That said, modern communications do allow us to work more
efficiently. We have established a number of small posts in places
where we do not require a large, full-service embassy. Restructuring
our overseas presence to accomplish our goals through ``regional''
embassies of the type described in the question would undoubtedly
produce some savings. We doubt, however, if those savings would be
worth the loss of our ability to assist American citizens in a prompt,
effective manner, or the loss of our ability to support U.S. business
in its efforts to penetrate new markets.
There could also be negative political repercussions to closing
down embassies in countries where we have a long history of productive,
friendly relations. If we have never had an embassy in a given country,
we still have an option of being represented there through an embassy
in a nearby country. Closing embassies could also call into question
America's leadership role in the post Cold War era by signaling a
retreat from global engagement.
Question 3. Fee Authority Request. You are requesting permanent and
unlimited authority to collect certain user fees to pay for the cost of
State Department operations. I understand the logic of this request. I
wonder, however, if it makes good sense to request a permanent
authorization and an authorization that permits the use of these fees
for a variety of purposes.
If you had unlimited and permanent authority, how would
Congressional oversight operate under such an authority?
Would it not be better to preserve existing authorities in
the executive and legislative branches by limiting this
authority for a specific time period--say 2-4 years--and to
limit the use of those revenues to the same function for which
they were collected, e.g. passport fees for the conduct of
consular operations.
Answer. Congressional oversight of the requested fee authority
would remain unchanged from current oversight of the Department of
State. The Department would continue to be subject to biennial
authorization acts by the Congress which would address the full range
of authorities under which the Department operates. Making the fee
authorities unlimited and permanent rather than for a limited purpose
and for a limited time period serves both the executive and legislative
branches. The Department conducts consular (e.g., passport, visa and
American citizen services) services on a permanent, on-going, day-to-
day basis. Accordingly, it makes sense that the authorities to collect
and retain the fees charged for providing these services not be limited
by time period or subject to potential lapses in authorization. The
Department applies its worldwide facilities, infrastructure and support
network to carry out consular activities both domestically and at
overseas missions. In addition to the direct cost of providing consular
services, the cost of the worldwide support structure attributable to
consular services is embedded within the fees the Department charges.
Accordingly, it makes sense that user fees the Department collects can
be applied to the entire range of Department operations that support
consular services.
Disposal of U.S. Real Properties Overseas
Question. The United States owns or leases extensive properties
overseas for the conduct of our foreign relations. Could you describe
for the committee the extent of this ownership, how these properties
are being utilized, how they are determined to be surplus or excess,
and, more specifically, the process by which the Department disposes or
sells U.S. owned properties abroad?
Answer. The U.S. Department of State manages over 13,000 properties
world-wide in support of over 250 American diplomatic missions in 164
countries. These properties include single family residences,
apartments, office buildings; support facilities such as warehouses,
maintenance shops, and power plants; and building sites acquired for
future construction.
The Department's Office of Foreign Buildings Operations in the
Bureau of Administration manages this portfolio of approximately 13,100
properties which includes 1,100 office buildings, 10,500 residential
properties, 1,500 functional and support properties, and parcels of
land (mostly lots on which our facilities are built and some which were
acquired for future construction). Approximately 3,000 of these
properties are owned, and the rest are leased. Properties are
identified for disposal through an on-going review of our real property
needs world-wide. With an inventory of properties this large and
dispersed, many in unstable areas of the world, the Department must
continually review its inventory to evaluate which properties are too
big, too small, or no longer needed, no longer provide an adequate
level of security or are too expensive to maintain, etc. The Department
has identified over 100 properties worldwide that are candidates for
disposal, and we are seeking to sell these properties in such a way as
to derive the maximum benefit to the U.S. Government In today's budget
climate, it is essential that we have an aggressive program in place to
identify and sell real estate and use the proceeds for other high
priority property needs. As recommended by the Congress, the Department
has also established a Real Property Advisory Board to assist in
evaluating properties for disposal. Properties to be sold are typically
improved properties, but also include vacant land and properties that
clearly may have commercial or other development potential.
The Foreign Service Buildings Act of 1926, as amended, provides the
Secretary of State with authority to use proceeds from real property
disposals for acquisition of facilities. We intend to use the proceeds
derived from such actions to purchase additional property to reduce the
increasing cost of leaseholds worldwide and to replace existing
facilities which are beyond their useful life or no longer serve the
needs of the diplomatic mission.
Numerous methods of disposal are available to the Department as a
result of its authority granted by the Foreign Service Buildings Act of
1926 as amended. These include: general solicitation of offers; public
offerings; private negotiations; marketing via professional real estate
brokers; exchanges; or outleasing.
Local market conditions, the level of local market sophistication,
personnel resources available at post, and transaction complexity all
must be considered in making the decision to pursue a strategy for
disposal.
Recommendations regarding property disposals are made by the Real
Estate Division of the Office of Foreign Buildings Operations, with
final decisions regarding disposal made by the Deputy Assistant
Secretary for Foreign Buildings, or by higher authorities within the
Department
The Administrative Officer and/or the General Services Officer
located at the post nearest the subject property typically handles day-
to-day implementation of the disposal process with support from the
Real Estate Division.
In the last two fiscal years, the Department has disposed of 60
properties worth over $53 million.
3/5/97
Proceeds of Sale of U.S. Real Properties Overseas
Question. Over the past years, what have been the proceeds or cash
receipts realized from these sales and could you provide a broad
description as to how these proceeds have been used, the authorities
for the sale of these properties, and how the cash receipts from these
sales are managed?
Answer. Between FY 1992 and FY 1996, the Department's asset
management program was credited with $159 million in proceeds of which
$145.5 million have been obligated toward the acquisition of more
secure, safe or suitable properties. The table below shows the proceeds
credited to the Security and Maintenance of U.S. Missions appropriation
since fiscal year 1992 and the amounts that have been obligated far
real property purchases. By and large, these funds have been used to
acquire staff residences in high cost posts. Such purchases offer an
attractive internal rate of return and help the Department to minimize
increases in its leasehold program which now claims over 30 percent of
the annual appropriation for the Security and Maintenance of U.S.
Missions account.
Authority to sell property acquired for use of the diplomatic and
consular establishments in foreign countries is provided for in Section
9 of the Foreign Service Buildings Act of 1926, as amended.
Proceds of sale credited to the Security and Maintenance of U.S.
Missions appropriation are managed in the Real Property Acquisition
program. As proceeds become available they are applied to priority real
property acquisitions that offer attractive internal rates of return.
Foreign currencies received for disposal of real property are not
immediately available for obligation. Funds cannot be credited to the
Security and Maintenance of U.S. Missions Appropriation until the
currencies are disbursed by the Treasury to pay the operating costs of
overseas diplomatic missions or are exchanged for U.S. currency.
Subsequent to these transactions, proceeds are apportioned to the
Department by OMB and allotted to FBO by the Chief Financial Officer.
The chart below indicates the proceeds which have been made available
between FY 1992 and FY 1996.
Proceeds of Sale Credited to the Security and Maintenance of U.S.
Missions Appropriation and Amounts Obligated for Real Property
Acquisitions (in thousands of dollars)
------------------------------------------------------------------------
Obligated
Fiscal Year Proceeds for Real
Credited Property
------------------------------------------------------------------------
1992........................................ 44,888 18,192
1993........................................ 28,828 3,867
1994........................................ 16,346 31,617
1995........................................ 50,777 42,855
1996........................................ 18,100 49,000
TOTALS................................... 158,939 145,531
------------------------------------------------------------------------
3/5/97
__________
Responses of Mr. Kennedy to Questions Asked by Senator Biden
Question 1. Post Closings. The State Department closed some thirty
posts in the last several years, although it has also opened several
new posts in the nations of the former Soviet Empire.
How do you make decisions to close posts? What criteria do
you use?
Answer. In recent years, the Department has almost always closed
overseas posts in response to budget problems. We believe that one of
the ways the Department can and should fund higher priorities in a
tight budget environment--including the opening of new posts--is to
close some posts where we can meet our consular and diplomatic needs
through other means.
Developing a list of posts to be closed is a process which involves
close cooperation between the Department's central management offices
and the geographic bureaus. Once a preliminary list is prepared, it is
discussed with other executive branch agencies so that their concerns
can be addressed in the final decision process. And, in keeping with
legislative requirements, the Department consults with the Congress so
that its concerns can be met as well.
Our commitment to universal diplomatic representation has meant
that most of the posts closed in recent years have been consulates
rather than embassies, although a few embassies in small, island
nations were closed in recent years. These embassies were in
Micronesia, the Caribbean, and off the coast of Africa.
The criteria considered in deciding which posts to close include:
the consular workload at the post (e.g., visa issuance,
American citizen services);
political or political/military concerns;
American economic/commercial interests;
global issues (e.g., environmental and humanitarian
interests);
law enforcement issues; and
the operating costs involved in maintaining the post.
Question 2. Staffing requirements. Two years ago, the General
Accounting Office found that the Department relied on historical
staffing levels at each location instead of determining the staffing
required to achieve key foreign policy objectives in a country. The
Department has apparently moved to rectify this problem by developing
an ``Overseas Staffing Model,'' which, as you stated, attempts to
calculate staffing needs based on either objective data or on policy
priorities.
How was the model developed?
Answer. The Overseas Staffing Model (OSM) was initially
conceptualized by the January 1995 Strategic Management Initiative
Team. This team designed a prototype and outlined a general process by
which the Department could rationally determine appropriate staffing
for Core/Program, Consular and Administrative components at all
embassies, based on our foreign policy objectives and workload. Since
that time, we have consulted with subject matter experts, redesigning
the initial components and developing two additional components
(diplomatic security and information management). We have also enlarged
the Model process to include overseas posts other than embassies (e.g.,
consulates, consulates general branch offices, etc.) We have tested the
entire Model and are in the process of fine-tuning some of its
components.
The development of the Model enables us to examine our posts in a
worldwide perspective. In order to make the necessary global workforce
decisions, we have es-
tablished an Overseas Staffing Board, comprised of the Principal Deputy
Assistant Secretaries for the regional bureaus and new independent
states (S/NIS), the Director General of the Foreign Service, the Chief
Financial Officer and the Executive Secretary. The Board has
participated fully in the design of the Model and the review of the
results.
How is it being implemented?
The Overseas Staffing Board will review the final results of the
Model and make staffing recommendations to the Under Secretary for
Management. These recommendations will be considered in developing the
FY98 Financial Plan and FY99 Budget submission. In addition, posts have
been asked to address the Model's Core/Program component results in
their current Mission Program Plans, so that we will be able to
determine the effect of Model implementation. Bureaus will then
incorporate post input and Model results into their Program Plans,
which senior management will in turn use to assess resource allocations
and requirements in line with the Department's strategic plan.
How frequently will it be revalidated?
As this is the Model's first year, we have not made a final
decision on the frequency of validation. We anticipate that the
Overseas Staffing Board will meet at least bi-annually to rank our
overseas posts and to be briefed on current issues affecting posts
which the regional bureaus find inappropriately ranked. The Model will
be run to coincide with the program planning process, which will in
turn lead into the preparation of the financial plan and budget
submission.
Do you expect it to lead to significant changes in staffing
requirements?
Yes. The Model will determine worldwide staffing changes by each of
its components, and identify shifts in staffing resulting from changes
in foreign policy priorities and workload. In the initial run, the
Model projected that the Department needs an additional 200 positions
overseas to support foreign policy. Priorities, satisfy mandated
functions, and provide necessary administrative service to all USG
agencies overseas. The Model also identified where staffing shifts were
required among regions.
Question 3. Presence in the NIS. As I said in my opening statement,
I want to be sure that we are placing proper emphasis on assuring a
strong diplomatic presence in the New Independent States of the former
Soviet Union.
--Please provide a summary of our presence in each of the nations
that once comprised the Soviet Union (including Russia). Specifically,
how many American officers do we have in each post?
--Have we been able to buy or lease embassy facilities--or are our
people still operating out of hotels?
Answer. American direct hire staffing of all agencies in the NIS is
as follows:
Baku, Azerbaijan........................................... 14
Yerevan, Armenia........................................... 30
Minsk, Belarus............................................. 28
Tbilisi, Georgia........................................... 21
Chisinau, Moldova.......................................... 17
Almaty, Kazakhstan......................................... 66
Bishkek, Kyrgyzstan........................................ 17
Moscow, Russia............................................. 316
St. Petersburg, Russia..................................... 23
Vladivostok, Russia........................................ 10
Yekaterinburg, Russia,..................................... 5
Dushanbe, Tajikistan....................................... 12
Ashgabat, Turkmenistan..................................... 15
Kiev, Ukraine.............................................. 81
Tashkent, Uzbekistan....................................... 29
Not under the responsibility of Special Adviser for the New
Independent States, but part of the former Soviet empire:
Talinn, Estonia............................................ 19
Riga,Latvia................................................ 18
Vilnius, Lithuania......................................... 17
The American Embassy in Dushanbe Tajikistan operates out of the
October Hotel, pending the renovation of a building recently leased to
become a permanent Embassy Office Building. The USG has purchased-
leased, or built chanceries in all other posts in the former Soviet
Union.
Question 4. When ICASS is fully implemented, will the other US
agencies be paying the full costs of their presence overseas? If not,
what is the Percentage of the costs that they will pay?
Answer. It is the goal of ICASS that other agencies will pay the
full costs of their presence overseas. That said, ICASS as it is now
organized and agreed to by the other agencies, does not yet meet that
goal. It does, however, make a good start. For example, under the
previous system of shared administrative support (FAAS), other agencies
paid only 19.5% of covered support costs overseas. By fully sharing
administrative personnel salaries and benefits, and by including in the
common cost pool building operating expenses for goverenment-owned/
long-term leased office buildings, local guard expenses for offices,
and community liaison office expenses, ICASS increases other agencies
share to approximately 36%.
There remain several key, and expensive, areas of administrative
support overseas which are borne solely by the Department of State but
which benefit other agencies, e.g., Regional Security Officer salaries/
benefits and certain aspects of the Departments Information Management
program. It is the Department's intention to negotiate the inclusion of
these and other appropriate shared costs into ICASS for FY 99 and
subsequent years
Question 5. Presence of other agencies overseas. Aside from the
other foreign affairs agencies (i.e., AID, USIA), how are decisions
made to place personnel from other U.S. government agencies overseas?
In other words, what are the bases of such decisions, and what criteria
are used to assess whether to place personnel from other agencies
overseas?
Answer. Decisions to place USG personnel overseas are generally
based upon the same criteria, regardless of which U.S. agency is
assigning its personnel. Agencies use their own internal assessment
mechanisms to determine if and when a new overseas position is needed.
These assessments include, but are not limited to, reviews of current
and anticipated workload, agency priorities, available funding, and
Congressional mandates. Agencies may also consider whether an increase
in staffing at one post can be offset by a decrease at another post, if
existing support mechanisms are sufficient, and what kind of staffing
is needed (personnel traveling from the continental U.S. or other
posts, temporary personnel, or locally hired personnel).
If an agency determines it must establish a new position overseas,
it coordinates with the appropriate chief of mission. Informal
coordination is always encouraged. However, to add full-time,
permanent, direct-hire positions, an agency submits a formal proposal
to the chief of mission for approval. A formal proposal should provide
detailed justification, such as the findings of the agency's internal
assessment.
As the personal representatives of the President, chiefs of mission
have responsibility and authority over all USG Executive Branch agency
operations and activities within their missions, except those detailed
to an international organization or under the authority of an area
military commander. Chiefs of mission are charged by law and the
President to direct, coordinate, and supervise all mission personnel
under his/her authority.
In making their decisions, chiefs of mission take into account the
agencies' detailed justification, the views of concerned State
Department offices, substantive policy considerations, and the adequacy
of administrative support. The policy goals and objectives of the
mission, political realities, security implications, and other issues
are also considered by chiefs of mission. Once the chief of mission has
determined that the staffing change requested is essential, approval is
granted and the concerned agency may assign its new personnel overseas
If a staffing change proposal is disapproved, the concerned agency has
the option of appealing the chief's of mission denial to the Secretary
of State. Chiefs of mission are also directed by the President to
initiate staffing changes whenever they consider current staffing
within their missions to be either inadequate or excessive to the
performance of essential mission functions.
Question 6. Diplomatic Security. Back in 1986, the Committee, in
cooperation with the Reagan administration--and based on the
recommendations of the Inman Commission--pushed through new legislation
designed to enhance our diplomatic security.
Now that we have had a decade of experience with the law, give us
your assessment of the successes and failures over the past ten years.
Please provide a summary of the ``risk management strategy''
referred to in your statement. Provide the information in
classified form if necessary.
How often are the assessments revalidated?
Answer. The Advisory Panel on Overseas Security, headed by retired
Admiral Bobby Inman, was convened in 1984 to address the chilling
phenomenon of terrorism at our missions abroad. On November 4, 1985,
the Bureau of Diplomatic Security (DS) was created and the Inman
Panel's recommendations received strong support from Congress.
At that time nearly half of our diplomatic facilities overseas were
highly vulnerable to threats requiring physical and technical security
countermeasures. Many of our embassy facilities fronted onto busy
streets and were open to bomb attacks; others were vulnerable to
espionage as the result of shared buildings with non-U.S. tenants.
Much has been accomplished in the past 10 years at our missions
abroad. Physical security projects (e.g., perimeter walls, public
access controls guard booths, bollards) have been completed at all
posts based on security standards appropriate to the situation and
level of threat at each post. Security standards for protection of
sites and materials for diplomatic facilities under construction or
major renovations abroad are now employed at all project sites.
To protect the homes and families of mission employees, including
those of other Foreign Affairs agencies, residential security upgrades
(e.g., locks, lights, grilles, alarms) have been provided to 216 posts.
Like the physical security program, residential security is an on-going
effort because of new acquisitions and lease terminations.
Consistent policies and standards were developed for the local
guard program, and a local guard manual was published. The Local Guard
Program is currently administered by DS security professionals. In
addition to local guard forces, Marine Security Guard detachments are
currently deployed at 121 posts.
In the technical security area, DS developed policies and standards
for information systems security and initiated the technical
Countermeasures Program (CMP), which was recommended by the Inman
commission. CMP was charged with the development of programs, equipment
and policies to address the technical security threat abroad. Some of
the CMP initiatives included development of technology to address
electronic eavesdropping and the development and installation of
treated conference rooms to provide secure conference and processing
facilities.
To address the threat of espionage, or the human intelligence
threat, DS designed a counterintelligence program to deter, detect and
neutralize the efforts of hostile intelligence agencies against our
employees.
The focal point of our security efforts is the Regional Security
Officer (RIO), who is responsible for the management of all post
security programs. Required to complete a formal, in-depth training
program, RSOs are augmented by a cadre of Security Engineering
Officers, Diplomatic Couriers, Security Specialists, and other
professionals. The DS training function now provides a comprehensive
training program. Security training is available, as appropriate, to
the entire Foreign Affairs community in numerous security specialities
and at many levels of instruction.
As our security program was built up and evolved following the
Inman Commission recommendations, many realized that adequate security
for one post may be excessive at another post in a less threatened
environment. Since 1990, the Bureau of Diplomatic Security has issued
46 standards developed through the Overseas Security Policy Board
(OSPB), which consists of representatives from all agencies represented
at U.S. missions abroad. The standards applied at each post are
determined by its threat level (low, medium, high, or critical) for
each of four categories of major security threats overseas: 1)
Political Violence/Terrorism; 2) Human Intelligence or Espionage; 3)
Technical Penetration; and 4) Crime.
Because the security standards were developed by threat level, they
are inherently flexible, and assist DS with adjusting to changing
threat environments. The threat environment overseas is monitored on a
daily basis, with emergency and critical threat requirements receiving
priority attention. DS promulgates formal threat assessments
semiannually in the Departmental Composite Threat List with input from
the intelligence community and other sources. The threat list, which
rates each post in every category, serves as the basis for the level of
security support a post receives.
By updating original standards and developing new standards for
emerging technologies such as cellular phones, DS keeps the standards
process dynamic and responsive to the actual security environment
overseas. The development and application of a Risk Management approach
has further refined this process to ensure resources are managed
effectively and efficiently.
The Bureau of Diplomatic Security, in cooperation with the Overseas
Security Policy Board, developed the Risk Management policy, which was
issued on July 20, 1994. The policy calls for a detailed examination of
1) the threat that a specific post is facing, 2) the vulnerability of
our physical assets to that particular threat, and 3) the value of the
physical assets. Based on this analysis DS adopts appropriate and cost
effective countermeasures. The recommendation states whether an
exception to the standards should be granted or whether a different
countermeasure, other than the one contained in the standards, should
be applied. In this way countermeasures are more accurately tailored to
post, often avoiding costs of unnecessary security upgrades. When a
post's threat level changes, or when a post changes its level of
classified processing, countermeasures based on standards plus the
application of the Risk Management policy are reassessed and adjusted
as necessary.
The application of the Risk Management policy has made it possible
for the Department to use resources more effectively and efficiently.
Resulting savings can be deployed to meet our most pressing security
needs and other high priorities.
Question 7. Information Resources Management
How will the State Department facilitate a smooth transition at the
staff level from the Wang computer system to new systems? How will the
overseas personnel be included in this process?
Answer. The transition is already underway. Many employees are
already using new systems for word processing, spread sheets and data
bases. We recognize that expansion of our training and education
program for information resource management professionals must be an
essential component of the transition to modern information systems.
To achieve a comprehensive and integrated training program, we
recently established a School of Applied Information Technology at the
Foreign Service Institute. Our goal is a technologically competent
workforce capable of adapting to the changing IRM environment in
Washington and our overseas posts. The School will, taking into account
existing personnel capabilities, IRM core competencies and the
particular technologies embedded in our modernization plan, ensure that
curriculum and resources are appropriately directed to areas of need.
The School is currently engaged in providing training to overseas post
personnel on the Wang replacement hardware and software.
We need to leverage scarce training dollars and intend to employ
the most advantageous delivery systems and training philosophies. Thus,
while more traditional methods like classroom instruction and mentoring
continue to be alternatives, we also utilize, for both overseas and
domestic students--computer and video based training. In addition, we
are currently running distance learning pilots.
Question 8. Security and Computer Modernization.
With different levels of confidentiality, ranging from unclassified
to top secret, it seems that ensuring the security of documents and
correspondences will be challenging indeed. Presently some offices have
up to three different computer systems at one work station. Greater
demands are being placed on the State Department to communicate by
computer with other U.S. agencies and to outside organizations--
possibly increasing the vulnerability of State's information system.
How will modernization efforts reduce the volumes of computers,
streamline the information system, facilitate communication with other
agencies, while ensuring a high level of security? What, if any, are
the new security risks posed by the information technology changes, and
how will those risks be addressed?
Answer. One of the important benefits of the modernization plan is
the enhancement of information security it offers by enabling the
review of vulnerabilities at critical connection points. That is not
possible today in an environment of multiple computer systems. At the
same time, however, because we are moving away from a proprietary
environment to open systems standards, the network may be more
accessible to hackers or more susceptible to the insertion of viruses.
We are cognizant of the increased exposure to risk and the compromise
of information, and we intend to monitor the network carefully. We will
regularly update our firewall programs and our anti-virus security
software, so as to be able to close security loopholes as soon as they
are discovered. Adoption of opens systems standards will afford us
considerable flexibility and the opportunity to take advantage of the
growing number of vendors offering security software, hardware,
encryption techniques and training.
In order to ensure that our modernization plan takes information
system security fully into account, we have adopted a lifecycle
approach to program management. We require that information security be
explicitly addressed at the outset of any planning effort. Program
plans and budgets must include a discussion of the security issues that
may be anticipated over the lifetime of a proposed program. Resources
must be budgeted for training, and the acquisition, maintenance and
possible improvement of security hardware and software.
We see a need to expand our training program to specifically meet
our information security management objectives. To this end, we are
working with George Mason University and the National Defense
University on information security training; we are increasing
enrollment in courses on project management; and we are examining the
assignment of information system security officers to major information
technology facilities or programs.
Question. What is the purpose of the proposed conference on
international environmental cooperation?
Answer. Securing favorable international agreements is only one of
the steps necessary to protect our environmental interests. Agreements
must be structured with compliance in mind, and when agreements are
concluded we must work with governments to ensure that they meet their
obligations. for this reason, former Secretary Christopher announced,
as part of his initiative to put environmental issues into the
mainstream of U.S. foreign policy, that the U.S. would host a
conference on compliance with international environmental agreements.
While a date for the conference has not yet been set, we anticipate
an early 1998 timeframe. The list of invitees will include foreign
government personnel involved in the negotiation of environmental
agreements, as well as officials of environment, industry, trade,
finance and other ministries involved with enforcement and
implementation, and relevant industry groups and NG0s. Exact location
and format are not decided. We will keep congress informed as planning
progresses.
We hope the conference will produce practical approaches to
ensuring compliance with agreements we have negotiated and which may be
negotiated in the future.
__________
Responses of Mr. Kennedy to Questions Asked by Senator Feinstein
Information Management
Question 1. I am glad that the Department is taking action to
overhaul its information technology. In the age of CNN I think it is no
understatement to say that the effective management of information is
critical to America's diplomatic success. I am troubled, however, by
one aspect of the Department's plans: When the Department purchased the
Wang system a little more than a decade ago it was considered state of
the art by many inside and outside government. Now it is a very
expensive paperweight. Given the rapidity of the computer and
information revolution, what assurances can you give this Committee
that ten years from now, having endorsed a costly new computer and
information system for the Department to see us into the new
millennium, we will not be once again be faced with a similar
situation?
Answer. The original Wang equipment utilizes proprietary technology
that precludes the integration of more modern information systems and
applications. During the last several years the industry has moved to
open system standards which permit the integration and utilization of
new hardware from multiple vendors, and modern software applications.
The Department is committed to a strategic information resource
management plan at the heart of which is implementation of an
information technology architecture that will allow us to evolve or
maintain existing information technology while acquiring new
information technology. This architecture is predicated on established
industry standards, i.e., open systems, which are conducive to
interoperability and the use of commercial software applications, such
as financial and personnel data bases.
A further important feature of the Department's strategic
information resources plan is life cycle management of information
technology. We will periodically replenish our technology base in order
to meet the business requirements of the Department. Open systems
standards provide flexibility and a cost effective operating
environment.
(Editor's Note: Question 2 was crossed out.)
Information Management
Question 3. What efforts are being made by the Department to
integrate new communications technology--such as e-mail or video-
conferencing--into the way in which the Department conducts business?
Do you anticipate-that these changes--overhauling the present cable
writing and review process in light of electronic communication, for
example--will have any significant management or financial impacts on
the Department?
Answer. Extensive discussions with Department staff and an analysis
of the Department's missions underpin the Department's strategic
information resources management (IRM) plan. We will improve or
introduce new capabilities so that users can get their work done. We
have already seen the impact of new information technologies.
E-mail, with the capability to attach documents, has become an
established means for Department staff to collaborate and coordinate.
In January alone this year there were over 343,000 e-mail messages. At
the same time, there are important issues with management and financial
consequences to be considered. For example, e-mail messages may not be
used as a substitute for established policy channels, including cables.
Certain e-mail messages may fall within the definition of records in
the Federal Records Act and, as such, they must be preserved in
accordance with law and regulation. Finally, in view of congestion at
network gateways, and the need to introduce common messaging and
directory standards, our strategic IRM plan includes investments to
improve the overall performance of our e-mail system.
We have more limited experience with video-conferencing. The
Diplomatic Telecommunications Service Program Office (DTS-PO) recently
supported two video-conferencing pilot projects, one involving studio
video conferencing for USIS in Geneva, and the other involving desktop
video-conferencing for USAID in Jakarta. In addition, several
Department Bureaus, in collaboration with USIA, have been using USIA
video-conferencing facilities in Washington and overseas to conduct
bilateral conferences and negotiations. They will soon begin to use a
video-conference facility in the State Department, and, as previously,
host country officials will be invited into the USIA video-conferencing
facilities. Finally, we are also examining the opportunities to broaden
the reach of training programs through introduction of distance
learning via video-conferencing.
The information technology architecture which is central to our
strategic information resource plan will allow for the orderly
introduction of video-conferencing services once industry standards
have been established and video-conferencing becomes a broadly-based
and validated business-need. The bandwidth requirements are heavy,
however, and may constrain development and implementation.
Border Security Program
Question 1. According to the Department's Tactical Plan for
Information Resources Management, one of the goals that you are
currently trying to meet is to strengthen border security through
``more reliable name check processing and improved integrity of
passports and visas.'' I was wondering if you could describe for me
what some of the problems and dangers with the current system are, and
how, more specifically, these improvements will make the name check
processing more reliable. I was also wondering if you might comment on
the coordination process between the Department and other federal
agencies on these issues.
Answer. The Department of State's efforts to improve border
security are rooted in four issues: information, infrastructure,
communications connectivity and human resources. Improving the quality
of name checks requires targeted investments in at least three of these
areas. The basis for name checks is having access to information
generated by both the Department of State and other federal agencies
regarding persons who may be inadmissible to the United States.
Significant strides continue to be made in this area. In 1994 the
database in the Consular Lookout and Support System (CLASS) totaled
some 3 million records. Today, owing to the willingness of other
federal agencies to share data, there are more than 5 million records
in CLASS. Furthermore, on-going negotiations with the FBI could result
in significant growth in this database through the inclusion of
information on persons who were born abroad, but who have a U.S.
criminal history.
The second method to strengthen name checks requires improving the
speed and accuracy of the linguistic-based algorithms which actually
perform the name comparisons. In 1994, before the Department was
authorized to retain Machine Readable Visa fees, there was only one
general purpose algorithm which performed all name checks. Today, that
general purpose algorithm has been improved and has been augmented by
both a date-of-birth algorithm used for all name checks as well as a
specialized algorithm which performs name checks on names of Arabic
origin This process of specialized name checks will grow in FY-1998
with the introduction of an Hispanic language algorithm.
The next element in improving name checks requires significant
investments in the mainframe computer system upon which CLASS operates.
Such a major investment is planned for late in FY-1997. This
investment, in turn, will allow for the introduction of a new version
of CLASS which operates as a relational database and allows for more
robust data management techniques. Finally, there is the issue of
communications connectivity between the Department and visa-issuing
posts. The most accurate name checks are those performed against the
Department's mainframe computer in Beltsville, Md. That computer has
both an up-to-date database as well as more powerful algorithm than can
be installed at the post level. Today, and as a direct result of the
Department's ability to retain MRV fees, every visa-issuing post has
on-line connectivity to the CLASS database in Beltsville.
Regarding the issue of cooperation with other federal agencies, the
growth in the CLASS database--about 60 percent in the last three years-
demonstrates the willingness of federal agencies to share data to help
keep our borders as secure as possible.
Question 2. Mr. Kennedy, I was wondering if you could expand on the
Department's efforts to increase border security.
As I understand it, the revenues generated by the Department's
Machine Readable Visa programs are going to be earmarked for the
Department as part of a government-wide initiative supported by the OMB
to link user fees more directly to those departments and agencies
responsible for the revenue. These MRV fees, in turn, will become
central to creating the budget needed to implement the Department's
Border Security Programs.
What would happen to border security efforts if these fees do not
become available to the Department because the government-wide program
does not go through? I was also wondering if you could explain how you
derived the $140 million estimate for fees from MRVs, and what the
potential impact would be if MRV fees generated considerably less than
this amount?
Answer. Since 1994 the Department of State has had the authority to
assess and retain a fee imposed on all applicants for Machine Readable
Visas. The proceeds of this program must be used to finance ``consular
operations.''
While the MRV fees are part of the Administration's overall
proposal to allow for fee retention, it should be understood that the
Department currently has this authority in terms of MRV revenue and has
financed the entire Border Security program from MRV proceeds. Any
development which ended the Department's authority to retain MRV fees
would have a devastating effect on our efforts to continue to improve
U.S. border security. Not only would our new investments in systems and
technology have to end, but we would be unable to finance the people
and infrastructure currently committed to the Border Security program.
The estimate of $140 million in MRV revenue in FY 1998 is based on
the projected workload of 7 million visa applications and the current
fee of $20 per person. The FY-1998 estimate represents an increase of
only 2 percent above our current projection that FY-1997 collections
will amount to nearly $137 million.
Should MRV collections decline for some reason, for example, as a
result of a widespread conflict or epidemic that limits international
travel, the Department would be faced with a serious resource issue. We
would have reduced revenues, but our costs would not decline
immediately. We have engaged in some preliminary planning about such a
contingency, however. The first option would be to finance on-going
border security activities by drawing down all balances in the MRV
account That would probably finance a few months of services. Should
the decline in revenue continue beyond that point, however, the
Department would have to undertake an aggressive effort to reduce its
border security costs to the level required by demand for visa
services. Such a development, while unlikely, would almost certainly
result in staff reductions and the cancellation of planned investments
in border security technology.
China 2000
Question. Beyond additional language classes, I was wondering if
you could provide me with more information on the efforts being
undertaken by the Department to build a cadre of real china experts.
Answer. The Department of State recognizes the need to advance the
rapidly growing interests of the United States with China. Expanding
our cadre of China experts is a keystone of our long-range strategic
plan for accomplishing our mission. The plan has two additional
elements--improving our facilities and our information technologies in
China. These three efforts form the core of our special drive, known as
China 2000, to prepare the Department for near- and long-term relations
with China.
The quality of American diplomacy--and thus our ability to maintain
a productive relationship with the Chinese and advance our strategic
interests--is determined by several key factors. One is developing our
officers' fluency in the Mandarin Chinese language. We have taken steps
to attract the highest quality young officers and staff to positions in
our posts in China. These are employees with the skills, motivation and
commitment to overcome the difficulties of Chinese language training
and to surmount the rigors of serving in china. We are also encouraging
those who succeed in achieving Chinese language proficiency to serve
repeat tours in China--often in different professional areas and with
increased responsibility. Our goal is to increase significantly within
the next six to eight years the number of Chinese-speaking officers
available for assignment to China.
Other steps we are considering include expanding in-country
language training in Beijing and undertaking new recruitment efforts
for Chinese-language proficient and China-experienced FSO candidates.
Although Chinese language capability is important--it is only one
of the tools needed to get the job done. We must ensure that our
employees also have knowledge of the Chinese culture and way of doing
business; they must have analytical and management skills; they must
have knowledge of global issues and the broad strategic interests of
the United States. We are taking steps to ensure that our cadre of
China experts is as well-equipped as possible in such areas.
China 2000
Question. Given the size of the problems that we face in building a
more adequate infrastructure for our diplomatic efforts in China, how
much headway will the $3 million requested in FY 1998 really allow us
to make? Could you expand on the total budget request that China 2000
will entail and how those funds will be phased and used over the next
several years?
Answer. In addition to the Embassy facilities in Beijing, the USG
operates four Consulates General in China: Shanghai, Shenyang,
Guangzhou, and Chengdu. We also operate a Consulate General in Hong
Kong. The facilities we currently hold in Beijing were acquired in the
1970's and have been outgrown by increasing Embassy staff. Work is
needed on housing and office facilities at constituent posts as well.
To meet this challenge the Department is evaluating U.S. Government
projected staffing in China and resulting facility needs.
During FY 1994-1996, inclusive, the Office of Foreign Buildings
Operations has provided over $95 million in direct support of facility
requirements in China (including Hong Kong) and is prepared to proceed
with an upgrade of the mechanical systems in the chancery and with
construction of a Cleared American Annex for the present Chancery in
Beijing which will accommodate the increasing number of Americans for
the near future. The Department presently plans that funding for this
project and other facility requirements in China will come from sales
of excess real property. In addition to the new annex in Beijing, the
chancery will undergo a renovation to improve the mechanical,
electrical, plumbing, heating and air conditioning. The entrance and
receiving areas of the Embassy will be redesigned.
Staff apartments which are leased from the Chinese Government are
sub-standard. The Department is planning to renovate these apartments
and is analyzing the feasibility of constructing housing on a lot which
we presently own.
This project will provide the necessary facilities required now and
in the near term and allow time for longer range development to be
planned and implemented.
In Chengdu, provision of secure communications will require a major
addition carried out by cleared American workers.
In Shanghai, a $8.8 million rehabilitation of the consulate is in
progress and will be finished this year. Residential facilities are
being reviewed as well with the Department looking at construction of
housing on a USG-owned lot. Leased housing in Shanghai is among the
most expensive in the world.
In Guangzhou, the Consulate General and staff residences are co-
located in a single high rise tower. As our lease terminates in 2005,
we are planning for our future office and residential needs. Guangzhou
processes all immigrant visas in the PRC.
In Hong Kong, the Department has underway a major $28.9 million
renovation of the Consulate General which will be completed in May
1997. The rehabilitation included building modifications, security
improvements, fire and life safety improvements as well as the upgrade
of the mechanical and electrical systems.
The Department intends to generate funds for other construction and
major renovation projects throughout China from asset management.
Although we estimate that short term needs can be met utilizing sales
proceeds, the cost of construction of a new Embassy facility in China
would likely require substantial funding beyond the present
availability of sales proceeds.
We expect to acquire a site adjacent to our current facilities (the
Bulgarian Compound) in accordance with the 1991 and 1994 property
agreements upon which a new Chancery could be constructed in the
future.
Question. I understand that the proposed FY 1998 budget does not
reflect the changes that ICASS will have on the Department's budget
Could you expand (on your earlier comments) on the support services
provided by the Department of State to other government agencies under
the current system which will now be shared more equitably under ICASS?
Answer. It is true that the Department of State FY 1998 budget does
not reflect the changes that ICASS will have on the Department's budget
At the time the Department formulated its FY 98 budget, the budget
adjustment numbers related to ICASS had not been finalized. In
addition, the Administration believes that a stand-alone budget
amendment, separate from each agency's Congressional budget request,
will provide a more comprehensive presentation of the transfers and a
unified review by the Congress. In FY 90 the Department attempted a
more equitable sharing of its administrative support costs overseas
through expanded FAAS. In this process, budget adjustments were made
part of the Congressional presentation. As separate Congressional
Appropriations Subcommittees acted on the requests from each agency,
reductions/changes were made to the transfer. As a result, agencies did
not have enough funding to pay their expanded FAAS bills, and expanded
FAAS failed. This time the stand-alone zero-sum budget amendment can be
effected in toto and should provide agencies with sufficient resources
to cover their FY 98 ICASS charges.
The Department of State provides a wide range of administrative
support services to agencies overseas including, personnel
administration, security, housing/leasing, maintenance, procurement,
customs & shipping, information management, and other support services
necessary to maintain government functions overseas. ICASS moves in the
direction of more equitable sharing of these support costs by
distributing several administrative functions, hitherto borne solely by
the Department, among State and all agencies benefiting from the
services. These areas are building operating expenses for our
Chanceries and other government-owned/long-term leased offices, local
guard expenses for offices, and community liaison office costs. ICASS
also opens the way for more comprehensive understanding and sharing of
overseas costs in future years.
Question. Do you anticipate that ICASS, in shifting the burden off
the Department of State, may also create situations in which other
agencies which would find themselves paying for mission administration
may want to have more say in how overseas missions are run than is
consistent with the agency missions, but not necessarily in the best
interest of US diplomacy? What sort of consultative and coordination
processes to settle issues of mission management does ICASS put in
place?
Answer. ICASS contains a number of features which, while providing
for customer feed-back and encouraging service-provider responsiveness,
preserves the Department's ability to maintain its operating platform
overseas and to conduct its core diplomatic function. The ICASS Council
at overseas posts acts like a corporate board of directors in
overseeing the provision of support services. The service provider
(generally the Administrative Counselor of the Embassy) as well as the
Deputy Chief of Mission are members of the Council. Decisions are
reached preferably by consensus and, if that is not possible, by a two-
thirds vote. In extreme cases--a Chief of Mission may overrule a
Council decision if it jeopardizes the Department's ability to maintain
its operating platform and conduct its core diplomatic function.
At the Washington level, ICASS is managed by the Department's
Financial Management Bureau and its ICASS Service Center. Policy is set
by an inter-agency body, the ICASS Executive Board, currently chaired
by the Department of State Assistant Secretary for Administration and
by the Washington ICASS Working Group.
In sum, ICASS is a participatory, performance-based, cost-driven
system of providing administrative support services to our overseas
missions which preserves the Department of State's diplomatic and
management functions.
Question. The past several years have seen an increasing number of
American diplomats lose their lives or be placed in harm's way in the
pursuit of American diplomacy. Indeed, sometimes it seems that at a
time we are increasingly hesitant to put our soldiers in potentially
dangerous situations we do not think twice about sending our diplomats.
For that I believe that the State Department and America's diplomatic
corps deserve our thanks, and support.
In the last two years we have provided the Department with two
specific counter-terrorism appropriations. Given the risks that we ask
our diplomats to face, could you provide us with additional information
about the Department's counter-terrorism programs, and how the efforts
of the Diplomatic and Consular Programs and Security and Maintenance of
U.S. Missions programs are coordinated? What progress is being made
towards the implementation of the 1997 Anti-terrorism Budget Amendment?
Is there any program or effort to increase diplomatic security that
you would like to be able to undertake but for which you feel the
current budget request does not provide sufficient funds?
Answer. The security of our posts and all our personnel is a solemn
responsibility, and we can have no higher priority. We very much
appreciate your support for the diplomatic corps and for the
Department's security programs.
Attached is a report we have prepared that details how the
Department is applying the portion of the Fiscal Year 1997
Antiterrorism Budget Amendment that provides for security enhancements
under our Diplomatic and Consular Programs account. The report
addresses the important questions you have raised.
Plan for Implementation of
Funding for Counterterrorism Requirements Overseas in
Title IV, Departments of Commerce, Justice, and State,
the Judiciary, and Related Agencies
Appropriations Act, 1997
Section 101(a) of Division A of P.L. 104-208
(Making Omnibus Consolidated Appropriations For
Fiscal Year 1997)
IMPROVING THE SECURITY OF
U.S. DIPLOMATIC FACILITIES AND INCREASING
THE PROTECTION OF PERSONNEL OVERSEAS
FY 1997 COUNTERTERRORISM BUDGET AMENDMENT
DIPLOMATIC AND CONSULAR PROGRAMS
FUNDING FOR COUNTERTERRORISM REQUIREMENTS OVERSEAS
DECEMBER 1996
($23,700,000)
Consistent with the Conference Report to the FY 1997 Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies
Appropriations Act, P.L. 104-208, this report is provided to detail the
Department of State's plan to apply the $23.7 million portion of the
Counterterrorism Budget Amendment to security enhancements for U.S.
diplomatic facilities and increasing the protection of personnel
overseas.
Our embassies and consulates are essential platforms for American
interests. This goes beyond the day-to-day conduct of foreign policy.
They are the platforms for a wide range of activities such as law
enforcement and promotion of U.S. security and economic interests. The
State Department's diplomatic readiness has been significantly eroded.
We have shortfalls in every major component--facilities, housing,
training, information management, post operating equipment and
security. The Department is extremely appreciative of the resources
made available in this bill to enhance security, primarily in the
Middle East, and to make an initial down payment on the security
infrastructure gap that has to be addressed over the next several
years.
I. OVERSEAS PHYSICAL SECURITY SUPPORT: $12,260,000
LOCAL GUARD PROGRAMS ($6,000,000)
Funding limitations have required the Department to fund and staff
local guard programs at the minimum level allowed by Overseas Security
Policy Board approved standards in most cases. Additional funding will
supplement guard programs at high and critical threat posts to enhance
those essential staffing levels. The funding will provide for
additional countersurveillance teams and mobile patrols, increased
numbers of fixed guard posts at high profile installations and
residential complexes, and guard vehicles and other equipment to meet
the prevailing threat.
In the Middle East, the following posts will receive supplemental
guard funding: Abu Dhabi, Algiers, Amman, Beirut, Cairo, Damascus,
Dhahran, Dhaka, Dubai, Islamabad, Jeddah, Jerusalem, Karachi,
Kathmandu, Kuwait, Lahore, Manama, New Delhi, Peshawar, Rabat, Riyadh,
Sanaa, Tel Aviv and Tunis. An estimated $500,000 will be utilized to
meet increased contract and pay requirements at other high and critical
threat posts to maintain existing or enhanced security coverage levels.
RESIDENTIAL SECURITY PROGRAMS ($1,000,000)
Most of these funds will be utilized for residential security
equipment upgrades to high and critical threat posts and for shatter
resistant window film (SRWF) in residences in the Middle East region.
Since residential security funds for medium and low threat posts had
been deferred to support the needs of high and critical threat posts,
the remaining funds will allow the Department to fully fund posts at
all threat levels, which would bring them into compliance with the
residential security standards.
FULLY ARMORED VEHICLES ($2,160,000)
The Bureau of Diplomatic Security (DS) intends to provide sixteen
(16) fully armored vehicles to posts in the critical/high threat
category for the transportation of employees under heightened risk.
DS has begun processing orders for seven fully armored carry-all
vehicles, and will procure nine additional vehicles during the last two
quarters of Fiscal Year 1997. As soon as the first order for four
vehicles is delivered, a fully armored vehicle will be sent to each of
the following posts:
Kuwait, Jeddah, Riyadh and Sanaa.
The remaining l2 vehicles, upon delivery, will be sent to the
following posts:
Amman (1), Beirut (2), Cairo (2), Damascus (2), Jeddah (1),
Jerusalem (1), Kuwait (1), Riyadh (1) and Tel Aviv
LIGHT ARMORED VEHICLES ($1,700,000)
Posts in the Near East region require additional light armored
fleet vehicles to safely transport staff and dependents. The Department
is placing an order with the General Services Administration for 27
carry-all vehicles. Upon delivery, sixteen fleet vehicles will be light
armored by the Department's contractor and sent to the following posts:
Abu Dhabu (1), Algiers (2), Amman (2), Cairo (2), Dhahran (1),
Jeddah (1), Jerusalem (2), Kuwait (2), Manama (2) and Riyadh
(1).
Six of the remaining vehicles will be configured as follow cars to
support protective security missions at the following posts:
Beirut, Cairo and Tel Aviv.
The five remaining vehicles will be temporarily retained by DS for
shipment as contingencies arise during the year. In addition, a 28-
passenger bus is being light armored for use by the Embassy in Riyadh.
PHYSICAL SECURITY CONTRACTOR SUPPORT ($400,000)
The increased funds being provided the Office of Foreign buildings
in the Budget Amendment for Security and Maintenance of U.S. Missions
($14,300,000) will impact directly on the workload of the Physical
Security officers in the Bureau of Diplomatic Security. To meet the
increased workload, DS plans to hire, under contract, four physical
security professionals and provide necessary funds for their travel.
DS is requesting the contractor supporting the Physical Security
Programs to provide the additional four security professionals
commencing March 15, 1997. These persons will perform site visits to
posts in the Middle East region; design physical security improvements;
interpret regulations and standards; perform technical surveillance
inspections; examine the results of the enhancements performed by
commercial contractors; provide necessary transit security for the
materials used; and prepare reports to Congress in accordance with
relevant statutes confirming that the work will be performed in a
secure manner.
PUBLIC ACCESS CONTROL EQUIPMENT ($400,000)
Each overseas post has at least one walk-thru metal detector (WTMD)
and a limited number of hand-held metal detectors. DS plans to use the
available funds to provide 80 additional WTMDs to critical and high
threat posts. DS anticipates completing procurement during the third
quarter of Fiscal Year 1997.
SPECIAL PROTECTIVE EQUIPMENT ($300,000)
State Department security officers have worldwide security and law
enforcement responsibilities. The bullet proof vests currently issued
to them no longer meet acceptable standards of protection due to age
and normal deterioration. DS needs to purchase 190 replacement vests;
purchase other special protective equipment (e.g., pistols, holster/
handcuffs, training ammunition, ballistic vests) for the 55 new agents
funded by the Counterterrorism Budget Amendment; and purchase 45
automatic weapons and 45 sets of night vision equipment to meet
existing requirements.
DS plans to purchase the replacement vests during the third quarter
of Fiscal Year 1997. The equipment needed for the new agents and the
automatic weapons and night vision equipment will be purchased in the
third and fourth quarters of Fiscal Year 1997.
REGIONAL SECURITY OFFICER TRAVEL ($200,000)
DS plans to fund additional temporary duty costs for Regional
Security Officers (RSOs) to travel to high and critical threat posts,
particularly those in the Persian Gulf, to ensure professional security
officer oversight continues during assignment gaps, to conduct security
surveys, and to support resident RSOs during incidents requiring an
emergency response. Countries requiring this additional intensive
travel support include Bahrain, Egypt, Kuwait, Qatar and Saudi Arabia.
USIA/PEACE CORPS SUPPORT ($100, 000)
DS will provide additional security support to USIA for Emergency
and Evacuation Radios ($50,000) and to the Peace Corps for selected
physical security upgrades ($50,000).
II. OVERSEAS TECHNICAL SECURITY SUPPORT: $5,840,000
ELECTRONIC SECURITY EQUIPMENT ($2,000,000)
Approximately 60% of the technical security equipment, valued in
excess of 100 million dollars and installed at overseas locations, was
purchased between 1986 and 1988 using ``Inman'' funds. DS plans to use
the funds approved to replace 80 aging, closed circuit television
(CCTV) and alarm systems at critical and high threat posts.
Tests are currently being conducted on systems compatible with
existing equipment. The selection and award of contracts is expected to
take place during the third or fourth quarter of Fiscal Year 1997.
SECURITY EQUIPMENT MAINTENANCE ($800,000)
There is an insufficient number of Security Equipment Maintenance
Program (SEMP) teams to adequately maintain the multi-million dollar
inventory of electronic equipment installed at critical and high
technical threat posts.
DS plans to increase the number of teams from 8 to 10 as of March
15, 1997, and authorize the hiring of contract U.S. citizen personnel,
residing overseas, to perform maintenance on security systems under the
direction of the regional Security Engineering Officers. This
additional labor effort will allow reduction of the length of time
between maintenance visits to critical and high threat posts from 10
months to 8 months.
SEABEES/ENGINEERING SUPPORT ($1,200,000)
Additional Seabee and Security Officer engineering support is
required in several areas. First, it is necessary to restore $500,000
in temporary duty travel funds to meet continuing and new requirements.
In addition, five Foreign Service National Personal Service Contractors
costing a total of $150,000 are needed in Cairo (2), Rio de Janerio,
Manila and Athens. Next, four additional Seabees at a cost of $315,000
are required in Manila (3) and Athens (l) to strengthen regional
efforts in these two areas. Fourth, four vehicles costing $130,000 need
to be added or replaced--two in Frankfurt and one each in Mexico City
and Vienna. Finally, $105,000 is needed to restore funds for the
Engineering Support program which absorbed pay increases for the
Seabees.
EXPLOSIVE DETECTION EQUIPMENT ($1,840,000)
DS plans to purchase desk top explosive detection analyzers, with
hand portable sample collectors, for testing at critical and high
threat posts. The unit would supplement existing equipment, supporting
current security procedures, to prevent bombs from being introduced
into the office facilities. To explore technical capability of other
explosive detection systems, DS also will procure additional systems
for operational comparison.
III. MOBILE TRAINING AND EMERGENCY SECURITY: $275,000
Because of increased terrorist activity, particularly in the
Persian Gulf region, six additional mobile training and emergency
support teams of four persons each are needed to provide emergency
security support, security awareness training and training for guards
and drivers. During Fiscal Year 1997, DS plans to purchase equipment
(clothing, weapons and laptop computers) for these teams ($125,000),
begin training them ($100,000), and support Crisis Management Exercises
training overseas provided by the Foreign Service Institute ($50,000).
IV. INFRASTRUCTURE DEFICIENCIES: $4,117,000
NIS REQUIREMENTS ($1,972,000)
There is a comprehensive need to upgrade technical security at
posts in the Newly Independent States (NIS) of the former Soviet Union.
A recent report of the Department's Inspector General stated that
technical security requirements were the most neglected security
element in these posts. Accordingly, numerous actions need to be
undertaken in FY 1997 as follows: procurement of special technical
security equipment for Bishkek, Tashkent, Dushanbe, and Minsk
($500,000); improved entry detection systems for 12 NIS posts
($420,000); development and installation of light radio frequency
shielding throughout the NIS area ($500,000); access control and
visitor screening ($60,000); other technical security equipment such as
CCTVs and sensors ($70,000); and three TDY Seabees andtravel for
installation ($422,000).
BUILT-IN CONFERENCE ROOMS ($240,000)
Built-in conference rooms are a low-cost risk management
alternative to Modular Treated Conference Rooms to conduct classified
conversations and processing at medium technical threat posts overseas.
In Fiscal Year 1997, these resources will be used to provide rooms to
three posts at which deteriorating conference rooms protect classified
discussions and classified automated processing activities.
IMPROVED ENTRY DETECTION SYSTEMS ($450,000)
This effort will allow the purchase of 18 improved entry detection
systems each year at critical, high, and medium threat posts. These
devices will supplement 24-hour U.S. cleared presence at posts abroad
in a cost-effective way and significantly extend coverage beyond
current limits.
COUNTERMEASURES EQUIPMENT ($1,455,000)
DS plans to restore countermeasures activities which have been
severely curtailed because of recent budget constraints. Specifically,
DS will purchase state of the art radio frequency devices, i.e., signal
analyzers and computer-controlled receivers ($450,000); new sets of
detection equipment ($400,000); new suites of Tempest testing equipment
($500,000); new equipment to test classified information processing
areas ($75,000); and software for safeguarding local area networks
($30,000).
V. AMERICAN SALARIES: $1,208,000
The Department will fund 65 security and counterterrorism positions
in Fiscal Year 1997. Although the annualized salary cost for these
positions is about $4,000,000, the Fiscal Year 1997 new hires will not
be on board, on-average, until the last quarter of the fiscal year. The
difference between the full year costs of $4 million and the $1.2
million Fiscal Year 1997 costs will be used to fund most of the
infrastructure deficiencies detailed in section IV.
DIPLOMATIC SECURITY $1,048,000
The Department will hire 61 officers (55 special agents and 6
engineers) to support an increased effort in the Persian Gulf (53 of
the positions) and elsewhere throughout the world to combat terrorism.
The new positions will be distributed as follows:
-- 6 Security Engineering Officers to plan and oversee the
installation and maintenance of equipment for planned projects
at critical and high threat posts.
-- 6 Physical Security Officers to handle increased physical security
projects at critical and high threat posts abroad and to
conduct physical security surveys to assess terrorism
vulnerability at our posts overseas.
-- 24 Mobile Security Officers to form six additional teams which will
allow training at each of the 125 critical and high threat
posts worldwide every other year.
-- 10 Protective Intelligence Officers to conduct and coordinate
investigations of terrorist threats or attacks against our
posts overseas.
-- 15 Security Officers to increase support to posts in the Persian
Gulf and Eastern Europe, including (11) overseas positions and
(4) in Washington, D.C., to directly support overseas
operations.
INTELLIGENCE AND RESEARCH $160,000
The Department will fund four counterterrorism positions within she
Bureau of Intelligence and Research (INR). The additional positions
increase the Department's overall counterterrorism and diplomatic
security capacity, and help the Department recognize areas of increased
terrorist activity before major security issues arise. These positions
improve counterterrorism coordination, and increase analytical
capability for the Middle East, South Asia, and in areas of
international crime (a growing component of the fight against
terrorism). These positions complement the diplomatic security position
increases, and help to provide comprehensive coverage on
counterterrorism and security issues.
__________
Responses of Mr. Kennedy to Questions Asked by Chairman Helms
Question. Are you aware that numerous American businessmen with
prior government service have been denied visas to visit or conduct
business in Russia based upon false charges that they are engaged in
espionage?
Answer. The Russian Government has denied entry permission to
several individuals we are aware of on the grounds that, as former
employees of U.S. intelligence agencies who had previously served in
Russia or the Soviet Union, they were responsible for actions against
Russian interests. We are not aware of any individuals to whom the
Russians have denied entry permission on these grounds who were not
former employees of U.S. intelligence agencies who previously served in
Moscow or elsewhere in the former Soviet Union. For some time until
October 1996, we assumed that such denial of entry permission to former
U.S. intelligence officials was Russian policy. The Russian Government
specifically affirmed it to us in the course of discussions following
the October 1996 U.S. arrest of former KGB officer Vladimir Galkin upon
his arrival at JFK International Airport. The Russians protested that
their practice is to deny admission to former U.S. intelligence
officials--not to admit them and expose them to the possibility of
arrest.
Question. What is the State Department doing to rectify this unfair
treatment of U.S. citizens who otherwise served our nation with honor
and distinction during the Cold War?
Answer. The Russian Foreign Ministry has noted that, in analogous
situations, the U.S. would either deny entry permission or admit the
individuals subject to possible arrest for violation of the Espionage
Act. In consultation with U.S. intelligence agencies, the State
Department has raised, on a case-by-case basis with the Russian Foreign
Ministry, the situations of former U.S. intelligence of officials who
have been denied Russian visas or entry permission.
Question. What steps has the State Department taken to ensure that
all equivalent Russian visa applications are denied on a reciprocal
basis?
Answer. All applicants related to the Russian intelligence
gathering community are reviewed individually under INA 212(a) (3) (i).
That section renders inadmissable ``any alien who a consular officer of
the Attorney General knows, or has reasonable ground to believe, seeks
to enter the United States to engage in solely, principally, or
incidentally in.... (i) any activity (I) to violate any law of the
United States relating to espionage or sabotage or (II) to violate or
evade any law prohibiting the export from the United States of goods,
technology, sensitive information....'' No requirement of reciprocal
treatment is imposed by the provisions of the INA in this regard.
Question. Will you support legislation in the Foreign Relations
Committee permanently prohibiting the issuance of a United States visa
to all active or retired Russian intelligence officials?
Answer. We do not believe such legislation is appropriate or
necessary. INA 212(a) (3) (i) provides the Attorney General the
authority to render inadmissible ``any alien who a consular officer of
the Attorney General knows, or has reasonable ground to believe, seeks
to enter the United States to engage in solely, principally, or
incidentally in .... (i) any activity (I) to violate any law of the
United States relating to espionage or sabotage or (II) to violate or
evade any law prohibiting the export from the United States of goods,
technology, sensitive information....'' We believe this legislation is
effective. We believe that categorical and binding legislation would
create significant difficulties for important U.S. foreign policy
interests. We would be prepared, along with the intelligence agencies,
to discuss this matter further in a classified format.
__________
Responses of Mr. Kennedy to Questions Asked by Senator Grams
1. STATE DEPARTMENT EMPLOYEES
Question. 1. Please detail the total number of people who are
currently employed worldwide by the U.S. State Department in any
capacity, including (but not limited to) Foreign Service, civil
Service, foreign nationals, part-time and temporary employees, and
contractors. Please also provide a breakdown by type of employee.
Answer. The Department of State employs 20,971 Full-time Permanent
and 1,444 Part-time, Temporary employees. In addition, 15,594 people
are employed as Contractors and Personal Service Contractors.
Full-time Permanent Employee
----------------------
Foreign Service............................................ 7,936
Civil Service.............................................. 5,146
Foreign Nationals.......................................... 7,889
------------
Sub-Total............................................... 20,971
Part-Time/Temporary........................................ 1,444
Contractor Personnel
----------------
Contractors \1\ (Domestic)................................. 3,594
PSC--Overseas \2\.......................................... 12,000
------------
Sub-total................................................ 15,594
Grand Total............................................ 38,009
\1\ The number of domestic contractors represents data collected in 1995
Contractor survey.
\2\ PSCs is the latest estimate based on regional surveys.
Question. 2. OMB Budget Projections In July 1995, the Office of
Management and Budget recommended reducing funding for the State
Department to $2.5 billion by the year 2000--totaling a 7 percent
decline in constant dollars from 1995 appropriated levels. The FY98
budget request of $2.7 billion represents a reversal of this trend.
What are the current budget projections for the State
Department's budget in the year 2000?
Answer. The current budget authority projection for the State
Department in the year 2000 is $2.7 billion--essentially a straight-
line projection from our FY 1998 budget request. This projection is
consistent with the President's plan to balance the budget.
The Department plans to sustain Department operations within these
budget authority levels by implementing the key management initiatives
we are championing in our FY 1998 budget request including ICASS cost
sharing arrangements with other agencies, the user fee retention
proposal, logistics reengineering, and asset management.
As part of each annual budget process, the Department will refine
these out year budget projections and work within the Administration's
overall budget framework to ensure that high priority Department
initiatives are identified and included for funding in future budget
submissions.
Question 3. A November 1966 GAO report found that implementation of
the State Department's Strategic Management Initiative, tasked with
identifying ways to increase productivity and improve management in the
State Department, had stalled, partly because the State Department
resisted setting funding priorities among its functions.
Please assess the status of the Strategic Management
Initiative. What cost savings have been achieved to date?
Answer. The Strategic Management Initiative (SMI) identified
recommendations for large and small resource savings. In addition to
identifying ways to increase productivity and improve management, the
SMI process validated the apportionment of reductions the Department
had planned in order to live within its FY 1996 appropriation levels.
Those reductions were in fact assessed among the Department's programs
and operations on the basis of policy and management priorities.
Indeed, much of the Department's ability to achieve its downsizing
mandate over the past two years can be attributed to our internal SMI
process and other re-engineering efforts. For example, from December,
1993, to October, 1996, the Department's Executive Secretariat staffing
level decreased by 17 positions, and the offices of 7th Floor
principals decreased by four positions.
Through SMI and its predecessor efforts 115 reports were
eliminated. Forty-two of these reports were part of the Scheduled
Periodic Reporting Program (SPR), a program that coordinated taskings
from other agencies such as the Minerals Questionnaire and the World
Survey of Petroleum Product Prices. Nine reports were also simplified.
We have achieved a 29% reduction in required reporting since 1993. The
Department has also sought legislative approval to eliminate an
additional 24 Congressionally-mandated reports.
The Department has also reduced internal regulations by 64%
(approximately 4,000 pages of regulations). This was accomplished
principally by eliminating or simplifying regulations, and by
converting them into less rigid ``guidelines'' for publication in the
Foreign Affairs Handbook.
Question 4. Rethinking The Overseas Operating Structure. An August
1996 report by the General Accounting Office (GAO) recommended that the
State Department fundamentally rethink the way it does business in
order to increase efficiency and reduce operating costs. GAO
recommended that the State Department rethink its overseas locations in
countries where the United States has limited interests.
What studies has the State Department undertaken to reduce
costs in this area?
Where will downsizing occur in Fiscal Year 1998?
A March 1996 GAO report recommended that each embassy establish a
formal management improvement program to ensure sound management
practices by documenting problems and monitoring corrective actions.
What, if any, efforts have been made to date to establish
such a program?
Answer. While the August 1996 GAO report (GAO/NSIAD-96-124)
entitled ``State Department-Options for Addressing Possible Budget
Reductions'' offers an excellent and detailed exposition of the
principal role played by the Department of State in advancing the
foreign policy and commercial interests of the nation, as well as in
protecting our citizens abroad, it fails to recognize the scope of the
Department's downsizing efforts.
We believe that the United States is best served by maintaining a
presence in every country with which it has diplomatic relations. We do
not agree with the GAO's contention that the notion of ``universality''
is an anachronistic relic of the Cold War. With the breakup of the
Soviet Union and the increasing importance of multilateral institutions
and global problems such as environmental degradation, narcotics
trafficking, and international terrorism, it is critical that the
United States--as the world's only superpower--remain globally engaged.
This does not mean that we need a large, full-service embassy in every
country, but it does mean maintaining universality of diplomatic
representation.
The GAO's argument against ``universality'' also fails to recognize
the fact that Americans are traveling abroad to a greater extent than
ever before and thus have a greater need for consular services. For
example, the closure of our embassy in Moroni complicated immensely our
efforts at providing consular assistance to the Americans killed and
injured in last November's hijacking and ensuing crash of an Ethiopian
Airways aircraft in the Comoros Islands. The GAO report also did not
accord any weight to the fact that foreign visitors, who spend
significant sums of money while in the United States, require visas
issued by the Department of State to enter this country.
Lastly, the authors of the GAO report did not mention the fact that
other U.S. Government agencies usually require an embassy or consulate
as a platform from which to conduct their business abroad.
With respect to the question of downsizing in fiscal year 1998, the
Department does not envision any additional overseas post closings next
fiscal year. We will, however, be guided by the Overseas Staffing Model
to ensure that our posts are staffed in the consular and administrative
areas in a manner consistent with objective workload data and in the
political and economic areas on the basis of our bilateral, regional,
and global priorities.
Concerning the March 1996 GAO report (GAO/NSIAD-96-1) entitled
``State Department-Actions Needed to Improve Embassy Management'' and
its advocacy of embassy-specific management improvement programs, the
Department continues to believe that the Mission Program Plan (MPP) is
the most appropriate means to improve embassy management operations and
address material weaknesses in administrative areas at our overseas
posts. Both bureau and post management make use of this important
planning tool to bolster the management practices of individual posts.
Lastly, it is important to underscore the fact that the
International Cooperative Administrative Support Services (ICASS)
system will become fully operational with the onset of fiscal year
1998. ICASS is a completely new system to manage and fund the
administrative support provided to agencies of the U.S. Government
operating at our Foreign Service missions abroad. Under ICASS, other
agencies will assume their fair share of a wide array of administrative
support services which, heretofore, have been provided by the
Department. Local ICASS councils established at our overseas posts will
ensure that the costs of these services will be distributed equitably
and in a transparent fashion. Since ICASS is a system which is customer
driven, we believe that it will also result in qualitative improvements
in the administrative services provided at our diplomatic and consular
missions, and, at the same time, provide them at the lowest cost
possible.
Question 5. Information Resources Management Plan
A $2.7 billion five year information resources management (IRM)
plan to invest in and modernize technology infrastructure is underway
at the State Department, extending from 1997 to 2001.
How will the Administration adapt the principles of its five
year technology infrastructure modernization plan into a system
that adapts to changing technology more readily and within
budgetary limitations?
What studies have been done to determine employment
modifications and staff level changes as a result of the
technological modernization underway at the State Department?
What studies have been done to reorganize the management
structure given this changing technology?
To implement the Information Resources Management Plan, the
Administration employs more than 2,000 people. Does the
Administration anticipate a reduction in force at the
conclusion of the five year plan?
Answer. At the heart of the five year technology infrastructure
modernization plan is the design and implementation of an information
technology architecture that is predicated on established industry, or
open, standards. These standards are conducive to interoperatiblity and
the use of commercial software applications. We will be able to evolve
or maintain existing information technology while acquiring new
information technology. For example, our deployment of modernized
infrastructure at posts worldwide will establish the base technology
for our migration to open systems based on a Logical Modernization
Approach (ALMA) which enables newer technologies to coexist with older
technology until such time that we can afford to replace it. Life cycle
management is a further feature of the modernization plan. We will
periodically replenish our technology base in order to meet the
business requirements of the Department. Reliance on open standards
provides flexibility and a cost effective operating environment.
We can not say at this time whether there will be fewer or greater
numbers of IRM personnel at the end of the five year plan. The number
will ultimately depend on how we answer questions like whether
particular functions need to be done, whether operating processes can
be re-engineered to advantage and how they can be improved with
information technology, or whether work can be done better by someone
else. As we work through these questions we will be guided by GAO's
analysis of the best practices, and A Guide for Evaluating IT
Investments which OMB, in collaboration with GAO, prepared.
Another important aspect of this question is retraining our staff
for the jobs that come about as the result of the introduction of
information technology. An interagency group chaired by State's Chief
Information Officer recently identified the core competencies generally
required for sound information resources management. We will take
advantage of this work in developing our training and education
programs. We recently consolidated information technology training by
establishing the School of Applied Information Technology at the
National Foreign Affairs Training Center. The School will conduct
advanced training for our Information Management Specialists, so that
they can maintain or update their skills, and offer training to our
entire workforce to enable it to use the newer technologies.
We recognize the magnitude of our information technology challenge
and have realigned our management structure to ensure effective policy
focus and oversight. The Department appointed a chief information
Officer (CIO) in 1996. The CIO has responsibility to oversee the
establishment and promulgation of policies, plans and programs to
ensure information resources are designed, acquired, operated,
maintained, monitored and evaluated so as to support the efficient,
cost-effective and timely achievement of strategic Department missions.
Further, to both broaden senior management involvement in
information technology issues and strengthen the process for approving
and managing investments in technology, we established an IRM Program
Board. comprised of twelve senior Department officials, and chaired by
the CIO, it advises the Under Secretary for Management on IRM matters
generally, and approves the Department's IRM Strategic Plan, reviews,
recommends, and prioritizes for consideration by the Under Secretary
IRM acquisitions whose life cycle costs are under $30 million, and
reviews and approves or disapproves program implementation at key
decision points.
Finally, at the beginning of 1997 we reorganized the Department's
Office of Information Management around core competencies. The goal is
to reduce bureaucratic layers, promote efficiency and effectiveness,
apply lifecycle management methodologies, and encourage teamwork and
creativity. This reorganization has positioned us to utilize more
efficiently the dramatic changes in technology and to be more
responsive in supporting America's diplomacy in the 21st century.
User Fees
Question. During testimony before the Subcommittee on International
Operations, you testified that fee-setting for passports, visas, and
immigration documents would be determined using a ``fully loaded cost
of service'' calculation, including such costs as rent and electricity.
What method is currently used to determine the fees? Is it a
``fully loaded cost of service'' calculation?
Please provide the Committee with the regulations regarding
fee setting?
Please detail the prices currently charged for documents
that would fall under the proposed indirect appropriation? What
are the projected prices in FY98?
What procedure would be used to increase fees on these
documents under your proposed authorization legislation?
Please list the other user fee programs the Administration
is proposing for the FY98 budget?
Answer. The Office of Management and Budget Circular A-25 as
revised July 8, 1993, establishes guidelines for a biennial assessment
of fees including those charged for Government-provided services.
Circular A-25 states that user charges will be set at a level
sufficient to recover the full cost to the Federal Government of
providing a service. In determining the full cost, all direct and
indirect costs to any part of the Federal Government of providing the
services are to be included in the proposed fee, including:
Direct and indirect personnel costs
Physical overhead, consulting, and other indirect costs
(including material and supply costs, utilities, insurance,
travel, and rents)
Depreciation of equipment
Management and supervisory costs
Costs of enforcement, collection, research, establishment of
standards, and regulation.
User fees, as determined using the OMB guidelines, are instituted
through the promulgation of regulations or through submission of
legislation when there are statutory prohibitions or limitations on
charges. Attached is the current Schedule of Fees for Consular Services
as provided in the Code of Federal Regulations, Title 22, Part 22,
Section 22.1. The Department is finalizing the cost of service study
and determining how to restructure and streamline the current Schedule
of Fees for Consular Services, and whether changes should be made to
individual fees commencing in FY 1998. Any proposed changes to the
current Schedule of Fees for Consular Services will be published in the
Federal Register, followed by a public comment period of 30 days. After
assessing public input and revising the fee schedule as necessary, a
final rule will be published in the Federal Register. The Department
hopes to institute the new fee schedule by October 1, 1997.
The Department is seeking permanent authority to retain MRV fees
and to eliminate any cap on fee receipts which the Department can
retain to finance consular operations in its authorization legislation.
Because the Department's fees are based upon costs as established by a
cost of service study, revenues will closely reflect actual costs.
The other user fee programs the Administration is proposing are
contained in the attached section of the Analytical Perspectives of the
FY 1998 President's Budget.
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Appendix 3
Hearing of March 6, 1997
United States Information Agency,
Washington, DC 20547,
March 19, 1997.
Tom Kleine
Patti McNerney
Committee on Foreign Relations,
United States Senate, Washington, DC.
Dear Tom and Patti: I am pleased to forward the Agency's responses
to Chairman Grams's, and Senator Feinstein's questions for the record
on USIA programs.
Please note that the answers to the broadcasting questions we are
forwarding were drafted by the Broadcasting Board of Governors.
Sincerely,
Caroline Isacco,
Acting Director,
Office of Congressional
and Intergovernmental Affairs.
______
Responses of Mr. Duffey to Questions Asked by Senator Grams
EFFECTIVENESS OF EXCHANGE PROGRAMS
Question. How does USIA determine the effectiveness of exchange
programs in promoting U.S. foreign policy objectives? How is this
quantified? What programs do U.S. Ambassadors and embassy personnel
think are the most effective?
Answer. Ambassadors and U.S. Embassies overseas view the Fulbright
and International Visitors programs--our two largest programs--as the
highest priority U.S. exchange efforts supporting their missions.
USIA employs a variety of methods in evaluating its programs,
including formal surveys, focus groups, site observation, and field
reporting. Through these methods we gather the comments and opinions of
program participants, USIA/Embassy staff overseas, cooperating program
organizations, and individual and institutional American interlocutors
(NGOs, businesses, professional associations, etc.). The combination
and distillation of input from these groups--on a worldwide, regional
and country basis--informs USIA's determination of its exchange program
results.
Measuring the results of educational and professional exchanges
isn't easy, particularly when dealing with young people and students,
because the changes in their attitudes and values take place over a
period of years rather than days or weeks. USIA, however, accepts this
challenge when we ask ourselves, ``Did our work make a difference?'' To
find answers, USIA begins with a clear understanding of its exchange
program goals which are supportive of U.S. policy and the national
interest. From this solid basis program analysis proceeds in conformity
with the Government Performance and Results Act of 1993. USIA has
identified measurable ``indicators of successful program'' outcomes or
results. We consider the following results to be evidence of the
accomplishment of our goals:
A cadre of individuals abroad whose knowledge, skills and
abilities have been positively influenced by exposure to
American values, views and methods on a specific theme or
issue;
Increased U.S. knowledge and understanding of international
issues and perspectives and the value of mutual understanding;
Establishment and enhancement of long-lasting and productive
relationships between U.S. and foreign individuals and
institutions; and
Expanded and improved international exchanges through the
use of USIA resources to leverage support from foreign
governments and the U.S. and foreign private sector/NGOs.
NIS SECONDARY SCHOOL INITIATIVE
Question. What is the status of the U.S.-Russia secondary school
program? Does the decline in funding for this program reflect simple
budgetary constraints or a judgment about its relative effectiveness?
Answer. The NIS Secondary School Initiative remains a key component
of USIA's balanced mix of exchange and training programs in Russia and
the NIS.
In FY 97, we anticipate that the NIS Secondary School Initiative
will be funded at the $10 million level, with $5 million coming from
Freedom Support Act (FSA) funds transferred to USIA and $5 million from
USIA base funding. Reductions in available funds and relative program
priority required a decrease of 29% in the secondary school program
from the FY 96 level.
SHORT-TERM VS. LONG-TERM EXCHANGES
Question. How do you measure the impact of short-term versus long-
term exchanges? How do you ensure that exchanges lasting only 2 or 3
weeks aren't seen as ``all-expense-paid vacations to America?''
Answer. USIA exchange programs are not ``all expense paid''
vacations but rather rigorous, structured programs designed to meet
U.S. goals and objectives.
The success of USIA exchange programs--regardless of their length--
stems from a combination of careful program design and selection of
U.S. and foreign participants. The selection process determines the
compatibility of the participants' professional profile to stated
program goals.
USIA exchanges yield both near and long-term effects. After an
exchange, participants return to implement models and ideas they have
been exposed to by a wide range of people with varied experiences. Over
time and through such expressions and actions, the participants'
professional circles and home institutions benefit from the
``multiplier'' effect generated by the participant. USIA program
evaluations examine these effects to determine program effectiveness
and achievement of stated goals, both country-specific and supportive
of worldwide USG interests.
Recent examples of effectiveness in short-term USIA exchanges
include the following:
USIA uses exchange programs to foster contact between
Israelis and their Arab neighbors. For example, in July 1996
USIA brought a group of environmental specialists to the United
States for a month-long exchange program on environmental
education. The group included an Israeli Jew and an Israeli
Arab in addition to participants from the West Bank, Jordan,
Egypt and Lebanon. The participants have launched a regional
environmental network and remain in contact with each other.
As the result of his participation in an International
Visitor program focused on the importance of intellectual
property rights protection, an Italian official undertook raids
on computer software pirates.
A participant in the Business for Russia professional
internship program followed up on his hands-on entrepreneurial
experience in the United States by initiating the purchase of
U.S. building materials for distribution in his home region in
Russia.
COMPETITIVE GRANT PROCESS
Question. The FY 97 Senate Appropriations Committee report
recommended an open, competitive bidding process for all USIA exchange
grant programs that ensures that small grassroots operations have an
opportunity to compete for these grants. What is your response to this
recommendation and what efforts has USIA made to make the grant process
more competitive?
Answer. Late last year, the Director submitted a report to the
Congress outlining our plan to increase competition among organizations
administering the Fulbright and other USIA exchange programs. That
report reiterated our commitment to the participation of a broad range
of U.S. organizations, communities and groups in international
exchanges.
Most USIA grants are already competed through Federal Register
announcements. All Citizen Exchanges discretionary grants are made on
the basis. of open competition. This year, we began to compete the
administration of International Visitor multi-regional projects. And of
the several dozen grants awarded annually by the Office of Academic
Programs, only seven have not been regularly competed.
Our plan establishes a timetable to extend competition to other
exchange program activities, including our largest grants which support
administration of the Fulbright and International Visitor programs.
Competition for the Fulbright Senior Scholar program will
begin in October 1998 with competition of the Fulbright Student
Program to begin in October 2000.
In October 1997 we will begin an incremental competition of
the principal International Visitors program agency grants with
two of the six grants awarded every two years over a six-year
period.
In Citizens Exchanges, a segment of each core grant program
will be competed beginning in October 1997.
INCREASED REQUEST FOR IV PROGRAM
Question. I noticed most exchange programs in the FY 98 budget were
undergoing some level of reduction in funding with the exception of the
International Visitor Program, which will receive an increase of
$384,000. Why has that particular program been targeted for an
increased request? How did USIA decide which exchange programs should
bear the greatest impact of its $4.6 million requested reduction from
FY 97 spending on exchanges?
Answer. USIA's budget reduction strategy seeks to reduce the impact
on its centerpiece exchange programs: the Fulbright and IV programs.
The International Visitor Program is one of our largest and most
respected exchange programs. It is one of the most important foreign
policy tools that U.S. ambassadors have at their disposal. Over more
than 55 years, the program has brought emerging foreign leaders in
government, economics, trade, the media, labor, and other critical
fields to the United States to experience our democratic way of life
and to network with their professional counterparts in this country.
The IV program selection process is very effective in identifying
emerging leaders, so that our investment here pays dividends for
decades after the International Visitor returns home. Most participants
have never been to the U.S. before, which increases the impact of their
highly targeted exposure to our country.
Program participants experience this country at formative stages of
their careers. They visit constituencies throughout our country and
provide our citizens with the opportunity to establish lasting contacts
for use in pursuit of American international goals, both governmental
and private sector. Program funding is spent in communities throughout
our country, not overseas. Because of the international networking
opportunities the program provides to Americans, local organizations
throughout the U.S. are involved in every program to ensure access to
the visitors by internationally mind local citizens and organizations.
The proposed funding increase--less than 1% of the FY 97 IV program
budget--will help to stabilize operating levels for this program.
STAFF REDUCTIONS
Question. USIA is in the process of eliminating 287 positions in FY
97 and its FY 98 budget plans a reduction of another 128 positions. The
FY 97 Senate Appropriations Committee report recommended that USIA
should concentrate further personnel reductions in support staff in
Washington rather than programming staff in the field.
How are USIA's position reductions in FY 97 and FY 98 split between
Washington and field staff?
Answer. The Agency has focussed its reductions on domestic
operations and staff to the maximum extent possible. However, because
almost 70% of the Agency's International Information Program account
funds and staff are devoted directly to overseas operations, budget
cuts weigh heavily on those operations. In Broadcasting Operations,
where staffing is concentrated in the U.S, staff reductions are
principally in the U.S.
In FY 97 and FY 98, the Agency's staff reductions are as follows:
Domestic, 145; Overseas Americans, 50; Foreign National
Employees, 220; Total, 415.
From FY 94 through FY 96, the staff reductions totaled:
Domestic, 950; Overseas Americans, 224; Foreign National
Employees, 759; Total 1,933.
TECHNOLOGY FUND
Question. What regions and populations do you expect to get the
most use out of the digital library? Have you done studies by region to
determine how widespread is the access to computers and the knowledge
to use them?
Answer. The USIS Digital Library is designed to provide information
about America to countries around the world--including Third World
countries without Internet access.
The library is currently being tested as a pilot project at 12 USIS
posts that represent every type of technology access, from those with
full Internet connectivity to those that are less technologically
advanced with limited or no Internet access.
For many posts, especially in less developed countries, Internet
connectivity is either too expensive, not very reliable or does not
exist. The project's new CD-ROM technology will provide access to the
USIS Digital Library in these countries, and position them to use
Internet resources when they gain access to that environment.
The Digital Library will also benefit the Londons and Helsinkis of
the world by reducing the costs of access for these technologically-
advanced posts, and allowing them to hyperlink in and out of Internet
sites they find useful in their work.
The Internet is certain to grow in importance around the world over
the next several years, emerging as a low-cost pathway that allows
information to be more accessible and transferable.
A study just released by Nielsen Media Research reports that nearly
one in four people over age 16 in the United States and Canada now use
the Internet, more than twice the number of people who were online 18
months ago. The survey found that Internet usage increased from 10
percent to 23 percent, showing that the Internet is truly becoming a
mass-market phenomenon, according to an Nielsen spokesman.
While the United States remains a leader in Internet usage, the lag
in Internet connectivity in many countries is only 6 to 12 months in
Europe. While there is little Internet connectivity within the African
continent right now, several African countries are only several years
away from having Internet access. Countries like Ghana, Mauritius, Cote
D'Ivoire, and Zimbabwe are already connected to the World Wide Web. We
see great opportunities for providing African nations access to the
global information superhighway.
Finally, there is the Leland Initiative, a five-year $15-million
U.S. Government effort to extend full Internet connectivity to
approximately 20 African countries in order to promote sustainable
development. The project will promote policy reform to reduce barriers
to open connectivity. This is expected to result in affordable prices
conducive to a broad expansion in computer use, and the delivery of
Internet services by private sector companies like MCI and AT&T that
provide access to the Internet.
TECHNOLOGY ACCOMPLISHMENTS
Question. During last week's hearing on the State Department
``Administration of Foreign Affairs'' budget, we spent a substantial
amount of time discussing the Department's challenges in the area of
information technology infrastructure. Although your requested increase
focuses on communications between Washington and overseas operations,
how would you assess the state of USIA's overall information technology
infrastructure?
Answer. Information technology is vital to USIA for both
programmatic and administrative purposes, and we have made significant
progress modernizing our infrastructure. We have successfully:
Converted from antiquated Wang systems to PC Local Area
Networks worldwide;
Made important use of the Internet both in Washington and
overseas;
Developed innovative programs and products to exploit the
Internet--e.g. USIA and Embassy Home Pages, and Electronic
Journals;
Developed a number of automated applications to improve
internal productivity, e.g. electronic processing of cable
traffic via our CableXpress system.
We are proud of those achievements and think we may be ahead of
some of our colleagues.
We are concerned about the daunting technology infrastructure
challenges that remain. This infrastructure must be kept up-to-date in
order for USIA to achieve its mission effectively in the digital age.
q The rapid obsolescence of hardware and software due to the
accelerated product life-cycles in the industry, combined with
shrinking resources, mean a constant scramble to maintain our
infrastructure at a reasonable level. For example, our network
operating and corporate e-mail systems are rapidly nearing the
end of their life cycles, which soon will require major new
investments.