[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



      FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS 
                        APPROPRIATIONS FOR 2001

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                             SECOND SESSION
                                ________
   SUBCOMMITTEE ON FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED 
                                PROGRAMS
                    SONNY CALLAHAN, Alabama, Chairman
 JOHN EDWARD PORTER, Illinois        NANCY PELOSI, California
 FRANK R. WOLF, Virginia             NITA M. LOWEY, New York
 RON PACKARD, California             JESSE L. JACKSON, Jr., Illinois
 JOE KNOLLENBERG, Michigan           CAROLYN C. KILPATRICK, Michigan
 JACK KINGSTON, Georgia              MARTIN OLAV SABO, Minnesota    
 JERRY LEWIS, California
 ROGER F. WICKER, Mississippi       
                        
 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
     Charles Flickner, John Shank, and Christopher J. Walker, Staff 
                              Assistants,
                     Lori Maes, Administrative Aide
                                ________
                                 PART 3
                                                                   Page
 Security Assistance..............................................    1
 Agency for International Development.............................   91
 Department of the Treasury.......................................  241

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 65-471                     WASHINGTON : 2000





                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois        NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky             MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico               JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 RON PACKARD, California             NANCY PELOSI, California
 SONNY CALLAHAN, Alabama             PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York            NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina   JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio               ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma     JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan           ED PASTOR, Arizona
 DAN MILLER, Florida                 CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia              MICHAEL P. FORBES, New York
 RODNEY P. FRELINGHUYSEN, New Jersey CHET EDWARDS, Texas
 ROGER F. WICKER, Mississippi        ROBERT E. ``BUD'' CRAMER, Jr., 
 GEORGE R. NETHERCUTT, Jr.,          Alabama
Washington                           MAURICE D. HINCHEY, New York
 RANDY ``DUKE'' CUNNINGHAM,          LUCILLE ROYBAL-ALLARD, California
California                           SAM FARR, California
 TODD TIAHRT, Kansas                 JESSE L. JACKSON, Jr., Illinois
 ZACH WAMP, Tennessee                CAROLYN C. KILPATRICK, Michigan
 TOM LATHAM, Iowa                    ALLEN BOYD, Florida              
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania
 VIRGIL H. GOODE, Jr., Virginia     
                   
                 James W. Dyer, Clerk and Staff Director

                                  (ii)

 
      FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS 
                        APPROPRIATIONS FOR 2001

                                           Thursday, April 6, 2000.

                          SECURITY ASSISTANCE

                               WITNESSES

JAMES BODNER, PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE FOR POLICY
JOHN HOLUM, SENIOR ADVISOR FOR ARMS CONTROL AND INTERNATIONAL SECURITY, 
    DEPARTMENT OF STATE

                 Chairman Callahan's Opening Statement

    Mr. Callahan. We are going to go ahead and get started. 
Mrs. Pelosi is on her way, but we are going to try to get 
through with this hearing in a timely fashion.
    Today we are pleased to hear from the Department of State 
and the Department of Defense on the administration's request 
for international security assistance for the fiscal year 2001. 
The appropriations account for security assistance includes the 
economic support fund, the foreign military financing program, 
international military education and training, peacekeeping 
operations and the nonproliferation account. Excluding the 
emergency supplemental for the Wye River Accord, total funding 
in these accounts for fiscal year 2000 was $6.185 billion. The 
request for fiscal year 2001 is $6.351 billion, an increase of 
$166 million. I should also note that most of the almost $5.2 
billion of the request for security assistance, or over 80 
percent of the total, is for the Middle East.

    It is my intention to explore measures to withhold up to 
$250 million in fiscal year 2001 Foreign Military Financing 
funds to Israel until the Secretary of Defense certifies that 
sales of military equipment to China are not a threat to U.S. 
security interests in east Asia.

    Under Secretary of Defense Walt Slocombe was detained on 
important business in the Middle East and could not join us 
today, but we are pleased to welcome Deputy Under Secretary 
James Bodner as his replacement for the day. While Mr. Slocombe 
could not be with us, we are asking that he report to the 
subcommittee upon his return to Washington to discuss several 
important issues relating to his trip to the Middle East. We 
prepared a letter extending an invitation to him to meet with 
our members in closed session, and we would appreciate it if 
you would pass it on to him when he returns.
    There is one issue in particular we would like to discuss 
with him, and that is Israel's military relationship with 
China. I will have a question on that matter later in the 
hearing, but there are a number of concerns that we cannot 
discuss in open session.
    I might comment that this morning in the Israeli Post there 
is a very interesting editorial which I am going to insert into 
the record that I think expresses the views of most of the 
people in Congress, that I have talked to anyway, on the sale 
of arms to China by Israel. The Israeli Post says that Israel 
is making a mistake, and I certainly agree with that.
    [The information follows:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    Mr. Callahan. Mr. Holum, we would also welcome you back to 
this subcommittee. We have enjoyed working with you over the 
past few years, and we hope the feeling is mutual. We would ask 
that you proceed with your statement, and then we will turn to 
Mr. Bodner. I would ask each of you to summarize your written 
testimony, since all of it will be included in its entirety in 
the record.
    And now I would like to welcome any comments from Ms. 
Pelosi.

                     MS. PELOSI'S OPENING STATEMENT

    Ms. Pelosi. Thank you, Mr. Chairman. I was holding down the 
fort in the Capitol in our usual room. We have grown.
    Gentlemen, welcome. I want to welcome our distinguished 
witnesses to the security assistance hearing for fiscal year 
2001. This subcommittee will be pleased to hear from both of 
you on a wide range of topics covered by our security 
assistance programs.
    Mr. Chairman, I intend to use my time during the question 
period to address a variety of issues, including the status of 
our military relationship with Indonesia, the foreign military 
training report, human rights issues in Colombia and Turkey and 
the situation in North Korea and the proliferation concerns 
around the world. I share your concern about the AWAC sale, and 
I will get to that as well.
    A comment at this time about the foreign military training 
report just received by the committee, unfortunately, Mr. 
Chairman, late last week.
    As you may recall, the reason for the requirement for the 
report originally was a strong concern in Congress that foreign 
military training programs were proliferating around the globe 
as a result of broad authority granted to DOD in the early 
1990s. The extent and nature of these programs is largely 
unknown to the Congress; and, more importantly, there is a 
specific concern that DOD-funded military was being used as a 
foreign policy tool without any congressional oversight. The 
fact that the DOD funds were used to initiate the training of 
the counternarcotics battalions in Colombia without any 
congressional involvement is one example of this point.
    Last year, the committee received the initial report; and, 
though it was extremely voluminous, it did provide some useful 
information. This year's report, however, was received 1 month 
after the deadline prescribed in law; and three of its four 
volumes have been classified. In addition, much of the detailed 
information is missing even from the classified volumes.
    What makes this even harder to understand is that this 
report was substantially complete almost a month ago, yet it 
was sent to Congress only last week. Consequently, we have not 
had time to fully absorb its contents, and, thus, the 
possibilities of a meaningful dialogue at this hearing has been 
diminished, and that was really the purpose of getting it in a 
timely fashion.
    While there may be legitimate reasons to classify some of 
this year's information, the same information was not 
classified in last year's report. But, more important, this 
issue was never discussed with the committee prior to the 
receipt of the report.
    I will be signing a letter with Mr. Callahan asking for 
further meeting with Assistant Slocombe to follow up on these 
concerns. However, I would appreciate clarification from our 
witnesses this morning on these concerns. We can and will 
disagree about the wisdom of some of this activity, but there 
is no excuse for the seeming deliberate action to hinder 
Congressional oversight of the executive branch activity.
    Mr. Chairman, since you called this meeting, there is a 
media report about a Russia China destroyer deal detailed which 
is further complicated by the AWAC--the possible or further 
AWAC sales to China that I would like to go into; and I can do 
it here because these questions spring from open sources. But 
it may be necessary for us to meet in closed session or some 
venue that you would recommend, Mr. Chairman, to go over some 
of these issues further.
    Thank you, Mr. Chairman. Thank you, witnesses.
    Mr. Callahan. May I comment about the AWACS sale?
    Mr. Obey and I talked about it very briefly this morning 
with Mr. Holum. So Israel will recognize how serious we feel 
about this, it is my intention to provide a mechanism for a 
hold on a minimum of $250 million, which is, I think, what the 
AWACS sale amounts to, or whatever amount we find the 
Department of Defense feels interferes with our national 
security or harms the safety of our own troops. I feel the 
Defense Department needs some leverage, and it is my intention 
to give the Department of Defense rather than the Department of 
State the ability to withhold monies in order to emphasize our 
point.
    So I do intend to address that in the bill when it comes 
up. But every Member of Congress I have talked to is very 
distressed by this move by Israel.
    Mr. Callahan. So, Mr. Holum.

                     MR. HOLUM'S OPENING STATEMENT

    Mr. Holum. Thank you, Mr. Chairman and members of the 
subcommittee. I will keep my opening statement brief, as you 
suggest, and ask that the written statement, which covers our 
request in detail, be included in the record.
    I come to ask your support for our fiscal year 2001 budget 
request of $6.28 billion. And, as the secretary emphasized to 
this committee a few weeks ago, we need every penny. We need 
your support for this request to enable the United States to 
help shape the kind of a world that deters aggression, secures 
peace, promotes democracies, safeguards U.S. borders, protects 
human health and encourages prosperity.
    While these funds come from the foreign operations budget, 
we are keenly aware that these funds, particularly the FMF and 
IMET dollars, do double duty. That is, while funding helps 
cement our bilateral relationships, it also helps our DOD 
colleagues with operational military and readiness issues. The 
more these funds help our friends and allies develop their own 
defense capabilities and improve interoperability with the U.S. 
forces, the less American servicemen and women will be asked to 
step into the fray.
    Every Service Chief has publicly spoken of the vital role 
coalitions will play in the new century. They are here to stay. 
The extent to which our coalition partners are equipped and 
ready to work side by side with us is in many ways dependent on 
the training and assistance we provide through these security 
assistance programs. And who the next coalition partners will 
be depends on what the next crisis may be.
    In transition countries many experts agree that an initial 
phase of instability must be borne before democracy is 
successfully ingrained in society. This crucial period is when 
our security assistance funds can make the difference. When it 
is often necessary to separate and demobilize adversaries, 
deliver humanitarian relief, facilitate repatriation of 
refugees and displaced persons, facilitate the establishment 
and growth of new market economies, and generally help create 
conditions under which political reconciliation may occur, 
democratic elections may be held and lasting peace may be 
achieved. This is when funding can leverage long-term gains for 
the United States in our interests.
    With this in mind, the Secretary has emphasized unique, 
timely opportunities for putting these words into action.
    First is Plan Colombia and our urgent and clear stake in 
supporting Colombian Pastrana's efforts to battle the scourge 
of cocaine.
    Next is the need for well-timed support for Nigeria, where 
we can be a productive factor in helping to determine whether 
that country will be beleaguered by chaos and corruption or 
become a motivating, influential force for stability and 
progress throughout West Africa.
    Third is Indonesia, a country that has the potential to 
continue to be a leader in Southeast Asia, despite its current 
strains, and emerge as a strong proponent of multicultural 
democracy.
    And, finally, the Ukraine, one of the largest and most 
influential of the new independent states which many consider a 
bellweather for the region.
    Regionally, we began the 21st century with a strategic goal 
of a partnership with Europe that is no longer focused on what 
America should do for Europe, but one which is defined by what 
America can do with Europe to pursue our common interests and 
values. Highest among our priorities includes a stronger NATO, 
with more robust partnerships and improved interoperability and 
the development of capabilities and preparations to leave the 
door open to new members and new missions.
    We continue to reinforce the long view through the 
Partnership for Peace to help countries from the Baltics to the 
Balkans become strong candidates for NATO membership and 
enhance interoperability within the Alliance.
    Mr. Chairman, lasting peace in Europe depends on building 
confidence and security within and among young democracies and 
integrating them into NATO and the EU. This is especially true 
for Southeastern Europe. As the Secretary has noted, we are no 
illusions about the difficulty of trying to transform the 
patterns of history. But we must press on with the same 
determination we had in ending the conflict.
    Our request continues support for the OSCE's missions in 
Bosnia, Kosovo and other countries in Central Europe and the 
New Independent States and funds to continue work with our 
European partners and international organizations to help the 
Kosovars build a democratic society, promote full 
implementation of the Dayton Accords, and operate with Yugoslav 
opposition forces to advance democracy in Serbia.
    The funds we have requested, including the supplemental 
request currently before the Senate, are critical to these 
processes. I want to take this opportunity to thank you for 
your leadership in supporting the supplemental request.
    As I know this committee is very much aware, we began the 
new century with renewed hope for a just, lasting and 
comprehensive peace between Israel and her Arab neighbors. Our 
long efforts to facilitate and promote all tracks of the Middle 
East peace process must not falter now. Congressional support 
for Wye River and Sharm-el Sheikh interim accords was 
fundamental to U.S. support for peace. We ask for your 
continued support now as we seek to bring peace closer to 
fruition.
    In Africa, we are continuing to address pressing security 
and humanitarian concerns, while working towards the 
realization of the continent's great human and economic 
potential. The security assistance piece in this puzzle rests 
on our strategy to help resolve existing conflicts and support 
peacekeeping in the short term, while simultaneously building 
an African capability to handle conflict and prevent crises in 
the future.
    Our request includes an expanded regional stability program 
to resolve the extremely complex conflict in the Democratic 
Republic of Congo, to assist ECOWAS' peacekeeping operations in 
West Africa and to strengthen Africa's own conflict resolution 
capacity through continued funding for the Africa Crisis 
Response Initiative.
    We also seek ESF funding to develop sound economic 
policies, bolster institutions that promote respect for human 
rights and the rule of law and help create the foundation upon 
which lasting democracy can take hold.
    Our Latin American and Caribbean neighbors have made 
historic strides in building democracy over the past 2 decades, 
but this amity continues to be threatened by economic 
disparities that erode support for democracy and undermine 
capabilities to combat grave threats. The fiscal year 2001 
request for this region is focused on maintaining effective 
security forces essential to regional peace andcombating 
transnational threats, addressing economic weaknesses and supporting 
democratic institutions critical to lasting peace. This includes 
funding for Guatemala, Ecuador and Peru, Haiti and the International 
Criminal Investigative Training Assistance Program to support the 
development of civilian police agencies.
    Our request also includes funds for public diplomacy 
efforts to promote democratization, respect for human rights 
and development of a free market economy in Cuba.
    While Plan Colombia does not include major security 
assistance funds, I want to take this opportunity to thank you 
for supporting this strategy that will complement President 
Pastrana's courageous steps to address the complex and daunting 
problems in Colombia.
    In the East Asia and Pacific region, the fiscal year 2001 
request supports our key alliances and promotes continued 
development and democratization. Our request includes funds to 
support reform in the Indonesian government and assistance to 
East Timor in its transition to independence. It includes 
activities to support democracy, human rights and health care 
activities in Cambodia; and it includes funding to continue 
vital support for KEDO, a path that has been reaffirmed by the 
comprehensive policy review undertaken last year by former 
Defense Secretary Perry.
    Our priorities in this region also include working to 
reestablish an effective dialogue with China on a full spectrum 
of issues between us.
    As underscored by President Clinton's recent visit to the 
region, South Asia remains a key area of security concern. We 
remain committed to the nonproliferation benchmarks that India 
and Pakistan must meet that chart that path to reduce the 
nuclear danger in South Asia.
    Our request includes measures to promote cross-border 
confidence-building measures and mechanisms to help businesses 
and NGO's address common concerns. We also seek to bolster 
regional stability by promoting effective democratic process 
and activities to mitigate human rights abuses.
    In addition to these core security assistance programs, we 
are requesting funds for activities and programs to support 
nonproliferation disarmament and related security initiatives.
    First and foremost is the immediate challenge of halting 
the clandestine spread of weapons of mass destruction, 
materials and technology to rogue states, terrorist groups and 
other nonstate actors. Through the Nonproliferation and 
Disarmament Fund, our Export Control Assistance Program, and 
the work of the Science Centers, we are working to ensure that 
potential suppliers have proper controls on exports of dual-use 
goods and technologies, the transit countries have the tools to 
interdict elicit shipments and that transshipment states 
implement controls to prevent diversions.
    We understand that this committee has had some concerns 
about the initial congressional notifications involving the 
Science Center program for this year. We are in discussion with 
committee staff and hope we can get this resolved shortly so as 
to prevent the U.S. from having to suspend participation in the 
program in the next few weeks.
    Our request also includes support for our multilateral 
partners in the nonproliferation effort, the IAEA and the CBTB 
Preparatory Commission.
    Finally, we continue to champion the Humanitarian Demining 
program which has been enormously successful in helping mine-
affected regions save the lives and limbs of innocent 
civilians, return displaced persons to their homes, rebuild 
shattered economies, return agricultural land to productivity 
and allow the safe delivery of humanitarian services.
    We are also initiating a new program to destroy stockpiles 
of small arms and light weapons which claim hundreds of 
thousands of lives and displace millions of civilians every 
year.
    Let me conclude by saying that the breadth, scope and depth 
of the activities and programs we undertake with these security 
assistance funds are the pieces with which a stable, peaceful 
and prosperous international community is forged. We need to 
help our friends and allies improve their own capabilities so 
they can assume their rightful role in preserving international 
peace and combating transnational threats. We need to limit the 
proliferation of destabilizing weapons and materials that 
menace mankind. We need to foster capacity-building efforts 
that will encourage stable economies. And we need to assist 
those who ask in that precarious transition period when 
democratic institutions can either flourish or wither depending 
on whether the right kind of help is available at the right 
time.
    This is what it takes as we approach a new millennium to 
ensure that the international community is headed on a path 
leading to lasting peace, economic stability and respect for 
human rights.
    Mr. Chairman, I want to thank you and the members of the 
committee for this opportunity to address you and would be 
pleased to answer your questions.
    [The information follows:]
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    Mr. Callahan. Mr. Bodner.

                     MR. BODNER'S OPENING STATEMENT

    Mr. Bodner. Thank you, Mr. Chairman, Representative Pelosi, 
members of the committee. I appreciate having the chance this 
morning to talk to you about our security assistance program 
and how we think it supports America's national security 
interests.
    The leadership of this committee and other Members of 
Congress for our security assistance program has enabled us to 
remain engaged in the world and to shape an international 
environment that is more peaceful, more prosperous and more 
compatible with American interests and ideals.
    Security assistance remains an indispensable tool for 
achieving our national security and foreign policy objectives. 
It is one of our most cost-effective means of promoting 
regional stability, military cooperation, and interoperability 
of forces. This engagement also promotes the principles of 
democracy, respect for human rights and the rule of law.
    Enhancing the capabilities of our friends and allies to 
address conflicts, humanitarian crises and natural disasters 
makes it less likely that American forces will be called upon 
to respond to regional problems. And it helps to limit their 
involvement when they are called.
    Security assistance programs ensure that, when U.S. forces 
are employed, foreign militaries can work more effectively with 
them and not be hobbled by mismatched equipment, communications 
or doctrine.
    Before I turn to the specific requests in the proposed 
budget, I would like to briefly address the Foreign Military 
Training Report that was required by legislation and that 
Representative Pelosi addressed. This report was a joint effort 
between the Department of Defense and the Department of State. 
Together, we worked to make this year's report significantly 
more thorough in its analysis and content than last year's 
report, which was the first year's report. As a result, we just 
delivered the reports to the committee last week, as 
Representative Pelosi mentioned, which was 4 weeks late. I 
apologize for the delay. But I do hope that you will find the 
enhanced quality and detail in the report better able to 
support you as you do your important work.
    This year's report provides a detailed description of the 
operational benefits to U.S. forces that participate in the 
training. It also provides the foreign policy justification for 
our training activities, which was a point of particular 
interest to this committee last year. It also contains more 
information on the funding sources for the training. We think 
it is better organized, easier to use for your purposes. I 
would note that volume 1 encapsulates in a single unclassified 
document all the training activities for each country.
    As you are aware, the report consists of three volumes that 
document all U.S. training activities undertaken in fiscal year 
1999 and projected for fiscal year 2000. Volume 1 is 
unclassified and will soon be posted on the Internet. We have 
classified volumes 2 and 3 for force protection reasons. Each 
of these volumes contain sensitive data, including information 
about specific U.S. units and foreign student units and 
precisely where and when they will conduct training events in 
the United States or in the host country.
    We have worked hard to make the report as comprehensive and 
useful as possible, and we think this will be apparent as you 
review the report.
    Now with regard to our IMET program, the International 
Military Education and Training program is clearly one of DOD's 
highest military priorities in terms of military assistance. It 
offers a variety of opportunities for foreign military and 
civilian officials to take over 2,000 courses of formal 
instruction that are taught at over 150 military schools and 
installations, and some 9,500 foreign students partake of this 
annually.
    Under the expanded IMET program we provide training on 
defense resource management, civil-military relations, 
including civilian control of the military, and military 
justice. Expanded IMET now represents almost 30 percent of the 
$50 million IMET program.
    IMET fosters the military-to-military relationships and 
military professionalism that is necessary for conducting 
effective joint operations and enhances the ability of allies 
and friends to defend themselves. IMET exposes thousands of 
current and future foreign military leaders to values that are 
essential to maintaining security forces in democratic 
societies. And in the process we, the United States, derive 
great benefit from the military-to-military interaction which, 
over time, facilitate information sharing, joint planning, 
combined force exercises, and access to foreign military bases 
and facilities. These are among the reasons that U.S. 
commanders in the field or CINCs consistently cite IMET as 
probably their most important tool for enhancing relationships 
with other countries' armed forces.
    I would note that U.S. ambassadors often cite IMET as one 
of their best tools for promoting U.S. influence and U.S. 
Values abroad.
    In fiscal year 2001, the administration is requesting $55 
million for IMET, which is an increase of $5 million over the 
level provided in fiscal year '99 and '00. This increase is 
primarily to expand our programs in Central Europe, both with 
the three new NATO members and with the Partnership for Peace 
countries. In the Balkans, we also plan to augment our programs 
in Albania and Bosnia. And we, of course, are also requesting 
increases for Colombia, Egypt and Jordan.
    Let me also highlight Guatemala. This year, we are 
requesting to extend full IMET benefits to Guatemala. As you 
recall, you resumed a limited IMET program with Guatemala in 
1997 following a 2-year period during which IMET was suspended. 
Since resuming, expanded IMET has been extremely successful. 
For the first time in decades, Guatemalan civilians and 
military officials are working together resolving important 
issues about that country's future.
    Allowing the administration to offer full IMET courses to 
Guatemala will expose a new generation of officers to our 
standards and military professionalism. They will also promote 
democratic values and the military's reorientation to its new 
roles countering the flow of narcotics, stemming illegal alien 
smuggling and assisting other Guatemalan agencies as they 
provide disaster relief.
    I would note that the Guatemalan military made significant 
and professional contributions to the prompt, effective action 
that saved thousands of lives and provided disaster relief 
during and in the aftermath of Hurricane Mitch. If we restore 
full IMET, that will allow us to help the Guatemalan military 
enhance these capabilities.
    The second item I would like to talk about is the Foreign 
Military Finance program. As you know, the vast majority of our 
security assistance funding is in the FMF program. This 
promotes our national security interests by strengthening 
coalitions with friends and allies. It enhances our cooperative 
bilateral military relationships and also enhances 
interoperability by foreign forces with U.S. forces. Because 
FMF monies are used to purchase U.S. military equipment, 
American workers and the defense industrial base directly 
benefit from our security assistance program as well.
    This year, we are requesting $3.54 billion in the FMF 
program for fiscal year 2001, which is an increase of $118 
million over last year's appropriation request, if you exclude 
the Wye Supplemental, as the chairman mentioned. The 
overwhelming bulk of this request will be used to promote 
regional peace in the Middle East. Of the portion not devoted 
to the Middle East, the next largest recipients would be 
Poland, Hungary and the Czech Republic to support their full 
military integration into NATO.
    Our FMF request would also allow us to continue our support 
for the Partnership for Peace program. I would note that past 
FMF support has brought visible results. A significant number 
of PFP partners have participated in NATO's ongoing military 
operations in Bosnia and Kosovo, for example.
    In addition, our FMF request will bolster the capabilities 
of African militaries to conduct peace and humanitarian 
missions. Our significantly enhanced assistance to Nigeria that 
we are proposing will also help to solidify the recent 
democratic political changes in that strategically significant 
country.
    Last year, I reported to you that the DOD had undertaken an 
effort to reengineer the FMF system; and over the last year the 
primary goals of this effort, led by General Mike Davison who 
is here with me, who is the director of the Defense Security 
Cooperation Agency, the goals of those efforts had been to 
improve customer satisfaction, reduce business cycle times, 
promote an open business environment, use existing resources 
more efficiently and automate wherever possible. DSCA has 
released a series of white papers that have been developed in 
collaboration with industry and our customers, and the papers 
recommend ways for making FMF more efficient, more transparent 
and more responsive to needs.
    This FMF reinvention is a continuing effort that will 
require time and resources, and we hope we have your continued 
support for it. We look forward to being able to share whatever 
information you need on that effort.
    The programs I have outlined work directly, as I said, for 
the U.S. taxpayers. They produce national security and economic 
benefits that far exceed the money we spend. They are important 
to our foreign policy agenda, and they represent good 
investments in a future international environment friendly to 
American interests. For all those reasons, I would ask for your 
support for our proposal.
    Thank you.
    Mr. Callahan. Thank you. Your entire statement will be 
accepted for the record.
    [The information follows:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Callahan. We are going to once again adhere on this 
first round of questioning to the strict 5-minute rule, so we 
ask you in your response to recognize that we have a lot of 
members here today, each interested in some of your 
responsibilities. So let me just run over a couple of things.

                                COLOMBIA

    One, Plan Colombia. As you said, the House passed the money 
for Colombia, and there is some question as to whether or not 
the Senate will act in a timely fashion. How detrimental would 
that be to the overall Plan Colombia to wait until the regular 
2001 appropriation bill passes with it included in there? Is 
this going to seriously erode the political environment of 
Colombia to the point where President Pastrana might have 
political problems if indeed we don't respond so he can then go 
to the other nations who are participating?
    Mr. Holum. Mr. Chairman, it is hard to predict precisely 
what the impact would be, but I would worry about the delay--
any delay setting back the program. As you have pointed out, 
the United States' contribution is a part of a very broad 
effort involving internal Colombian funds, financing from the 
international financial institutions. It is a very broad 
package. I think it is all mutually dependent to a considerable 
extent.
    It is highly significant that President Pastrana has taken 
this initiative, and I think the likelihood of it succeeding 
and enjoying broad support in Colombia is dependent on the most 
rapid possible response. So I do hope that the supplemental 
will be approved in the Senate. I think it may jeopardize the 
program if there is a delay into the next year's budget cycle.
    Mr. Callahan. Well, there is some question whether or not 
the money could actually be channeled down there by October 
anyway. Because, as you well know, most of it is for the 
acquisition of helicopters. Helicopters are not going to be 
ready in October either.
    I don't know what he plans to do with the money he has 
pledged from other nations. I don't know when he intends to 
move forward with his own $4 billion or where that money is 
coming from. But that is his problem, not ours.
    But I just wonder if it is that detrimental to the overall 
total plan of Colombia to delay it 4 months or so. In any 
event, it appears at this point that we are going to have to 
address it in our regular bill.
    Mr. Holum. In terms of the fiscal impact in Colombia, I 
doubt whether it would be dramatic. I suspect that the 
political impact would be more significant. But Mr. Bodner may 
have----
    Mr. Bodner. I was just going to concur on that point.

                         SUPPLEMENTAL REQUESTS

    I would also note there are items in the supplemental that 
the Department of Defense has great concern about. There is 
funding for Kosovo. The absence of confidence about what money 
will be forthcoming that will have a negative impact on the 
readiness of the U.S. military.
    Mr. Callahan. I think the money for both Plan Colombia and 
defense is forthcoming, even if we have to wait until our 
regular bills for it to come. I think it is coming. But there 
appears to be some delay. I am sure the members will want to 
talk about Kosovo--if not, I will--before you leave.

                       MIDDLE EAST PEACE PROCESS

    The peace process in the Middle East, I don't know what the 
administration's plan is now. I know they have already 
approached us, even though it is not concrete. And Israeli 
political leaders are now talking about a need for $17 billion 
in new money to facilitate the new peace process. But we are 
not going to have one.
    I don't imagine we are talking about any need for any 
monies for the drawback from the Golan Heights. I remain 
concerned that they seem to place too much priority to the 
amount of money they are going to get for signing a peace 
process than they do for the peace process. To just come up and 
say we need $17 billion, we never did really find out what the 
Israeli government was going to do with the Wye money. When 
they finally did give us a report, it certainly wasn't related 
in some areas to the Wye agreement.
    I am concerned that Israel feels if the United States will 
give them $17 billion, they will draft a peace process around 
that number rather than determining that we will have a peace 
process and then coming to us saying can you assist us. This is 
not an entitlement program. Israel is not entitled to anything. 
Syria is not going to get any money out of this subcommittee. 
So that can't be a part of it.

                        FMF DEPRECIATION PROCESS

    At some point, I would like to address the FMF depreciation 
schedules. Notices cross our desks indicating we are 
transferring military equipment to foreign countries, and the 
depreciation schedules are far greater than what the IRS will 
allow me or any other businessman to do with respect to 
depreciation in the private sector. It is not uncommon to see a 
piece of equipment that cost a million dollars be charged to 
the fund for as little as $1,000. I don't know who determines 
that process or if there is a schedule or if you just pick a 
number out of the air.
    But I think at some point we are going to have to look at 
this depreciation process and try to understand where are you 
getting these numbers from. They might send 20 trucks over 
there that cost a million dollars and say the military doesn't 
need them anymore, therefore they are only valued at $1,000. 
Well, I just disagree with that. And while I know today we 
can't resolve that, it is my intention to ask the Department of 
Defense to give us an explanation of who determines the value 
of this equipment. Because, instead of giving $3 billion in 
FMF, we might be giving away $40 billion in FMF, if I read 
these depreciation schedules correctly.
    So if you could briefly comment on the depreciation 
schedules.
    Mr. Bodner. I will get you a more complete response, and 
perhaps there will be some dialog we need to have with your 
staff in detail on this. I don't have a detailed answer for 
you.
    Military equipment which is excess to U.S. military needs 
is something that we generally look to dispose of. To maintain 
the equipment costs money. Even just to house and store the 
equipment costs money. And so there is a value to us in the 
disposal process. We don't want to maintain equipment.
    Mr. Callahan. That is not a real good answer, that you are 
saving money by depreciating it to the point of 1 percent. 
Anyway, I know you can't answer that today. But I would like 
for you all to give this committee an accountability of how you 
arrive at these numbers and who is responsible. Is it a clerk, 
is it a secretary, an under secretary? Or who arrives at the 
valuation that they put on the notification that determines the 
amount that will be deducted from the FMF allotment to that 
individual country?
    [The information follows:]

    Pricing of excess material is accomplished in accordance with the 
Department of Defense Financial Management regulation 7000.14-R, Volume 
15, Chapter 7, Section 070304.
    The regulation states that the selling price of excess material, 
exclusive of repair or modification costs, shall be the highest of:
    (1) The item's market value (which includes nonrecurring costs);
    (2) The item's scrap value plus nonrecurring costs and the last 
major overhaul costs incurred; or
    (3) The item's fair value (plus nonrecurring and pro-rated major 
overhaul costs) computed using the fair value rates contained in this 
subsection.
    The Military Department that proposes the transfer of excess 
material is responsible for evaluating and pricing the excess material 
in question.

    Mr. Callahan. So, Ms. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman.
    Mr. Chairman, I expressed my concerns about the report, the 
timing of it and some of my concerns. Since we are going to 
have the meeting with Mr. Slocombe, in the interest of time I 
will go to some other issues now. If we have time at the end, I 
will come back to that.

                               INDONESIA

    But I wanted to talk about Indonesia which, as you know, 
has been an issue of great concern to this committee, and that 
is why it was interesting to me it was not mentioned in your 
report, Mr. Bodner.
    The Indonesian militias continue to operate in East Timor 
to disrupt refugee returns and harass and threaten 
international aid workers. The recently released Indonesian 
government inquiry preceding formal indictments of Indonesian 
officials for atrocities in East Timor lists 33 individual 
military officers and militia leaders suspected of involvement 
in 1999 human rights violations. Has there been any attempt by 
the DOD and State to ascertain whether any of these individuals 
were trained under any U.S. program?
    Mr. Bodner. I believe from the information we have 
available that of those 33 there were two individuals that we 
can positively correlate to training. One individual back in 
1979 was on a week and a half, orientation tour of the United 
States under IMF funding; and another individual back in 1980 
did receive some training in the United States.
    Ms. Pelosi. It seems that the change in military leadership 
in Indonesia has had little or no effect on the militia 
activity in East Timor. In fact, militia activity increased 
immediately after the new Indonesian president's visit to East 
Timor. What is your assessment of the extent to which the new 
civilian leadership controls the military?
    Mr. Bodner. Let me comment first on the militia activity. 
There is a pattern of activity. There was a spike in activity 
at the time of the Handover of command to the international 
force there. Quite frankly, that was something that we 
anticipated; that the new command would be challenged.
    Overall, the security situation in East Timor has improved. 
I just spoke with the CINC, Admiral Blair last evening. He was 
just in Dili and reported the situation in Dili itself is quite 
good, and I think that that is the assessment of the U.N. Force 
as well.
    President Wahid, who took office in the fall, did in fact 
undertake a number of steps with regard to exercising control. 
As you know, he changed out not only the top leadership but 
leadership of many commands. And so there has been a movement 
of commanders within the armed forces, and I think that that is 
a very positive indication of his intent to ensure that there 
is civilian leadership. We now have a civilian defense minister 
for the first time in Indonesia.
    Ms. Pelosi. I understand his good intentions, and we 
support him, but I wanted to know if you thought that that 
civilian government was in control of the military.
    Mr. Bodner. I think that greater influence and exercise of 
control is clearly evident. This is something that I think 
takes time in terms of institutional change getting all the way 
down to the level of the people in the field. It is a 
development that takes time.
    Ms. Pelosi. Why have you requested $400,000 in IMET funding 
for Indonesia, given the fact that certifications of the 
conditions of section 589 are not possible today and may never 
be in the future?
    Section 589, as you know, requires no FMF or IMET until the 
President certifies that the Indonesian armed forces are 
bringing to justice armed forces members accused of human 
rights abuses, of aiding or abetting militia groups, allowing 
refugee returnees into East Timor more, not impeding the UN in 
East Timor, demonstrating a commitment to prevent insurgence 
into East Timor and cooperating with investigations of human 
rights abuses.
    The U.S. ambassador has suggested applying the section 589 
restriction separately to individual elements of the Indonesian 
military, recognizing that these certifications aren't 
possible, making it possible to resume assistance to the 
Indonesian navy or marines on a faster track than the army. Can 
you comment on that? Why would that be desirable? Is that a 
reflection that the certification is impossible?
    Mr. Bodner. We are fully aware of and intend to fully 
comply with the requirements of last year's appropriations 
bill. We want to see progress. We expect to see progress. That 
is what Admiral Blair was doing in Jakarta. He was conveying 
the message that we expect to see progress. So I think that we 
do have some hope that there will be continued progress and 
sufficient continued progress that it might be possible in the 
next fiscal year to be able to meet the certification 
requirement. Right now, we have not made that certification.
    I don't know if Mr. Holum has a comment on that.
    Mr. Holum. Only to underscore the point that the military 
relations--military-to-military relations have been restricted, 
going back, as you know, to the Soeharto regime. And, as Mr. 
Bodner has said, we can't make the certification--we haven't 
made the certification as of now, but we are requesting funds 
in the hope and expectation that it will be possible to do 
that. But, obviously, we will comply with the requirements of 
the certification.
    Mr. Bodner. We certainly don't want to send the signal that 
we are not expecting progress. We expect progress, and we have 
sent that message to them.
    Ms. Pelosi. I wish you had made it part of your report. 
Because, as of now, it is an issue of concern to many members 
on this panel and many Members of the Congress of the United 
States. We have spoken directly to the President on this issue, 
and I would have hoped it would have risen to the level of 
interest in your report as well.
    I wanted to spend the remaining moment on the AWAC sales, 
as I mentioned, in the report. Because, as the chairman said, 
we have many members here, and they have many other questions. 
We have our other opportunities.

                      RUSSIA-CHINA DESTROYER DEAL

    There is a concern in a report that is unclassified talking 
about the Russia-China destroyer deal. As you know, there is a 
Russia-China destroyer deal. In light of this deal, it is 
interesting to point out that an air naval formation, 
comprising the 956E destroyers, the Su-27SK fighters, and the 
new long-range radar aircraft being built in Israel to China's 
order based on Russian-made 1176, is fully capable of fighting 
as equals with the U.S. Navy aircraft carrier formation. Will 
these--do you know if the SSN-27 or these Su-27SK fighters--the 
same thing--have nuclear warheads?
    Mr. Bodner. I am not sure which report you are referring 
to. We have----
    Ms. Pelosi. I will tell you. It is a report dated 3-20-
2000, and it is called the Russia-China Destroyer Deal 
Declared. It is a report by Sergei Sokad, and it is about 
Russian-made destroyers and Chinese navy trigger violent 
repercussions in Taipei and Washington. I can make it available 
to you.
    Mr. Bodner. I would appreciate that.
    Ms. Pelosi. Do you think the Su-27SK fighters will have 
nuclear warheads?
    Mr. Bodner. Off the cuff, I do not know whether Su-27s have 
compatible tactical weapons to go with them. I do know we have 
provided the Congress classified reports from the Defense 
Intelligence Agency that do assessments of the military 
capability of the PLA, including specifically the acquisitions 
they are making from the Russians. I might refer you back to 
that.
    Ms. Pelosi. If it is not that, could you find out the 
answer to that question for whatever level of classified or 
whatever for the committee?
    I believe my time has expired. Thank you, Mr. Chairman.
    Mr. Callahan. Mr. Wolf.
    Mr. Wolf. Mr. Chairman, I came in after the others so, you 
know--is that okay?
    Mr. Callahan. It is all right with me.
    Mr. Wolf. I will just say I won't even take the full time.
    One, I share Ms. Pelosi's comments about IMET and East 
Timor and Indonesia. Admiral Blair really didn't want to go out 
there when the atrocities are getting ready to take place. Had 
he gone out there, I think maybe the atrocities would not have 
taken place.
    Also, I saw he was in Beijing the other day saying he was 
opposed to the Taiwan Defense Act. So, speaking for myself, my 
respect for his judgment is not as great as maybe yours; and I 
think on this issue I share what Ms. Pelosi says.
    Secondly, and you might want to submit this for the record 
so I don't take the time, are you concerned over the fact that 
President--former President Iliescu is running for the 
presidency of Romania and is now even, some people say, ahead 
in the polls and next year Romania is head of CSCE or OSCE, as 
it is now referred to, and you are giving this money to OSCE to 
deal with Kosovo and Iliescu supported the Russian effort and 
not our effort? Does this trouble you, that Romania may be head 
of OSCE and he may win?
    Mr. Holum. I will have to answer in more detail for the 
record, but let me just say that operations conducted by OSCE 
are not controlled by the individual who happens to be the 
head. They are consensus planned. So I wouldn't overestimate--
--
    Mr. Wolf. Does it trouble you that if he were president 
they would be head of OSCE?
    Mr. Holum. Let me respond to that in more detail for the 
record, because it is a ways out of my area of competence.
    Mr. Wolf. With that, Mr. Chairman, I will just give the 
rest of the time, but thank you very much.
    Mr. Callahan. Thank you.
    Mrs. Lowey.
    Mrs. Lowey. Thank you, Mr. Chairman.

                              MIDDLE EAST

    I thank you for your testimony. And I understand there was 
some discussion before I arrived regarding sales between Israel 
and China, and I certainly think we should get and I personally 
have requested detailed information, and I appreciate any 
ongoing information in that regard.
    However, I have taken a very strong position in support of 
military assistance to Israel because I truly believe, and we 
have seen from our history that Israel is our strongest ally in 
the Middle East. I think military assistance to Israel serves 
our national security interest, and it helps keeps Israel and 
the entire Middle East stable and secure. In fact, as the final 
status negotiations between Israel and the Palestinians 
continue to progress and Israel prepares to withdraw from 
Lebanon later this year, our interest in ensuring regional 
stability becomes even more critical.
    Please discuss further how these developments will impact 
the security situation in the region and discuss the role of 
our assistance in ensuring stability in the region. I feel that 
the greatest threats to our security is international 
terrorism, and the threat of proliferation, which certainly is 
prevalent in that region of the world, and I would be very 
interested in your response to that question.
    Thank you.
    Mr. Holum. Well, thank you. It certainly is the case that 
we regard Israel's security as a matter of U.S. national 
interest. And the President has and the administration have 
devoted enormous amounts of time to pursuing the Middle East 
peace process, both the Syria and Palestinian tracks. We will 
continue to do so, and we remain committed to maintaining 
Israel's qualitative edge in the region. That is something that 
will not falter.
    In addition to that, we have collaborated with Israel as 
well as making our own direct efforts to stem the flow of 
technology for weapons of mass destruction into the region, 
spent a great deal of time, as you know, working with Russia 
and China trying to curtail transfers of missile and nuclear 
technology to Iran and to others in the region with some degree 
of success but certainly not satisfactory.
    All of those efforts shouldn't and I don't think will--I am 
confident will not detract from our determination to raise 
concerns about Israeli arms transfers or technology transfers 
that impinge on our security interests. This is something that 
we have raised, I have raised and others in the administration, 
with senior Israel officials repeatedly, Secretary Cohen most 
recently in Israel in a press briefing with Prime Minister 
Barak. So it is something that is very high on our agenda, and 
we continue to address it.
    We are very concerned about these transfers. I don't think 
we should let our close relationship with Israel get in the way 
of those kinds of discussions. In fact, it is in significant 
part the character of our relationship that permits and 
facilitates that kind of discussion.
    Since Secretary Cohen most recently raised this, I would 
like to also defer to Mr. Bodner.
    Mr. Bodner. I would agree with the point that Secretary 
Holum is making. The Secretary of Defense is committed to 
Israel's security and its qualitative edge. We have had very 
effective programs. They serve Israel's interest. They serve 
our interests. We do have concerns. Secretary Cohen discussed 
them when he was in Jerusalem, Tel Aviv.
    And I don't think I can really amplify beyond that.

                                 JORDAN

    Mrs. Lowey. Thank you. I also believe and I believe this 
administration is committed to Jordan's security. The United 
States has a great interest in ensuring that Jordan maintains 
the stability and strength it needs to continue as an active 
partner in the peace process and a credible military deterrent 
against potential threats in the region. In fact, Mr. Bodner, 
you mentioned that one of the objectives of our military 
support for Jordan was ensuring that it wasable to continue 
enforcing sanctions against Iraq. Can you discuss how our military 
assistance has helped Jordan in this capacity and how the 5-year 
funding plan will help serve our strategic interests in the region?
    Mr. Bodner. We have worked very well and very energetically 
with Jordan to make sure that its 5-year plan meets its highest 
priorities. We have periodic reviews with them to do so.
    Secretary Cohen was just in Jordan. Mr. Slocombe preceded 
him and had additional meetings in Jordan. I think the degree 
of cooperation we have with them is outstanding. They operate 
with very old equipment, primarily U.S. equipment; and we are 
working with them to be able to ensure that the equipment they 
have can be updated, can be maintained, that they have the 
right support for it and also that the training that their 
people receive enables them to be as effective as possible.
    That is one of the reasons why we are asking for an 
increase for Jordan this year. We view the assistance to Jordan 
as key. We would appreciate your support for it.
    Mrs. Lowey. And----

                      ISRAEL'S AWACS SALE TO CHINA

    Mr. Callahan. The gentlelady's time has expired.
     Mrs. Lowey, before you came in I also expressed my concern 
and our colleagues' concern about this sale--AWACS sale to 
China. It is my intention to find a mechanism to withhold from 
the expedited payment $250 million, which is the equivalent of 
a sale from proceeds going to Israel. So this committee or at 
least this chairman intends to take aggressive action to back 
up the Secretary of Defense who contends that it will be 
detrimental to our national security.
    Mrs. Lowey. Mr. Chairman, I would just like to say that I 
always respect your views as the chairman. I personally have 
requested additional information in that regard, and have met 
with the special assistant to Prime Minister Barak.
    Mr. Callahan. I have also requested that Mr. Slocombe, when 
he returns to the United States, meet with us to discuss the 
security dangers involved in this sale.
    Mrs. Lowey. I think this is very important, and we need to 
get that information.
    The point that I was trying to stress, and I have always 
stressed, is that I do believe that our military assistance to 
Israel is in the national security interest of the United 
States.
    Mr. Callahan. It is our----
    Mrs. Lowey. We have seen that during the Gulf War.
    Mr. Callahan [continuing]. Had Israel not provided a 
country with technology that could be detrimental to the rest 
of the world. There is another section of the world other than 
the Middle East.
    Mrs. Lowey. I am not questioning that. I personally 
requested a response to the information which we have all 
received because I think it is very troubling to all of us.
    And I thank you.
    Mr. Callahan. Mr. Knollenberg.
    Mr. Knollenberg. Thank you very much. I want to thank my 
colleagues for yielding this early time on behalf of myself.

                                  KEDO

    Gentlemen, welcome; and let me get into the KEDO situation 
very quickly. Under KEDO, as you know, which is the 
administration's current situation with North Korea, the U.S. 
is leading an effort to finance and build two nuclear reactors; 
and this project I believe will total an estimated $5 billion. 
But they are running into difficulty, and I believe you are 
both very familiar with the difficulty in that they can't 
convince companies to build nuclear reactors in North Korea.
    Currently, there is no liability protection in place for 
these contractors; and, I have been told they don't want to 
bear the risk. I don't blame them, personally. Because, 
frankly, there could be tens of billions, billions of dollars 
involved here if there were a Chernobyl-type situation.
    Added to the problem is this: North Korea has no 
infrastructure for this type of endeavor. They have no 
experience, and they don't know how to properly operate the 
reactors. So they have to be taught.
    The techs can't leave the country. That is a North Korea 
prohibition. We don't know of any experts in the NK, who could 
deal with the kind of material that would come from U.S. 
companies or even foreign companies. I am not going to mention 
the companies. But there are U.S. entities involved. There are, 
of course, foreign entities involved. And another problem that 
we see is that you need something like 1,000 people to properly 
operate a nuclear power plant. These people have to come from 
within.
    Now, to the burden. It occurs to us that--and there have 
been some staff contacts there is legislation being proposed to 
deal with prohibiting the funds that would be used to cover the 
insurance if a so-called disaster occurred.
    I think both of you gentlemen are very familiar with the 
Price-Anderson Act which is age-old, applies to local, domestic 
and to foreign situations, but the exposure is much higher here 
than it is on a foreign basis. It is my understanding there is 
a limit of a million dollars in foreign situations. Hardly 
enough to even give any company the assurance that they would 
be reimbursed if something were to take place. So the insurance 
thing is a problem.
    I guess what I want to ask very quickly is, how does the 
administration plan to address the liability concerns of the 
contractors? Either gentlemen can respond. Will the U.S. be 
asked to assume the financial responsibility, for example, and 
what would that cost be?
    Mr. Holum. That is one of the issues that is currently 
under discussion and remains to be resolved.
    We haven't yet reached a solution to the liability 
question. You are correct that it is something that will have 
to be addressed before U.S. contractors will likely be involved 
in the Price-Anderson Act provisions or are not sufficient to 
deal with that.
    Let me underscore that while there may be U.S.--or likely 
to be, assuming liability is resolved--U.S. contractors 
involved in parts of this proposal, that the dominant 
involvement will be on the part of South Korea. And one of the 
possible values of proceeding with this project from the 
perspective of South Korea is that the necessity in change of 
personnel training and preparations to operate these reactors 
as well as the long and detailed involvement across the 38th 
parallel during the construction process will tend to open up, 
in ways that otherwise might not be possible, North Korea's 
economy and society. I am not saying this is going to work 
miracles, but it is expected to have some benefits of that kind 
of----
    Mr. Knollenberg. My concern is that, ultimately, the U.S. 
taxpayer could be brought into the picture if, as I understand, 
these current negotiations are looking at Title 50 of the U.S. 
Code under the armed services. If that is being looked at by 
the administration, that would throw total liability on 
whatever U.S. company might be involved in that process, and 
that is scary to me because that says that it is a way for the 
administration to circumvent the Congress. It is important to 
dialogue with us on what is going to be done so that we can 
prepare to deal with you and talk with you and work something 
out.
    But it appears as though, while there has been some staff-
to-staff contact and there is legislation being architected now 
that would prohibit spending--and I don't think that is any 
mystery to anybody. I think Mr. Gilman has something that he is 
working on, prohibit spending of any kind that would get into 
the area, into the stratosphere of those numbers we are talking 
about, because $100 million, obviously, is not going to be 
acceptable to American taxpayers. And I know that there are 
other companies involved here, but a hundred million is a drop 
in the bucket. And these people, frankly, don't have any talent 
when it comes to knowing how to run a nuclear plant.
    If you are worried about plutonium, what do you do with the 
spent fuel? You can still produce in time weapons grade 
plutonium. There is no dealing with that issue. That is going 
to be a cardinal concern of ours.
    Mr. Holum. The agreed framework does address that concern 
by virtue of requiring North Korea to come back into compliance 
with its IAEA obligations and its safeguard agreement even 
prior to any arrival of fuel in North Korea. So this process, 
this plant will be safeguarded; and reprocessing, therefore, 
would be detected.
    Mr. Knollenberg. Presumably it will be, if you get to that 
point. In the meantime, we can't get started until we get some 
clearance on that. So I wish I could have that assurance if we 
get there, we will have some guarantees.
    But, Mr. Chairman, I think my time is probably out.
    Mr. Callahan. I just might comment, on KEDO, that this is 
getting stickier and stickier. It is getting to the point where 
it is almost ridiculous. The very fact that they haven't really 
started the new plants after 5 years, that our cost is 
escalating each year and because of the heavy oil price 
increases, there is no telling what you are going to need this 
year.
    There comes a time when we must recognize that the KEDO 
agreement is not going to work and that we are going to have to 
find another way to pacify North Korea into not attacking South 
Korea. But for the United States to be making the contribution 
they are making--and now I understand, because of the fact that 
South Korea and Japan have not fulfilled their end of the KEDO 
agreement, that North Korea is coming to us and saying you have 
got to give us some more resources. This is something that the 
International Relations Committee should be having a hearing on 
before we go to markup.
    I agree with Mr. Knollenberg that this has just gone far 
enough. I didn't agree with it when Mr. Gallucci came to us 5 
years ago, but I went along with it because you all told me it 
was going to be World War III, and they were going to hold me 
responsible for it. Well, now 5 years later--almost 6 years 
later, we are the only ones, you know, holding up our end of 
the bargain. And there is no progress. There is no end in 
sight.
    So it is something we are going to have to address in a 
hearing, I hope before the International Relations Committee. I 
protected the Defense Department and the State Department from 
the International Relations Committee because I have been 
complaining about it all along. But I am through protecting 
them. Something has got to change in this agreement.
    Mr. Holum. I think it is important to ventilate this fully. 
I know you don't want to do that in detail here, but let me 
just say respectfully that I do think there is progress under 
the agreed framework if we compare what might have been with 
what is.
    What might have been, had those plutonium-producing, 
graphite-moderated reactors been allowed to continue, is North 
Korea could be in the business of not only producing nuclear 
weapons but selling them to other countries. They could produce 
enough plutonium for three to five weapons a year. And what the 
agreed framework has accomplished is to shut down those 
proliferation-prone reactors, to close down the reprocessing 
plant, to can the fuel, to dramatically reduce the risk of 
proliferation.
    Now it is true what North Korea hasn't yet received what it 
anticipated as the benefit from that, but the process is 
rolling forward. The necessary agreements are in place. The 
funding commitments have been made by South Korea and by Japan. 
So I think this process has a great deal of promise. I 
recognize it is controversial. I recognize your position has 
been skeptical.
    Mr. Callahan. If you look at the record, when Mr. Gallucci 
came before the committee 5 years ago, he said $13 million 
would accomplish this. And now we are far over a hundred 
million and not even beginning to see an end.
    Mrs. Kilpatrick.
    Ms. Kilpatrick. Thank you, Mr. Chairman. Good morning, 
gentlemen.

                              SUPPLEMENTAL

    When Chairman Callahan opened the meeting or in some of his 
earlier questioning he mentioned that the supplemental may or 
may not come and that you may have to use the regular 
appropriations process and the 2000 appropriations already 
given to meet some of the demands that the supplemental 
addressed. Are you planning for that? Has that begun? Are you 
waiting for the Senate to act? What is the status?
    Mr. Holum. Well, as a general principle, if the 
supplemental isn't approved--and we hope it will be--we would 
increase the programs for the next fiscal year by a 
corresponding amount. But we are still hopeful that the 
supplemental funding will be made available.
    Ms. Kilpatrick. Are you waiting hopefully or are you 
exploring other options?
    Mr. Holum. We are pursuing approval of the supplemental. 
Not only waiting, arguing for it, pressing the Senate to act. 
But if it is not done, we would come back, we would propose 
amendments to the----
    Ms. Kilpatrick. How long would you wait, Mr. Holum? We have 
verification from high levels in the government that it is not 
moving. Although there is some controversy over whether it will 
or will not pass, do you move on it or do you continue to wait 
as we move on and get into the regular budget process?
    Mr. Holum. I can't give you a definitive answer to that, 
when we would give up hope and start working on the----
    Ms. Kilpatrick.  I think you ought to start now, today, 
plan B, C and otherwise, because it may or may not come.
    As you know, the Plan Colombia is a part of that 
$1,700,000,000 supplemental. Earlier, you mentioned monies. 
What other countries have committed resources to Plan Colombia?
    Mr. Holum. I will have to--there are--out of the total of 
what we are proposing, it is an additional--in addition to $4.5 
billion that the government of Colombia will commit to the 
plan----
    Ms. Kilpatrick. Excuse me, any other countries?
    Mr. Holum. I was getting to that--from its own resources 
and from loans. I can't give you the specific lists of other 
countries. The loans will be part from international financial 
institutions. A large portion, as you know, of the Plan 
Colombia funding is related to antinarcotics, and that is a--
the dominant part of the U.S. contribution.
    Ms. Kilpatrick.  U.S. contribution is one; Colombia is 
contribution two. Are there any other countries making such a 
commitment to this plan?
    Mr. Bodner. Ms. Kilpatrick, I believe that the overall Plan 
Colombia totals around $7.5 billion, of which $4.9 billion is 
intended to be provided by the government of Colombia. The 
United States has stepped forward with----
    Ms. Kilpatrick.  You are wasting my time. I only have 5 
minutes. Are there any other countries who----
    Mr. Bodner. I believe that government of Colombia looks to 
other countries beyond the United States for approximately a 
billion dollars.
    Ms. Kilpatrick. Has any other country come forth with 
money?
    Mr. Bodner. President Pastrana has recently been in Europe 
for the exact purpose of eliciting support.
    Ms. Kilpatrick. Can you provide for me in writing the list 
of countries--if there are none, say so--that have committed 
hard dollars to Plan Colombia?
    Mr. Callahan. If the gentlelady would yield, it is our 
understanding that the European Community is meeting in June 
for a pledging meeting; and they intend to raise, I think, 
about $2 billion or $1.6 billion from the European Community.
    Ms. Kilpatrick. In June.
    Mr. Callahan. The pledging session is scheduled for June.
    Ms. Kilpatrick. Okay.
    Mr. Callahan. That is one reason we think it isimportant to 
go ahead and pass the supplemental bill through the Senate, because the 
European nations are not going to pledge anything until the United 
States pledges something.
    Ms. Kilpatrick. We are further along than they are if they 
don't have anything yet and you have 1.7 coming that way, 
halfway there I should say.
    Ms. Pelosi. Would the gentlelady yield?
    The big mystery is, where does the, does the money come 
from in Colombia?
    Ms. Kilpatrick. Thank you very much, Madam Ranking Member.
    In that supplemental as well as in your line item, the 
administration's request of some $311 million for 
nonproliferation, antiterrorism, demining and related programs, 
there is $311 million there. I want to know--and, you know, 
about the tragedy in Mozambique, I will not go over that all 
over again--but before the cyclone had identified 2 million 
mines in the country that are now floating and moving around 
the country. Can any of those $311 million be used or will any 
of it be used for that mine elimination?
    Mr. Holum. Yes, there is funding, $2 million, as you said, 
in the original funding for Mozambique mine clearance. In light 
of the flooding, we have identified near term an additional 
million dollars for demining in Mozambique. At the same time, 
we are also, unrelated to the demining program, pursuing the 
initial relief effort in response to the tragic floods.
    Ms. Kilpatrick. I understand that is some $37 million for 
the aircraft personnel and some foodstuffs. Is that $37 million 
including the $2 million that you mentioned for the mining?
    Mr. Holum. No, I think that is separate.
    Ms. Kilpatrick. Is that on its way to Mozambique?
    Mr. Holum. In terms of actual physical delivery, I will 
have to find out, but the funding is available. We have 
identified the funds for additional demining.

                        FOREIGN MILITARY REPORT

    Ms. Kilpatrick. The report that was mentioned earlier, the 
foreign military report, Mr. Bodner, that arrived 4 weeks late. 
I think the ranking member got hers a week ago. We got ours 2 
days ago in the office. It is a bit thick so, we weren't 
prepared today to ask you the questions. I did hear my chairman 
speak on the $250 million possibly being withheld from Israel, 
but I reserve the right to review this issue, Mr. Chairman, 
after we have had a chance to look at the report, and to ask 
some questions in writing with hopes that they will be 
responded to in a timely matter.
    Mr. Callahan. We will, obviously, have to have another 
hearing to respond to that after we have the opportunity to 
review what they have submitted to us.
    Ms. Kilpatrick. Thank you, Mr. Chairman. I yield back.
    Mr. Callahan. I appreciate you allowing me to jump over 
you. Mr. Knollenberg had another committee hearing that he had 
to go to.
    Thank you, sir. You are recognized.
    Mr. Packard. Thank you, Mr. Chairman.
    I am trying to figure out the numbers on your overall 
budget request. I can't figure whether you are asking for an 
increase or a decrease and how much. Would you enlighten me 
please, Mr. Holum?
    Mr. Holum. Yes. The----
    Mr. Packard. That may figure in with what comes out of this 
committee for supplemental.
    Mr. Holum. It depends on how you add--how you contemplate 
the supplementals. What we are requesting, the $22.8 billion 
for 2001 is a $600 million or 2 percent increase for 
international affairs over fiscal year 2000. If you don't count 
one-time expenses for Wye and U.N. Arrears in the baseline, 
then some would argue that the increase is larger.
    What we are trying to establish is that every year you have 
to count on some kind of additional contingency happening. So 
it makes more sense if you are considering the budget as a 
business would that you include supplemental funding as part of 
the assessments of the baseline from the prior year.
    Mr. Packard. So you are looking at in excess of a 2 percent 
increase?
    Mr. Holum. Would peg it at 2 percent.
    Mr. Packard. And it appears, with the numbers we have been 
given, that we will probably be lucky to have level funding for 
this committee from last year and could be asked to take some 
reductions. If there was no way to get any more than what you 
got last year, what would suffer?
    Mr. Holum. That is hard to say. Because, as I said in my 
statement and as the Secretary has emphasized, this is a very 
austere budget, from our perspective. We have--so you don't 
know whether you would stop doing something or whether all--you 
would have programs take a detriment across the board. For 
example, we are engaged in trying to prevent some 30,000 former 
nuclear weapons and other weapons of mass destruction 
scientists from the former Soviet Union from sharing their 
expertise by turning them to alternative pursuits. That might 
suffer. Our efforts--our services to U.S. travelers abroad 
might suffer. Our efforts to promote U.S. business might 
suffer. We may come up short in our efforts to promote the 
reconciliation in Kosovo. I mean, the whole range of programs 
are on the line.

                             EMBASSY DAMAGE

    Mr. Packard. Okay. I notice on your Asian--East Asian 
section of your statement in the graph it shows $28 million for 
China damage payment. That is, I think, to restore the 
destroyed embassy in Kosovo--or in Belgrade. Is that a one-time 
thing?
    Mr. Holum. Yes.
    Mr. Packard. Then it shows, $2.87 million that China would 
also return for facilities of the U.S. Government in China. 
What are those?
    Mr. Holum. The part of the negotiation that the State 
Department legal advisor worked out with the Chinese as 
compensation for the bombing of their embassy in Yugoslavia and 
compensation for damage to our embassy caused by demonstrations 
that followed the embassy bombing.
    Mr. Packard. That, too, would be a one-time thing.
    Mr. Holum. That is also a one time.
    Mr. Packard. For this round, that is all I have, Mr. 
Chairman.
    Mr. Callahan. Follow-up on the question about the embassy 
bombing in Belgrade and ask why the State Department is making 
this request instead of the Defense Department. The State 
Department didn't bomb the embassy, it was the Defense 
Department and an error by the intelligence community. Why is 
the State Department reimbursing something that was a 
responsibility of the Defense Department?
    Mr. Holum. I think the best answer to that, Mr. Chairman, 
is that the money has to come out of U.S. pockets--and I know 
this isn't the case as far as you are concerned, because you 
have your own caps to work with, but the--we just felt that the 
best place to categorize was it was economic support funds. You 
can argue that the conflict was under way or the intervention 
took place because the State Department pursued it. That is one 
argument. Others would argue that the agency that made the 
mistake should pay. It is very hard to arrive at anything other 
than an arbitrary answer.
    Mr. Callahan. I just wondered why. I know the client's 
don't care whether it comes from the Defense Department or the 
State Department, but I just wondered, in these budget 
constraints we are under, especially the State Department is 
telling us we don't have enough money for them, yet they are 
volunteering to pay something that truly is a responsibility of 
the Defense Department.
    Let me ask you another question. We visited the embassy in 
Beijing that the riot damaged extensively to the point that we 
have to move. We are going to move anyway because of security 
measures. Did we request that the Chinese reimburse us for the 
damage that Chinese rioters did to our embassy or we did we 
just forget about that?
    Mr. Holum. No, that is included in the settlement; andthey 
will compensate for that damage.
    Mr. Callahan. Mr. Sabo.

                                 RUSSIA

    Mr. Sabo. Mr. Holum, could you update us on what the status 
of START II is in Russia? Is there likely ratification in the 
near future?
    Mr. Holum. We are hopeful that they will.
    They have resumed consideration of it. There have been 
meetings by the leadership of the executive branch in Russia in 
recent weeks with the Duma, a renewed effort to ratify. There 
has been some speculation that ratification could occur this 
month. They have an interest in achieving ratification before 
the Nuclear Nonproliferation Treaty Review Conference in New 
York beginning April 24th. We also have that same interest. I 
think it would be a very important step.
    I don't know if that will happen, but they are actively 
engaged in the ratification effort. I think there is a 
reasonable possibility that, if not in April, then possibly as 
soon as June. But it is under active consideration.
    Mr. Sabo. Is the new leader in support?
    Mr. Holum. Yes, very actively in support. He has made that 
clear, made it clear to the Secretary when she was in Moscow 
not too long ago and has publicly avidly endorsed ratification.
    Mr. Sabo. Thank you.
    Mr. Callahan. Mr. Lewis.
    Mr. Lewis. Thank you, Mr. Chairman.
    Mr. Chairman, it has come to my attention that the State 
Department has charged one of our major military contractors 
with violation of the Arms Export Control Act. It would appear 
that--at least it is alleged--that that contractor has provided 
assistance to the Chinese government. That would be a serious 
concern to the United States' interest. The contractor is 
directed to respond within 30 days. The seriousness is 
indicated by the fact that, if they follow through on these 
charges and the contractor is found to be in violation, there 
could be a $15 million fine and a suspension of trade in 
connection with satellite items for as long as 3 years.
    The contractor, as I understand it, indicates that it sent 
a copy of the material to the Department of Defense for their 
review. Secretary Bodner, would such a request for such an item 
be sent to your office for such a review?
    Mr. Bodner. The office in the Department of Defense that 
handles export licensing matters for DOD does report to me. I 
would note that the Department of Defense is not a licensing 
authority for matters that are under the Arms Export Control 
Act.
    Mr. Lewis. I understand that. But they sent it to an office 
at the DOD. So would yours be the office?
    Mr. Bodner. My office oversees that part.
    Mr. Lewis. So the answer is yes.
    Mr. Bodner. The answer is yes. He reports to two people. He 
reports to me, yes.
    Mr. Lewis. I may want to pursue this and ask for some 
extended discussion with the committee where State is making 
the charges that are involved here.

                        TRANSFER OF JURISDICTION

    Following essentially the same line, but shifting gears to 
you, Mr. Holum, I believe in 1994 the Clinton administration 
transferred satellite export questions, licensing authority, as 
you have suggested, and other questions to Commerce versus the 
State Department. Yet the State Department is making these 
allegations. Some suggested at the time that there were 
significant areas of gray relative to America's defense and 
security interests and, thus, there was a debate at the time 
about that transfer.
    Mr. Holum, I am interested in knowing, do you see 
significant areas of gray that need to be reviewed? A case like 
this would indicate that maybe there are problems? Should we 
have a much more direct line whereby State, DOD and Commerce 
work together relative to American security interests?
    Mr. Holum. The--in terms of the kind of technology that is 
under consideration in this case, jurisdiction was never 
transferred to the Department of Commerce. And that is why, 
under any circumstances, the State Department and the Office of 
Defense Trade Controls has always controlled technology that 
would have relevance to the launcher.
    What was transferred to the Department of Commerce was the 
package on top, the satellite, and very limited technology 
related to form, fit and function of that technology to the 
Chinese booster. What--so we have always required a license 
from the Department of State for anything that would have 
relevance to the booster; and we would not, in the case of 
China, grant a license.
    Mr. Lewis. In this case, the contractor suggests that they 
sent this material to DOD first. DOD redacted all but five 
pages of a 50-page report. But State is alleging that the 
contractor sent to a Chinese company, the full report 
unredacted some time before DOD received this request for 
review. That is a very interesting series of factual 
allegations, if proven to be accurate. I will be very 
interested in following through on this.
    But, in the meantime, it seems to me that there is enough 
confusion here that a bias towards Commerce expanding trade on 
the one hand, many of our concerns about our defense interests 
and security interests on the other, are very real American 
interests and there should be pretty clear lines of review and 
communication. And I am really interested to know if the two of 
you believe there is a need for reconsidering where we are in a 
matter like this. When you get into a technical question like a 
kick motor that may or may not be used to reposition satellites 
you quickly get into an area of gray, and I am confused.
    Mr. Holum. I don't want to debate the details of this case 
because--on, obviously, an enforcement proceeding. But you are 
correct. There are areas that the transfer of jurisdiction left 
unresolved, the area of space-qualified items.
    What was transferred was anything specially designed or 
specifically designed for space use. And that sounds easy to 
resolve, but in some cases it is not. But I would emphasize, 
again, in this case we are not talking about that. We are 
talking about something that was never transferred and, from 
our perspective, was never in doubt.
    Mr. Lewis. Mr. Chairman, I want to review this in some 
depth in coordination with this committee.
    Mr. Callahan. It should be reviewed.

                                  IMET

    Mr. Lewis. In a second round I would like to pursue the 
subject of IMET. I presume, Mr. Bodner, that falls under your 
general area of purview.
    Mr. Bodner. Legislative authority rests with the Secretary 
of State. We execute the program.
    Mr. Lewis. I assume General Davison relates to IMET's 
activity.
    Mr. Bodner. His agency executes the program.
    Mr. Lewis. I think we could have some discussion of that 
subject.
    Mr. Callahan. You are absolutely right.
    Mr. Wicker.
    Mr. Wicker. Thank you, Mr. Chairman.
    It is--gentlemen, it is good to hear your very interesting 
and wide-ranging testimony.

                             PLAN COLOMBIA

    In the 5 minutes that I have, let me just start off by 
commenting about Plan Colombia and this supplemental. I am sure 
you watched the proceedings on the floor, as did the rest of 
the administration. I was one of 56 or so Republicans that 
voted for the Obey amendment. I also voted for the Ramstad 
amendment. I don't have the exact vote total in front of me, 
but I think it is fair to say that a swing of 20 votes the 
other way would have made a difference in the outcome of those 
amendments--at least the Obey amendment.
    I will also say this: There are a lot of Members of the 
House of Representatives who have a great deal of respect for 
Chairman Lewis, the gentleman to my right, and we are willing 
to defer to him on that issue; or Chairman Callahan, and we are 
willing to defer to him and also to the Speaker of the House. 
On the Democratic side, there were a number of people who were 
willing to defer to the President of the United States.
    But I can tell you, gentlemen, that there is considerable 
doubt among Members who voted to go forward with this program 
as to the advisability of our involvement in Plan Colombia. I 
would just say to you that it may be that the Senate's 
reluctance to move forward on the supplemental appropriation 
bill may be because it is an utter disaster, as some members of 
this subcommittee have suggested. It may also be that, some 
people want, to give the administration a little time to make a 
better case to the American people.

                            PUBLIC AWARENESS

    I wish you would take this message back to the President. I 
wish the President and General McCaffrey would go on nationwide 
TV and, if this is a drug war, make the case to the American 
people that this is a war. Tell us what our expectations are in 
Colombia. Tell us realistically what the truth is and what we 
can expect this investment to be in terms of years and dollars.
    You know, Mr. Chairman, oftentimes we think what we say in 
Washington, D.C., is immediately broadcast out to the American 
people and that they are hanging on our every word and deed. I 
think sometimes we speak in a lexicon that is almost 
indecipherable among the people in the hinterlands. It is my 
feeling that the American people don't realize yet fully that 
we are about to embark on the supplying of Colombian troops 
that will be involved in a war and those troops are going to 
rely on the support of the United States for years and years to 
come. We are also going to have to have more than 1 year of 
appropriations. We are going to have an extended level of 
commitment to this.
    I would just ask you, do you know whether the President or 
the Secretary of State or General McCaffrey plans to fully 
inform and go before the American people with all the power 
that the administration has to use the media and make the case? 
Will you take this one Congressman's suggestion back to the 
administration?
    Mr. Holum. Certainly will. I appreciate the thought. I 
think it is a fair description of the need to make the public 
case for this.
    Let me emphasize something that puts it in a somewhat 
broader context. We have, through the Secretary's initiative 
and as I emphasize in my statement, tried to stress in 
particular a focus with substantial resources on democracies or 
potential democracies in transition. That has included 
Indonesia, Ukraine, Nigeria and Colombia. They happen to 
reflect all the major geographic regions of the world. They 
also are all countries that have the potential for either 
succeeding or failing in brave, potential, democratic efforts.
    In the case of Colombia, the circumstance is clouded by the 
fact that there is an enormous drug problem that has direct 
implications for U.S. interests and for the American people, 
and that is a major proportion of our own direct involvement. 
But the program is much broader than that. It is a pro-
democracy transition program that I think could spell the 
difference between success and failure for the oldest 
democratic society in the Western hemisphere or--I am sorry--in 
South America.
    Mr. Wicker. Well, I appreciate that. And, as I told General 
McCaffrey in this very room several weeks back, I hope he is 
absolutely right and I hope my skepticism is unfounded. But I 
do think the case has not yet been made. I think at some point 
the American people are going to wake up, and we will have 
spent billions of dollars, and they will wonder when we made 
that commitment as a Nation.

                                 RUSSIA

    Let me just ask one more question, if I might, Mr. 
Chairman, about Russia. And I will start by noting that you are 
requesting $21.5 million to fund a voluntary contribution to 
the comprehensive test ban treaty organization preparatory 
commission responsible for the effective implementation of the 
test ban treaty. And I know that Mr. Sabo, while I was out of 
the room, asked a question about SALT II and President Putin 
and the prospects in Russia. Did it enter into your 
considerations at all in respect to that request that the 
Senate defeated the test ban treaty? Did that enter into the 
administration's considerations in asking for this level of 
funding?
    Mr. Holum. Yes, it did. And I would respond in two ways. 
One is that, with the help of the former chairman of the Joint 
Chief of Staff, General Shalikashvili, who is engaged in a 
long-term, quiet effort to work at revisiting that vote, we 
hope that this decision will change sometime in the future. I 
don't expect that to happen during President Clinton's term in 
office or during my service to the administration. But we think 
it is important to examine that and to work at that to try to 
address in a more sustained and careful way some of the 
legitimate concerns that were raised during the course of a 
very brief Senate debate.
    But in addition to that, if the treaty is never ratified, 
if the treaty never enters into force, there is nonetheless 
value to the contributions we are making to the comprehensive 
test ban treaty organization, 80 percent of which go toward the 
development of an international monitoring system to detect 
nuclear tests anywhere in the world. That includes building 
seismic stations in places where we can't get with our own 
access, in China and Russia, in South Asia and elsewhere.
    So--and we have an interest, whether or not there is a 
treaty, in knowing whether countries are conducting nuclear 
tests. To the extent that it will help us detect nuclear 
testing and this information will be freely available, it 
serves our security interests in a--in dealing with nuclear 
proliferation to have the information, whether or not the 
treaty is in force.
    We spend an enormous amount of resources on our own 
unilateral national technical means and other means to detect 
nuclear tests. Our money is leveraged in the CTBTO because 
there we pay 25 percent of the cost, others pay 75 percent, to 
build the similar kinds of assets that we can draw upon.
    Mr. Wicker. Thank you, Mr. Chairman.
    Mr. Chairman, if I could have 30 seconds of that time that 
Mr. Wolf yielded back to follow up on your response to Mr. 
Sabo's request question about President Putin. Have you taken a 
look at the recent New York Times article headlined Putin Vows 
Russia Will Reinvigorate Its Nuclear Force? Have you had a 
chance to look into its remarks there and could you----
    Mr. Holum. Yes, I have looked at it, and this is something 
we follow and the public record and all sources of information 
we can find. There are some encouraging aspects to that 
assessment. For example, it suggests a continuing process to 
reduce the number of nuclear weapons in their forces and to 
reduce the number of nuclear weapons development facilities, 
something we have been interested in pursuing.
    We want the nuclear arms reduction process to be 
irreversible. One of the ways you do that is reduce the 
capacity to make more nuclear weapons.
    At the same time, President Putin--or President-Elect Putin 
seems intent on invigorating their exports in nuclear 
technology and in modernizing their nuclear weapons productive 
capability. Those parts of his position are more worrisome.
    But you are right. This is something we need to follow very 
closely.

                               SKEPTICISM

    Mr. Callahan. With respect to the gentleman's views on 
Colombia, I might say that I share your skepticism. However, I 
feel a responsibility because of the structure of our 
Constitution to respond to the administration's request.
    For example, in Bosnia I disagreed and had great skepticism 
about the success capabilities of Bosnia. I had great 
reservations about going into Kosovo as we did, and I had great 
reservations about going into Haiti. But I don't think you can 
deny the tremendous success that we have had in Haiti as a 
result of our involvement. We have built that into a model 
country for the world. I say this with tongue in cheek.
    And if you look at Kosovo, the very fact that the thugs 
that----.
    Mr. Wicker. How much time are you going to give me to 
respond?
    Mr. Callahan. I am just saying that I share your 
skepticism. When you look at the success, to say that we 
facilitated one group of thugs so--that now have the capability 
of trying to eliminate the Serbs----
    Mr. Wicker. Not to mention our 1-year-long involvement in 
Bosnia.
    Mr. Callahan. I understand that. So you can't deny the 
success of the administration's foreign policy.
    And even though I argue on all points on every one of these 
endeavors, I believe the people elected our commander-in-chief, 
he appointed the drug czar, they came to us and said, this is 
what we need to make this drug war a success which will help 
us. So I share your skepticism. Plan Colombia is a mile wide 
and an inch deep, and there are a lot of questions. But that is 
what the administration requested, and I feel an obligation to 
fulfill that.
    Mrs. Pelosi.

                        ISRAEL-CHINA WEAPON SALE

    Ms. Pelosi. Thank you, Mr. Chairman. I know you want to 
wrap up the hearing, so I will try to be brief and defer some 
of my questions to when we have the meeting with Mr. Slocombe.
    I do just want to reiterate my concern about the Israel-
China weapon sale. I believe the U.S. must secure ironclad 
understandings with the Israeli government about their 
relationship with China in terms of these sales. It doesn't 
mean they shouldn't trade with China or have a relationship or 
engage with China. It is specifically about selling in 
qualitative advantage to the Chinese which will give them an 
advantage over our presence in that region of the world.

                           IMET JUSTIFICATION

    As far as Colombia is concerned, just on the IMET 
justification, we have been told that the justification is that 
it is a force protection for the benefit of U.S. troops. That 
is the justification for IMET. And at no point during any of 
the extensive debate on Plan Colombia did I hear anyone contend 
that the purpose of training our battalions in Colombia was for 
the benefit of U.S. troops. Could you comment on that?
    Mr. Bodner. I am sorry. You are referring to the 
justification for the use of the DOD authorities?
    Ms. Pelosi. Right. For the DOD. Yes. Because the 
justification has been force protection for the benefit of U.S. 
troops.
    Mr. Bodner. I am not sure I understand the question, but 
let me try to respond.
    Ms. Pelosi. Briefly though.
    Mr. Bodner. Last year, you were concerned about the use of 
DOD's authority for the training of the first battalion. Under 
those DOD authorities, that activity needs to be for the 
benefit of the U.S. forces.
    Ms. Pelosi. So where is the benefit to the U.S. forces in 
the use of DOD funds for training the battalion? DOD----
    Mr. Bodner. The benefit is, by having U.S. forces, whether 
it is in Colombia for these activities or similar activities--
--
    Ms. Pelosi. Okay.
    Mr. Bodner [continuing]. It improves their languages 
skills, it improves their familiarization with the country and 
with the armed forces with that country. It significantly 
benefits the ability of those forces--special operations forces 
typically--to be able to be inserted quickly in any place in 
the world by having on-the-ground experience in doing the 
training. And so, for our special operations forces, it is of 
tremendous benefit as they improve their Military-Essential 
Task List skills to actually have on-the-ground experience in a 
foreign environment.
    Ms. Pelosi. I do not see that as a justification. It is a 
justification you could drive a truck full of U.S. personnel 
through, and that sounds like an overall blanket justification 
that, as you said, you could apply anyplace. And I don't see 
that advantage, but you did answer the question.
    As far as the report's lateness and its content, I will 
take that up with Mr. Slocombe again. Some of my questions 
about it, since it was classified, I would rather do in a 
closed meeting.

                         SCHOOL OF THE AMERICAS

    In terms of the School of the Americas, can you outline 
this legislative proposal and submit it to the committee. The 
proposal to change the name, put Members of Congress on the 
board of visitors and eliminate some of the combat-related 
courses?
    Mr. Bodner. We have worked with the Army, and there is a 
legislative proposal that we will soon be coming forward--that 
would make some adjustments in the structure and organization 
of the school.
    Ms. Pelosi. When do you think the timing of that would be?
    Mr. Bodner. It is in interagency coordination right now.
    Ms. Pelosi. When do you think the timing of that will be?
    Mr. Bodner. I anticipate soon.
    Ms. Pelosi. I do support the administration's initiative on 
KEDO, but I think the questions my colleagues have asked are 
very justified.
    For the record, I just wanted to ask some questions about 
the Congress-provided $10 million to the Iraqi opposition in 
last year's bill. Another 10 has been requested. So I had some 
questions about who gets that money. But you can submit these 
for the record.

                                 TURKEY

    Ms. Pelosi. And then, in conclusion, to Turkey. Turkey is 
in the process of making a decision on the purchase of a 
significant number of attack helicopters. U.S. firms are 
competing. The Secretary of State laid down several specific 
benchmarks on human rights issues that she said would have to 
be met before the U.S. would approve such a sale. What is the 
status of the Turkish government's progress toward meeting 
these conditions which involve freeing parliamentarians and 
journalists who have been imprisoned and developing more humane 
principles with respect to the Kurdish population? When do you 
anticipate a Turkish decision on the sale and what kind of 
formal/informal determination will the Secretary make if a U.S. 
firm is chosen?
    Mr. Holum. You have seen our human rights report released 
in February which details our continuing human rights concerns 
with Turkey. As to the specifics of the helicopter sale, one 
U.S. manufacturer still in the running along with two European 
manufacturers, we are not certain of the timing. If a U.S. 
contractor were selected, the United States would make clear 
our human rights requirements as part of that--the licensing 
process. And it is not a forgone conclusion that it would be 
approved.
    At the same time, it is, I think, significant that the 
Turkish government has--the President--Prime Minister has taken 
steps to address our human rights and democracy concerns. As 
the report specified, we still have serious problems, including 
those you mentioned.
    Ms. Pelosi. I thank you for your answer; and, obviously, 
this will be ongoing.
    I thank our distinguished witnesses for their testimony.
    Thank you, Mr. Chairman.
    Mr. Callahan. Mr. Packard.
    Mr. Packard. I will be very brief.
    In excess of $7 billion is budgeted for your activities, 
and it goes to multitudes of nations for multitudes of 
purposes, as your written testimony certainly outlines. What 
kind of monitoring oversight do we have of all of the 
distribution of these funds in the various countries? Are you 
satisfied that we are getting enough feedback to determine that 
the money is going where it is intended to go?
    Mr. Holum. Yes, I think we are. There are a number of 
different monitoring mechanisms in place. The dominant one, 
obviously, is centered on the embassy. For example, the 
monitoring of the--in connection with the Leahy amendment to 
make sure that military assistance and military training don't 
go to units that have credible allegations of human rights 
abuses, the embassies are very much involved in those programs, 
in those determinations.
    We have monitoring programs--for example, a lot of the ESF 
funds are run through the Agency for InternationalDevelopment 
and are run by effective program managers, have safeguards against 
corruption, safeguards against diversion, steps to make sure that the 
funds are expended for their intended purposes. I think, overall, the 
monitoring for--to carry out the purposes of the legislation as well as 
to avoid diversions is quite good.
    Mr. Packard. Thank you.
    What are some of the activities in Lebanon that we fund 
through the economic support funds? What are some of the 
specific activities that we do in Lebanon?
    Mr. Holum. I have to supply a detailed answer for the 
record.
    Mr. Packard. If you would.

                            PEACE AGREEMENT

    Mr. Packard. In the event of a peace agreement reached by 
Israel and its neighbors, what is your budget or does it 
include anything--and what are your plans in that event of 
peacekeeping activities for funding in the Golan Heights and 
other parts of the Middle East?
    Mr. Holum. As you know, as far as the Golan is concerned, 
the President has indicated that if the parties request it, we 
would consider a monitoring or peacekeeping presence in the 
Golan.
    More generally, we have not submitted a supplemental or 
identified funding for a supplemental in the case of a peace 
agreement because we don't have a peace agreement. But I think 
it is important that we in the Congress continue to consult on 
this. We don't want to spring a surprise on the Congress. There 
likely would be a supplemental, but we would have to consult 
with the Congress about how to proceed when and if we achieve a 
peace agreement.
    Mr. Packard. Thank you, Mr. Chairman. That is all.
    Mr. Callahan. Mr. Lewis.
    Mr. Lewis. Thank you, Mr. Chairman.

                                  IMET

    Secretary Bodner, take me to IMET. When I served on the 
committee in the past, IMET had funding, I think I recall, in 
the high 30s in millions of dollars. That has risen somewhat 
over time.
    Last year, the administration made a request of $55 
million. As I understand it, the conference brought the amount 
back to 50 rather than 55. The administration is requesting $55 
million again this year. Can you give the committee for 
discussion at this point in time the administration's rationale 
for giving increased support for IMET? Obviously, they must 
think this program is a value because there has been a repeated 
request.
    Mr. Bodner. Sir, I think the historical trend is that the 
IMET funding was reduced by a significant amount and that in 
recent years we have brought it back up, as you indicated.
    Mr. Lewis. When was it reduced significantly?
    Mr. Bodner. In 1994, that period of time, and then we have 
been bringing it back up. It is the case that we are asking for 
$55 million this year because we think----
    Mr. Lewis. I know it was during my absence from the 
committee. The then chairman of the full committee I know has 
had some serious questions about IMET in the past. But the 
administration now is expressing pretty strong concern going to 
50 and 55 million dollars. As you say, you have increased 
funding since that '94 period. Why? What is the rationale? What 
are the values here? Money is mighty dear. So tell us why the 
administration thinks we should expand this program.
    Mr. Bodner. I think it is precisely because money is dear. 
This is one of the most cost-effective mechanisms we have to 
promote our national security interests and promote American 
values and influence around the world.
    It is not just a question of the Department of Defense 
advancing these programs. This is, in fact, the administration 
as a whole. If you have the opportunity to talk to U.S. 
ambassadors when they are back in Washington, I would think 
that you should ask them that question as well. Because this is 
one of the most effective tools we have to influence future 
leaders in foreign countries, military leaders as well as 
civilians, who do go through the program as well.
    Mr. Lewis. It is my understanding that in recent years the 
committee has had pretty intense discussions about the use of 
IMET funds and the result in military leadership in countries 
like Indonesia and Guatemala. Could you maybe be specific in 
connection with what impact IMET has had in those two 
countries?

                               INDONESIA

    Mr. Bodner. Yes, if you look at Indonesia, Indonesia has 
gone through a remarkable transformation in that society over 
the last couple of years. Unlike 2 years ago, there is a 
democratic president, there is a democratic legislative body 
which has real power, and, perhaps most notably, there is a 
free press.
    The person in the government with responsibility for 
overseeing the press during the Habibie tenure is an individual 
who went through U.S. courses in IMET. And one of the things he 
did while he was in the United States on his IMET course was 
study the role of a free press in a democratic society. And he 
returned to Indonesia, and he played a significant role when he 
entered office of overseeing the media and opening up the media 
and allowing it to open up. I think that is just one concrete 
example.

                               GUATEMALA

    In Guatemala, we have had, again, a tremendous 
transformation. It is a very difficult transformation, but, for 
the first time, we have military leaders and civilians sitting 
down, having meaningful discussions about the future of that 
country, and we are seeing significant progress in civilian 
control of the military and the effectiveness of the military 
in carrying out legitimate professional military activities. I 
do think that the training that has been provided has 
influenced that significantly.
    Mr. Lewis. I very much appreciate that response, Secretary 
Bodner. I would appreciate also your expanding, if you would, 
for the record any additional comments you would make regarding 
the values of IMET that would justify our expanding the dollars 
available reflecting the administration's support for IMET.
    Mr. Bodner. I think that every time a commander-in-chief, 
one of our regional CINCs testifies about his budget and 
posture, they highlight IMET as one of the most significant 
programs for influencing the countries in their AORs.
    [The information follows:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Lewis. Thank you for your testimony.

                                  IMET

    Mr. Callahan. Following up on that, the Defense Department 
tells us IMET is a great international development tool, that 
it is crucial and that the State Department says it is crucial. 
Yet we can't get the State Department to lift the phone and 
call a Member of Congress and ask them to support it. And we 
wouldn't defer to the State Department. Why do I have to defend 
the administration? Half the generals in the Pentagon call me 
and tell me to support IMET. Well, tell them to stop calling 
me. I support it. Call somebody who doesn't support it. Call 
the Democrats who are trying to close down the School of 
Americas, for example, and protect IMET.
    But the State Department--if you agree with the Defense 
Department that this is such an important tool, then you are 
going to have to send somebody up here to ask people to vote 
for it. I lost the vote on the floor of the House last year on 
the School of Americas, and we put it back in in the 
conference. I know there is a plan to change its name, but if 
you in the State Department want this, or want the Defense 
Department to have this capability, you are going to have to 
help me. You know, I can't carry all the water for Bill 
Clinton. But these loads are getting heavy.
    Mr. Lewis. If you would yield just a moment more.
    For both of our witnesses, let me say that there seems to 
be a contradiction here that is reflective of the contradiction 
that we had just about 10 days ago in this committee relative 
to the Colombian proposal. When I went back to the Department 
of Defense and indicated we needed to have lots of 
communication regarding the importance of the effort they will 
be involved in, they went out and worked the halls on both 
sides of the aisle. The State Department didn't work the halls. 
And, frankly, I was very disappointed in that.
    They didn't go up to Democrats and Republicans and say, 
look, this is what the administration's position is. In IMET, 
they never work this, especially on the side of the aisle that 
doesn't seem to care for this program.
    The administration is asking for more money. If the State 
Department isn't willing to come and talk to their friends on 
both sides of the aisle about this program, why not give it 
back to the Department of Defense? DoD, after all, does the 
training in the first place. It is a valuable program, but it 
seems that it has very little support in a nonpartisan way 
largely because State has chosen not to make the case. They say 
it is a great program, but one-on-one talking to Mr. Obey, 
talking to the ranking member of the committee I don't know if 
those discussions are taking place. If they are, I would sure 
like to know about it.
    Mr. Holum. I can't give you chapter and verse of every 
conversation we have had in support of IMET. I can tell you 
that you shouldn't confuse lack of success with lack of effort. 
I mean, we do place an emphasis on this program. I am here in 
part to testify that, from the State department's perspective, 
it is an important program.
    I think it has achieved the benefits that Jim Bodner has 
described in a wide variety of environments. These military-to-
military contacts, it seems to me, are crucial for our ability 
to instill democratic values and to have working relationships 
with other governments. The number of people that have--are in 
senior leadership positions in the military forces of allies 
and neutral countries who have gone through this process is 
striking.
    And so I want to underscore here and I certainly will 
continue to stress with your democratic colleagues that this is 
an important program to us. We strong----
    Mr. Callahan. That is the point we are both trying to make. 
If it is this important, why wouldn't someone in the State 
Department pick up the telephone and call Dick Gephardt or Dave 
Bonior? Call the Democrats and tell them to get Members on 
their side of the aisle to support this?
    You and I know the real reason behind this is because there 
is a very liberal element that is opposed to IMET because of 
killings in Central and South America many years ago. They 
don't want to aggravate those people in the community that is 
opposed to it. So they say, no, let Callahan do it. Let Jerry 
Lewis do it. Let us be the responsible ones, because it is 
crucial to our successful international involvement. And yet 
you guys are willing to let us hang out there on the limb and 
unwilling to come up here and lobby for what you say is crucial 
to your successful international policy.
    So I know you are saying that, and I know it is not up to 
you to come stand outside the halls of Congress and shake hands 
with Members as they go in to vote. But they do it on other 
issues. We had to call them up here on Colombia. But after we 
called them at least they came. And they stood out and 
indicated to Members that they are supportive of this.
    If you want IMET to be continued, then the administration 
is going to have to give us some help. Period.
    One other question. Let me just touch on this with respect 
to the interest-bearing-account request last year for Egypt. 
The President requested that we provide an interest-bearing 
account with the funds provided for military financing for 
Egypt. We did not include this request, but we did put $25 
million in the supplemental bill as sort of a part of the Wye 
River emergency supplemental. But the administration doesn't 
request it this year.
    Mr. Mubarak was just here. I assume that the President told 
him he no longer supported the interest-bearing account for 
Egypt. Is that correct?
    Mr. Holum. No. We are continuing to pursue this.
    Mr. Callahan. If you are continuing to pursue, why didn't 
you request it in your bill?
    Mr. Holum. Because we have been in the process of working 
out an arrangement with the--wherein the administration--and we 
have conducted technical consultations with the Congressional 
Budget Office to avoid the scoring problems that have made it 
difficult in the past. I think we have or we are on the verge 
of a solution to that problem, and I am hopeful we will be 
presenting that to you shortly.
    Mr. Bodner. I would summarize it, sir, by saying we are 
aware of the concerns the committee and others have expressed 
about it. We are trying to be responsive to those concerns and 
work up an arrangement that will be acceptable, and we have 
been working with the CBO.

                                 EGYPT

    Mr. Callahan. I question whether or not it is the right 
thing to do. We forgave a huge debt to Egypt during the Persian 
Gulf War, and I question whether or not it is right or wrong. 
But Mr. Mubarak comes over here. He tells me, I can't 
understand it. The President of the United States, the 
Secretary of State, the Speaker of the House, the leader of the 
Senate, all are in favor of the interest-bearing account and 
only you, Mr. Callahan, are against it. And why are you doing 
this to Egypt?
    Well, first, I tell him I am not that powerful. And I told 
him this year, when he was here last week, then why didn't he 
get all these people to write me a letter and tell me to 
include it in my bill? And, if they do, I will.
    But, I mean, they go to these coffees and these teas, and 
they have these White House dinners. They toast each other, and 
they say oh, mean ole Callahan won't give you what is 
rightfully yours, but we are supportive of it.
    But tell the President, tell the Secretary of State, tell 
the Secretary of Defense, tell the Speaker of the House and the 
leader of the Senate to write me a letter, lobby for it if you 
want it. And then you all compound it by not even requesting 
it.
    So write me a letter and--to this effect, have the 
President drop me a note. It doesn't have to be long. Just say, 
support the interest-bearing account for Egypt. But let's stop 
telling Mr. Mubarak everyone is for it but Callahan, because 
that is not the case--even though I am not for it.
    Thank you very much.
    [Questions and answers for the record follow:]
  QUESTIONS FOR THE RECORD SUBMITTED TO STATE DEPARTMENT BY CHAIRMAN 
                                CALLAHAN
                     DELIVERY OF AID TO MOZAMBIQUE
    Question. The Administration has set aside $3.5 million in aid for 
humanitarian demining for Mozambique and another $37 million in aid for 
aircraft, personnel, and foodstuffs all in the wake of the flooding 
there. What is the actual status of the aid and funding for Mozambique? 
Is it actually on its way to Mozambique?
    Answer. The U.S. has provided over $41 million to the southern 
African region, mostly to Mozambique, for emergency flood relief. Of 
the total amount, USAID provided some $19 million for emergency food 
aid, relief supplies, search and rescue operations and transport, seeds 
and tools, and a 25-member disaster assistance response team. U.S. 
assistance in response to the flooding also included an additional $1 
million for humanitarian demining assistance and over $21 million for 
Operation Atlas Response, a 700-person Joint Task Force, equipped with 
transport helicopters and C-130s, deployed by the European command 
(EUCOM) to establish a civil-military operations center and airlift 
relief supplies and personnel throughout March.
    On April 21 the President signed a request to Congress for $200 
million in emergency supplemental funding to assist in the 
reconstruction of southern Africa. The funding would be used for 
reconstruction/rehabilitation of roads, bridges, railways, agricultural 
networks, health systems, and schools. If approved, Mozambique would 
receive $131 million (plus $10 million in reprogrammed funds). South 
Africa, Madagascar, Zimbabwe, Botswana, and Zambia would receive the 
remainder.
                 ROMANIA/ILIESCU AS PRESIDENT AND OSCE
    Question. Former President Iliescu, who supported the Russian 
effort in Kosovo and not our effort, is running in the elections for 
the Presidency of Romania. Does it concern you that Romania may be head 
of the OSCE next year and Iliescu may be Romania's leader?
    Answer. No. This is an election year in Romania and Romania has a 
competitive political system. The outcome of the elections is uncertain 
and is for the Romanian people to decide. What is clear, however, is 
that Romania's OSCE chairmanship for 2001 is a national goal endorsed 
by all major political parties, including the Romanian Social Democracy 
Party (PDSR) of former President Iliescu. We are confident of 
widespread support in Romania for the OSCE's Helsinki Principles and 
continued integration into Euro-Atlantic institutions.
    At the OSCE Istanbul Summit last year, the United States supported 
Romania's successful candidacy to be OSCE Chairman in Office for 2001. 
We did so because of our confidence in Romania's ability to do the job. 
The Romanian Foreign Ministry is making extensive preparations to take 
on this important task. The Ministry has increased its OSCE staff in 
Bucharest and Vienna, secured additional funds for OSCE duties from the 
budget, and sent its diplomats on OSCE training to key OSCE states. 
Romania is currently a member of the OSCE troika. We will continue to 
work closely with the Romanian MFA as Romania prepares to become CIO.
                              LEBANON ESF
    Question. What are some of the specific activities or programs in 
Lebanon that we fund through the economic support funds?
    Answer. The U.S. provided Lebanon $12 million in economic support 
funds (ESF) in FY 1999. This funding is targeted at promoting economic 
growth, building democracy, and protecting the environment. In the area 
of economic growth, the flagship of USAID's program is the Rural 
Community Development Clusters, which include 251 villages and 600 
projects in basic infrastructure, income production, environment, and 
civil society.
    USAID's democracy program provides assistance and technical support 
to central and local institutions of government so it can better enact 
public policy and provide social services. The environment program aims 
to help the Lebanese better understand environmental problems, point 
the way to policy reforms, and illustrate environmental solutions. The 
program promotes the development of wasterwater and solid waste 
treatment activities in rural areas, including treatment of potable 
water, soil conservation and environmental awareness campaigns. ESF is 
also used to support the American educational institutions in Lebanon.
                              KEDO FUNDING
    Question. For fiscal year 2001, the Administration is requesting 
$55 million for KEDO, most of which will be provided for heavy fuel oil 
for North Korea. How much of the $55 million will be used for heavy 
fuel oil? Based on current oil prices, will this be sufficient? How 
much will be needed?
    Answer. The annual appropriation for KEDO is used for heavy fuel 
oil (HFO) and administrative costs. KEDO's administrative budget is 
approved each year by the KEDO Executive Board; the U.S. share of these 
administrative costs is dependent on each year's budget. For FY 2000, 
the United States will contribute $3.85 million toward the 
administrative budget. Its administrative contribution for 2001 is 
expected to be in the neighborhood of $4 million.
    The remaining $51 million of the Administration's request will be 
used for HFO shipments to North Korea. In the past, KEDO's HFO costs 
have ranged from a low of $48.7 million in 1998 to a high of $67.4 
million in 1996. With the spike in oil prices which began late last 
year, KEDO's HFO expenses could exceed $100 million in 2000.
    Our request for $55 million for FY 2001 was based on an estimated 
HFO cost of $70-80 million, which is higher than the average $60-65 
million in the 1996-99 period but assumes some easing in the price of 
oil from its current high levels. It is, however, difficult to predict 
whether this amount will prove sufficient, given the historical 
volatility of HFO prices.
    Contributions from other countries, particularly the EU, toward 
KEDO's HFO program have typically amounted to $16-$20 million per year. 
We have actively urged greater contributions, and we hope that the EU, 
in particular, will raise its funding beginning next year.
    If oil prices ease somewhat in the next year and the total cost 
returns to the $70 million range, the requested $55 million in U.S. 
funding, together with contributions from other KEDO donors, might be 
adequate to finance the 2001 shipments. We also hope to be able to make 
some progress in paying down KEDO's HFO debt. If prices remain at or 
near their current range, however, additional resources--perhaps in the 
$30-35 million range--would need to be found.
                         KEDO LWR CONSTRUCTION
    Question. Construction of a light water nuclear reactor for North 
Korea has been delayed. Press reports indicate that North Korea has 
told the United States that it wants compensation due to that delay. Is 
that true? What form of compensation are the North Koreans requesting?
    Answer. In the latest round of U.S.-DPRK talks in Rome May 24-30, 
the DPRK again raised its energy concerns, linking them to the delay in 
the light water reactor project, and reiterating its claim that it 
should receive due ``compensation'' in the form of alternative energy 
for this delay.
    The U.S. side made clear that it did not accept the concept of 
compensation, and that the DPRK itself has been the cause of much of 
the delay in light-water reactor construction.
    We also noted that KEDO has continued to fulfill its commitment to 
provide the DPRK with heavy fuel oil pending the completion of the 
first of the two light-water reactors.
    We expect the DPRK to raise this issue again with us in future 
bilateral discussions.
           INDEMNIFICATION OF U.S. COMPANIES FOR KEDO PROJECT
    Question. The Committee has received information that some of the 
American companies involved in providing major equipment for the light 
water reactor in North Korea may not participate in the project due to 
concerns that they would be liable for any damages due to a nuclear 
accident at the plant. However, they may participate if the United 
States government agrees to assume the liability. Is it true? Is the 
government considering the assumption of such liability? If so, what is 
the authority in law that would allow for this?
    Answer. Under the terms of the 1995 KEDO-DPRK Supply Agreement, it 
is North Korea's responsibility to ensure that a legal and financial 
mechanism is available for meeting claims brought within North Korea 
for damages in the event of a nuclear incident. North Korea must enter 
into an indemnity agreement with KEDO and secure nuclear liability 
insurance or other financial security to protect KEDO and its 
contractors against third party claims outside North Korea.
    North Korea has about four years to fulfill its responsibilities to 
provide these protections, which must be in place before KEDO begins to 
deliver key components. These protections are not in place now. For 
that reason, under the Prime Contract for the LWRs, all contractors 
have the right to walk away from the project if adequate protections 
against liability are not in place when the time comes to deliver key 
components. As a result, contractors are assured that they will not 
risk any exposure to nuclear liability unless and until they are 
satisfied that they have adequate protections.
    KEDO is actively exploring ways in which North Korea can meet its 
obligations to the satisfaction of interested governments and 
participating contractors.
    One mechanism that would help remove liability concerns is DPRK 
participation in the Convention on Supplementary Compensation for 
Nuclear Damage. The USG and industry strongly support this Convention 
as a means to allow our companies to compete abroad on nuclear 
projects. If all regional states and the United States join this 
convention, we could be assured that all nuclear liability claims are 
channeled to the plant operator (the DPRK government), that all claims 
would be brought in North Korea, and that, as a result, governments 
other than the DPRK and contractors would be free of nuclear liability 
risks.
    The CSC would have the added benefit that it requires that parties 
also adhere to the Nuclear Safety Convention, which would help bring 
the DPRK up to international nuclear safety standards.
    All contractors except GE have accepted this arrangement. GE 
believes it requires comprehensive liability protection from the 
outset. We continue to work with GE to try to find a means of enabling 
its participation in the project.
                       HACFO SECURITY ASSISTANCE
    Question. For the past few years we have had a military assistance 
program in Africa that provided funding for both Ethiopia and Eritrea, 
two countries that have been engaged in a war that has seen as many as 
50,000 people killed. In addition, $10 million is allocated this year 
in military assistance for Nigeria.
    The Africa military assistance program would grow from $12 in the 
current year to $18 million in fiscal year 2001. However, there is no 
country allocation for these funds.
    How does the Administration propose to allocate these funds? What 
role will Congress have in the allocation of these funds by country? 
Will we continue or initiate programs with countries that are at war, 
or are involved in civil wars in other countries?
    Answer. The Africa Regional Stability initiative was established to 
assist countries and regional/sub-regional organizations in support of 
peacekeeping, conflict resolution, and regional stability operations. 
Not only do we want to help Africans prepare for regional stability 
operations in their own backyard, but we seek to promote democratic 
transition in the armed forces of key states. Many African countries 
are willing to assist in regional stability missions, but are unable to 
fully participate because of a lack of resources. Examples of what 
support these funds can provide include medical supplies, 
communications gear, mine detectors, repair parts, tents, deployment 
assistance, vehicles and other material.
    Because of the constantly evolving nature of the political-military 
picture in Africa, we believe it is important to retain maximum 
flexibility in the allocation of these funds. Some of the potential 
recipients of this funding include:
    Nigeria, to continue civil-military training, aircraft 
rehabilitation and training infrastructure. Nigeria is the Secretary's 
focus country in Africa and has its most active peacekeeping force.
    The Organization for African Unity (OAU), to support an expanded 
peacekeeping and mediation role throughout the continent by building 
and equipping the Crisis Management Center and equipping a Rapid 
Deployment Military Observer Force.
    The Economic Community of West African States (ECOWAS), to maintain 
and to train the most active regional headquarters on the continent 
through the purchase of necessary equipment and spares and to help 
military preparedness for peacekeeping, humanitarian response and other 
operations which support regional stability.
    East Africa regional cooperation, to support efforts to contain 
terrorism and insecurity emanating from Sudan and to encourage efforts 
taken by East African militaries toward more regional cooperation.
    Funds requested under the ``Africa Regional Stability'' program 
will be allocated and notified to Congress in accordance with 
applicable provisions of law, including sections 563(a), 634A, and 515 
of the Foreign Assistance Act.
    It has been our general policy that countries engaged in conflicts 
are not eligible for this type of assistance. For example, in the past 
two years, plans to provide FMF funds for the Front Line States were 
placed on hold during the time that peace between Ethiopia and Eritrea 
remained elusive. Also, we have postponed the continuation of ACRI 
training in Uganda because of the involvement of that country's forces 
in the DROC.
                             SEEDS OF PEACE
    Question. Seeds of Peace promotes understanding between Arab and 
Israeli teenagers. We asked that $861,000 be provided to that 
organization in fiscal year 2000. When and how will the State 
Department comply with Congressional intent in this regard?
    Answer. The State Department and USAID have worked closely with 
Seeds of Peace to provide grant funding for their programs in 
coexistence and conflict resolution for children from the Middle East, 
the Balkans, and Cyprus.
    $694,000 in funding from USAID and/or State Department accounts has 
been identified and committed for this project. Seeds of Peace 
indicates that this level of assistance is satisfactory and will permit 
them to implement their programs.
    Seeds of Peace should receive most, if not all, of its grant 
funding within the next few weeks once USAID has completed the fund 
allocation and grant preparation process.
               LEBANON: U.S. INVOLVEMENT IN PEACEKEEPING
    Question. Would the United States have an increased role in 
peacekeeping in south Lebanon? If so, what form would it take?
    Answer. The U.S. fully supports the UN in its efforts to implement 
UNSCR 425 in a peaceful and orderly manner.
    UNIFIL has important responsibilities under 425: to confirm the 
withdrawal of Israeli forces from Lebanon, to restore international 
peace and security, and to assist the Government of Lebanon in ensuring 
the effective return of its authority in the area.
    The UN has already confirmed the withdrawal of Israeli forces from 
Lebanon.
    No U.S. personnel currently serve with UNIFIL, and the U.S. has no 
plans to contribute any military personnel to the force.
    The U.S. pays approximately 25% of UNIFIL's operating budget--more 
than any other country. We would not expect that commitment to 
diminish.
    The U.S. also supports a demining program in Lebanon.
                                 ______
                                 
                        QUESTIONS BY MS. PELOSI
                                  CTBT
    Question. What effect did the negative vote in the U.S. Senate have 
on efforts to get other countries to ratify the treaty?
    Answer. The negative vote in the Senate clearly undercut the 
ability of the U.S. to take the lead in pushing other countries to 
ratify. Some states, such as Japan, that strongly support the Treaty 
have accordingly redoubled their efforts to secure ratifications by 
others in order to demonstrate that the Treaty is still alive even 
after the Senate action.
    Despite the President's successful trip, the U.S. has had a more 
difficult job in urging India and Pakistan to come on board when the 
U.S. has not itself ratified the Treaty. Indeed, some Indian opponents 
of the Treaty have argued that the action of the U.S. Senate has let 
India off the hook.
    Basically, we just continue to push ahead in our diplomatic 
channels. Since the Senate vote, six countries have ratified or taken 
the key legislative steps needed for ratification. They include four 
whose ratifications are necessary for entry into force: Turkey, 
Bangladesh, Chile, and most importantly, Russia.
    Question. What can you report to the Committee on efforts to secure 
ratification of the CTBT treaty from India and Pakistan?
    Answer. Since completion of the CTBT negotiations, the U.S. has 
consistently urged India and Pakistan to sign and ratify the Treaty. 
Following their May 1998 nuclear tests the international community 
stood united in its call for India and Pakistan to join the Treaty, 
including in communiques issued by the P-5 and G-8 and in UNSC 
Resolution 1172. Deputy Secretary Talbott made this a central part of 
his nonproliferation discussions with senior Indian and Pakistani 
officials, emphasizing that joining the treaty would enhance Indian and 
Pakistani security and help prevent a costly and destabilizing regional 
arms race in the region.
    During his recent trip to South Asia, the President repeated 
publicly and privately the call for CTBT a signature and ratification. 
For example, he said in his speech to the Indian parliament, ``I 
believe both nations should join the Comprehensive Nuclear Test-Ban 
Treaty.''
    We are also encouraging other countries to make these points with 
India and Pakistan.
    Leaders of both countries have told us they are working to build a 
national consensus on the CTBT, enabling them to sign the Treaty.
    Question. Explain why the pace of improvements underway to the 
International Monitoring System (IMS) justifies the need for $21.5 
million next year.
    Answer. The Comprehensive Nuclear-Test-Ban Treaty Preparatory 
Commission (CTBT Prepcom) budget for 2000 is about $80 million. While a 
higher figure is possible, we expect for 2001 a Prepcom budget of about 
$88 million, with U.S. assessment about $22 million. We can meet this 
obligation with the $21.5 in the FY 2001 budget, plus an expected 
$500,000 in reduced assessment credit from U.S.-funded work on a 
seismic array station.
    We will not know details of the 2001 Prepcom budget until May 2000, 
but there are good reasons for an increase. The building program of 
International Monitoring System (IMS) stations will continue to grow. 
Work will continue on remaining seismic arrays, including arrays in 
China, Egypt, and Russia. Work on a seismic array in Turkmenistan will 
begin as soon as the CTBT Organization completes legal arrangements 
with the host government. The pace of building new radionuclide and 
infrasound stations will also rise, limited mainly by funds available, 
as completion of site surveys allows more and more stations to be 
started.
    The first few IMS stations will be certified in 2000, yet more will 
be certified in 2001, and this entails new Prepcom expense. Stations 
receive Prepcom support during their ``pre-certification'' evaluation 
phase; visits for final certification inspection must be funded; and, 
once certified, station operational support is a Prepcom 
responsibility. Another new expense is related to the International 
Data Centre which, during 2000, assumed responsibility for preparing 
and distributing IMS data and data products. (This had been done by the 
prototype data center in Arlington, Virginia.) This expense will grow 
with the volume of data and data products that the IDC handles, as more 
IMS stations come on-line.
                            IRAQ OPPOSITION
    Question. The Congress provided $10 million to the Iraqi Opposition 
in last year's bill and another $10 million has been requested this 
year. It is my understanding that grants to the Iraqi National Congress 
have recently been made with a special mechanism in place to get proper 
accounting for these funds.
    1. Explain how grants to the Iraqi National Congress will be 
monitored and audited.
    2. Who are the individuals in the Iraqi National Congress 
responsible for administering these funds and what is their 
relationship to Mohammed Chalabi?
    Answer. Economic Support Funds for Iraq are used to support 
programs to promote a transition to democracy in Iraq and efforts to 
indict members of the current Iraqi regime on war crimes charges. Up to 
$8 million in FY 2000 funds are available to support appropriate 
projects undertaken by the Iraqi opposition to promote a transition to 
democracy in Iraq. We also intend to obligate up to $2 million of FY 
2000 ESF to support efforts aimed at indicting Iraqi perpetrators of 
war crimes and crimes against humanity. Subject to the availability of 
appropriations for Iraqi opposition and war crimes purposes, it would 
be our intent to do the same with FY 2001 ESF.
    Funding for projects for the Iraqi opposition will be made 
available primarily through the Iraqi National Congress (INC), an 
umbrella organization of opposition groups, through the Iraqi National 
Congress Support Foundation (INCSF). The INC has asked to use these 
funds to help them become a more effective voice of the Iraqi people, 
to assist them in garnering international support and implementing 
programs that willhelp bring about new leadership in Iraq. These 
programs should include organization building, information and advocacy 
campaigns, humanitarian relief programs, and training and planning for 
instituting democracy following regime change.
    The INCSF grant will be monitored in accordance with applicable 
laws, regulations and requirements. As with other grants, the 
Department will monitor and review the required financial and activity 
reports and all drawdown payment requests. Under all DOS grants, funds 
are disbursed only when a U.S. Government officer can certify grantee 
compliance with all applicable laws, regulations and requirements.
    In the case of the INCSF, a newly incorporated organization that 
had never before received a grant from the USG, the Department 
determined that certain technical assistance should be provided to the 
INCSF to ensure that the organization would be able to establish the 
infrastructure necessary to assure proper accounting and internal 
financial management controls expected of all grant recipients. With 
the support and assistance of the Department's Office of Inspector 
General, we contracted for a accountant to provide technical assistance 
to the INCSF regarding compliance with various OMB circulars governing 
grant administration. The accountant worked with the INCSF for several 
months prior to the award of our initial grant to the INCSF, 
specifically with the elected leadership of the INC and officers of the 
INCSF, Mohammad Mohammad Ali, Ahmad Chalabi, Sharif Ali Bin Hussein, 
Latif Rashid, Riyadh Al-Yawir and Hoshyar Zebari. Of these, Ali, 
Chalabi, Bin Hussein and Rashid have collectively acted as the INCSF's 
``Grants Committee,'' which is responsible for implementing the grant 
agreement. The accountant has worked with them to develop appropriate 
internal controls and to ensure adequate checks and balances on the use 
of funds are in place. The accountant will continue to work with the 
Grants Committee to hire a financial officer and accounting firm to 
handle routine bookkeeping and checkwriting.
                                  KEDO
    Question. Update the Committee on the latest diplomatic efforts to 
advance diplomatic efforts with the North Koreans. Have they lived up 
to the understanding reached with respect to U.S. access to 
construction sites in North Korea?
    Answer. The United States has long worked in support of achieving a 
North-South dialogue, which is envisioned as part of the process 
outlined by Dr. Perry as fundamental to solving the problems of the 
Korean Peninsula. On April 10, the ROK and DPRK announced their 
agreement to hold a summit June 12-14 in Pyongyang, a development we 
wholeheartedly support.
    The U.S.-DPRK dialogue is also producing results, as demonstrated 
by the DPRK's September 1999 pledge to suspend long-range missile 
launches while talks aimed at improving bilateral relations are 
ongoing. This commitment remains in place. Through further dialogue, we 
intend to address our key concerns regarding North Korea.
    During March talks in New York, the DPRK agreed to resume 
discussions concerning the North Korean missile program and to begin 
new talks on the implementation of the Agreed Framework. The U.S. and 
the DPRK also plan to resume discussions in the near future to prepare 
for the visit of a high-level DPRK official to Washington. 
Additionally, we expect that a seventh round of Four Party Talks will 
reconvene in Geneva as soon as possible.
    At our March talks in New York, the DPRK reconfirmed its agreement 
for a second U.S. visit to Kumchang-ni to take place this Spring. The 
March 16, 1999 agreement reached on U.S. access to the underground site 
at Kumchang-ni called for the DPRK to provide the U.S. team with 
satisfactory access to the facility in May 1999, again in May 2000, and 
for subsequent visits. During the first Kumchang-ni visit, in 
accordance with that agreement, the U.S. team was able to access the 
entire site and conduct its activities in the manner it deemed 
necessary. Analysis of data from the first U.S. visit to Kumchang-ni 
resulted in a finding that the site, as configured, was unsuitable for 
either a nuclear reactor or a reprocessing facility, and was probably 
not configured to support any large industrial uses. We are now 
discussing with the DPRK preparations for the second visit, and we 
expect the second visit to confirm these conclusions. Indications are 
that the second visit will be as successful as the initial 1999 visit.

                           KEDO CONSTRUCTION

    Question. What is the status of construction of the light water 
reactors?
    Answer. KEDO and the prime contractor for the light-water reactor 
(LWR) project signed the Turnkey Contract (the prime contract) on 
December 15, and the contract became effective on February 3.
    Financial arrangements between KEDO and the ROK, and KEDO and Japan 
have been completed, and disbursement have begun. Since the Turnkey 
contract became effective, South Korea has disbursed over $120 million 
of its $3.22 billion commitment. Japan has disbursed about $52 million 
of its $1 billion commitment. Disbursements from these two countries 
will reach close to $450 million by the end of the year. The United 
States does not make any contributions to KEDO's light-water reactor 
project costs.
    We are continuing work on site infrastructure, design-work, and 
procurement of long-lead items. Site construction should pick up 
significantly during the summer months of this year. The final 
completion date of the overall LWR project will depend on a variety of 
factors, including North Korean compliance with its non-proliferation 
commitments.

                      KEDO: JAPANESE CONTRIBUTION

    Question. What is the status of the Japanese contribution to the 
construction of these reactors?
    Answer. Japan is a founding member of KEDO and an active 
participant in its activities. In a cost-sharing resolution adopted in 
October 1998 by the KEDO Executive Board, the Government of Japan 
committed itself to provide 116.5 billion Yen (equivalent at that time 
to US$1 billion for the LWR project.
    Following the conclusion of the Turnkey Contract on December 15, 
1999, and the completion of funding arrangements, Japan began the 
disbursal of funds for the LWR project early this year. As of April 15, 
2000, the GOJ has contributed $52.5 million for LWR construction, as 
well as $3 million for a survey of the reactor construction site in 
1995.
    In addition to the LWR project, Japan has also contributed $16.8 
million since 1995 to KEDO's administrative budget and has provided a 
collateral fund of $19 million to help finance heavy fuel oil 
purchases.
                               INDONESIA
    Question. 1. Recognizing that Section 589 only restricts FMF and 
IMET funding and that there are no restrictions on the use of DOD 
funds, under what circumstances do you envision the U.S. will resume 
its military relationship with Indonesia, and what forms will it take?
    2. How will Congress be informed of these decision?
    3. Indonesian militias continue to operate in East Timor and to 
disrupt refugee returns and even harass and threaten international aid 
workers. To what extent are these militias operating in cooperation 
with or knowledge of the Indonesian military?
    4. The U.S. ambassador to Indonesia has suggested applying the 
Section 589 restrictions separately to individual elements of the 
Indonesian military, making it possible to resume assistance to the 
Indonesian Navy or Marines on a faster track than the Army. Why are 
these desirable?
    Answer. In September 1999, in reaction to violence in East Timor, 
President Clinton suspended the already-restricted U.S.-Indonesia 
military-to-military relations, including initiating new training under 
E-IMET. This suspension includes a ban on initiating new training for 
Indonesian military (TNI) personnel under E-IMET, an activity which has 
been permissible up to that point. Some former E-IMET students who were 
in the U.S. when the suspension was announced have been allowed to 
complete their studies using non-IMET funds. As you mention,legislation 
(section 589 of the FY 2000 Foreign Operations Appropriations Act as 
enacted in the Consolidated Appropriations Act for FY 2000 (PL 106-
113--the ``Leahy Amendment'') also conditions resumption of FMF and 
IMET or E-IMET with Indonesia.
    How and when to resume U.S.-Indonesia military-to-military 
relations is an issue of great import for U.S. policy toward Indonesia. 
As President Wahid makes progress in bringing about reform in the 
Indonesian military (TNI), we believe that a point will come when a 
gradual, phased resumption of U.S. bilateral defense links with TNI 
could help strengthen his efforts. A carefully calibrated program of 
reengagement could help reinforce changes underway, promote civilian 
control, and help move TNI toward a new, professional, de-politicized 
role. We have discussed a ``roadmap,'' and even identified some 
activities--such as high level visits, TNI attendance at multilateral 
conferences and seminars, and ship visits--which are not prohibited by 
law and could be suitable for an initial phase of resumption of ties. 
That roadmap is currently under review.
    We fully recognize the importance of the timing and substance of a 
re-engagement decision to the Congress. Any effort to begin a phased 
resumption will take place only after verbal briefings and 
consultations with the U.S. Congress. We are particularly mindful of 
the restrictions in section 589 (the ``Leahy Amendment'') and the 
conditions that must be met before resumption of IMET or the sale of 
defense articles. Despite commitments by President Wahid and senior TNI 
leaders, we are not satisfied yet that these conditions--which relate 
to justice and accountability for human rights violations in East 
Timor, return of refugees from West to East Timor, and preventing 
incursions of militia groups into East Timor--have been met. We believe 
that local elements of the Indonesian Army continue to cooperate with 
the militias in West Timor and we are strongly pressing the Indonesian 
government for a complete end to that collaboration.
    The Administration will continue to consult with Congress to 
determine when it would be appropriate to resume training of Indonesian 
military personnel. Any reengagement would be designed to bolster 
positive trends in effective civilian control over the military and 
general military reform. Distinctions can be made between the 
Indonesian TNI services on the matter of human rights violations. The 
bad legacy of some Army units does not extend to the Navy or Air Force. 
On the basis of this principle, we have also considered including, 
under the right circumstances, reinstatement of certain non-combat 
related operational interactions with the Indonesian Navy and Air Force 
in a possible initial re-engagement phase. This would address our 
interests in having ties with the TNI branches responsible for the 
important sea and air lanes of Indonesia, would avoid punishing 
untainted elements of TNI, and could strengthen TNI reformers. It was 
in this context that the U.S. Ambassador to Indonesia made his 
suggestion about applying Section 589 restrictions to individual 
elements of TNI.
                                   ____
                                 
                        QUESTIONS BY MRS. LOWEY
                  MILITARY TRAINING REPORT/EAST TIMOR
    Question. I notice in the Military Training Report that you are 
planning for a resumption of IMET for Indonesia in Fiscal Year 2001. On 
what basis have you made these plans? What is your assessment of the 
progress that Indonesia has made in living up to these requirements?
    Answer. President Clinton suspended in September 1999 the already-
restricted U.S.-Indonesia military-to-military relations, in reaction 
to violence in East Timor. This suspension includes a ban on initiating 
new training for Indonesian military (TNI)) personnel under E-IMET, an 
activity which had been permissible up to that point. Also in reaction 
to East Timor events, the Congress passed legislation (section 589 of 
the FY 2000 Foreign Operations Appropriations Act as enacted in the 
Consolidated Appropriations Act for FY 2000 (PL 106-113--the ``Leahy 
Amendment'') which conditioned resumption of FMF and IMET or E-IMET 
with Indonesia.
    Indonesia is going through a sensitive and historic transition away 
from the authoritarianism of the past. The Indonesian people and the 
international community have very high expectations that President 
Wahid and other leaders of the government of Indonesia will sustain 
their efforts at political and economic reform--including military 
reform--and ensure that this huge, diverse, and important nation has a 
prosperous and democratic future. In anticipation that Indonesia might 
meet current or future legislative requirements by next year, we 
requested E-IMET funds for FY2001 on a contingency basis. We would only 
attempt to restart the E-IMET program with Indonesia after verbal 
briefings of and consultations with Congress.
    Our assessment is that, while Indonesia has made substantial 
progress to date, and the direction of Indonesian efforts is right, the 
achievements are not yet sufficient to meet either the Administration's 
concerns or the Leahy requirements embodied in the current fiscal 
year's Foreign Operations Appropriation. On the positive side, 
President Wahid has committed to establish civilian authority over the 
Indonesian armed forces (TNI), promote real reform within its ranks, 
and to pursue accountability for gross human rights abuses by TNI in 
East Timor, Aceh and elsewhere in the archipelago. He has pleaded to 
disarm and disband the militias and to end cooperation by elements of 
TNI with them, and ordered his generals to take steps to achieve those 
objectives. Indonesia's attorney general has established a team and 
taken other credible steps to pursue accountability investigations, 
including against TNI members, on human rights violations. Indonesia 
has signed an agreement of cooperation with UNTAET, the UN peacekeeping 
force in East Timor, on accountability. The TNI has also signed an 
agreement with UNTAET on managing the border between East and West 
Timor. Many refugees in West Timor have voluntarily returned home.
    However, despite commitments and actions by President Wahid and 
senior TNI leaders, we are not satisfied yet that the conditions which 
relate to justice and accountability for human rights violations in 
East Timor, return of refugees from West to East Timor, and preventing 
incursions of militia groups into East Timor have been met. The 
accountability process is not yet close enough to completion, some 
militias continue to exist as corporate entities and to work against 
safe repatriation of East Timorese refugees in West Timor camps, and 
local elements of the Indonesian Army continue to cooperate with them. 
While there has been a welcome break in militia incursions into East 
Timor since a spike in March, the militias still represent a potential 
threat to UNTAET and the East Timorese people. We are strongly pressing 
the Indonesian government to continue addressing these problems.

                                 INDIA

    Question. Can you discuss the long-term objectives of the Talbott-
Singh partnership, and assess how the talks are going so far?
    Answer. The discussion between Deputy Secretary Talbott and Indian 
External Affairs Minister Singh (and similar discussions with the 
Foreign Secretary of Pakistan) were initiated in the aftermath of the 
May 1998 Indian and Pakistani nuclear tests, which threatened regional 
security and global momentum toward non-proliferation. The discussions 
came in the context of the G-8 statement of June 12, 1998, as well as 
UN Security Council Resolution 1172 which called on India and Pakistan 
to take specific steps toward terminating their nuclear weapons 
programs. The near-term objectives of the talks were to persuade the 
two governments to take steps to restrain their nuclear and missile 
programs, and to reduce the risks of nuclear conflict, a destabilizing 
arms race or further proliferation.
    The dialogue with India has produced a much better mutual 
understanding of strategic policies, and some narrowing of differences 
in perception. It has led to modest but useful steps by India to 
confirm its moratorium on future testing, to enhance its export 
controls, and to improve cooperation in negotiating a Fissile Material 
Cutoff Treaty.
    There is much more work to be done, as the President repeatedly 
stressed to Indian leaders during his recent visit. We are disappointed 
that India has not made more tangible progress toward joining the 
international mainstream on proliferation issues. In recognition of the 
need for more progress, India and the United States agreed during the 
President's visit to institutionalize the dialogue on security and non-
proliferation. We are hopeful that this framework will help us achieve 
our long-term non-proliferation goals.
    The Talbott-Singh dialogue has constituted the most sustained, 
intensive and substantive high-level engagement between our two 
countries since India gained independence. In addition to addressing 
specific non-proliferation concerns, we have used the dialogue to 
improve understanding, overcome suspicions, and address other sensitive 
issues such as counter-terrorism in an atmosphere of candid cordiality. 
Much of the success of the President's trip can be attributed to the 
degree of trust and goodwill developed during the course of the 
Talbott-Singh talks.
                                 ______
                                 

        QUESTIONS FOR THE RECORD SUBMITTED TO DEFENSE DEPARTMENT

                        QUESTIONS BY MS. PELOSI

    Question 5. Your report details extensive and continuing training 
in Colombia on many different fronts. Is there any planned activity you 
can point to in the report that addresses the problem of the increasing 
violence perpetrated by the paramilitary groups in rural villages?
    Answer. No planned DoD training program is specifically designed to 
address the paramilitary problem. One factor contributing to the 
expansion of paramilitaries, however, is that inadequate capacity of 
the Colombian National Police and Colombian Armed Forces leads to a 
security vacuum that paramilitaries seek to fill and take advantage of. 
By helping to expand the capabilities of the Colombian police and armed 
forces, DOD (and State Department) training and assistance programs 
address underlying causes of the paramilitary problem.
    Question 6. DOD funds have been requested to fund base construction 
in Tres Esquinas, the forward operating location and for Larandia, the 
main training base. To what extent do you envision DOD continuing to 
fund construction needs as the operations expand into other areas?
    Answer. The following minor construction projects were funded in 
FY99 and FY00 by the DoD counterdrug appropriation in Tres Esquinas and 
the surrounding region:

        Project                                                     Cost
Colombia Joint Intelligence Center............................     $3.2M
Construct Riverine Base Operating Facility....................      1.5M
Construct A-37 Taxiway and Turnaround.........................      1.2M
Counterdrug Battalion Pioneer Facilities......................      1.3M
UH-1N Helicopter Operations Facility..........................      1.1M
UH-1N Helicopter Utilities....................................      1.0M

    In addition, DoD has requested $8.2M in FY00 in the Emergency 
Colombia Supplemental and $5.0M in the FY01 counterdrug budget request 
to establish and expand aviation infrastructure in the region. This 
request supports the additional UH-1N and UH-60 helicopters the United 
States is providing to the Colombia Army Counternarcotics Battalion.
    Question 7. Can you tell us why the report was late, given that I 
understand it has been complete and ready for signature since late 
February?
    Answer. After the Acting Secretary of State signed this year's 
military training report on 2 March, we discovered data base errors 
during our final review, which resulted in some delays. This year's 
report is significantly more thorough in its analysis and content. I 
believe its quality, detail, and accuracy will better meet your needs 
and facilitate your review. We are refining our process for compiling 
training data for next year's report to help ensure its timely 
submission.
    Question 8. Why is the report now classified when it was not last 
year?
    Answer. Volume I of this year's Military Training Report is 
unclassified and contains detailed descriptions of the operational 
benefits to U.S. forces, as well as the foreign policy justifications 
for our training activities at the individual country level. Volume I 
also includes information on the various funding sources for the 
training activities provided and summarizes the activities for each 
country. There is also a new section in Volume I, different from the 
1999 Training report, which provides the purpose of the training. 
Overall, this volume contains most of the information contained in the 
other volumes, is easier to read and allows for a review of all 
activities country-by-country in a single section of the report. Volume 
I is also available on the Department of State and Defense Security 
Cooperation Agency websites.
    We classified Volume II Confidential for force protection reasons 
based on a recommendation by the Joint Staff. This section contains 
sensitive data, including detailed descriptions of individual training 
events, the time and location of such training, and specifically those 
US units and foreign student units that will participate. Moreover, 
much of the information documented in the volume is prospective. 
Releasing such data in an unclassified format would present 
unacceptable risks to our forces and those we are training.
    Volume III is classified Secret, as it was last year, because it 
provides operational details on sensitive prospective Special 
Operations Forces missions.
    Question 9. Why is much of the information about JCET training 
missing from the report?
    Answer. The Department of Defense is aware that some data elements 
(number of students and costs) were missing from Volume III of the 
Military Training Report submitted to Congress. On April 3, 2000, we 
submitted to the House Appropriations Subcommittee of Foreign 
Operations the annual JCET report required under USC Section 2011, 
which provides more detail on prior year training activities.
    As you may recall, the primary purpose of JCET activities is always 
the training of U.S. Special Operations Forces (SOF) personnel, 
authorized under 10 USC Section 2011. Since the focus of the training 
is on U.S. personnel, the actual number of foreign military personnel 
trained, as well as the total costs involved in a specific JCET 
activity, may not be known until after the activity has been completed. 
The information about JCET training absent from the report was not 
known at the time the report was compiled in late January.
    Question 10. When do you anticipate a Turkish decision on the sale, 
and what kind of formal or informal determination will the Secretary 
make, if a US firm is chosen?
    Answer. The Government of Turkey expects to announce its final 
decision for an attack helicopter by 30 June 2000. One U.S. 
manufacturer and two non-U.S. companies remain in the running.
    The sale of attack helicopters to Turkey would provide the Turkish 
Land Forces Command the capability to perform NATO-mandated mission 
support by securing NATO's southern flank against attack by hostile 
armored forces.
    Should Turkey choose a U.S. manufacturer, the USG export license 
decision will be based on the full range of considerations required by 
law and on our arms export control policy, including a thorough review 
and evaluation of Turkey's progress on improving human rights.
    As the Government of Turkey has not yet made a choice in the attack 
helicopter competition, we cannot comment on what we might or might not 
decide.
    Question. The Committee has once again received the certification 
that the training conducted at the School of the Americas is fully 
consistent with human rights standards. In addition DOD will soon send 
up a legislative proposal that will change the name of the school, put 
Members of Congress on the board of visitors, and eliminate some of the 
combat related courses.
    Question 11. Can you outline this legislative proposal, and submit 
it formally to the Committee?
    Question 12. What does this proposal mean with respect to how the 
school is changing its philosophy and training emphasis?
    Question 13. To what extent will the new training regime increase 
emphasis on human rights awareness?
    Answer to Questions 11-13. Since I appeared before your committee, 
DoD has submitted the legislative proposal to the Foreign Operations 
Subcommittee of the House Appropriations Committee and briefed 
subcommittee staffers. Our legislative proposal seeks to establish a 
new Institute for Professional Military Education and Training which 
would educate and train members of military forces, as well as select 
law enforcement and civilian defense officials, from countries in the 
Western Hemisphere. The new institute, which would replace the United 
States Army School of the Americas, would offer a range of updated 
educational and training opportunities, including courses on human 
rights, leadership development, counter drug operations, peace support 
operations, humanitarian mine removal, medical assistance, disaster 
relief, and defense resource management.
    The proposed amendment to section 10 USC 2166 would place the 
authority to operate the Institute directly with the Secretary of 
Defense, thereby enhancing oversight and policy integration with other 
DOD training institutions. The Secretary would be advised on the 
Institute by an independent Board of Visitors which would include 
Members of Congress and, to the extent possible, representatives from 
the academic, religious, and human rights communities. The Board would 
review the Institute's curriculum and instruction to ensure they comply 
with United States law and appropriately emphasize human rights, the 
rule of law, civilian control of the military, and the role of the 
military in a democratic society. The Board would report annually to 
the Secretary of Defense who, in turn, would report annually to 
Congress on the Institute's activities during the previous year.
    The Institute would provide an invaluable opportunity to enhance 
military professionalism, advance democracy and respect for human 
rights, and promote greater cooperation among nations of this 
hemisphere. We anticipate annual attendance would number approximately 
1,000 students from South, Central, and North American--including the 
United States and the Caribbean. The Institute's estimated annual 
budget would be approximately $4.45 million. The Department of State 
and the appropriate United States Embassy would carefully select and 
screen students for enrollment at the Institute.
    Our legislative proposal includes a requirement that all students 
receive a minimum of 8 ``direct'' hours of human rights instruction in 
the classroom. The basic 8 hours would include courses in Ethics and 
Just War Theory, Human Rights and International Humanitarian Law and 
Operations Case Study (including Rule of Law matters and the role of a 
professional military in a democratic society). In addition, there 
would be ``indirect hours'' which take students through exercise 
scenarios requiring them to employ classroom lessons in a field 
environment. Though our legislative proposal establishes a minimum of 8 
hours, most courses would contain at least 12 hours of direct human 
rights instruction. The Institute's flagship course would be the 
Command and General Staff Course, requiring a minimum of 48 direct 
hours and as many as 200 indirect hours of human rights instruction.
    Question 14. Explain which courses are being eliminated and why.
    Answer. Courses Eliminated:
    1. Commando Course: As of 1 January 2000, this course was 
eliminated from the curriculum and is no longer part of the training 
and education offered. There were several reasons for this change. 
First, we intend to give greater emphasis to mid-career level 
leadership courses, that is courses for 04s, 05s and 06s that focus on 
the skills required to lead forces under one's command effectively. 
Second, only 21 students attended the commando course over the past two 
years; such a small number did not justify continuing the course, which 
has required a large number of instructors and several different 
training sites. Those students who speak English may still take the 
U.S. Army Ranger School course (of which the USARSA Commando Course was 
a clone), using either IMET or FMS purchase of the training.
    2. Psychological Operations: As of 1 October 1999, we replaced this 
course with a course entitled Information Operations to reflect changes 
in U.S. Army doctrine as well as a shift in our regional strategy. The 
new course stresses Public Affairs and Command Information, 
specifically the necessary interaction in a democracy between the 
military, civilian agencies, and the public. There is a ``psychological 
operations'' module in the new course, but it is limited in scope. The 
module emphasizes, consistent with US doctrine, that psychological 
operations are viable only in accordance with national laws and 
policies, and oriented toward specific objectives in support of 
military operations.
                                 ______
                                 
                        QUESTIONS BY MRS. LOWEY
    Question 23. I am aware that changes are being proposed to the 
School of the Americas, including a name change and an advisory board, 
which may include Members of Congress, and the human rights community. 
Are these changes simply cosmetic, or will they help ensure that the 
mistakes of the past are not repeated, and that trainees are provided 
with intensive instruction in human rights practices and the rule of 
law?
    Answer. Past criticism of the School of the Americas has tended to 
focus on curriculum, oversight, and transparency. Our legislative 
proposal responds to each of these areas of concern and outlines the 
critical role the new Institute for Professional Military Education and 
Training would play in promoting U.S. policy objectives in this 
Hemisphere.
    Under our proposal, the Institute would focus on democracy and 
respect for human rights, rule of law matters, and civilian control of 
the military. The Institute's curriculum would place special emphasis 
on professional military education, leadership development, peace 
support operations, disaster relief, and counter-drug operations. U.S. 
Southern Command would conduct an annual curriculum review to ensure 
that all courses supported its Theater Engagement Plan.
    Human rights would be a mandatory part of the Institute's 
curriculum; this requirement has not previously existed in statute. Our 
legislative proposal includes a requirement that all students receive a 
minimum of 8 ``direct'' hours of instruction in the classroom on human 
rights. The basic 8 hours would include coursework in Ethics and Just 
War Theory, Human Rights and International Humanitarian Law, and 
Operational Case Study (including Rule of Law matters and the role of a 
professional military in a democratic society). In addition, there 
would be ``indirect hours'' which would take students through exercise 
scenarios requiring them to employ classroom lessons in a field 
environment. Though our legislative proposal establishes a minimum of 8 
hours, most courses would contain at least 12 hours of direct human 
rights instruction. The Institute's flagship course would be the 
Command and General Staff Course, requiring a minimum of 48 direct 
hours and as many as 200 indirect hours of human rights instruction.
    Under our legislative proposal, authority to operate the Institute 
would reside directly with the Secretary of Defense, thereby enhancing 
oversight and policy integration with other DOD training institutions. 
An independent Board of Visitors, which would include Members of 
Congress and--to the extent possible--representatives from the 
academic, religious, and human rights communities, would have 
significantly increased oversight to the Institute to ensure that its 
curriculum and instruction comply with U.S. law, policy goals, and 
military doctrine. The Board would report annually to the Secretary of 
Defense who, in turn, would report annually to Congress assessing the 
Institute's activities during the previous year.
                                           Tuesday, April 11, 2000.

               U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

                                WITNESS

J. BRADY ANDERSON, ADMINISTRATOR

                      Chairman's Opening Statement

    Mr. Callahan. Mr. Anderson, we welcome you to the Foreign 
Operations Subcommittee.
    Mr. Anderson. Thank you, Mr. Chairman.
    Mr. Callahan. This is your first appearance before this 
committee during your 8-month tenure at AID; and for those who 
are not aware, Mr. Anderson served as the U.S. Ambassador to 
Tanzania and prior to that he conducted missionary work in 
Africa. So, given your experiences, I look forward to your 
testimony since you bring a fresh outside-the-Beltway approach 
to international development.
    Today, Mr. Anderson will present the USAID fiscal year 2001 
budget justification, which is for $6.6 billion for AID-
administered programs under the jurisdiction of the Foreign 
Operations Subcommittee. And since this subcommittee's fiscal 
year 2001 allocation will likely be below the fiscal year 2000 
freeze, I must tell you that it is unrealistic to expect 
funding for most AID programs would be higher than the current 
level.
    Mr. Administrator, I intend to explore with you several 
issues during the question-and-answer period. You and I have 
chatted privately about a number of these issues, but I believe 
it is important to have a full public discussion as well. These 
include the status of AID expenditures from the Hurricane Mitch 
supplemental, your efforts to improve AID's long-standing 
management weaknesses, an update of the events in Mozambique, 
the status of a supplemental request, and your views on the 
recent events in Haiti and the future of our aid programs 
there.
    You have made no secret that regardless of who sits in the 
White House next January you don't expect to be the AID 
Administrator. Likewise, regardless of the outcome of the House 
elections, our rules prohibit me from retaining chairmanship of 
this subcommittee. Therefore, during the upcoming months, you 
and I, as lame ducks so to speak, will have a unique 
opportunity to tackle some of the serious problems facing AID, 
so the next AID Administrator and the next chairman or 
chairwoman of this subcommittee and I look forward to working 
with you.
    And I now yield to Ms. Pelosi for as much time as she may 
consume, as long as it is not more than 5 minutes.
    Ms. Pelosi. The chairman is too generous. Thank you, Mr. 
Chairman. I want to join you in welcoming Administrator 
Anderson to our hearing this morning--well, I guess it is 
afternoon now, on the fiscal year 2001 program administered by 
the Agency for International Development. As you mentioned, Mr. 
Chairman, this is Mr. Anderson's first appearance before this 
subcommittee, and I welcome him.
    I realize that you have been on a job for about 8 months 
and that it has been quite a transition for you from U.S. 
Ambassador to Tanzania to this post; we hope to share and 
benefit from your unique experience.
    As a perspective this morning, you know that Africa is high 
priority for us with $7.5 billion in AID programs. There are 
several new and essential initiatives requested for funding 
this year, a total of $259 million requested for HIV/AIDS 
programs, which is an increase of $54 million over last year. 
Increases have also been requested for infectious diseases 
overall, with continued programs for TB, polio, malaria and 
measles.
    The administration has also requested $542 million for 
family planning programs, which bring the funding level for 
those programs back to the level of funding they had in 1995. 
We should all remember that these programs, which provide 
access to vitally needed family planning and related maternal 
and child health services save the lives of women and children 
and indeed do reduce the number of abortions worldwide, which 
is a goal I think we all share.
    The administration has requested $532 million for a 
separate account for Africa. Establishing this account would 
renew the practice of providing a separate line item for 
Africa, and is essential as a tool to protect sufficient 
funding levels for programs in Africa and for highlighting our 
commitment to the development needs of that continent.
    I take the time in my opening statement this morning to 
highlight a few of the priorities for funding in AID's 
programs. There are others which we will address during our 
hearing this morning. However, I do want to address the 
question of levels of foreign aid funding briefly.
    The Administrator, in his prepared remarks, cites President 
John F. Kennedy's challenge, which says that the United States 
would pay any price, bear any burden, meet any hardship, 
support any friend or oppose any foe to assure the survival and 
success of liberty. I have often quoted President Kennedy's 
remarks about meeting the challenge, addressing the needs of 
humanity and freedom from his inaugural address.
    Everybody in the world who knows anything about John F. 
Kennedy knows that he said in his inaugural address--I was 
there, Mr. Chairman, as a student--said--``Ask not''--to the 
citizens of America--``Ask not what you can do for your''--
``what your country can do for you, but what you can do for 
your country.'' The very next line in that speech, but what 
most people don't know--the very next line in that speech is, 
the President said to the people of the world, ``Ask not what 
America can do for you, but what we can do, working together, 
to promote the freedom of man.'' .
    I think that is in the spirit of your remarks and the 
spirit of your mission, and I appreciate the idealism that you 
bring to your new post.
    There should be no question that the United States has a 
responsibility to its own citizens and to the citizens of the 
world to lead the way with assistance programs. We should not 
be shackled by the artificial targets of budget process whose 
rulings are routinely ignored by both the House and Senate. We 
should not start the process of developing a bill by imposing 
punitive limits on programs which address women's and 
children's health programs. We should not be faced with a 
myriad of artificial trade laws caused by having to cut as much 
as 15 percent from the President's request.
    If we can find $1.6 billion to fund a drug war, funded as 
an emergency, if we can find $4 billion for the defense budget, 
funded as an emergency, we ought to be able to get an 
allocation for this bill that meets the challenges around the 
world for the world's children.
    Thank you, Mr. Chairman. I look forward to Mr. Anderson's 
testimony.
    Mr. Callahan. Thank you, Mrs. Pelosi. I can't quote John 
Kennedy or any other President, but I can quote people like 
David Obey. And since this is Mr. Anderson's first appearance 
before this subcommittee, I will quote David Obey when he 
quotes Archie the cockroach.
    Ms. Pelosi. Archie, the Roach.
    Mr. Callahan. When he says, I may not give youeverything 
that you want, but I am the one who gives you everything you get.
    I would like also to recognize--and think it is a great 
idea, Mr. Anderson, that you brought with you most of your 
senior management team today--Vivian Derryk from the Africa 
Bureau, Barbara Turner from the Global Bureau, Carl Leonard 
from the Latin America Bureau, Len Rogers from the Humanitarian 
Response Bureau, Bob Randolph from the Asia-Near East Bureau, 
Tom Fox from the Policy and Program Coordination Bureau, Rick 
Nygard from the Management Bureau, and Joe Crapa from the 
Legislative Affairs Bureau.
    We welcome you all here today.
    I suppose, with the presence of all of you here, there will 
be no need to submit questions for the record because you 
should have all of the answers here, unless it is something you 
don't want to answer. So, with that, we welcome you to the 
committee. Your entire statement will be submitted for the 
record, and we ask you to abbreviate it as best you can.
    Mr. Anderson. Mr. Chairman and Congresswoman Pelosi, 
members of the subcommittee, I am pleased to be here today to 
present the Administration's fiscal year 2001 request for 
foreign assistance programs and to lay out the priorities for 
the U.S. Agency for International Development. I would like to 
make a brief statement and ask my formal remarks be included in 
the record.
    Mr. Chairman, the United States has a long history of 
supporting foreign assistance. We do this not only because it 
is the right thing to do, but because it is in our best 
interests. As I always say, no one wants to live in a world of 
failed states, a world where famine, disease, conflict, crime, 
and terrorism are commonplace. Such a world would threaten our 
health, security, and prosperity, and Americans understand that 
foreign assistance prevents or lessens these threats.
    The major foreign policy goal of this or any administration 
is to help develop an international community of stable and 
relatively prosperous states that do not threaten their people 
or their neighbors. This is the business of USAID.
    Now I would like to address some concerns that I know are 
of particular interest to this committee. Let me start with 
management and say again that making USAID more effective is a 
personal priority of mine and one that I take very seriously.
    As you know, there have been a number of inspector general 
reports and audits that point out recurring deficiencies in the 
Agency's financial management systems; these concern me deeply. 
I find it completely unacceptable that for 4 years the 
inspector general has not been able to conduct internal audits. 
But I believe we are close to resolving this issue.
    Last September, USAID purchased a commercial off-the-shelf 
accounting package which is currently being installed in 
Washington. We anticipate the system will be operational in 
Washington by October of this year. Installation overseas will 
begin in fiscal year 2001 and be completed in fiscal year 2002. 
I know that this committee is also troubled by USAID's apparent 
inability to respond quickly to congressional requests for the 
details of particular programs administered abroad. Let me 
assure you that this troubles me as well.
    To remedy this situation, we are currently testing a system 
in Washington to capture the backlog of field data. That is 
procurement data. In May, we will begin implementing this 
system in places like Guatemala, South Africa and Egypt. We 
anticipate the testing will go well so that we can have most, 
if not all, of the backlog eliminated by the end of this 
calendar year.
    With regard to personnel and payroll processing, I would 
first like to thank the people who run USAID's current 
personnel and payroll systems for doing such an outstanding 
job. However, the technology the systems depend on is old and 
the cost of maintaining it is a luxury we can no longer afford.
    Therefore, we have entered into an agreement with the USDA 
National Finance Center to handle USAID personnel and payroll 
processing. That center currently provides these services to a 
number of other Federal agencies like the Department of 
Justice, HUD, and the GAO. By outsourcing these systems, we 
will save about $6 million in operating costs over the next 5 
years.
    Recently, we have learned that we will have to replace our 
computer network operating system which supports our domestic 
and international e-mail, because the company that services the 
system has announced it will no longer do so. This is a cost we 
did not foresee in our fiscal year 2000 appropriations request. 
We expect to spend $2.7 million this year to replace the system 
in Washington, and we have requested $14.4 million for fiscal 
year 2001 to replace that system in the field.
    We are also working to address the concerns of small and 
minority-owned businesses. As you may know, USAID does most of 
its business through contracts, grants, and cooperative 
agreements. Over the past few years, because of funding cuts, 
USAID has followed the trends of most Federal agencies, 
awarding larger contracts to fewer organizations. I recognize 
that opportunities for small and disadvantaged businesses to 
work with the Agency have shrunk as a result of our use of 
these larger contracts. In the coming months, I hope we can 
come up with a workable solution to this problem, and we are 
working on it.
    Let me address another issue the Agency is facing, and that 
is staffing. As with all Federal agencies, USAID must work to 
position itself for the future. To do so, we are using the 
buyout authority provided in the Fiscal Year 2000 
Appropriations Act, as well as early-out authority granted by 
OPM to encourage voluntary retirement.
    Our new hiring emphasis will be in the areas of 
contracting, information technology, and financial management, 
as well as other technical specialties, skills we need to 
maintain--we need in order to maintain our ability to serve as 
the world's premiere bilateral development agency.
    Mr. Chairman, since 1993, USAID's staffing levels have been 
cut by over 30 percent. As I said a few minutes ago, I will 
look for ways to improve the efficiency of this agency. 
However, we are reaching a point where more effective and 
efficient management is jeopardized by the erosion of staff and 
the loss of experienced professionals.
    I am sure you understand that USAID needs good people to do 
a good job. At the very least, we must maintain the current 
staff levels.
    Mr. Chairman, President Clinton has said that the common 
good at home is not separate from the common good around the 
world. They must be one and the same if we are to be truly 
secure in the world of the 21st century. I believe that 
Americans share this view.
    Development takes time, it takes hard work, and most 
importantly, it takes political will. Those who once feared 
their government understandably cannot the next day participate 
in it. Those who grew used to looking over their shoulder need 
time to learn to look to the horizon.
    The United States Government has a long history of helping 
these people through its foreign assistance programs. I 
understand this agency has had its share of problems, but over 
the past year, I am pleased to say we have made a lot of 
progress through a lot of hard work by the people sitting 
behind me and many more back in the building here and in our 
offices around the world.
    By the same token, I know we need to do a lot more. But 
this agency cannot do this alone. As we look to the 21st 
century, I ask for your support.
    Thank you. I would be happy to answer any questions that 
you might have.
    [The information follows:]
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

    Mr. Callahan. I thank you.

                           BUDGET ALLOCATION

    Let me just insert something for the record that I briefly 
debated with Mrs. Pelosi and others, including administrators 
and the Secretary of State, and that is the percentage of the 
overall budget allocated to foreign assistance.
    There are many things we in the United States do that are 
not measured as foreign assistance, which other countries 
measure. We seem to eliminate Mr. Lewis' contribution through 
the Department of Defense in our assistance to overseas 
countries.
    Let me give you a recent dollar figure of humanitarian 
spending by the Pentagon.
    The Central America hurricane, $150 million in addition to 
what we gave--the DOD came up with $150 million in resources, 
that is, foreign assistance that is never measured;
    Kosovo humanitarian--with respect to just the military, 
$47.9 million;
    Mozambique floods, $21 million;
    Venezuela floods, $5.7 million;
    East Timor, $2 million;
    Turkey earthquake, $2 million.
    Those alone totaled more than $225 million that is never 
counted for some reason.
    In addition to the security aspect that our DOD provides 
for all of our allies everywhere, such as we did in the Persian 
Gulf, such as we do anytime a democracy is threatened anywhere, 
our military is the security blanket for all of these 
countries. Japan doesn't have to worry about a national defense 
because we protect them.
    So I think it is unfair to criticize the Congress, and I 
have not heard you do that. But certainly the Secretary of 
State has on many occasions talked about the limited amount of 
money we provide in foreign assistance, and I think if we are 
going to start advertising to the world that the United States 
is not doing its fair share; at the least, we ought to include 
everything that we do. And part of that is because of the money 
we appropriate to the Department of Defense to provide 
protection, security, and in this instance, humanitarian 
assistance. So I think we should be careful about saying we 
don't give enough money or enough of a percentage of our 
budget.
    Mrs. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman. Mr. Chairman, I 
associate myself with the recognitions of those who have 
accompanied the distinguished Administrator here, but I also 
say you have some big shoes to fill.
    Brian Atwood is very, very respected and admired here on 
the Hill. We miss him, but we are glad to see the new capacity 
that you are in. I mentioned in my opening statements, I have 
some concerns about AIDS, the AIDS pandemic and our assistance 
to Africa. But I want to turn first to another line of 
questioning.

                             KYOTO PROTOCOL

    Last year, the foreign operations bill contained a 
provision, section 589, that no funds could be used, proposed 
or issue rules, regulations, decrees, or orders for the purpose 
of implementation or in preparation for implementation of the 
Kyoto Protocol. In addition, congressional notification of any 
projects whose primary purpose is to promote or assist country 
participation in the Kyoto Protocol was also required. 
Extensive reporting of proposed activity government-wide was 
also required.
    Although I believe these restrictions are not necessary and 
a hindrance to getting on with the important projects, they are 
in law and AID has complied with them. Programs promoting 
energy efficiency, sewage treatment, emission controls are 
desperately needed in the developing world, and the resources 
we are able to scrape together are completely inadequate.
    My question is, what has AID done to implement the 
provisions of section 589 and you, in compliance--are you in 
compliance with the law and how? Describe the details of AID's 
role in the clean energy initiative and what the new resources 
request will be.
    Mr. Anderson. Thank you, Congresswoman.
    Congressman Knollenberg and I and our staffs have spent 
some time together talking about this, and I believe our staffs 
are coming together again later in the week to look at specific 
things that we are doing which some may feel--and the 
Congressman certainly can speak for himself, if he likes--but 
some may feel are in violation of that requirement.
    I insist that we obey the laws, naturally. And I have been 
told by our environment people that we are obeying the law. 
Sometimes that, naturally, can be a matter of interpretation 
of--maybe reasonable people can differ.
    But I would like to know if there are specific areas, and I 
have asked the Congressman--and our staffs are working 
together--if there are things that we disagree on, that we 
think perhaps are not in violation, and perhaps he or his staff 
believes are in violation. I would like to know what those 
areas are, so that I can make my own determination.
    I take it very seriously that the overall intent certainly 
of our clean energy programs and of the new money that the 
President has requested is to do exactly that, to assist 
developing countries to produce clean energy.
    For example, I was just with the President and 
Congresswoman Lowey in India and Bangladesh. India burns soft, 
or dirty, coal, and it produces terrible emissions; it is 
harmful to people's health. Part of our program is to work with 
the Indians, as well as other governments in the third world, 
to produce cleaner energy. We have already in India helped them 
clean up with scrubbers and modern technology, clean energy 
technology, which is also a big part of the President's 
proposal.
    As you probably know, Congresswoman, the United States 
companies are leaders in the world in producing clean energy 
technologies, either alternative energy production or 
technologies to clean up existing systems in developing 
countries. And so it is to our great advantage to encourage 
countries in the developing world to adopt cleaner systems, and 
they can in fact ``Buy American,'' and everybody's happier.
    But there is a health issue. It is an environmental issue 
for the people in the developing countries, like in India, but 
it is also an issue for all of us to have a cleaner 
environment.
    In South Asia, in India and Bangladesh and Nepal, we are 
encouraging a regional approach to energy for a variety of 
reasons. Bangladesh has a lot of natural gas. India doesn't, 
and India needs more and more energy. Natural gas is a cleaner 
fuel than the soft and dirty coal that the Indians burn now. We 
are encouraging a process as a part of our regional South Asia 
clean energy initiative whereby the Bangladeshis would export 
natural gas or electricity produced by natural gas to India and 
Nepal and could even export electricity produced by hydropower, 
which they have in abundance.
    Ms. Pelosi. I have many more questions, Mr. Administrator, 
but my time has expired.
    Thank you, Mr. Chairman.
    Mr. Callahan. We are going to recognize the members of the 
subcommittee as they arrive, rather than to do like we do every 
week to Mr. Wicker and to Mr. Sabo, by having them sit there 
diligently through all these hearings and then suddenly some 
guy walks in and they are 10 more minutes behind.
    So we will recognize Mr. Packard, Mr. Knollenberg, Mr. 
Lewis, Mr. Wicker on our side; Mrs. Lowey, Ms. Kilpatrick, and 
Mr. Sabo first on the other side.
    Ms. Pelosi. Are we going back and forth?
    Mr. Callahan. Unless the chairman of the full committee 
comes in, he will jump in front of somebody, or the ranking 
member of the other side comes in, we will do that.
    Mr. Packard.
    Mr. Packard. Thank you, Mr. Chairman.
    Mr. Anderson, welcome.
    Mr. Anderson. Thank you.
    Mr. Packard. I have some specific questions I will ask 
perhaps on the next go-around, but I picked up some as I read 
through your statement and I would like to refer--ask you to 
respond to those if you would.

                          AIDS PREVENTIVE DRUG

    You say in your written testimony, in Uganda, USAID helped 
develop a drug that helps prevent the transmission of the AIDS 
virus from mother to child, a discovery that could have an 
influence throughout the world. Would you explain what that is 
and what your doing?
    Mr. Anderson. That drug is Nevirapine. And it was developed 
jointly, I believe UNICEF also was involved, as was the World 
Health Organization. We were involved in a pilot project in 
Uganda in which that drug was developed. We now plan to use 
that drug to prevent, as you say, the transmission from mother 
to child in more trials in Uganda, Kenya and perhaps in Zambia.
    It is a fairly inexpensive drug.
    Mr. Packard. How effective?
    Mr. Anderson. It is very effective. It is in its early 
stages, but it is apparently safe, and everyone is quite 
excited about it in Africa.
    Mr. Packard. Thank you.

                                 BOSNIA

    In your remark regarding the Balkan area, very little if 
anything was said about Bosnia. What progress are we making in 
Bosnia?
    I remember when we funded that exercise, free elections 
were promised within a year as were the rebuilding of the 
infrastructure and getting our troops out. None of that has 
happened. Where are we at?
    Mr. Anderson. Bosnia has just had municipal elections in 
which, according to published reports, the Croatian and Serbian 
areas tended to continue to vote for Croatian and Serbian 
nationalist parties. But in Muslim-dominated areas, including 
Sarajevo, I think the name of it is Social Democrat Party whose 
members were elected in the municipal elections. The U.S. 
representatives in Sarajevo have proclaimed it a free and fair 
election and were very pleased that at least in the Muslim-
dominated areas the opposition actually won.
    Our funding in Bosnia is on a decline from $100 million, I 
believe, this year--to 90, next year. It is actually declining. 
There have been returns minority; there should be more minority 
returns.
    We have encouraged municipalities by offering services, 
encouraging them to kick people out of houses so others can get 
back in the houses that belong to them. But it has been a very, 
very tough row to hoe.
    We have worked with small business in Bosnia, encouraging 
making small loans to small businessmen and women, and that has 
been successful.
    Mr. Packard. I have been to Sarajevo three times, and the 
last time I was there, I saw very little change in rebuilding 
the city. It is been perhaps 2 or 3 years since I have been 
there now. Has there been any major rebuilding of the country?
    Mr. Anderson. We have been involved in some infrastructure 
reconstruction over the years. A lot of that has been 
completed. That is one reason our funding in USAID is on the 
decline, because the major infrastructure reconstruction 
projects are completed, so--there has been a quite a bit of 
reconstruction.

                        MICROENTERPRISE PROGRAM

    Mr. Packard. In your micro and small enterprise development 
program, Your predecessor, I think it was 2 years ago, 
explained some of the experiences that they have had where they 
loan--$50, $100, $200--very small amounts for developing small 
business successes.
    How is that program working? How much is being funded?
    Mr. Anderson. It is at a $135 million level this year, 
2000, and the same for 2001. Actually, this year it might wind 
up at almost $150 million; and think it is one of the most 
remarkably successful programs anywhere. Oftentimes, the 
borrowers are women who have never been able to borrow any 
money of any kind before. When I travel, I always make an 
effort to see the--I call them sometimes the ``microenterprise 
ladies'' because they give me great encouragement.
    There are a lot of things in developing countries, as you 
mentioned, Bosnia, that are not encouraging; but 
microenterprise has been a hugely successful program. They 
start off sometimes at 40 bucks as a first loan. And because 
these people don't have any credit background, so no ordinary 
bank is going to give them a loan. Then with the micro loan 
they work; they repay that loan as a part of a group that 
guarantees it, as it were. Then the next loan is maybe 80 
dollars; then 3 months later, they may get one for $120.
    Mr. Packard. What is the payback return now, approximately?
    Mr. Anderson. It is 96 to 98 percent. It is just 
phenomenal. When I travel with the President to India, he is 
always overwhelmed by it.
    Mr. Packard. How long has that program been in existence?
    Mr. Anderson. I am not sure--it started in Bangladesh about 
two decades ago, I would think.
    Mr. Packard. Thank you, Mr. Chairman.
    Mr. Anderson. It is an affectionate term.
    Mrs. Lowey. I understand, Mr. Anderson, our administrator, 
completely; and I just want to say that after traveling through 
India with Mr. Anderson, one of the highlights, of my trip and 
of yours was our visit to the unauthorized community, where we 
saw the results of AID family planning, we saw the results of 
educating the young people, educating the women, and we saw the 
results of educating the barber about HIV prevention and family 
planning, so as he cut hair he could educate the community.
    I found it so very exciting. And it was, I know, equally 
exciting to you to see the women put together this street 
theater, which demonstrated a graphic way the benefits of 
family planning and spacing children; and I know we felt, as we 
saw that extreme poverty everywhere, if we can double the 
funding, triple the funding, it could be used well.
    I think this is an investment that is very important for us 
in building democracy, building community in this part of the 
world. I want to particularly commend you on the focus you have 
put on administration. Because unless we can answer those 
questions, it is very difficult to build support for these 
vital programs.
    So congratulations, it was a wonderful trip. And I learned 
a great deal from you. And I also want to say, Mr. Chairman, 
that the AID staff was so impressive. The knowledge that they 
shared with us, the commitment that they had to what they are 
doing was, for me, very, very important. One of the questions I 
know we ask all the time is, how do you mandate excellence? You 
know, you can fund these programs and the programs can sound 
great; how can you mandate excellence?
    One other comment--and I am probably using my time up so I 
won't have any chance to ask a question--I too want to make a 
comment about microenterprise, because we saw how successful 
those programs can be.
    But, Mr. Chairman, I will just say, whether it is ladies or 
women, one of the things that was very disappointing to me in 
India and elsewhere.
    One of the things that was disappointing, on the one hand, 
you had very successful microenterprise programs, but when you 
looked at the macroenterprise and you looked at the meeting we 
had with the business community, there were very few women in 
that room;and I think we have to do a lot more by educating the 
population.
    I know we agree that that has to be a top priority, so not 
only are we ensuring microenterprise--and we know the strength 
of that--but we have to figure out how we can encourage more 
women getting into macroenterprise and larger business 
interests there and in other places throughout the world.
    But I probably just have a couple of minutes. I want to 
thank you for your support in restoring the family planning 
funding request to 542 million. I also want to thank you for 
emphasizing in your statement the importance of using our 
foreign assistance to promote and defend American principles 
abroad.
    As you know, I was appalled, shocked, disappointed, that we 
were forced to accept undemocratic restrictions on our 
population program. This global gag rule forces international 
organizations, many of whom have been loyal partners of AID for 
many years, to sacrifice their right to free speech in order to 
participate in United States-funded family planning programs; 
and it undermines, in my judgment, a key goal of the United 
States foreign policy, promoting democracy.
    As the head of the Agency that carries out the lion's share 
of our democracy promotion programs, could you comment on the 
message we send by incorporating this fundamentally 
undemocratic principle into our foreign policy?
    Mr. Anderson. The United States is probably the greatest, 
most vocal, and aggressive advocate of democracy in the world. 
And it is a bipartisan priority to encourage democracy, because 
in a democracy we believe men and women can have the freedoms 
and protections that allow them to develop and grow and reach 
their God-given potential, and minorities can be protected.
    This prohibition does go against our arguments of the value 
of freedom of speech. As Americans, we are proud that we have 
freedom of speech; and we encourage, through USAID, democracy 
and governance programs in developing countries; every day we 
encourage freedom of speech. And when freedom of speech is 
abridged in any country--and it certainly has happened since I 
have been here--we all complain vociferously, and our 
ambassadors raise in and shake their fingers in the face of 
totalitarian dictators and countries.
    There does seem an inconsistency, from my view, when we 
preach freedom of speech as an absolute value that does have 
some legal restrictions, but it is an absolute value. In this 
particular case, we restrict foreign NGOs' ability to lobby in 
this case. And it seems--it does appear to me to be an 
inconsistency in the position that we take in these developing 
countries.
    Mr. Callahan. Mr. Knollenberg.
    Mr. Knollenberg. Mr. Chairman, I came after Mr. Lewis; I 
will yield to him if that will be in order. You can come back 
to me.
    Mr. Callahan. Thank you.
    Mr. Lewis.
    Mr. Lewis. Mr. Knollenberg, I very much appreciate that. It 
was very unnecessary, but.

                            INDIA AND CHINA

    Ambassador, it is a pleasure to be with you. I want to ask 
a question, largely directed towards China, but very much 
inclusive of India's future role in Asia as well. The chairman 
was very generous in his comments regarding the Defense 
Department's work in this total arena, and it is my view that 
all of us in the defense interest community should be looking 
down the line to 2020-2025, for many in here, as well as 
elsewhere, presume some time in that time frame China is going 
to mature into its own, perhaps fully, perhaps India as well.
    As they compete for dominance in Asia, and perhaps in the 
world, many presume there is going to be a time of 
confrontation between the United States and forces there. If 
there is reason for us to have the priority we have for 
national defense dollars, and especially research and 
development, it is my hope that America will be so strong that 
others will seek other avenues for solving their problems, as 
well as world problems. So the objective is peace. If there is 
a concern that I have ofttimes, the dialogue in this 
subcommittee is so less than nonpartisan, so polarized, that we 
speak with a voice that is a divided voice overseas. I hope it 
is not heard by those overseas.
    China is a country that is a part of that hopefully 
peaceful future. India is as well.
    Speak first to China, if you would, but India perhaps. 
Speak of those programs that are designed to promote economic 
development and trade relations with China that would build a 
foundation of hope for their economic independence over time 
and how we can help with those programs.
    Mr. Anderson. Thank you, Congressman.
    Of course, we have no presence at all in China. We don't 
have a relationship, USAID and China. Unlike a lot of places we 
work, India is a vibrant, if sometimes it seems, overly active 
democracy. If there is something anyone seems to generally get 
hold of, it is elections and multipartyism and democratic 
values. They are the world's largest democracy.
    One that we all--of course, on both sides of the aisle, all 
of us wish that China would take such an interest in democracy. 
As Secretary Albright has said before, no two functioning 
democracies have ever gone to war with each other. So that 
would be one solution to problems in South Asia. But it may be 
some time before the Chinese realize that democracy is in their 
future.

                                 TAIWAN

    Mr. Lewis. I think you must be very well aware of the fact 
that within Taiwan there are many business institutions dealing 
with the real world of the rising cost of labor who are turn-
keying their economic values. That is a form of economic 
development and growth that seems to me to have huge potential. 
They are getting a vested interest in that cash flow.
    I assume, one way or another, USAID may have some channels 
of communication or information there.
    Mr. Anderson. We certainly don't through Taiwan. What we do 
encourage in India, is, for example, the development of their 
capital markets in India. That is relatively in the last 5 or 6 
years a new venture for Indians. They have also been very good, 
intelligent, aggressive business folks, often family-based or 
large extended-family based. But the idea of a capital market 
and securities that can be traded in exchange is fairly new, 
and USAID has a program to help the Indians develop that, 
encouraging in that sense broader economic development in 
India.
    Mr. Lewis. Shifting gears, frankly, it just strikes me that 
we have been so long in India, long-range foreign policy 
considerations, you look to that future hope for peace that I 
described; and I am not surprised by the response, but I 
presume we share frustration about your having to respond in 
that fashion.
    Mr. Anderson. A lot of our professionals, development 
professionals, would love to be in China and would love to be 
encouraging them to develop capital markets and talking about 
multipartyism or freedom of speech, but we can't do it yet.
    Mr. Lewis. Mr. Chairman, I yield back.
    Mr. Callahan. Thank you.
    Mrs. Kilpatrick.
    Ms. Kilpatrick.  Thank you, Mr. Chairman.
    Good afternoon.
    Mr. Anderson. Good afternoon.
    Ms. Kilpatrick.  Good to see you again. A couple of things: 
The pandemic that is obviously in sub-Saharan Africa--soon 
India, the Baltic states and so forth--what are you doing, what 
is the program? I know last year's appropriation was for 
approximately 200 million; this year you are asking for 
approximately 254 million. Can you give us an update?

                                HIV/AIDS

    Mr. Anderson. Yes. Thank you, Congresswoman; it is niceto 
see you again. When I gave a speech last night, I listed HIV/AIDS as 
one of the three greatest challenges to sub-Saharan Africa, the others 
being poverty and conflict.
    The USAID is the world's largest bilateral donor country in 
fighting the HIV/AIDS pandemic. With the new money that we have 
this year, over last year's level by around $60 million for a 
total of 200 million this year, and next year is another $60 
million for a total of $260 million, with the new money we are 
taking more of an aggressive stance in treatment and care for 
families, especially orphans in sub-Saharan Africa.
    The figures are horrible, and we all have known them; the 
numbers, millions of children who are either or will be 
orphaned by HIV/AIDS, and their parents who are able to earn a 
living die, and what happens to all these kids.
    I have been in villages in northwest Tanzania in which 
everyone you see is either very old or a baby or a young child. 
There is nobody sort of 20 to 40 years old or 20 to 35 years 
old. So we are increasing our prevention activities, which 
involve education and training.
    Ms. Kilpatrick. Do you have the financial resources to make 
a difference in the budget that is before us today?
    Mr. Anderson. Well, we are increasing greatly our request, 
and if there were more available, then we could certainly use 
it. It is an epidemic. HIV/AIDS, like TB and polio, does not 
recognize boundaries. HIV/AIDS does not need a visa to enter 
the United States. So we know it is in our own self-interest to 
do all that we can.
    Ms. Kilpatrick. This committee, with the chairman's 
leadership and support, has been very sensitive to that. I know 
that this issue will be one of my interest areas as we go 
through this budget. I appreciate the work that you have done 
and looking forward to your work in the future.

                               MOZAMBIQUE

    Let me move on because I have 5 minutes here. I can't let 
you go without talking about Mozambique.
    About a month ago Secretary Albright sat in that chair and 
said, an assessment had to be made; therefore, I backed off of 
an amendment. The chairman of this committee, as well as the 
chairman of our full committee, Chairman Young, accepted that, 
yes, we will do something as soon as we know what to do. I was 
told the date of the assessment, which has now come and gone. I 
understood, as we met in my office with your assistants, that 
the assessment is complete. But nothing has moved yet.
    What is happening, what can we do? When is it going to 
happen?
    Mr. Anderson. I don't know when. I know that a supplemental 
is being considered, and I think one will be proposed, but it 
is out of my hands.
    Ms. Kilpatrick. I am off of the supplemental. We passed 
one; the Senate has not even taken one up.
    The money is there in the accounts; as we discussed 
earlier, Mr. Anderson, the money is there. My chairman tells 
me, if the President will request it, we can send it; in the 
supplemental process or in the regular appropriation process, 
we can replenish those accounts. But what has not happened is, 
a formal request from the White House, AID, or Secretary 
Albright that, yes, we need to do this. How much longer must we 
wait?
    Mr. Anderson. We are working in Mozambique, and as you 
know, we have been there a long time. But USAID spent maybe $18 
million, and the Department of Defense----
    Ms. Kilpatrick. 47.5 million total from the U.S.
    Mr. Anderson. You know the figures better than I do. And 
you know we are continuing to work there. We sent a team out 
from Miami Dade recently because we were fearful of the next 
cyclone that struck.
    Ms. Kilpatrick. It is most important that you do that, that 
you not take money from the other Africa accounts to help 
Mozambique because all Africa accounts are stretched. So as you 
do the work of your commitment, we want you to move on.
    I will certainly do anything that I can to get the funds to 
Africa, as the children of Mozambique are suffering, while the 
floods affect the people, the housing, the land mines, and the 
spread of cholera. It is of monumental proportions, as you 
know.
    You have been there. You know the region.
    Mr. Anderson. It is a tremendous need. As we have spoken, 
Congresswoman, Mozambique is a country that has done all the 
things asked of it, both politically and economically, and they 
need to be encouraged. I know that they will be, but I cannot 
give you a date.
    Ms. Kilpatrick. Who can? I am serious.
    Mr. Anderson. I don't know. I don't know the answer to that 
question.
    [The information follows:]

                        MOZAMBIQUE SUPPLEMENTAL

    A formal request for $200 million in supplemental funds was 
sent to the Congress on April 21, 2000. The supplemental 
request includes $10 million in Disaster Assistance Funds; $7 
million in USAID operating expenses; and $183 million in ESF 
funds ($131 million for Mozambique; $15 million for South 
Africa; $17 million for Madagascar; and $20 million for 
regional efforts, including other flood-affected countries).

    Ms. Kilpatrick. March 31st has come and gone. So has April. 
It is really past time.
    Mr. Chairman, I need your help on this one; and you have 
been good, and so has Chairman Young, but I think enough is 
enough. We need to look forward.
    Mr. Anderson. I will convey your very strong message.
    Ms. Kilpatrick. I hate to go to the President and talk bad 
about the people I support, but I will move to that very 
quickly.
    Mr. Chairman, it is cold in here.
    Mr. Callahan. Will someone----
    Mr. Anderson. I felt the heat.
    Mr. Callahan. Would someone bring the gentlelady a jacket?
    I might remind the gentlelady that I will work with her 
with regard to Mozambique and there are other areas of 
interest. I am going to work with Mrs. Pelosi about her human 
rights and HIV issues, I will work with Mrs. Lowey about Israel 
and the other concerns of hers, if I can receive a commitment 
from them that they will vote for the bill. Without that, it is 
going to be very difficult to be totally cooperative as I have 
in past years.
    Family planning, too, I am going to help you on that.
    Mrs. Lowey. How much?
    Mr. Callahan. Give me a commitment.
    Mr. Knollenberg. I will take my turn this time. Thank you 
very much.
    Mr. Anderson, welcome.
    Mr. Anderson. Thank you.
    Mr. Knollenberg. Thank you again for your courtesy in 
coming before my staff and discussing some of the things that 
are of concern to me. It was a good-faith effort, I think, on 
your part and your people to do that.

                             KYOTO PROTOCOL

    I appreciate the comment you made in response to Ms. Pelosi 
when it comes to obeying the law regarding the climate control 
issue. And I appreciate that although you have been there a 
short time, you are willing to grapple with this. And we want 
to work with you, but let me just say, I do have some serious 
concerns, you know, that we talked about, on the 
administration's actions, and not just in AID but in many 
departments, many agencies, where there is an effortthat is 
being made to implement the Kyoto Protocol without sending it first to 
the Senate for ratification. That is obviously pursuant to the U.S. 
Constitution, as you know.
    I will say that USAID is involved in these activities. We 
talked about some of those the other day. Currently, there is 
no place in U.S. law that authorizes taxpayer dollars to be 
used to implement anything having to do with carbon emissions 
trading and clean development mechanisms. Those are terms that 
were born out of the Kyoto Treaty in the final days in 1997 in 
Kyoto; they are solely Kyoto Protocol activities.
    Unfortunately, there are many examples of USAID engaging in 
these Kyoto Protocol activities; let me highlight an example. 
For the benefit of the members of the subcommittee and others, 
this is from the CCI handbook. I would like to have references 
made available for inclusion in the record, if I could.
    On page 4--and I don't have time to read all of this, but 
one reference here, ``establishment of legislative, regulatory, 
and market structures and local capacity to participate in the 
mission trading regimes in appropriate countries,'' suggests 
that dollars, taxpayer dollars, are being spent to do this.
    There are other examples that I could go to. There is, on 
page 34, ``emissions trading regimes and other flexible market 
mechanisms,'' which are again phrases coming out of Kyoto.
    There is a whole doctrine of activity on page 35 in this 
manual.
    Now, let me--with information supplied by AID, there are 
four that I am just going to cite, and there are many, many 
more where they have crossed the line including a manual for 
developing CDM projects in Latin America.
    Number 2 would be--I am just talking about the major ones--
the Ukraine subgroup on climate change. This was done in July 
1999. So that would have been included in the fiscal year 1999 
budget.
    Number 3, is the U.S.-Brazil Aspen Forum. This was an 
organization of workshops organized to advance CDM development.
    Number 4 has to do with Panama. It is another case where 
they have involved strengthening the newly established CDM 
office in Panama. So CDM has become a part of the prohibition.
    Now, those are just a few. We talked about some of these 
the other day. Then there is this little item that is in the 
big book. This is the State Department. The question I wanted 
to raise with you, for the record, is, it says on page 238 the 
plan of action outlines a process that seeks to elaborate the 
rules for international market-based implementation mechanisms, 
emissions trading, joint implementation and joint economic 
mechanisms. Again, this is a State Department policy.
    Do you plan to follow this statement? Maybe it is a trick 
question.
    Mr. Anderson. Congressman, I plan to follow the law. I 
don't mean to be facetious. I hope you have said that you 
recognize I am sincere in that. I am. And we--our staffs and I 
must get together; and I really want them to outline on paper--
I always prefer a piece of paper with something on it so we all 
know what we are talking about--areas where your staff or you 
feel what USAID is violating the law. And if my staff feels 
that we are not, I would like to see that list. We both have 
it.
    And then--as you said, then you can decide what steps to 
take. Or I may agree with you and say, well, yeah, I think we 
have gone too far.
    Mr. Knollenberg. Let me ask you--not to cut you off, but 
very quickly, another question.
    Do you know how much--and maybe you don't know, but tell me 
if you do--how much money has been spent to this point by AID 
on CDM-type activities?
    Mr. Anderson. I do not.
    Mr. Knollenberg. Do you know--and this relates to the 
question raised by Ms. Pelosi. What action will you take to 
prevent violations of 583, which is the matter that Ms. Pelosi 
brought up?
    Mr. Anderson. Directives to the USAID missions around the 
world do not violate section 583.
    Mr. Knollenberg. That is the section that has to do with 
appropriations of funds not to be confused with sec. 568, which 
is the advisory; and I may be getting too far into something 
that I don't have time for.
    But I really would like to comment in the next round if I 
could, Mr. Chairman.
    Mr. Callahan. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman.
    And welcome; good to see you again, Mr. Anderson.
    Mr. Anderson. Thank you, Congressman.

                TREATMENT CENTERS FOR VICTIMS OF TORTURE

    Mr. Sabo. As you know, this committee recommended that AID 
spend $7.5 million in support of foreign treatment centers for 
torture victims; and I was pleased to see that AID identified 
assistance to torture victims as a special challenge in its 
budget justifications to Congress.
    I was pleased to see AID plans to award $1.5 million in 
grants to support capacity-building programs for foreign 
treatment centers. However, I am concerned that AID has adopted 
a definition of torture that does not appear consistent with 
congressional intent. I am also concerned that apart from the 
$1.5 million initiative, AID's report does not indicate planned 
further support for treatment centers.
    Please provide for the record the amount of new money AID 
has committed, or plans to commit, to treatment centers in 
fiscal year 2000 and provide details on the Agency's plan for 
these activities in 2001. And I would also like to know for the 
record what action AID has taken on initiatives recommended for 
AID funding by the secretary-general of the International 
Rehabilitation Council for Torture Victims.
    It strikes us that AID's definition of eligible activities 
goes substantially beyond the commitment I had in mind, and 
that the money we recommended being set aside is not really 
being fully utilized for what was recommended by the committee.
    Mr. Anderson. Congressman, I would like to ask your 
permission and the permission of the chairman to give you a 
written response to--if you have not already gotten a written 
response--to exactly what centers.
    Mr. Sabo. Not a satisfactory one.
    Mr. Anderson. Let me try orally, as well.
    On the definition, I guess there is--at least, hopefully--
room for honest disagreement.
    As you know, we--I think the more restrictive definition 
would limit torture as being what we more commonly think of as 
political torture when somebody is taken into a room somewhere, 
I guess, and tortured in more of a political situation; whereas 
our definition included the sort of organized rape of women in, 
for example, Kosovo, which we have included. When we say, we 
have spent--we will spend $10 million this year, we have 
included those women who were--we would say, were tortured and 
raped in Kosovo.
    We have also included the support that we have given 
through Catholic Relief Services and World Vision and other 
American NGOs and PVOs in northern Uganda and Sierra Leone, 
where children--little, young boys and oftentimes girls--are 
abused and sometimes made to fight and tortured in various 
ways. I don't want to belabor it, but that is a definition, 
that it is a service that we feel it is important to provide.
    American private volunteer organizations like Catholic 
Relief Services and World Vision have provided services to 
those people, those women and those children who have been 
abused; it is the kind of services that children who have been 
tortured would have also received. It is the same kind of 
services, and it seems to me that these people also have been 
tortured. It may have been in more of a context of civil 
conflict, but they have nonetheless been tortured.
    [The information follows:]
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Sabo. Including war-related atrocities goes 
significantly beyond what the committee had in mind. I would 
appreciate the written response. The committee's recommendation 
was aimed at a particular problem with a fairly limited amount 
of money. The broader description can lead to endless 
activities which go beyond what the committee had in mind.
    Mr. Anderson. I would only say that the activities aren't 
endless. We fairly well defined them. And in those cases, they 
are not--it is not situations in which, you know, the women in 
Kosovo were fighting or anything. I mean, they were taken aside 
and they were intentionally raped, and to us, that is torture.
    Mr. Sabo. Mr. Chairman, if I might have--and I have a 
little bit of time. I am just curious. In all the reports I 
heard last year on the effectiveness of our AIDS programs in 
developing countries, there was a high correlation between 
success and the attitude of existing governments where our 
programs were part of a comprehensive program; they appeared to 
work. Where there was not local support for what we were doing, 
the success rate was much less.
    The other day I saw a brief report in the newspaper or 
heard something briefly on radio; about a variety of programs 
we used for dealing with poverty in developing countries--and 
again the report was somewhat along the same line, that when 
lots of well-intentioned programs operated sort of ad hoc, the 
long-term consequences were not particularly good. If they 
operated in conjunction with local support, the success rate 
was substantially greater.
    Is that an accurate reflection of what does or doesn't 
happen?
    Mr. Anderson. I think it is. I think development 
professionals would say that we have learned that.
    Back during the Cold War a lot of our foreign assistance 
had more of a political connotation with it, and it wasn't well 
coordinated with other donors. The assistance was given to 
countries that were, as it were, on our side in the Cold War.
    Now, we are freed of that. That is all over, and we can 
focus more on things that work.
    One of the keys to success that development professionals 
have learned has been the attitude toward reform, because we 
are talking about change and reform, when we are talking about 
development, of the government and the culture and the people 
in the country where we work. So that is why in Nigeria, for 
example, we are increasing our program greatly because 
President Obasanjo and his new regime have been elected and, we 
believe, are committed to actually reforming--a very, very 
difficult country to reform politically and economically with 
all their division. But during the years it was under military 
dictatorship, we had a very, very small program. It had nothing 
to do with the government; it was a program to build up women's 
groups in Nigeria and was focused on family planning and 
health.
    But programs that require change to a country going from 
centrally-controlled to a market-oriented economy or change to 
a multiparty democracy from a central executive authority 
alone, that absolutely must have cooperation and strong 
political will.
    I think I said in my remarks that development is an aspect 
of political will, the political will has got to be there among 
the people in the country as well as among its leadership. That 
is why in Mozambique, for example, they did well, because the 
leadership on both sides of the aisle, as it were, in 
Mozambique, and the people themselves, wanted true political 
and economic reform. They were tired of their civil war for all 
those years that put Mozambique at the lowest per capita income 
on Earth. I was out in East Africa when they decided that they 
wanted to reform. Then our programs really, really can help 
somebody take off.
    Mr. Callahan. Mr. Wicker.
    Mr. Wicker. Thank you, Mr. Chairman.
    Mr. Anderson, you have answered several questions about 
sub-Saharan Africa, and your biography would certainly indicate 
that you have a basis for knowing whereof you speak. Not only 
have you been Ambassador to Tanzania, and not only do you speak 
fluent Swahili, but you and your wife spent 5 years working in 
villages in East Africa.
    How many nations did you and your wife spend time living 
in?
    Mr. Anderson. We lived in Ethiopia, Kenya and Tanzania.
    Mr. Wicker. Let me just take Tanzania.
    How many languages are spoken in Tanzania?
    Mr. Anderson. About 120.
    Mr. Wicker. Are those languages unique to various tribes?
    Mr. Anderson. They are. That is, Language separates ethnic 
groups, or you might call them sociolinguistic groups or 
tribes.

                           SUB-SAHARAN AFRICA

    Mr. Wicker. Well, you have answered a number of questions 
concerning the AIDS pandemic and the progress that we are 
making. I have never been to sub-Saharan Africa, but I have 
read a little bit about the region. The impression that I have 
is that one of the problems that these nations have in getting 
to the goals that you have outlined in your testimony--
institute a rule of law, build a strong civil society, sound 
economic institutions--having an independent judiciary and 
media--has been the lack of a sense of nationhood among the 
inhabitants of these countries. There is much more of a loyalty 
to the tribal group or to the ethnic group as you mentioned.
    This is not limited to Africa. Certainly we have seen that 
in the Balkans.
    I would appreciate it if you could just enlighten me and 
the subcommittee whether that phenomenon has changed over time. 
Have you seen any improvement in that respect?
    Mr. Anderson. That is a very interesting question that I 
can talk about for days with you. I would love to do it.
    Mr. Wicker. I have only 5 minutes.
    Mr. Anderson. I will give you my 30-second answer.
    Tanzania is a good example. With 120 different ethnic 
groups, and Julius Nyerere was a sort of the George Washington-
Abraham Lincoln-John F. Kennedy of Tanzania, Nyerere wanted to 
build an identity, a Tanzanian identity, because all these 
countries have been colonies before and they didn't have a 
national identity. And he chose the Swahili language, which was 
spoken only on the coast at the time, and he encouraged----
    Mr. Wicker. That is a European-imposed language; is it not?
    Mr. Anderson. No, it is actually not. It is a combination 
of the Bantu language and Arabic. Because the slave traders 
came from the east, they came to the Middle East on the eastern 
coast; and so it was actually brought from the Middle East. So 
Africans consider Swahili as grown up from Bantu. It has got a 
lot of Bantu in it, as well as Arabic.
    So he took Swahili, and he created, as it were, a Tanzanian 
identity on a base of these 120 different ethnic groups, 
because they are related. They are related to each other more 
like cousins, but they aren't always mutually intelligible. And 
they don't have different identities. I am a Chaga. If I am a 
member of the Chaga tribe, then I consider myself a Chaga 
first, Tanzanian second.
    But he was quite successful in building this identity.
    Mozambique is trying to do it--Nigeria, Kenya, everybody is 
trying to do it, some more successful than others. If we look 
at our own experience in the U.S., these ethnic identities take 
time to meld and form into one national identity. They don't 
have to be eliminated; in fact, I think we see in the world 
these things, people's own languages, even ethnic identities, 
don't just disappear overnight.
    The Russians have learned that the hard way in the former 
Soviet Union. Once they disappeared, all these different ethnic 
identities popped back up. Nyerere tried to provide peoplewith 
enough services from the government, and gave them roads or health 
care, so they could say, gee, there is something I get from the federal 
government. And he was successful in creating a pride, as a Tanzanian, 
so there has been no real civil conflict within Tanzania because of 
that.
    Other countries are trying it, but they have a long way to 
go. It is the challenge of the 21st century, in a way.
    Mr. Wicker. I think I may take you up on that long visit.
    Mr. Anderson. Good. I would like to.
    Mr. Wicker. If I have time for just one more quick 
question, or should I wait for the next round?
    Mr. Callahan. Out of deference to the gentleman sitting 
here for the last three meetings, I will give you an extended 
minute or 2.

                    FAMILY PLANNING PROGRAM IN PERU

    Mr. Wicker. As you know, Mr. Anderson, a number of Members 
of Congress are concerned about potential coercion with regard 
to family planning monies that this Congress has appropriated 
through USAID. Three Congressmen--Christopher Smith, Todd 
Tiahrt, and Tom Coburn--wrote you on March 24th, 2000, 
mentioning their concern with respect to Peru. They pointed out 
detailed descriptions of human rights violations alleged to 
have taken place in the Peruvian family planning program during 
the last year, including sterilization of women without 
informed consent and, in some cases, against the woman's will 
and/or without her knowledge, as well as pressure to accept a 
family planning method in connection with the provision of 
other medical services or of food.
    Have you had a chance to review the allegations in this 
letter? When do you plan to respond to it, and could you 
enlighten the subcommittee about what you know about Peruvian 
practices in this regard?
    Mr. Anderson. I have. I first had our Latin America Bureau 
contact the USAID mission in Lima to find out, if they knew 
about it. Finally there was a meeting, I think, with the folks 
from PRI, which is the group that had gone down to Peru and 
brought back the information, to find out exactly what the 
allegations were.
    I called our Mission Director, whose name is Tom Geiger--I 
actually was in college with him, Mr. Chairman, a few years 
ago; we weren't close friends, but we were in college together 
in Memphis. I called Mr. Geiger and talked with him a long time 
about it. He and the ambassador went in to see the Minister of 
Health last--I am not sure what day it was, Wednesday or 
Thursday of last week, to talk to him about this and let him 
know of our concerns. And our Mission Director, Mr. Geiger, 
told me that he and the ambassador believed that the Minister 
of Health is very competent and he is very sincere in his 
commitment to root this kind of thing out.
    There was a serious problem with this, as Congressman Smith 
could tell us all about at length, I know, some several years 
ago. And I think in 1998 there was a hearing, or Congressman 
Smith had some open meeting; and we, USAID, instituted new 
procedures including funding of an ombudsman in Office of the 
Ministry of Health. It has regional offices where women could 
go and complain, or anybody could make a complaint that there 
was something coercive going on. Back in 1998, I am told, 
everyone here was pleased with the result.
    Some of this problem is left over, sort of like a bad 
headache, from those days; and down in the villages or towns, 
there are some people who feel they can get away with that kind 
of behavior, which I personally think is outrageous and 
undemocratic and immoral and everything else.
    It is really the antithesis of development to coerce 
somebody to do something. The family planning program is 
designed to educate people and provide people with modern 
contraceptive methods that all Americans have and use to make 
their own decision about when they start their family and when 
they stop and whether they have two daughters, like I do, or 
eight little boys or whatever they want to have. The forced 
sterilization or quotas or anything like that is completely 
against our policy.
    Mr. Geiger assured me that he is going to give a complete, 
in-depth report. He told me that the Minister of Health has 
given him information indicating that there are between 10 and 
15 million annual visits that a woman or man make to a 
``reproductive health provider,'' for lack of a better phrase--
10 to 15 million times when something coercive could happen. 
And that is a lot, of course. And these few have been 
uncovered. One is obviously too many and highly inappropriate, 
and as soon as he gives me a full report, I will report back.
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    Mr. Callahan. This is going to be very important to the 
committee that you respond to that, because we are beginning to 
get correspondence on this, which gives us a pretty good 
indication that the fears are well founded, and that USAID is 
participating in something that is violative of the law.
    So we ask that you give us some response to this in a 
timely fashion.
    Mr. Anderson. I certainly will do so.
    Mr. Callahan. Mrs. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman, and let me associate 
myself with the concerns expressed. We certainly do not want 
any of the funds that are designated for family planning to be 
used to--to degrade women, and that would be a very serious 
concern. Thank you, Mr. Wicker, for bringing that forward.
    I also was intrigued by your line of questioning about 
tribes and African language. You talked about being in college, 
so I will take the liberty of saying that when I met my 
husband, I met him in South Africa south of the Sahara, because 
that was the course at Georgetown that we were taking in the 
summer. Then later I went on to the Leakey Foundation board, 
and Dr. Louis Leakey--one of my prized possessions is an 
introduction of the Kikuyu language that he gave me, signed. 
And Dr. Leakey, Mary Leakey, Richard Leakey have taken my 
children to paleontological digs in Lake Turkana, formerly Lake 
Rudolph, when we started all this many, many years ago.
    So it is interesting to hear the discussion about the 
political implications of the tribes and Nyerere's leadership. 
In his death he was acclaimed for what he did do for Africa and 
for Tanzania, Tanganyika at the time.
    In any event, my colleague Congresswoman Kilpatrick 
haspursued the AIDS pandemic issue, and the family planning issue has 
been pursued as well. So it affords me the luxury of talking about 
another issue of concern, health and environmental issues in Russia and 
the Ukraine. The committee has consistently urged that more resources 
from the Independent States programs be devoted to health and 
environment programs.

                         HEALTH PROGRAM IN NIS

    As you know, we have limitation on funds. I will try to 
make this concise. Estimates for all countries in the former 
Soviet Union are that as much as 40 percent of the population, 
or 190 million people, may be vulnerable to iodine deficiencies 
disorders. It is just one of the nutritional health and 
environmental concerns. What is your view of whether AID should 
accelerate planning for expansion of health programs in the 
NIS?
    Mr. Anderson. I think we have begun to spend more money on 
health programs, especially in Russia, than we did before. I 
think our focus has been to date, and it was right, reform of 
markets and democracy. But I think we are getting back, as it 
were, a bit more to our traditional concerns also without 
letting go of concern for markets, because we think there is a 
window of opportunity here.
    But getting back to more of a focus on health, and we are 
spending more money than we have in the past on health 
concerns. On the IDD and Kiwanis, I think we have an agreement 
to fund $2 million. I have met with the Kiwanis folks. I am 
going to speak to their convention in Miami this summer, and 
their IDD is one of the best things that we, all Americans, can 
be proud of. We should support that.
    Ms. Pelosi. It is a wonderful thing. They have done a great 
job. We have praised them on every occasion that we can. And 
you have answered a couple other of my questions.

                               INDONESIA

    I want to get to Indonesia. The administration has proposed 
increasing the resources devoted to Indonesia in both fiscal 
2000 and 2001 to fund a variety of programs including banker 
training, democracy building, even police training. Over 100 
million is proposed for fiscal year 2001. At the same time, 
funding for requests for East Timor have been reduced from 25 
million in fiscal year 2000 to 10 million in 2001. I don't 
oppose helping Indonesia, but I wonder about the relative 
priorities. Why was only 10 million requested for East Timor 
when it is clear that the whole area has been completely 
devastated? What do we hope to accomplish in Indonesia in the 
banker training and police training programs?

                               EAST TIMOR

    Mr. Anderson. We have put as many resources, I think, into 
East Timor as quickly as possible because our people there are 
very concerned that there are a lot of young men roaming around 
the streets with absolutely nothing to do. So we have put a lot 
of resources into trying to get some income-producing and job-
generating projects going. That is ongoing now and is fairly 
successful.
    Also, we have had to put some of that money, I believe, 
into our coffee project, which has some thousands of farmers 
raise organic coffee in East Timor. That has been going on for 
a while. It had to stop during the conflict there, and we are 
providing resources to get it started again.
    I believe the feeling was that also there are many other 
donors who are interested in East Timor, not just us, and we 
are very often able to do things a little bit more quickly than 
others, of which we are quite proud. But now we feel that they 
are going to come on line, and other support to East Timor will 
be coming from other donors, not just from us.
    Ms. Pelosi. I know my time is up. So you think that the $10 
million is an adequate amount of money for East Timor?
    Mr. Anderson. It is never adequate.
    Ms. Pelosi. Thank you.
    Thank you, Mr. Chairman.
    Mr. Callahan. Mr. Packard.
    Mr. Packard. Thank you, Mr. Chairman.
    Mr. Anderson, you are aware that water in the Middle East 
is of crucial importance, and that the Middle East and 
Mediterranean Desert Development Program focuses on alternative 
sources of water for that desert area. San Diego State 
University in my general area, it is not in my district, but 
close by, has worked, and I have been over to visit their 
facilities and activities, in many countries in the Middle 
East, to develop water programs that will help.
    How many more modifications will AID request of that 
program? They have requested several modifications, which the 
coalition has implemented. But I was wondering if they are 
pretty well satisfied with what now they have come to, and when 
will they finalize the scope of work for that project?
    Mr. Anderson. I got a note just this morning, and, 
Congressman, according to my note, they were satisfied, and 
there is an agreement to fund $1.3 million per year for three 
years which would provide a total of $3.9 million.
    Mr. Packard. Would you be willing to have your people 
answer any specific questions that I have on this for the 
record?
    Mr. Anderson. Yes, I will, Congressman.
    Mr. Packard. I would appreciate that. It is an important 
program for me, and I like what they are doing, frankly, 
because the cooperative venture between the university and the 
Middle East countries is effectively finding water resources, 
that I think could be implemented in other places, certainly in 
other desert areas.

                                 RUSSIA

    During the 1998 economic crisis in Russia, the Russian 
Government failed to implement effective programs, can you 
please describe AID's strategy for implementing programs in 
Russia? What is being done to ensure a move away from the 
programs with the central government?
    Mr. Anderson. We are focusing our programs on four regional 
governments. The four were chosen because they are led by 
reform-minded leaders and because the private businessmen and 
women in those four regions were eager to work with us, and we 
wanted to move away from the central government.
    The only thing that we have left in the USAID in the 
central government in Moscow is some technical assistance we 
are providing to the central government in the arena of their 
tax system, which they certainly need. Whether or not they take 
the advice, I don't know, but we are providing them with 
technical assistance only for that fairly small arena. So we 
are in these four other regions--I don't pronounce the names 
well, and I don't want to attempt it, but we feel very positive 
about the relations between those regional governments and 
private business and the civil societies that are developing 
there. There are some very positive stories coming back from 
that. We are encouraged by that. But again, that is a very slow 
process.
    Mr. Packard. That is all I have, Mr. Chairman. Thank you 
very much.
    Mr. Callahan. Mrs. Lowey.
    Mrs. Lowey. Thank you, Mr. Chairman.

                        BASIC EDUCATION FUNDING

    I know, Administrator Anderson, that you believe that an 
educated and well-trained population is a precursor to long-
term economic growth in the developing world, and basic 
education for children provides the foundation on which 
sustainable development can be built. We know that it leads to 
higher wages, lower fertility rates, a healthier population.
    Given these realities, education and training must be a 
priority, in my judgment, of United States foreign assistance. 
Unfortunately, basic education funding has decreased in recent 
years from 135 million in fiscal year 1995 to 98 million in 
past years. And the basic education request again this year is 
98 million. I think, and you probably agree, that we can do 
much more to support such a fundamentally important initiative. 
Could you discuss the risk that in an increasingly knowledge-
based global economy,developing countries will fall further 
behind if we do not increase support for education and training?
    Mr. Anderson. They will. And in the speech that I gave last 
night to the Council of Foreign Relations, I actually talked 
about that. The kind of global economy we are involved in now, 
the countries are going to fall further and further behind.
    Some of the work that we do in basic education in 
developing countries isn't so expensive because it involves 
encouraging reform at the Ministry of Education level. And we 
are now, as a part of our stepped-up program in Nigeria, 
working, I think, with the World Bank to examine the entire 
education system in Nigeria. I am not sure if that includes 
universities, it may not, but certainly basic education, and 
find out where they have gone wrong.
    It is unbelievable to me that governments in this day and 
age can actually think their people are going to advance and 
their economy is going to grow and they can ignore the 
education of their children. It just doesn't make sense. And we 
are trying to convey that message all around the world.
    You and I, of course, discussed on our trip to India the 
education of girls and young women. I have yet to find anybody 
who would disagree that if not the most important thing that we 
can do in the world, certainly one of the top three is to 
educate young girls and women, truly educate them, not just 
some formal empty system, not a true education but one that our 
own daughters as well as those who have sons can experience in 
this country.
    The change, some have said, would be you wouldn't even need 
a family planning program if you educated young girls. And I 
suspect that that is true because they would have the education 
they need to make their own decisions. It is absolutely 
essential. I do wish we had a lot more funding to put into it. 
But it is a huge priority not just of mine, but to all of the 
folks sitting here. We talk about it all the time.
    Mr. Callahan. I will go ahead and offer that we will agree 
to cut family planning for whatever millions of dollars you 
want and add it to basic education if you would like.
    Mrs. Lowey. Well, I think we will need some further 
discussion on that.
    I know there is general agreement that if we invest in 
girls' education, it has been proven to reduce fertility rates 
and also to significantly improve the health and economic well-
being of families. I know you believe that. I would like to 
discuss further with you at some other time what we are really 
doing in education particularly to advance education for young 
girls.
    Later this month heads of donor agencies and education 
ministers will gather in Dakar, Senegal, for the World 
Education Forum. As we know, the meeting marks the 10th 
anniversary of the Education for All Conference, which began 
the initiative to achieve universal primary education and 
gender equity in education. However, despite our efforts and 
those of multilateral organizations, 130 million children still 
do not go to school.
    Could you perhaps discuss further how AID is contributing 
and plans to contribute further to meeting the global 
commitment for universal basic education? Will we have a strong 
presence in Dakar, and will we be considering a commitment for 
increased resources, because I know the Chairman will support 
it, in addition to our family planning?
    Mr. Anderson. I am aware of the meeting in Dakar. I am not 
certain who is going. I know I entertained the idea myself, but 
I am not going.
    One way we approach the girls' education question is from 
the very start we have to do some sort of survey to determine 
if girls are being educated or not in Egypt or where ever. If 
they are, is it the same kind of education the boys get? Is it 
a quality education? Are the curriculums old, and they often 
are, because some of the education systems are simply archaic, 
and they were left over from another time, and they weren't 
effective then, and they are certainly not effective now.
    So we determine what are the barriers maybe there are parts 
of the country like in Egypt where the girls are not getting 
educated, but there are parts where they are. So we can then 
focus our resources and encourage--sometimes scholarships. A 
lot of countries, still developing countries, still charge 
school fees. In Africa, I know uniform costs, just because 
African kids, I guess from their colonial days they still like 
to wear uniforms, the white shirt and blue skirt, and sometimes 
that can keep little girls out of school. So just a tiny little 
bit of money to purchase cloth. They make their own in a lot of 
places. They make their own outfits to wear to school, and a 
tiny bit of money can actually help them.
    Mrs. Lowey. I am just going to keep going. I think my 
Chairman--okay.
    Mr. Anderson. The sand must be wet.

                        MICROENTERPRISE FUNDING

    Mrs. Lowey. That is fine. I will just continue going for a 
few more minutes.
    I just wanted to mention again, although I talked about 
macroenterprise programs before, you are very well aware of my 
interest in supporting microenterprise around the world. So I 
won't pursue that, except I did want to just mention that in 
the AID report, it stated that 68 percent of the funds went to 
loans and other financial service programs, and 32 percent went 
to business development. Many of the interest groups in spite 
of your commitment, and I know it is very strong, are still 
very concerned that AID is not prioritizing enough of the 
microenterprise funds toward the poorest of the poor, and 
instead is more interested in larger loans and business 
development. I know this is always a balance, because I think 
we have to really do both. Perhaps you can comment on that.
    Mr. Anderson. Thank you.
    I think we do need to do both. As we talked earlier, I 
think it was Mr. Packard's question about microenterprise and 
its success stories, I talk to these people, and for one woman, 
the first loan was $30 or $40, then the next one was $120, and 
then, she starts off selling used baby shoes, and then she gets 
started selling baby clothes, and then she gets a $600 loan, 
and she is spread halfway down the sidewalk selling all kinds 
of stuff.
    So I think the ideas is if we keep the maximum loan, too 
low, then we are not allowing these people to actually grow. 
That is something that we all believe in very strongly, that, 
with your own drive and ambition and initiative and hard work, 
you can make it in this world. We preach that gospel 
everywhere.
    With microenterprise, I think it is true we should allow 
bigger loans, but still we must remember there is a whole lot 
more people who could get the 30 and $40 loans. We don't want 
to forget them.
    Mrs. Lowey. It is interesting that 84 percent of the loans 
are going to women. We know the impact of that on the whole 
family and the community.
    I thank you very much. I appreciate the Chairman's 
generosity.
    Mr. Callahan. We don't want these small companies to expand 
too rapidly, because when they expand too rapidly, we have a 
tendency to send in the Justice Department to break them up. So 
I think you ought to stay where you are.
    Mr. Anderson. The Microsofts of Honduras.
    Mrs. Lowey. Mr. Chairman, I just want to say that 84 
percent of these loans, as we know, are going to women. When we 
travel to India and other parts of the world, unfortunately we 
don't see too many women in a position that they would be 
affected by such a decision. Wouldn't that be nice if we 
reached that point?
    Mr. Callahan. I might pay the new administrator a 
compliment. It took your predecessor 4 years to understand the 
importance of child survival. It took the President of the 
United States, since we are talking about basic education--it 
took the President of the United States 4 years to understand 
that we need a child survival account, but you have come inyour 
first year so far advanced on the intelligence level that it is 
rewarding. Basic education and child survival are going to be a part of 
your budget resources next year.
    Mr. Anderson. That is for sure.
    Mr. Callahan. And we are going to do everything we can to 
increase it over and above the amount we included last year. I 
don't know if the allocation will permit that, but I can assure 
you that it will be no less.
    Mr. Knollenberg.
    Mr. Knollenberg. Mr. Chairman, Mr. Anderson, again I may 
have tried to put 5 pounds into a 3-pound bag in the last 5-
minute time frame, but just to make sure that you did get what 
I wanted in terms of full responses to a couple of questions, I 
want to make sure that I repeat those--you don't have to 
respond to them now--is how much money was spent by AID on 
preparation and implementation of the CDM and carbon emissions 
trading, and that will all be in the question, but I want to 
make sure we get an answer to that. Then also the assurances; 
what assurances you can give to the subcommittee that further 
implementation will cease.
    And then I want to go just to hopefully clarify maybe 
sections 583 and 568, because I think the subcommittee needs to 
have some understanding of both of these. And so if you could 
provide the policy guidance that AID is using to differentiate 
between activities prohibited by section 583, which is the 
language that I authored, and those that must be notified under 
section 568. That was a provision put in fiscal year 2000.
    And then finally, if you would furnish the committee with a 
written copy of the policy guidance regarding the matter and in 
general global climate change, I will appreciate that.
    Mr. Anderson. I will do that.
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                            nagorno karabakh

    Mr. Knollenberg. I want to go on quickly to the status of 
the money that was appropriated back in I believe fiscal year 
1998. It was $20 million that was to be used for the victims of 
the Nagorno Karabakh conflict, both the Adjarian and the 
Armenians living on that island. These directives have not been 
fully implemented. We talked about this briefly the other day. 
Only $8.3 million has been allocated for the victims, which is 
well short of the $20 million that was originally recommended.
    Here's the problem, I believe, and it wasn't on your watch, 
but USAID has dragged its feet distributing the necessary 
assistance, and we have continually recommended that this be 
looked at and obligated in some fashion. It comes down to this: 
According to my interpretation of the recommendation and the 
money itself that was allocated, it was to be spent by 
September 30th of the year 2000. You have got $8.3 million 
spent; you have about $11.7 to spend.
    The other thing I have heard by virtue of the strategic 
plan that you have for the USAID has for the fiscal year 1999 
through 2003, it says that you are not going to spend any money 
or obligate any money beyond May 30. It has to be spent by 
September 30. You have 6 weeks to go. And I guess I would like 
to know what are your intentions in the next 6 weeks if you 
live up to your statement. I am talking about this plan. You 
can spend the money, obviously, in our judgment, right up to 
the end of September 30, but there seems to be what you would 
call, I guess, a semiprohibition within AID itself as to not 
obligating those funds. It is a bit of a thorny question, but 
my worry is if we go beyond May 30, is that another fight we 
have to have with respect to getting money to people that need 
it, presuming they do need it. It is a little goofy.
    Mr. Anderson. It does sound a little goofy. It is something 
I must admit I don't know a lot about. I am aware that there 
has been a question that you have raised, and we may have 
discussed it very briefly, maybe not in this much detail, the 
other day. But if I could, I don't want to rattle off what I 
think about it. I think we have expended more than the 7.8- or 
8-, whatever it is. Maybe we haven't, but I want to find out 
about that and get--could I give you a written response?
    Mr. Knollenberg. Please. If you would put a hurry on that 
one, because the window is getting smaller and smaller. Now, I 
believe Congress has a right to recommend challenging your 
decision, if there is one, by May 30. However, we would like to 
know so we don't have one more hurdle to go through.
    Mr. Anderson. I would like to commit to you to get you an 
answer within a week. Is that acceptable?
    Mr. Knollenberg. We would appreciate that very much.
    Mr. Anderson. I think we will do that within 1 week.
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    Mr. Knollenberg. That is all I have.
    Mr. Wicker [presiding]. Thank you.
    Ms. Kilpatrick.
    Ms. Kilpatrick.  Thank you, Mr. New Chairman. How are you?

                             ATLAS PROGRAM

    Mr. Anderson and Ms. Lowey started talking about education 
and how important it is and what has been done about AIDS in 
the world, but particularly in Africa. I commend you for all 
the work that you have done. I think USAID has done, a yeomans 
job in the world in terms of helping developing countries.
    I did hear my Chairman say that he is going to increase the 
child survival and education account, that is a good thing. We 
all like to see that support there. One of the more successful 
programs that AID has had over the years is the Atlas program. 
In Michigan many of our universities participate in that 
program. It has trained many health professionals, scientists, 
and community leaders over the years. It has come to my 
attention that you are planning to move Atlas into the global 
education, bureau. Whenever you do this, I think Atlas will 
lose its significance, its dollars, and it won't have the same 
impact. Is there a reason for moving the program at this time? 
I want to register my strong opposition to seeing that program 
moved.
    Mr. Anderson. Well, certainly I think there are 200African 
students in graduate schools in the U.S. currently under this program. 
There is no question they will be taken care of.
    Ms. Kilpatrick.  Over the years how many have students 
matriculated?
    Mr. Anderson. I don't know. I will find out for you. I 
think the success of the program has caused people to not want 
to limit it to the continent of Africa. So in a way its success 
is its enemy. It is a good program, and we are going to 
continue to take a look at it, exactly how it is going to be 
implemented and who the providers will be. It will be a 
competitively-based system, I am sure. But we don't want to 
limit these good ideas that we have.
    Ms. Kilpatrick.  I am for expanding them.
    Mr. Anderson. We are not sure. But----
    Ms. Kilpatrick.  You are not sure you are going to move it?
    Mr. Anderson. You asked are we going to put more resources. 
I am saying I am not sure whether we will or not. We are really 
taking a look at it. We don't want to diminish the program in 
Africa.
    Ms. Kilpatrick. But if you aren't putting additional 
resources in, and I mean a whole lot of additional resources, 
and now going to move it to the global Bureau, is the impact 
that the program makes in Africa gong to be diminished in any 
way.
    Mr. Anderson. I don't think that is the plan at all.
    Ms. Kilpatrick.  What is the plan?
    Mr. Anderson. We haven't made the plan. We are taking a 
look at it. We obviously are in the process of assessing where 
we are and what others in other parts of the world, how they 
might take advantage of this kind of program.
    Ms. Kilpatrick. I support you moving the program all over 
the world in the--you can't do that with the same amount of 
money. This is global education. It says it in your budget. I 
would strongly urge you not to move the program. And if you 
can't find the resources, and this committee can't find them 
for you, then I think you really do a disadvantage to a very 
good program. So keep me up on that one.
    Mr. Anderson. We will continue to keep you informed and 
consult with you.
    Ms. Kilpatrick.  And let me know the number who have 
matriculated over the years, because it has made an impact.
    Mr. Anderson. I think they have. And I think as a general 
rule in countries, in developing countries, it is good if 
students can be educated, even university or college level 
education, in their own country or even nearby; like Tanzania, 
they can go to Kenya or Uganda or vice versa. It is awfully 
expensive to bring students to the U.S. for 4 years or graduate 
school or whatever it is, but everybody in the world wants to 
attend a university in the U.S. And, well, they should, because 
we have the finest universities in the world. I think we do 
contribute to the future of countries when their future leaders 
are educated here, as so many of them from Central America and 
Africa are.
    Ms. Kilpatrick.  I certainly want to keep it like that. 
With the technology and the learning opportunities that are 
available, we can really keep many of them in their own 
countries, not just Africa, but in the world, and use the 
technology that is available to us. And working with the First 
Lady of Ghana Mrs. Rawlings to see how we set up the 
university, there is no women's university in Ghana, and 
President Rawlings and his wife are ready now to use their 
resources to do some of that in a partnering with us. So I want 
to work with you on that. But changing that Atlas program, 
taking it out of Africa, making it global with no more money, 
that won't work.
    Mr. Anderson. There are over 2000 alumni, and I am sure 
they have an incredible impact back in their countries, and 
$800,000 for this fiscal year in the Atlas program in Africa. 
But I understand your concern.
    Ms. Kilpatrick.  I reserve the right to have my questions 
in writing and to get a written response from Mr. Anderson and 
his very able staff. Thank you all for coming today as well.
    [The information follows:]
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                       EASTERN EUROPEAN DEMOCRACY

    Mr. Wicker. Let me ask a couple of questions about support 
for Eastern European democracy, the seed program. I understand 
this is the cornerstone of U.S. assistance to Eastern Europe in 
the Baltic States. Now, how many countries have been involved 
in this program over time?
    Mr. Anderson. Nine. Well, now there are nine SEED 
countries.
    Mr. Wicker. Some have, quote, graduated from this program. 
Among these are Czechoslovakia, Latvia, Slovenia and Hungary.
    Mr. Anderson. Poland will graduate. So if we add all those, 
it gets up to 17 or something.
    Mr. Wicker. What are the criteria for graduating? What 
accomplishments have we had and what prospect do we have for 
other nations graduating from the seed program?
    Mr. Anderson. Well, I guess the best students graduate 
first, and, you know, the hard-to-educate students are the ones 
that they are still in the classroom. The criteria that Don 
Pressley assistant administrator for Europe and Eurasia, has 
for, the graduates--is he here? I was going to say nice things 
about him. He is a fine officer, he is a career Foreign Service 
officer, and he is one of the best. He and his Bureau have 
worked out a matrix that is quite interesting. It is a long 
presentation that would be interesting for the committee to 
get, or you could have him present it, how they determine the 
criteria and how the criteria mixes.
    But where is the civil society, where is the country in 
terms of its market reforms, and where is the country in terms 
of its political reforms and human rights and elections and 
democracy. And you plug all this in their matrix. We work with 
our State colleagues very much in this part of the world, and 
if we together are convinced that a country has reached a 
threshold. A lot of it comes down to the institutions in their 
society, independent judiciary would be one of them, and how 
strong is the Parliament in its opposition to the executive, 
and checks and balances, how strong is civil society, how 
strong are the market mechanisms. If it is all sufficiently 
strong, it is a judgment call, then, boom, they graduate.
    The ones that are remaining in the SEED program who have 
not graduated are Albania, Bosnia, Bulgaria, Croatia. Croatia 
is doing marvelously well these days. Macedonia; Kosovo is in 
there; Montenegro; Romania; and, of course, Serbia. We have a 
democratization program with Serbia. They are not really 
receiving anything other than democratization funding. Those 
are the countries that are remaining in the SEED program. And 
after all of the work, it really comes down to primarily civil 
society and market economy. Those are the two things that we 
really focus on.
    Mr. Wicker. Feel free to supplement that answer with that 
matrix if you need assistance in supplying that.
    [The information follows:]
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                          CLEAN AIR INITIATIVE

    Let me move then to the international clean energy 
initiative. You are advocating a 100 percent increase in this, 
and I understand this is only one of multiple organizations 
involved in the clean energy initiative. What have you seen in 
the past year that warrants an increase of 100 percent over FY 
2000 enacted levels?
    Mr. Anderson. My notes say the Clean Energy for the 21st 
Century Initiative would have the year 2000 level at 78.7 
million. The year 2001 level, 108.7, for--what would that be--
40 percent increase, but----
    Mr. Wicker. I have a release dated February 3rd, 2000, from 
the White House Office of Press Secretary saying that Clean 
Energy for the 21st Century International Initiative was more 
than 100 percent increase.
    Mr. Anderson. Some of that must be in DOE, Department of 
Energy budget, but in ours it is certainly a substantial 
increase.
    Mr. Wicker. So what have you seen that would indicate an 
increase of between 40 and 100 percent?
    Mr. Anderson. As I mentioned earlier we recently visited, 
so it is fresh on my mind, in India and Egypt this was a 
focus--two very crowded places with dirty industries and a lot 
of vehicles and a lotof people crowded into fairly relatively 
small places. There is a huge need for cleaner energy in places like 
India and Egypt. And I think the President has recognized, is 
recognizing that, the need that exists in developing countries and the 
production of greenhouse gases can affect the health of Americans as 
well.
    In Egypt we are encouraging the movement to using 
compressed gas amongst the taxicab drivers and municipal buses 
in Egypt. I met with the Governor of Cairo, and they have 
purchased 50 buses, bus engines made and manufactured in 
Detroit, which will burn clean natural gas.
    Mr. Wicker. Do you know if U.S. companies are partners in 
this program?
    Mr. Anderson. U.S. companies are very much encouraged to 
sell their products as a result of these programs. And one of 
the aims of the programs is to encourage the kind of clean 
energy technologies that developing countries can use, and the 
technologies themselves have been developed in the United 
States. I would be glad to give you written examples of 
companies that have manufactured clean technologies here that 
have already been purchased by, I know for certain, India, and 
other places. They are already using them. And the market is 
vast for this kind of technology.
    Mr. Wicker. If you will supply that for the record, I would 
appreciate it. Also expand on the success stories and what 
accomplishments we have gotten for our taxpayer dollars so far 
in this program.
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    Mr. Wicker. I believe Ms. Lowey has a question.

                    OFFICE OF TRANSITION INITIATIVES

    Mrs. Lowey. Thank you. I know it has been a long day, but 
Mrs. Pelosi asked me just to discuss the issue of OTI with you, 
the Office of Transition Initiatives. We believe that the OTI 
programs have been a central element to meeting development 
needs in countries such as Bosnia, Kosovo and East Timor, who 
are recovering from devastating disasters. The OTI programs 
have enjoyed the ability to operate using the broad and 
unrestricted authority of the disaster account. As the role of 
OTI programs has increased, so have the amounts spent under the 
program. And Mrs. Pelosi wanted me to discuss how essential it 
is to maintain the OTI program with flexible authority to 
operate because it fills the gap for countries transitioning 
from wars and natural disasters to full-scale development 
programs.
    The question is should the OTI programs have a separate 
account with separate, but flexible authorities? This 
arrangement would ensure the disaster funds remain exclusively 
for these purposes. What is your view of separating OTI into a 
separate account, and what kind of authorities would be 
appropriate for such an account?
    Mr. Anderson. I very much appreciate Congresswoman Pelosi's 
support and your support and the committee's support for OTI 
and the work they do.
    The Chairman mentioned earlier that I will bring an 
outside-the-Beltway view. Part of that would be reflected in my 
not having a strong opinion about whether there should be a 
separate account. But I do think that the work that OTI does, 
it is a bit like treating a patient, if we could look at, say, 
East Timor or Kosovo like a patient, or your car wreck, and the 
person in a car wreck is rushed to the hospital. The first 
place you go to is the emergency room. That would be our 
equivalent of the Office of Foreign Disaster Assistance. That 
is where life-saving emergency care is provided.
    Once the heartbeat is stabilized, the person is put into 
the critical care part of the same hospital, and then my 
metaphor of a hospital, that becomes OTI now. The person is in 
critical care, he or she, the life is not threatened, but he or 
she is not really being rehabilitated yet either; they still 
have to have the heart monitor. After a week or two, the person 
moves into the rehab unit of the same hospital so that the 
treatment is seamless. The experts hand off one to the other. 
Then eventually a person is cured and leaves the hospital.
    So OTI is, I think, really important. It does very 
important work. It is a new program. I credit Brian Atwood with 
it, and others and members of this committee. I wouldn't want 
anything to happen to it as a separate account that would harm 
its effectiveness. So I am not sure if it is a good idea to 
have a separate account or not.
    Mrs. Lowey. Thank you again for all your hard work and your 
commitment. I thank you, Mr. Chairman.
    Mr. Callahan [presiding]. Thank you.
    Mr. Anderson, as you know, this committee receives many 
requests from Members on various issues in various places of 
the world, and we try for the most part not to burden even you 
or the administration down with law. Instead we put many of 
these requests in report language. But it doesn't diminish the 
importance to our colleagues here in the Congress simply 
because we don't put them into law. I think you would prefer it 
this way.
    We don't want to change that direction. But we do expect 
your full cooperation in responding to these requests. Whether 
the Agency decides to agree to them or not, we still need 
responses. So we would ask that you provide the committee by 
the end of the month with written responses to the matters 
highlighted in the copy of the House report 106-254 that staff 
will provide at the end of the hearing. We would like for you 
to respond because we don't want to start running your 
Department or the State Department or any other agency, but 
nevertheless these are concerns that are brought to us. In 
order for us to get the votes on the floor of the House, we 
have to respond to these requests, and we need answers for 
these Members.
    Mr. Callahan. We also will keep the record open until the 
close of business this Friday, April the 14th, for additional 
questions.

                                 HAITI

    Mr. Callahan. Let me emphasize to you my concerns about 
Haiti. We are disturbed about the attention this administration 
has given to Haiti with zero results. You have been there. I 
have been there. We have zero progress after all of the 
billions of dollars we have spent there. And we would like you 
to recognize that we don't like to violate the 10 percent rule 
with respect to Haiti. You can spend as much money as you want 
to in Haiti, but for every dollar you spend in Haiti, you must 
spend $9 in some other country in this hemisphere. We don't 
think the administration is paying sufficient attention to this 
hemisphere, and is concentrating too much on the Middle East 
and on Haiti. So spend whatever you want in Haiti, but if your 
people spend a dollar there, keep in mind that it is the 
intention of this committee that you spent $9 someplace else in 
this hemisphere.
    And speaking of this hemisphere, with the urgency the 
President put on the Hurricane Mitch supplemental, why has so 
little money actually been spent when the request from the 
President came saying that they had to have the money before 
the spring planting season, and yet less than 5 percent of the 
money has been spent at this point. Maybe it is obligated, 
maybe it just takes that long, but we would hope that you will 
get that response back to us as soon as you possibly can before 
the markup.
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                             BUDGET PROCESS

    Mr. Callahan. With respect to the markup, we don't know 
when it will be. Probably sometime in the month of May we will 
be marking the bill up. I wouldn't imagine that we will skip 
the subcommittee, but we may as well do that if we are not 
going to get any support from our Democrat colleagues. We may 
as well write a bill that satisfies the Republican side, 
eliminates the request of the Minority. And this has not been 
my pattern of operation since I have been Chairman, but we are 
going to be faced with a limited allocation.
    I think the Minority will recognize that I am going to be 
faced with that problem, and that we ought to work together to 
appropriate responsibly what the allocation is with the hope 
that somewhere during the process we can increase the 
allocation. But if we receive zero help for getting your agency 
and the State Department 90 percent of what they want, then we 
may be reluctant to help get the other 10 percent at another 
stage.
    I am sure Mrs. Lowey and Mrs. Pelosi and Mrs. Kilpatrick on 
this side of this committee have always worked very well with 
me, and I am hoping this year we can do it in a sense whereby 
there is not all of this partisan bickering that brings me down 
to a late night in October, in a room with Jack Lew, who 
doesn't really understand your problem, doesn't want to, but is 
making demands that other factors are weighing on our issues.
    So I hope we can recognize the limitations that I am going 
to have, recognize the full Chairman's position on the 
allocation. I didn't vote for the budget either, but this is 
the real world, and this allocation is not going to be 
sufficient to fund the President's $15 billion request. We are 
going to have to do the best we can with the hand that is dealt 
to us, and I am hoping we can pass a responsible bill with 
Democrat support and agree to work together in a bipartisan 
fashion to increase it at some later date. That is something we 
have to resolve in our own subcommittee, but it is going to 
directly impact your future with respect to the money you will 
have for operating expenses at USAID.
    Mrs. Lowey. Just briefly, Mr. Chairman, I do hope that we 
can work in a bipartisan way to put together a responsible 
bill, such as we ended up with at the end of the process last 
year, even though I frankly don't even think it was sufficient 
to deal with the major challenges in the world. But I do hope 
we can work together.
    If I recall from the last session, many of the cardinals, 
such as our cardinals, may have been ready earlier to work in a 
bipartisan way. So I hope that the various forces out there in 
the leadership would understand that we do have a 
responsibility to address these challenges. And I thought in 
India, as you did, and I know we both talked about it, the 
President was outstanding in talking about the challenges of 
the world. He emphasized over and over again that the 
challenges of health, economic development, tuberculosis, 
malaria are not isolated; they affect us here. The challenges 
of promoting peace and our agenda throughout the world affect 
us here.
    I would hope that there is a real attempt in a bipartisan 
way to put together a realistic bill, because, as you know, I 
would be honored and privileged to vote for your bill and hope 
it will be a realistic bill that addresses the real needs, 
knowing that we can't solve all the problems in the world, but 
addressing the challenges that are put to this committee from 
the President. I do hope we can work together.

                                 INDIA

    Mr. Callahan. Maybe the trip to India would have been good 
for some of the Majority Members of this subcommittee to attend 
along with the President, such as the Minority was invited. I 
understand the International Relations Committee was invited, 
but the Majority on our side of the aisle were not invited to 
go to India to experience firsthand the needs of some of that 
area of the world. So maybe the President ought to learn that 
if he wants authorization, he goes to the international 
committee; if he wants money, he comes to this committee. I 
think his primary concern in international affairs is money, 
not policy so much. But in any event, you had an educational 
opportunity to go to India with the President, I didn't have 
that same opportunity.
    Mrs. Lowey. We can go again as a committee.
    Mr. Callahan. I want to go with the President though.
    Thank you, Mr. Anderson.
    Mr. Anderson. I will go with you, Mr. Chairman.
    [Questions and answers for the record follow:]
        QUESTIONS FOR THE RECORD SUBMITTED BY CHAIRMAN CALLAHAN

                              SIERRA LEONE

    Mr. Callahan. What is the total amount of USAID-administered funds 
(including humanitarian relief, food aid, and development assistance) 
for Sierra Leone in Fiscal Year 1999 (actual), Fiscal Year 2000 
(proposed) and Fiscal Year 2001 (requested)?
    Answer. USAID assistance to Sierra Leone for FY 1999 totaled $32.2 
million, distributed as follows: Food for Peace: $15.7 million; Office 
of Foreign Disaster Assistance: $13.9 million; Office of Transition 
Initiatives: $1.0 million; Bureau for Africa: $1.53 million (including 
Displaced Children and Orphans Fund, and Education for Development and 
Democracy Initiative); and ESF: $100,000.
    The proposed level for FY 2000 is as follows: Food for Peace; $25.4 
million (as of April 30); Office of Foreign Disaster Assistance: $12.0 
million; Office of Transition Initiatives: $2.8 million; Bureau for 
Africa: $4.017 million, depending on a resolution of the current crisis 
and restart of the disarmament, demobilization and reintegration 
process; and ESF: $1.5 million.
    For FY 2001, USAID's humanitarian relief and food aid offices do 
not budget emergency assistance by country for outyears; rather, funds 
are allocated as needed. If the situation improves and access to 
currently insecure areas is achieved, funding levels probably would be 
similar or slightly lower than FY 2000 levels.
    Office of Transition Initiatives: $3.0 million.
    Bureau for Africa: $5.0 million.

                         Non-Project Assistance

    Mr. Callahan. Please provide for the record the total amount of 
USAID-administered funds for cash transfers (``non-project 
assistance'') in Fiscal Year 1999 (actual), Fiscal Year 2000 (proposed) 
and Fiscal Year 2001 (requested).
    Answer. The table below lists by country the actual FY 1999, 
planned FY 2000 and FY 2001 non-project activities reflected in the 
request, and the amounts for each activity.

                                 USAID--NON-PROJECT ASSISTANCE--FY 1999-FY 2001
----------------------------------------------------------------------------------------------------------------
                                                              Fiscal year--
        Bureau/county and activity name           Account      1999 actual      2000 planned      2001 planned

----------------------------------------------------------------------------------------------------------------
      Africa...................................  .........        32,000,000        25,500,000        31,000,000
                                                           -----------------------------------------------------
Ghana:
    Trade & Investment Reform Program..........        DA   ................  ................         1,000,000
    Quality Improvements in Primary Schools....          CSD................  ................         3,500,000
Malawi: Natural Resources Mgmt/Environmental           DA          7,000,000         5,500,000         5,500,000
 Support.......................................
Mozambique:
    Increased Rural Incomes Program............        DA         10,000,000         5,000,000         5,000,000
    Supporting Electoral Choice................       ESF          1,000,000  ................  ................
    Growth Through Accelerated Investment &            DA          4,000,000         5,000,000         6,000,000
     Trade.....................................
Uganda: Support Ugandan Primary Education                CSD       8,000,000         8,000,000         8,000,000
 Reform........................................
Zambia: Sector Program Assistance..............          CSD       2,000,000         2,000,000         2,000,000
                                                ================================================================
      Asia/Near East...........................  .........     1,609,000,000     1,458,056,000     1,334,000,000
                                                           -----------------------------------------------------
Asia...........................................  .........        14,000,000        14,000,000        14,000,000
                                                ----------------------------------------------------------------
South Pacific: South Pacific Fisheries Treaty..       ESF         14,000,000        14,000,000        14,000,000
                                                ================================================================
Near East......................................  .........     1,595,000,000     1,444,056,000     1,320,000,000
                                                ----------------------------------------------------------------
    Israel: Balance of payments to support            ESF      1,080,000,000       949,056,000       840,000,000
     policy reform.............................
    Egypt:
        Agriculture Policy Reform..............       ESF         65,000,000  ................  ................
        Development Support Program............       ESF        200,000,000       200,000,000       200,000,000
        Private Sector CIP.....................       ESF        200,000,000       200,000,000       200,000,000
        Environmental policy reform............       ESF   ................        30,000,000        30,000,000
        Health policy support..................       ESF   ................        15,000,000  ................
    Jordan:
        Increase economic opportunity for             ESF         50,000,000        22,000,000        50,000,000
         Jordanians............................
        Improve water resources management.....       ESF   ................        23,000,000  ................
        Improve access & quality of                   ESF   ................         5,000,000  ................
         reproductive and primary health care..
                                                ================================================================
      Europe/Eurasia...........................  .........       156,600,000        54,700,000        69,600,000
Ireland: International Fund for Ireland........       ESF         19,600,000        19,600,000        19,600,000
Albania: Kosovo crisis--government support            ESF         12,000,000  ................  ................
 grant.........................................
Bosnia: Kosovo crisis--financial support              ESF         12,000,000  ................  ................
 program.......................................
                                                     SEED         10,000,000  ................  ................
Bulgaria: Kosovo crisis--economic support......       ESF         25,000,000  ................  ................
Kosovo (UNMIK): Kosovo crisis..................       ESF   ................        10,100,000  ................
                                                     SEED          4,000,000         2,000,000        15,000,000
Macedonia:
    Kosovo crisis--employment and pension             ESF         22,000,000  ................  ................
     relief....................................
    Kosovo crisis--family assistance program...       ESF          6,000,000  ................  ................
Montenegro: Kosovo crisis......................       ESF         12,000,000        11,000,000  ................
                                                     SEED         20,000,000        12,000,000        35,000,000
Romania: Kosovo crisis--balance of payments           ESF         14,000,000  ................  ................
 support.......................................
                                                ================================================================
      Latin America/Caribbean..................  .........        12,000,000                 0                 0
                                                ----------------------------------------------------------------
Bolivia: Counter-narcotics support.............       ESF          8,000,000  ................  ................
Guatemala: Support Peace Accords...............       ESF          4,000,000  ................  ................
                                                ================================================================
      USAID totals.............................  .........     1,809,600,000     1,538,256,000     1,434,600,000
----------------------------------------------------------------------------------------------------------------

                FUNDING FOR INTERNATIONAL ORGANIZATIONS

    Mr. Callahan. Please provide for the record the total amount of 
USAID-administered funds made available to an International 
Organization on a project-by-project basis for Fiscal Year 1999 
(actual), Fiscal Year 2000 (proposed) and Fiscal Year 2001 (requested).
    Answer. I would be happy to provide for the record information that 
is available to date when the staff responsible for this information 
returns from the field in late May. The staff has been sent overseas 
for the short time to assist selected missions to implement USAID's 
system for capturing a backlog of mission procurement data. This system 
is targeted for installation in USAID missions worldwide by the end of 
this year.

                   PROPOSED RELOCATION OF FACILITIES

    Mr. Callahan. Please provide for the record the status and costs, 
on a fiscal year basis, associated with USAID's proposed relocation of 
facilities in Colombia, Nigeria, and South Africa.
    Answer. Estimated cost for the relocation to new office facilities 
in Bogota, Colombia is $975,000. The move will be completed in June 
2000.
    Estimated cost for the relocation from Lagos to Abuja, Nigeria is 
$1,137,000 (includes rent, moving allowances, security costs, 
equipment, and relator fees). The move was scheduled for April 2000, 
but project has been delayed pending Diplomatic Security (DS) approval. 
The move will be completed in 4 to 6 months after approval is received. 
Once proposed office building in Abuja is approved by DS, it will serve 
as an interim office until USAID moves to the new Embassy compound in 
Abuja, estimated to be constructed in Fiscal Year 2005.
    USAID/Pretoria is seeking to relocate to a more secure commercially 
leased facility that meets current security standards. Following an 
unsuccessful extensive search for commercially leased space, USAID/
Pretoria has been working with the State Department Foreign Buildings 
Operations Office (FBO) to identify a developer that can build an 
economically feasible new office building using FBO and DS security 
standards. Because of the high costs of new construction, USAID/
Pretoria has been unable to identify or develop a cost-effective 
proposal as yet.

                    FAMILY PLANNING PROGRAMS IN PERU

    Mr. Callahan. Please provide for the record USAID's views regarding 
allegations of coercive family planning programs in Peru.
    Answer. USAID believes that family planning is essential to the 
health and well-being of women and children and we are firmly committed 
to the principle that family planning be voluntary and that programs 
assisted by USAID must adhere to this principle.
    Further developments have taken place since our report to 
Congressman Smith in May 1999. USAID has supported systemic reforms at 
the Peruvian Ministry of Health to guard against the possibility of any 
human rights abuses in its family planning program. These reforms 
include a ban on sterilization campaigns; the elimination of quotas, 
targets and incentives; and the adoption of new standards of practice 
that are in full compliance with the Tiahrt Amendment. In FY 1999 USAID 
withheld funds from the Government of Peru's family planning program, 
conditioning disbursements on evidence that the Government was 
effectively implementing its strict new standardsof practice in the 
field. This Condition Precedent resulted in more concerted Ministry 
actions to push its reforms into the field. Third, USAID set up a 
number of mechanisms to monitor the Ministry's family planning program 
and to investigate allegations of abuse, if they occur. These include 
periodic national client surveys, a USAID in-house monitoring program 
and support for the Peruvian Human Rights Ombudsman's Office to conduct 
investigations of alleged abuses.
    USAID takes any allegation of abuse in family planning programs 
very seriously. USAID learned of the recent allegations of abuses in 
Peru's family planning programs on March 10, 2000, just prior to 
Population Research Institute's (PRI) briefing on the Hill on this 
issue. We met with PRI on April 5 and they informed us that they had 
turned detailed information on these cases over to a Member of Peru's 
Congress who would forward the information to the Peruvian Ombudsman's 
Office for investigation. Currently the information on the cases has 
not been provided to the Ombudsman. PRI did give us information on the 
locations where the alleged abuses occurred and our Mission sent a 
medical team to investigate clinics in the areas where the alleged 
abuses occurred. The team was unable, however, to pinpoint any specific 
clinic or identify any specific victims during this visit.
    USAID met with the Ombudsman's Office to assure that high priority 
will be placed on the investigation of new allegations. In addition, 
the U.S. Ambassador and USAID Mission Director met with the Minister of 
Health who expressed a firm commitment to addressing any instance of 
abuse that may be found. The Minister also explained the reform 
measures the Ministry has taken and strongly defended the soundness of 
the current program. Both the Minister of Health and the Ombudsman have 
assured us of the importance of investigating the new allegations. They 
have agreed to provide us with detailed information, including details 
about any sanctions taken when cases are determined to have merit. 
Information on the outcomes of all reported cases to date is expected 
from the Ombudsman in late June. In the interim USAID will report on 
any further developments or findings regarding these accusations.
    Mr. Callahan. Please provide for the record a justification for the 
proposed program to be implemented jointly between OFDA and NASA 
regarding mapping of tropical forest. What percentage of funding is 
being provided by USAID?
    Answer. We know of no project, proposed or under way, involving the 
mapping of tropical rain forests by OFDA in cooperation with NASA or 
any other agency. Without more specifics on this mapping activity 
supposedly involving USAID, we are unable to provide any substantive 
information in reply.

                     USAID CHIEF FINANCIAL OFFICER

    Mr. Callahan. Another management weakness, according to your 
Inspector General, is USAID's continued failure to meet the 
requirements of the Chief Financial Officers Act of 1990. This 
Committee has been pressing AID to fully implement the requirements of 
the CFO Act since 1998. Last year, in the House Committee Report, we 
stated:
    ``The Committee expects Agency management to implement the 
recommendations of the Inspector General in this regard and to be 
regularly consulted about agency efforts to meet these requirements.''
    When can the Committee expect USAID to be in full compliance with 
the CFO Act?
    Answer. The Agency's Chief Financial Officer (CFO) has sufficiently 
broad authorities to ensure sound financial management practices are 
applied Agency-wide through the implementation of modern financial 
systems. The CFO has identified priority initiatives and projects to 
modernize the Agency's financial management systems. The cornerstone of 
this modernization effort is the Agency's new core financial system. 
The new core financial system will improve the quality of the Agency's 
financial information, standards and internal controls. These standards 
and internal controls will be promulgated and applied to each 
subsequent modernization effort. The CFO will oversee compliance 
reviews of financial management activities and systems supporting the 
programs and operations of the Agency. The CFO is developing Agency-
wide policies, procedures and training programs to implement the 
requirements of the CFO Act. The Agency expects to comply with the CFO 
Act in 2002 with the Agency-wide implementation of a modern integrated 
core financial system, standards and internal controls.

                       USAID FINANCIAL MANAGEMENT

    Mr. Callahan. Mr. Anderson, I am troubled by your Inspector 
General's recent report on USAID's overall financial health for Fiscal 
Year 1999. According to your Inspector General:
    ``We did not express an opinion on the consolidated financial 
statement for the fiscal year ending September 30, 1999, because our 
audit scope was impaired. This impairment resulted from poorly 
functioning accounting and financial management systems from which 
USAID was unable to produce accurate, complete, reliable, timely and 
consistent financial statement.''
    In light of the IG's lack of confidence in USAID's accounting 
systems, what specific steps is USAID taking to ensure that its foreign 
aid programs are not subject to widespread waste, fraud or abuse? How 
do I assure the people of southern Alabama that their tax dollars are 
being spent wisely?
    Answer. USAID's major initiative to improve the financial 
statements is the installation of a new accounting system in Washington 
and the field. Our goal is to implement the new system in Washington in 
October 2000 and to have a single integrated core accounting system 
worldwide by the end of 2002. We have developed a plan to replace the 
remaining major financial support systems (budget, procurement, human 
resources, property management and performance management) over the 
next five years.
    We have taken other steps to increase the likelihood that the 
Office of the Inspector General (OIG) can express an opinion on the 
consolidated financial statements.
    The Chief Financial Officer and the OIG agreed to devote audit 
resources during FY 1999 to problems with data quality. Working 
together, the offices improved the reconciliation of our cash accounts 
with Treasury. Discrepancies in the account were reduced from $60 
million in 1998 to $21 million in 1999. We improved management of 
credit programs by contracting out certain loan servicing and 
accounting functions to a commercial bank. The OIG validated 
improvements in reporting credit receivables. We are implementing OIG 
audit recommendations to improve the management of obligations and 
reporting on payables. We launched an intensive training program on the 
management of obligations, initiated an Agency-wide review of expired 
obligations, and strengthened Agency guidance in this area.
    The Agency's results measurement and reporting system has been 
streamlined to provide management with better and more timely 
information. We issued better guidance on quality standards for 
performance data and improved training in performance measurement and 
reporting.

                       USAID COMPUTER OPERATIONS

    Mr. Callahan. Mr. Anderson, we need not revisit the entire history 
of USAID's New Management System, except to say that USAID spent more 
than $100 million on computer systems in recent years and still it does 
not work properly. In fact, according to your Inspector General, USAID 
is not expected to be able to produce an ``unqualified'' audit of it 
books until 2003. Not surprisingly, there is not a lot of confidence on 
Capitol Hill in USAID's bookkeeping.
    Further, your IG has just reported: ``Computer security 
deficiencies continue to expose USAID to unacceptable risks that 
resources and data will not be adequately protected from loss, theft, 
alterations or destruction.'' Can you tell me when USAID will have an 
accounting and financial computer system functioning so that the 
Committee can be confident that it is receiving reliable information?
    Answer. The Agency has embarked on a multi-year effort to bring its 
financial management systems into compliance with Federal requirements. 
The Agency has acquired a new core financial system that has been 
certified compliant with Federal requirements. USAID's goal is to 
implement this system in Washington by October 2000. Concurrently, the 
Agency is also improving internal controls, management of obligations, 
reconciliation of accounts with Treasury, financial information quality 
and information system security. These improvements will increase the 
likelihood that the Inspector General can express an opinion on Fiscal 
Year 2000 consolidated financial statements. Beginning in 2001, the new 
core financial system will receive more timely and accurate financial 
information from the Agency's current overseas accounting systems. This 
will enable the Agency to produce complete, reliable and consistent 
financial information on its worldwide programs and operations.

                       USAID COMPUTER OPERATIONS

    Mr. Callahan. Your Fiscal Year 2001 request includes $17 million 
for this new computer system. What will be the total cost to make this 
system operational?
    Answer. The Agency's information technology (IT) budget request for 
Fiscal Year (FY) 2001 represents an increase of $17 million over FY 
2000. This increase is largely for IT capital improvements to upgrade 
the Agency's network operating systems and modernize its accounting 
systems. The Agency's new core financial system will cost an estimated 
$12.4 million in FY 2000. An additional $8.1 million in FY 2001 is 
needed to make this system operational in Washington and begin 
replacing the Agency's overseas accounting systems.
            population: status of mexico city implementation
    Mr. Callahan. Right now, Fiscal Year 200 population assistance 
spending is governed by the modified ``Mexico City'' language that the 
President supported last Fall. As you know, that language places 
restrictions on population aid to non-governmental organizations which 
cannot be ``certified'' by USAID. What is the status of USAID's efforts 
to comply with the ``Mexico City'' language? (USAID planned to have the 
NGO ``certification'' process completed by April 1, 2000.)
    Answer. The certification process is ongoing. We can provide 
preliminary information at this time from the first round of requests 
for certifications. We will also provide information throughout the 
process as requested by the Committee. Thus far, about 430 
organizations have certified. Under the certification guidance, 
organizations that certify can receive funds without regard to the $15 
million cap (but are counted within the $372.5 million cap on total FY 
2000 population funds). All organizations under projects that received 
emergency FY 2000 funding have certified.
    New procurements and subagreements to foreign NGOs will continue to 
be awarded under the programs notified to Congress. The certification 
process needs to continue as long as new subagreements are being made 
with FY 2000 funds.
    Mr. Callahan. Could you provide the Committee with a list of non-
governmental organizations which have not been certified by USAID under 
the requirements of ``Mexico City''.
    Answer. In accordance with the agreement reached with the Committee 
staff, a current list indicating funding levels for non-certifying 
organizations was provided in a letter to you from the Administrator on 
May 4, 2000. As discussed previously, it is important to handle 
information about non-certifying organizations with discretion.
    A very small number of organizations have not certified, and total 
funding for these organizations is well within the $15 million limit. 
No FY 2000 funding has been provided to any of these organizations yet. 
As the certification process continues, there may be additional 
organizations that choose not to certify. Provisions of FY 2000 funding 
will require written approval from USAID/Washington.USAID is monitoring 
the certifications process carefully to assure compliance with the law. 
A new clause is included with every contract and grant awarded, or 
amended to add FY 2000 funds requiring the awardee to ask its foreign 
NGO subcontractors and subgrantees to certify. For those that do not 
certify, the prime contractor must obtain written approval of funding 
from USAID, to assure that the $15 million cap is not exceeded. A GAO 
review of USAID's implementation is also ongoing.
    Mr. Callahan. Given that the President signed this language last 
year, would you object to identical language being included in this 
year's Appropriations bill?
    Answer. Yes, I would object very strongly to the inclusion of this 
language in this year's Appropriations bill. The President made it very 
clear when he signed the Appropriations language for FY 2000 that he 
considered this very objectionable and would not agree to its inclusion 
again. These restrictions are harmful and are already damaging our 
relations with important non-governmental organizations overseas. Our 
partners find these restrictions ``un-American'' and anti-democratic. 
The most immediate harm arises from a requirement that foreign NGOs 
agree, if they certify, to limit their participation in the democratic 
processes of their own countries.
    Under the law, all foreign NGOs expecting to receive FY 2000 
population funds were asked to certify, and each organization faced a 
dilemma: if it did not certify, it risked having to cut back family 
planning services that prevent abortion; if it certified, it signed 
away its right to free speech on a key public health policy issue. 
Several organizations that have certified have sent letters expressing 
their concerns. For example, a large network of NGO health providers in 
Bolivia wrote that the law is ``inconsistent with the democratic spirit 
fostered by the United States.'' And a leading women's organization in 
Peru wrote, ``We are now in the difficult position of having to choose 
between needed funding . . . on the one hand, and essential democratic 
participation on the other. Either way, there is a cost to women's 
reproductive health and to democracy in Peru.'' The World Health 
Organization has sent a letter stating that ``As an intergovernmental 
organization accountable to all our Member States, we are not in a 
position to respond to your request.''

                        HURRICANE MITCH SPENDING

    Mr. Callahan. Mr. Anderson, before you became administrator of 
USAID, this Committee approved a special emergency supplemental 
appropriation for USAID's reconstruction program in Central America 
following Hurricane Mitch. The chronology is as follows:
    1. Hurricane Mitch hit Central America in October 1998;
    2. Clinton requested Emergency funds in February 1999;
    3. Congress approved $621 million in May 1999.
    Yet today only $42 million of the $621 million appropriated has 
actually been expended. In a letter dated March 23, 1999, OMB called on 
Congress to quickly approve the spending, stating:
    ``Funds must be provided swiftly to prevent the spread of disease 
and to buy seed and plant crops in the fast-approaching Spring [1999] 
planting season . . .''
    Well, not only did USAID's Supplemental funds not arrive in time 
for the 1999 planting season, much of the assistance will not arrive in 
time for the 2000 planting season. Can you explain to the Committee why 
only $42 million of the total amount has been expended to date?
    Answer. Right after Hurricane Mitch struck, USAID began effectively 
programming $300 million in emergency assistance to respond to the 
humanitarian disaster. Over $100 million in reprogrammed funds helped 
to provide for relief and emergency needs until the Supplemental 
appropriation came on line last spring. Because of USAID's emergency 
assistance, outbreaks of infectious diseases and epidemics of cholera 
and malaria that often follow a disaster of this magnitude were 
avoided. USAID assistance in maternal and child health helped to 
maintain immunization rates and diseases that most frequently kill 
Central American infants remain at pre-Mitch levels. Wells and latrines 
have been constructed to reduce contamination from flooding. In 
response to the massive damages to agriculture and displaced 
communities, USAID provided emergency food aid (now transformed into 
Food-for-Work programs). Emergency grants to local non-governmental 
associations brought badly needed supplies, including water, food, 
shelter, blankets, mattresses, cooking equipment, sanitation and health 
supplies, seeds and agricultural tools for emergency planting, to the 
most vulnerable communities. Farmers have received seed and supplies, 
training and credit. Simultaneously with its emergency relief effort, 
USAID moved quickly to design and implement a comprehensive assistance 
package consistent with its pledge at the Consultative Group meeting 
for the Reconstruction and Transformation of Central America. The broad 
donor consensus and participation of Central American leaders in 
Stockholm established guiding principles for the process of 
reconstruction. At Stockholm, the U.S. government stated that, along 
with the other donors, our assistance would be guided by principles 
including, attention to equity issues, decentralization, 
accountability, donor coordination and building back better.
    Implementation of reconstruction activities are underway in all 
Mitch affected countries. Expenditures for relief activities, such as 
emergency food and shelter, naturally moved more quickly than 
reconstruction activities in which our objective is to ``build back 
better,'' thus helping to prevent future disasters. USAID missions have 
obligated 97 percent of the Supplemental funds they manage. In 
Nicaragua, 82 percent of the Supplemental funds are in the hands of 
contractors and grantees; in Honduras this figure is 65 percent. The 
rate of expenditure in other countries will increase over the coming 
months.
    In addition, USAID has taken extreme care to insist on 
accountability mechanisms, to coordinate with other donors and to take 
into account the absorptive capacity of the recipients. All of these 
measures will ensure that the rapid expenditure of the emergency 
Supplemental funding will not compromise the effectiveness of U.S. 
assistance. USAID is also completing the reconstruction programs to 
allow for the participation of U.S. firms.
    USAID/Washington was concerned about the mission expenditure rate 
ending the 2nd quarter of FY00. We askedall USAID missions implementing 
hurricane reconstruction programs to review their programs, sector by 
sector, contacting implementing contractors and grantees, to determine 
what bottlenecks exist and how they could be resolved. A meeting of all 
USAID Central American Mission Directors took place May 4 in San 
Salvador that reported on the results of those mission reviews. We 
believe that most missions are on course and that missions in Honduras 
and the Dominican Republic are taking proper steps to quicken the pace 
of implementation. In the case of Honduras construction, we are 
reviewing contracting procedures and conflicting priorities such as 
local versus U.S. contracting, in an effort at streamlining. In the 
case of the Dominican Republic, we sent contracting officers from other 
missions to complete obligations. As a result, we believe we will reach 
our Supplemental Reconstruction objectives by the end of December 2001 
and our projected 30 percent FY 2001 outlay of $173 million (including 
632 b transfers) by the end of September.
    Mr. Callahan. Can you tell the Committee when you expect all the 
funds to be expended?
    Answer. USAID expects to complete a successful program within the 
two-year timeframe. All goods and services funded by emergency 
supplemental, with the exception of a few infrastructure projects, will 
be shipped or completed by December 31, 2000. Along with post-activity 
audits and evaluations, there may be a very limited number of 
infrastructure projects that may require an extra few months for 
completion due to extended rainy seasons.
    Mr. Callahan. Right now, Congress is considering a Supplemental for 
Colombia and its neighbors which includes about $250 million for USAID-
administered programs. How will that assistance move more rapidly?
    Answer. USAID has the lead role in assisting Colombia with the 
social and government capacity-building elements of Plan Colombia and 
we are firmly committed to providing timely and effective assistance. 
As a result of our extensive consultations with the Colombian 
government (GOC) during the development of the U.S. response to Plan 
Colombia, USAID is well-prepared to fulfill this leadership role. 
USAID-supported sector teams have worked directly with Colombian 
planners in areas where USAID will provide support thus establishing a 
solid foundation for our expanded cooperation. Beyond this, the 
Pastrana administration is dedicated to making Plan Colombia a success 
and has put in place a strong team who will serve as valuable 
counterparts.
    In order to accelerate USAID's expanded assistance, we are 
broadening and deepening existing activities that will offer critical 
support to Plan Colombia--for instance, in the areas of human rights, 
rule of law, local government and alternative development. Planned 
assistance will be built upon the adaptation of sound programs with 
proven effectiveness in other Latin countries. Project design has 
already begun using FY 2000 funds. USAID is now identifying potential 
implementing partners and selection of technical proposals will proceed 
as far as possible until funding is made available. Immediate 
mobilization capacity will be a requirement for selected implementers. 
We will rely upon U.S. partners with proven experience and rapid 
mobilization capacity; and we will work with local or international 
non-governmental organizations when security or policy reasons require.
    Among the practical steps that will help USAID move rapidly are the 
following. Mobilization time with be minimized by ``notwithstanding 
language,'' should the appropriation be made directly to USAID, or 
through the counternarcotics account, as is currently envisioned. USAID 
is prepared to notify Congress about details of our activities financed 
by the Colombia Supplemental within 30 days of the appropriation. We 
are prepared to expedite contracting actions to commence programming in 
about a month after the funds are released to USAID. Our projected 
staff increase, from 22 to 50 staff, will be completed this summer and 
will enable USAID to effectively manage the rapid program scale up. 
Occupancy of the new, larger office is expected by the end of June, 
2000.

                          SUDAN (SECTION 592)

    Mr. Callahan. Included in the FY 00 Foreign Operations Law is a 
provision regarding assistance to Sudan (Section 592). Mr. Wolf was a 
strong advocate of this provision, which grants the President the 
authority to provide humanitarian aid directly to combatants in 
southern Sudan. I understand the President has elected not to exercise 
this authority at this time. What has been the impact of Section 592 on 
USAID's activities in Sudan?
    Answer. As you are aware, the Administration has not made a 
decision to use this authority at this time. The issue remains under 
review, and the Administration will consult with Congress and other 
relevant actors on the potential impact before making a policy 
decision. It is also not clear that the conditions for providing direct 
humanitarian assistance under Section 592 can be met. Although Section 
592 has not been implemented, USAID is concerned that there may have 
been some unintended impact just from the fact that Section 592 was 
passed into law. Some NGO implementing partners, including 
organizations that work in underserved areas, have expressed concern 
about accepting USAID funding because they believe that whether or not 
assistance is ultimately provided to the combatants, Section 592 
politicizes humanitarian assistance and could ultimately place their 
staff at risk. In addition, there is also concern that the potential 
for the provision of food aid in Section 592 has exacerbated tensions 
between the Sudanese Peoples Liberation Movement's (SPL) and the NGOs, 
some of whom have been outspoken in their opposition to providing food 
to combatants.

                                 SUDAN

    Mr. Callahan. What has been the impact of John Garang and the 
SPLM's demand that certain NGOs leave southern Sudan?
    Answer. Regarding the status of negotiations over the memorandum of 
understanding (MOU), the Sudanese People's Liberation Army (SPLM) and 
the Sudan Relief and Rehabilitation Agency (SRRA) have stated that non-
signatory NGOs are free to apply at any time to recommence operations. 
Following an NGO's application, the SRRA will conduct a short review 
and evaluation of the NGO, and make a recommendation to the SPLM 
National Leadership Council. Upon approval by the Council, the NGO 
applying may sign the MOU.
    Currently, it is understood that five NGOs who previously did not 
sign the MOU have written to the SRRA applying to recommence operations 
(including USAID grantees CARE, Save the Children/United Kingdom, and 
Veterinaires sans Frontieres).
    The overall impact of the withdrawal of some NGOs from SPLM-
controlled areas over the MOU remains uncertain.
    Recent press reports that 35 percent of assistance to southern 
Sudan was negatively impacted by the withdrawal of the non-signing NGOs 
is misleading. The 35 percent represents only the assistance for NGOs 
operating under Operation Lifeline Sudan (OLS). Approximately one-third 
of assistance to southern Sudan goes through non-OLS NGOs and the 35 
percent figure does not take into account assistance through the United 
Nations Children's Fund and the World Food Program. Our estimate is 
that approximately 10 percent of overall assistance is impacted by the 
MOU.
    The most significant impact is on programs funded by the European 
Union's humanitarian assistance agency, which has suspended all funding 
(both NGO and UN) to SPLM-controlled areas. The total amount of the 
suspended programs is approximately $7 million. We have asked the 
European Union to reconsider its decision to suspend funding.
    In the immediate term, we are concerned about the impact on food 
security as agricultural programs, such as seeds and tools 
distribution, are disrupted. Failure to procure, store and distribute 
seeds prior to the next rains could adversely affect agricultural 
production in the affected areas. USAID is considering support to 
UNICEF for an emergency seed procurement and storage program to address 
these concerns.
    Mr. Callahan. Your agency continues to provide humanitarian 
assistance to the starving people in southern Sudan. Clearly, that is 
the proper course of action. Still the leader of the largest rebel 
group in Sudan has forced a number of U.S. non-governmental 
organizations with which USAID works, to leave the region. What is the 
logical next step in Sudan? Is it inevitable that the U.S. must 
continue to provide food and humanitarian aid to Sudan for years and 
years to come?
    Answer. Tragically, as long as Sudan is plagued by conflict--both 
north-south and south-south fighting--humanitarian assistance will be 
necessary to save lives and mitigate suffering. However, USAID believes 
that even in this environment there are approaches that can reduce 
Sudanese reliance on emergency assistance, build local capacity to cope 
with future crises, and lay a foundation for development when peace and 
stability eventually take root. There are a number of areas in southern 
Sudan, particularly in the region of Western Equatoria, in which the 
impact of Sudan's conflict is extremely limited. In these areas, 
Sudanese have been organizing themselves to begin to re-establish 
livelihoods. Such areas no longer require a high level ofhumanitarian 
assistance and are now ready for longer term rehabilitation and 
development. For example, as a result of rehabilitation activities 
supported through humanitarian assistance, surplus food production in 
Western Equatoria, has been used to meet food and seed deficits in 
other areas of southern Sudan. In addition, rehabilitation of the road 
network is significantly reducing relief costs. In FY 99, approximately 
36,000 MT of food aid was moved by road, saving $9.25 million in 
transport costs. Providing development assistance to areas of southern 
Sudan in which the Sudanese are making efforts to improve their lives 
sends a positive message that there are tangible benefits to pursuing 
peace and stability. It also buttresses Sudanese capacity to prevent 
conflict and acts as a ``pull factor'' for internally displaced and 
refugees to return to their areas of origin. In addition, the U.S. 
Government supports the IGAD peace process for Sudan, which is an 
African-led initiative. It is our hope that this process will be 
successful in bringing an end to the conflict, which in turn will 
significantly decrease the need for humanitarian assistance.
    For USAID, the next steps are to continue the approach to 
assistance that I have outlined above and extend it to other regions as 
they become more stable.
                        MOZAMBIQUE SUPPLEMENTAL
    Mr. Callahan. Mr. Anderson, the Subcommittee is very interested in 
knowing the Administration's plans regarding reconstruction in 
Mozambique. I should note that Ms. Kilpatrick has taken the lead on 
this issue in recent months.
    To date, I understand that the U.S. government has provided more 
than $38 million through USAID and through the Pentagon to support the 
relief efforts.
    What changes has USAID made to modify its existing bilateral 
program in Mozambique as a result of the floods?
    Answer. With a literacy rate of 35%, average incomes of just over 
$100 per year, and some of the lowest health indicators in sub-Saharan 
Africa, Mozambique's development assistance requirements are extensive. 
The worst flood-affected areas in southern and central Mozambique only 
partly coincide with the USAID program area, which is concentrated in 
the center-north of the country.
    During the flood disaster, USAID relied heavily on disaster 
resources from USAID's Office of Foreign Disaster Assistance (OFDA) to 
respond to emergency rescue and relief needs. USAID resources also 
financed some of the earliest air rescue and assessment missions in 
February 2000. As the physical damage became worse, USAID allocated a 
portion of its development budget to finance assessment and design 
activities for partners working in the flood-affected areas.
    Although not contemplating changes in its in-country strategy or 
program, USAID is working with the Government of Mozambique to 
reprogram more than $10 million in existing resources for flood 
reconstruction efforts. Funding will be used for reconstruction of the 
severely damaged Limpopo rail line; to support the reestablishment of 
the feeder road network in food insecure areas; to provide needed 
commodities for households in flood-affected areas; and improve the 
readiness and responsiveness of Mozambican emergency response systems.
          MOZAMBIQUE SUPPLEMENTAL AND OTHER BILATERAL PROGRAMS
    Mr. Callahan. Have existing bilateral programs elsewhere in Africa 
seen their funding cut to meet the needs in Mozambique?
    Answer. No, these funds are being reprogrammed only in countries 
affected by the floods directly--Mozambique, Madagascar, South Africa, 
Zambia and Zimbabwe, as well as in the southern Africa regional 
program. USAID has identified $32 million in existing funds that are 
being reprogrammed to meet urgent flood relief efforts in Southern 
Africa. $25 million is being provided from development assistance funds 
and $7 million is being provided through P.L. 480 Title II support.
    However, the President has determined that flood relief should not 
be provided at the expense of critical on-going development programs in 
sub-Saharan Africa. On April 21, he submitted an emergency supplemental 
appropriation request to the Congress for $200 million in FY 2000 funds 
to provide emergency rehabilitation and reconstruction assistance for 
southern Africa, and in particular for Mozambique.
              MOZAMBIQUE SUPPLEMENTAL RATE OF EXPENDITURE
    Mr. Callahan. Given the very slow rate of expenditures associated 
with the Hurricane Mitch emergency funding, why should Congress have 
any confidence in USAID's ability to manage this emergency funding for 
Mozambique?
    Answer. With the Hurricane Mitch experience in mind, USAID has 
taken steps to ensure the Mozambique flood reconstruction program is 
implemented as quickly as possible. USAID already has begun to design 
key flood reconstruction activities.
    USAID has selected reconstruction program areas that correspond 
with its ongoing development program. This means that USAID can expand 
upon existing comparative advantages instead of requiring new personnel 
with new expertise. USAID program capability in these areas also will 
streamline the design process, given USAID's familiarity with these 
sectors and its relationships with key Mozambican counterparts in the 
public, private and non-government sectors.
    The flood reconstruction activities will require a minimum of new 
obligation actions. Existing agreements with the Mozambique Government 
will be amended to add reconstruction funds. USAID also has identified 
programs that require a minimum number of procurements and 
straightforward implementation mechanisms.
    While keeping with these principles, USAID also will ensure that 
all infrastructure activities include labor-intensive components to 
provide immediate employment for flood-affected Mozambicans.
                   DEVELOPMENT FUND FOR AFRICA (DFA)
    Mr. Callahan. Since I became Chairman of this Subcommittee, I have 
consistently fought against the practice of ``earmarking'' funds. We 
even succeeded in the past two years in eliminating from the House bill 
the decades-old earmarks for Israel and Egypt. I believe, Mr. Anderson, 
that it is in your interest to oppose earmarks. After all, they reduce 
the Executive Branch's flexibility. That is why I cannot understand 
that once again USAID is proposing the re-creation of its ``Development 
Fund for Africa'' to be funded at $512 million.
    Last year, when I asked a similar question to Brian Atwood about 
why he was proposing the re-creation of a distinct Development Fund for 
Africa, he responded ``I think the reason is as much, frankly, 
political as anything''.
    Given the severe funding restraints this year's bill will likely 
face, why do you propose earmarking funds for Africa at the expense of 
other regions of the world? Do you agree with Mr. Atwood's 
justification for funding a separate DFA? Doesn't a regional account 
like the DFA reduce your flexibility?
    Answer. The Administration has asked for funding for the 
Development Fund for Africa in its FY 2001 request to signal commitment 
to returning assistance to Africa to historic levels, as announced 
during the President's trip to Africa in 1998. The DFA symbolizes the 
importance of sub-Saharan Africa to U.S. national interests. It builds 
on our past success in helping Africans to integrate into the global 
economy. In addition, it acknowledges the transnational threats 
emanating from countries that are wrestling with pandemics such as HIV/
AIDS, and other destabilizing forces. The DFA emerged from a strong 
consensus in the mid 1980s that our relationship to Africa was changing 
as new leadership and new opportunities were manifested. The need is 
even more pressing today, as ethnic strife, global financial crises, 
and the burden of debt service--challenges throughout the developing 
and newly industrialized world--simply can't be ignored in Africa 
without long term risk to U.S. national interests.
    I believe, as did Mr. Atwood, that the re-creation of a distinct 
Development Fund for Africa underscores the United States' deep 
commitment to supporting the efforts Africa's leaders to tackling the 
region's complex development challenges in order to prevent crises and 
promote sustainable development. The United States has a strategic and 
financial interest in assisting Africa. There are immense economic, 
social and political development challenges in Africa. The DFA account 
will allow USAID to continue to support integrated development programs 
with significant resources in African countries where many of the 
conditions for sustainable development are not yet in place.
    USAID does not believe using a special fund for Africa is at the 
expense of other regions. The Administration's commitment to Latin 
America has already been achieved through the Summit and post-Summit 
processes that have kept Latin America high on this Administration's 
agenda. The Camp David Accord and Wye River Agreements have ensured 
that during difficult budget times, Israel, Egypt Jordan received the 
necessary funding to continue our critical programs in that region. The 
SEED and Freedom Support Acts guarantee funding support to the Eurasian 
Region. Keeping these things in mind, having a fund for Africa would 
not have a major impact on other regions.
                 USAID ROLE IN NIGERIA POLICE TRAINING
    Mr. Callahan. Mr. Anderson I understand that USAID right now is 
conducting an evaluation of the Nigerian Police Force's needs with an 
eye toward U.S. government funding for a larger police training program 
in future years. I am aware that the State Department is supportive of 
this police training effort.
    However, I note that during the past 6 years the United States has 
spent $60 million to train and arm the Haitian police force, which has 
been recently implicated in corruption, drug trafficking and murder.
    What can you tell us about USAID's plan regarding police training 
in Nigeria?
    Answer. The police, like many other Nigerian institutions, suffered 
under military rule.
    In 1999, an Interagency Assessment Team to Nigeria recognized the 
critical importance of police reform in assuring the success of 
Nigeria's transition to democracy. In response, State asked USAID to 
assess the magnitude of the reform need. On April 10-15, USAID, through 
its Office of Transition Initiatives (OTI), funded a trip to Nigeria. 
The team led by the U.S. Ambassador to Nigeria, William Twaddell, 
included participants from State's Bureau for International Narcotics 
and Law Enforcement Affairs (INL), Department of Justice's (DOJ) 
International Criminal Investigations Training Assistance Program 
(ICITAP), USAID's Democracy and Governance Center (G/DG) and OTI. The 
Government of Nigeria requested assistance to help develop an 
implementation plan from their 5-year police strategic plan, which is 
simply a conceptual document at this point. OTI recommended a two-
phased approach.
    In Phase I, technical experts would work with Nigerian counterparts 
to develop an action plan, prioritize the actions, and package the 
requirements so that multiple donor and government agencies could 
participate in funding parts of the action plan. Phase I could begin in 
June 2000 and could be fully funded by the Office of Transition 
Initiatives.
    Phase II would constitute the implementation of the action plan. 
Continuation into phase two of the project will be contingent upon the 
Government of Nigeria demonstrating during Phase I that it will commit 
the necessary fiscal and human resources to make and adhere to needed 
reform of the police.
    Development of the Nigerian police as a service oriented 
institution that supports human rights and the rule of law will be the 
goal of USG participation in this project. If Nigeria demonstrates the 
political will to reform the police, the USG will support the GON in 
its efforts to establish laws and policies that appropriately define 
the role, duties, and limits of the police. USAID is prepared to 
consider support for action plan activities dealing only with non-
tactical training, such as curricula reform, re-writing police laws, or 
policy analyses. USAID will not participate in any form of tactical 
training (e.g., use of firearms or civil disorder management). We 
expect that ESF might also be used for this activity.
    We understand that State's INL and DOJ will consider helping to 
revamp outdated training programs to introduce modern policing 
techniques. They may also help the GON to identify and implement the 
use of appropriate technologies. The estimate timing for beginning 
Phase II is September 2000.
    The USG will also coordinate any possible assistance efforts with 
the United Kingdom and other donors.
                        FUNDING FOR AGRICULTURE
    Mr. Callahan. Mr. Administrator, agricultural development projects 
are fundamental and essential to achieving true economic growth in 
developing countries. An overwhelming majority of the world's poor will 
continue to live in rural areas, including two-thirds of children in 
developing countries, and that these people and their families depend 
on agriculture for their livelihoods. Another important factor to keep 
in mind is that increased agricultural output in developing countries 
means increased agricultural imports from the U.S.; thus agricultural 
development benefits American farmers.
    At what level was agriculture funded in FY 2000? At what level will 
it be funded in this coming fiscal year at your request level?
    Answer. For fiscal year 2000 we project a total agriculture level 
of $302 million. Within that total the Development Assistance (DA) 
account level is $152 million. Approximately another $150 million will 
be funded from the Economic Support Fund (ESF), Support For East 
European Democracy (SEED) and Freedom Support Act (FSA) accounts. For 
FY 2001 the request includes an overall total of approximately $274 
million of which DA is $153 million with another $121 million funded 
from the ESF, SEED and FSA accounts. As you can see the level of 
funding for agriculture within the DA account has slightly increased. 
The reduction in the non-DA accounts is mainly due to a drop in 
agriculture programs in the ESF account, specifically in Egypt.
    Mr. Callahan. We are all aware that funding for agricultural 
development has declined in the past decade. What will you do to 
reverse this trend?
    Answer. We expect to maintain agriculture as a priority in the 
Agency's Development Assistance (DA) budget. In fact, we have reversed 
the overall declining trend in agriculture funding in DA and slightly 
increased the level of DA funding for agriculture from $149 million in 
FY 1999 to $152 million in 2000 and $153 million in our FY 2001 
request. However, in FY 2001 we were not able to entirely offset 
decreases in the non-DA accounts--in which USAID shares responsibility 
for budget decisions and programming with the State Department. In 
Egypt, a change in program strategy along with the reduction in the 
overall funding level for that program resulted in a drop of over $30 
million in ESF funded agriculture activities. In addition, USAID's 
programs in Eastern Europe and Russia focus on support for economic 
growth and political transition rather than traditional agriculture 
programs.
    While we strive to maintain DA funding for agriculture, it is very 
difficult to increase DA-funded agriculture due to competing high 
priority demands such as microenterprise, conserving tropical forests 
and biodiversity, promoting clean energy, expanding access to family 
planning, and strengthening democracy, good governance and the rule of 
law.
    To demonstrate USAID's continuing interest in agriculture 
development, four new agricultural officers are being added to our 
staff in FY 2000.

                           COMBINING PROGRAMS

    Mr. Callahan. Under our current difficult fiscal circumstances, 
what is being done to combine programs that achieve multiple goals, for 
instance using agriculture and child survival money to conduct 
nutrition research, delivery, and education; or combining agriculture 
and environmental money to use appropriate farming methods and mitigate 
the effects of natural disasters on the environment.
    Answer. USAID already supports a number of activities that pursue 
multiple goals. The Global Livestock Collaborative Research Support 
Program not only carries out research on factors contributing to 
increasing animal productivity, but also analyses that assess the 
nutritional impact of animal-source foods on children and the carbon 
sequestration effects associated with pasture management.
    Agriculture and Child Survival: In general, USAID's agricultural 
programs increase both the quantity and quality of food available. More 
food means that fewer people go hungry, while better quality food 
(e.g., increased content of micronutrients such as iron and vitamin A) 
means that more people live healthier lives. Given evidence linking 
malnutrition to over half of child mortality, USAID has been actively 
developing stronger linkages between its agricultural and child 
survival programs. Our agricultural research and extension programs are 
increasing improving access to, and utilization of, nutritious foods 
among these malnourished populations. Particular emphasis is being 
placed on micronutrient intake among vulnerable preschool-age children 
and women.
    Opportunities for this exist based on genetic and biotechnology 
applications, such as enhancing the vitamin A and mineral content of 
staple crops, such as rice. Such efforts will draw on cutting-edge 
research and, if successful, could lead to long-term, sustainable means 
to alleviate micronutrient malnutrition that would complement on-going 
fortification and supplementation efforts. Other possibilities include 
expanding access to livestock-based foods (meat and dairy), farmed fish 
(aguaculture) and vegetables. USAID will continue to vigorously pursue 
these initiatives within the constraints of available budget resources.
    Agriculture and the Environment: There are also fundamental ties 
between USAID's agricultural and environmental efforts. Farmers and 
livestock producers are the leading users as well as stewards of the 
developing world's land and water resources, managing the fields, 
streams and woodlands that constitute the global environmental resource 
base. Improved agricultural technologies and practices, developed with 
USAID support, have increased productivity and reduced the need for 
farmers to bring new land into cultivation. This has helped preserve 
hundreds of millions of hectares of biodiversity-rich woodlands and 
wetlands in their natural state. Recent studies show that the carbon 
sequestered in undisturbed lands in developing countries could be 
valued at over $200 billion, in cumulative terms. More sustainable 
agricultural practices offer the possibility ofsequestering that much 
carbon again through perennial crops and better soil fertility 
management.
    USAID-supported agricultural research programs also focus directly 
on enabling farming, herding, and fishing families to preserve the 
soil, water and landscape resource base on which their future 
productivity depends. Aquaculture and agroforestry technologies can 
provide sustainable sources of supply of fish and fuelwood and help 
reduce pressure on forests, estuaries, and reefs. Agro-pastoral systems 
are being managed to protect vegetation, thereby reducing 
desertification pressure while still providing high-quality foods and 
vital livelihoods to many of the world's poorest regions.
    USAID activities combine economic and environmentals goals in ways 
that foster community-level involvement in managing the natural 
resource base. As a case in point, tourism and ecological objectives 
can be furthered through promotion of agricultural technologies and 
practices that emphasize production of coffee, cocoa and other high-
value crops in ways that maintain the forest canopy and reduce soil 
erosion. This kind of ``win-win'' approach helps to increase incomes 
while enhancing important environmental services (e.g., watersheds, 
stream flow, water quality and habitat for flora and fauna). Such 
efforts are usually broad-based, involving research partners (e.g., 
universities, national or international agricultural research 
organizations); NGOs, the private sector, local and national 
government, and even other USG agencies. In the Brazilian Amazon, for 
example, USAID's program to promote eco-tourism and sustainable 
agroforestry-based production is closely coordinated with USDA's 
research on a devastating fungal disease of cocoa.
    USAID is increasingly drawing on new tools (e.g., remote sensing, 
geographic information systems and computer modeling) that optimize 
sustainable agricultural use of the resource base with conservation of 
critical physical and biological resources. These objectives and 
activities are so closely linked that agricultural and environmental 
funding are often combined to accomplish the programs.

                          ROLE OF UNIVERSITIES

    Mr. Callahan. Mr. Administrator, between 1992 and 1997, the number 
of USAID grants and contracts through U.S. universities fell 63 
percent. In the past, universities played valuable and leading roles in 
U.S. foreign assistance, today--as many of our universities are 
globalizing--they may be even better equipped to provide support to 
USAID than in the past.
    Why has USAID reduced its reliance on U.S. universities and their 
associated communities to provide assistance to developing countries?
    What do you intend to do to end this decline, especially as 
universities across this country would prove to be valuable allies to 
carry the success stories the Agency has had? Are there any new 
initiatives planned that would increase collaboration and consultation 
with the university community?
    Answer. While the number of actual awards made to US Universities 
by USAID/Washington did decrease from FY-1992 to FY-1997 by 63 percent, 
the value of the awards made declined by only 4.48 percent--from $156 
million in FY-92 to $149 million in FY-97. Overall, between FY 1990 and 
FY 1999 the value of awards made by USAID/Washington averaged $153 
million annually, the highest being $194million in FY 1995, the lowest 
being $118 million in FY 1996.
    U.S. institutions of higher education play a crucial role now and 
will continue to do so in the process of development assistance. 
Additionally, the remarkable success of the competed and peer reviewed 
partnerships being initiated by four- and two-year institutions of 
higher education under the cooperative agreement USAID has with the six 
major higher education associations through the American Council on 
Education speaks well for the future. Partnerships between four-year 
institutions here and abroad, funded for two years at $100,000, have 
not only leveraged significant additional resources, but clearly 
contribute to the achievement of Mission strategic objectives. The same 
holds true for partnerships of similar length between U.S. community 
colleges and like institutions abroad, which are funded at $50,000 
each.
    Increasingly we are seeing individual Missions establish linkages 
between U.S. and local universities directly, focused on specific 
development objectives. These investments in university collaboration 
are above and beyond those mediated by USAID/W. This is a clear 
indication of a broadening of the understanding institutions of higher 
education not only can play but must help with if the human capital 
necessary for sustainable change is ever to come about.

                      AGENCY BIODIVERSITY FUNDING

    Mr. Callahan. Please provide for the record the funding level for 
USAID biodiversity programs from the overall development assistance 
budget in FY 1998, FY 1999, and FY 2000? Please provide this 
information on a region-by-region basis.
    Answer. USAID development assistance funding for biodiversity in FY 
1998, FY 1999 and FY 2000 by region and for the Global Bureau was as 
follows:

FY 1998:
    Africa..............................................      19,559,000
    Asia Near East......................................       3,247,000
    Global..............................................       7,511,000
    LAC and the Caribbean...............................      21,826,000
                    --------------------------------------------------------
                    ____________________________________________________
      Total.............................................      52,143,000
                    ========================================================
                    ____________________________________________________
FY 1999:
    Africa..............................................      22,041,000
    Asia Near East......................................       8,022,000
    Global..............................................       6,455,000
    LAC and the Caribbean...............................      30,437,000
                    --------------------------------------------------------
                    ____________________________________________________
      Total.............................................      66,955,000
                    ========================================================
                    ____________________________________________________
FY 2000:
    Africa..............................................      21,072,000
    Asia Near East......................................       5,150,000
    Global..............................................       9,924,000
    LAC and the Caribbean...............................      27,547,000
                    --------------------------------------------------------
                    ____________________________________________________
      Total.............................................      63,693,000

                   GLOBAL BIODIVERSITY FUNDING LEVELS

    Mr. Callahan. Please provide for the record the funding level for 
USAID biodiversity programs from the overall development assistance 
budget through the Global Bureau's Environment and Natural Resources 
Office in FY 1998, FY 1999, and FY 2000.
    Answer. The Global Bureau's Environment and Natural Resource Office 
budget for biodiversity was $6,193,000 in FY 1998, $3,570,000 in FY 
1999, and $7,424,000 in FY 2000.
                     BIODIVERSITY FUNDING ACCURACY
    Mr. Callahan. Please explain how USAID's newly completed coding 
system makes the estimation of biodiversity spending more accurate than 
in previous years.
    Answer. USAID's coding system has been in existence since 1989 and 
has undergone a number of changes over the years. Last year the Agency 
revised the coding system to make it less cumbersome to Agency staff 
and increase overall accuracy of the data. Those efforts will continue.
    The coding system does not track spending, only obligations. 
Moreover, the revised system does not make the estimation of 
biodiversity obligations more accurate than it has been in the past.
    Accuracy of the coding data, while of course always a concern, is 
not the main issue. With around 150 codes to sort through currently, 
coding of agency activities is very time consuming. Based on comments 
from the users of the current system, we are considering further 
refinements to the coding system to reduce the number of codes in order 
to increase its ease of use as well as the availability of data on a 
more timely basis. When that is done, timeliness of the data, as well 
as accuracy, should be further improved.
                       NEPAL BIODIVERSITY PROGRAM
    Mr. Callahan. Why is the Nepal biodiversity program being 
considered for elimination?
    Answer. The U.S. Agency for International Development (USAID) has 
supported community-based natural resources management activities in 
Nepal for over a decade. Nepal's community forestry program is 
recognized worldwide for its success in improving the condition of 
Nepal's forests, protecting biodiversity, and providing new income 
generating opportunities to rural communities.
    The new country strategic plan for Nepal focuses the majority of 
USAID/Nepal's limited resources in two areas: health and hydropower 
development. Domestic and export-oriented hydropower development offers 
great hope to Nepal to significantly increase Nepal's national income 
and reverse its dependency on donors. The power and income generated 
from hydropower can raise the standard of living for the citizens of 
Nepal, currently among the poorest in the world.
    While this shift in strategy will require adjustments in our 
overall program, we are not abandoning our commitment to forestry or 
biodiversity conservation. Rather, USAID intends to apply the important 
lessons learned from these activities to the implementation of the new 
hydropower program.
    Improved management of watersheds and protection of water quality 
are critical to the long-term success and sustainability of hydropower 
development in Nepal. Therefore, USAID will explore ways to replicate 
the successes of our community forestry programs to ensure effective 
management and protection of key targeted watersheds. USAID will also 
encourage other donors to continue and expand their current support for 
community forestry, watershed management, and biodiversity conservation 
activities throughout Nepal.
    In addition to targeting key watersheds, USAID intends to 
consolidate and extend the impact of our achievements in community 
forestry bystrengthening the national federation of community forest 
user groups and by providing highly targeted support to address key 
policy and institutional issues that limit the progress of community 
forestry programs. We expect that these efforts will help protect 
Nepal's watersheds essential for hydropower development, strengthen 
local community user groups and improve rural livelihoods, and preserve 
Nepal's forests and biodiversity.
    USAID support for community forestry and biodiversity conservation 
is evolving; it is not terminating. USAID looks forward to continuing 
to work through partnerships with conservation organizations such as 
the World Wildlife Fund to ensure that the benefits of our past 
investments are not lost, but rather carried forward in innovative ways 
through a new generation of work in hydropower development, watershed 
protection, and political and environmental governance.
             APPLYING ENVIRONMENT OBJECTIVES IN ALL REGIONS
    Mr. Callahan. How does the Agency intend to ensure that its overall 
strategic objective of protecting the environment is applied in all 
regions?
    Answer. Title 22, Code of Federal Regulations, Part 216 codifies 
the Agency's procedures ``to ensure that environmental factors and 
values are integrated into the USAID decision making process.'' The 
Agency requires that Missions in all regions develop strategic plans 
that comply with Sections 117-119, 117 Environment and Natural 
Resource, 118, Tropical Forests, and 119, Endangered Species. 
Accordingly, USAID conducts assessments to ensure that its 
environmental priorities are incorporated into results planning, 
achieving, and monitoring.
    The Bureau for Management, Bureau for Policy and Program 
Coordination, and/or Global Bureau Environment Center specialists also 
participate in Mission and Bureau annual performance monitoring reviews 
to evaluate Environment activities. In addition, as part of an 
extensive annual Goal Area Review, technical specialists analyze 
environmental activities of the Agency to ensure an appropriate balance 
of environment activities and funding in all regions. Finally, the 
Agency prepares an Annual Performance Plan and Annual Performance 
Review for the Environment Strategic Objective where these issues are 
also considered.
     LINKING DEMOCRACY--GOVERNANCE AND ENVIRONMENT OBJECTIVES AND 
                   COORDINATING TRANSBOUNDARY EFFORTS
    Mr. Callahan. How is USAID linking its democracy-governance (DG) 
objectives with its environment objectives? How is USAID coordinating 
work between and among countries to conserve biodiversity in 
transboundary situations?
    Answer. USAID sees good governance as key to achieving 
environmental objectives and a healthy environment as a foundation for 
a strong democracy. Continuing environmental damage exacerbates 
political instability and dims hopes of future generations. 
Accountability, transparency, democratic participation, rule of law, 
and an active civil society all facilitate management and protection of 
ecosystems. Local self-governance over natural resources promotes 
effective conservation of these resources.
    A series of efforts are underway within USAID to link democracy-
governance (DG) objectives across other sectors in general and with the 
environment (ENV) sector specifically. Activities which promote DG/ENV 
linkages are taking place in 15-20 countries. A sample of the types of 
activitiesincludes: strengthening NGOs and NGO participation in policy 
making; organizing environmental planning in an inclusive, 
participatory and transparent manner; influencing new attitudes and 
expectations between local government officials and their constituents; 
creating forums to formulate advocacy programs to propel resource 
management issues to the forefront of national and local political 
agenda; promoting basic democratic principles, such as transparency, 
accountability, and participation into local government operation; 
supporting decentralization of biodiversity management requiring 
revised regulations and legislation; and promoting community based 
natural resource management.
    Efforts are underway to bring linkage activities more formally into 
USAID's strategic frameworks. Studies related to this objective are 
being done by the Program and Policy Coordination Bureau's Center for 
Development Information and Evaluation (PPC/CDIE), Africa Bureau's 
Office of Sustainable Development (AFR/SD), the Global Bureau's Center 
for Democracy and Governance (G/DG), and by the Global Bureau's 
Environment Center (G/ENV). In Collaboration with G/DG and AFR/SD/DG, 
PPC/CDIE has been gathering information about how, why, and with what 
effect some USAID Missions have progressed toward establishing linkages 
between DG and other sectors. CDIE has completed case studies in the 
Dominican Republic, Guinea, Madagascar, and the Philippines, while AFR/
SD/DG has conducted parallel studies in Mali, Zambia, and Zimbabwe. In 
addition to the country studies, PPC/CDIE has completed an analysis of 
USAID/Washington policies and operational problem associated with 
implementing DG cross-sectorally linked programs. G/ENV also reviewed 
country activities and prepared a paper, ``Exploring Linkages Between 
Governance, Democracy-Building and Environment.'' To review cross 
sector experience and disseminate lesson learned, seminar and workshops 
have been sponsored by PPC/CDIE, G/DG, and G/ENV.
    USAID Missions, Regional Bureaus and G/ENV are also working on a 
number of transboundary conservation initiatives to improve ecoregional 
management, create economic opportunities, decrease cultural isolation, 
foster peace and strengthen governance. USAID is providing support to 
form meaningful partnerships and promote synergism.
    The Global Bureau's Environment Center of USAID is working with 
conservation organizations through the Global Conservation Program to 
support transboundary initiatives in numerous sites including: 
Amboseli-Kilamanjaro (Kenya-Tanzania); Mana Pools-Lower Zambezi 
(Zimbabwe, Zambia and Mozambique); Forest of the Lower Mekong (Laos, 
Cambodia and Vietnam), the Bering Sea (Russia and the United States), 
the Atlantic Forests (Brazil, Argentina and Paraguay); the Southwest 
Amazon Ecological Corridor (Bolivia and Peru); and the Sula-Sulawesi 
Sea (Indonesia, Philippines and Malaysia).
    USAID's Regional Center for Southern Africa (RCSA) has a Strategic 
Objective of ``increased regional cooperation in the management of 
shared natural resources.'' RCSA will be providing support to a variety 
of transboundary conservation initiatives under this program to improve 
viable practices forsustainable management, enact policy and protocols, 
ensure that organizations and institutions are capable of effective 
regional intervention, and improve ecological monitoring for effective 
decision making.
    The Red Sea Marine Peace Parks Cooperative Research, Monitoring and 
Management Program in the Gulf of Aqaba is a joint undertaking between 
Egypt, Jordan and Israel to foster peace and cooperation to protect 
this coral reef ecosystem. The program will support cooperative 
management and outreach and strengthen the regional capability for 
science, information exchange, and national decision-making regarding 
resource management, protection and development.
                            RESEARCH GRANTS
    Mr. Callahan. As part of its strategy, has USAID considered 
supporting once again (as it did some years ago through the 
Biodiversity Support Program--BSP) a small grants program to help 
students in developing countries carry out biodiversity and 
conservation biology programs in their native countries?
    Answer. USAID's Global Bureau is initiating a strategic planning 
process which will examine analytical and capacity building needs in 
biodiversity conservation. This process will result either in a 
recommendation to reinstate the small grants program or to continue 
analysis and capacity building through other venues. The Global Bureau, 
and the Agency as a whole, primarily focus on partnerships with 
conservation organizations which address analytical and capacity 
building needs within the context of achieving conservation goals in 
biodiverse areas. Finally, USAID hopes to support additional applied 
research with developing country investigators through a joint effort 
with the National Science Foundation which will focus on biocomplexity 
research needs.
                                 ______
                                 
           QUESTIONS FOR THE RECORD SUBMITTED BY MR. PACKARD
        MIDDLE EAST AND MEDITERRANEAN DESERT DEVELOPMENT PROGRAM
    Mr. Packard. San Diego State University Foundation has worked 
continuously with USAID to develop and finalize the program and has 
incorporated USAID modifications into the program. How many more 
modifications will USAID request?
    Answer. USAID has worked constructively with the San Diego State 
University Foundation (SDSUF) to improve its Middle East and 
Mediterranean Desert Development Program proposal. USAID assistance has 
included participating in an SDSUF Partners Meeting in Amman, Jordan, 
in March 2000 and sending a USAID representative to work with SDSUF 
this month to finalize its proposal.
    SDSUF has welcomed this assistance and agreed to focus its proposal 
on the critical need to expand the use of alternative water resources 
and wastewater in agriculture. Based on this understanding, we do not 
anticipate the need for any further major modifications to SDSUF's 
program proposal and look forward to receiving a fundable proposal from 
them in the near future.
    Mr. Packard. On September 20, 1999, Mr. Wilkinson, Deputy Assistant 
Administrator for ANE met with Congressman Lewis' and my staff, as well 
as Committee staff. He indicated that USAID would work with SDSUF to 
finalize a Scope of Work by December 6, 1999 for the program, which 
would be funded for five years and included in the USAID budget. SDSUF 
and USAID have reached an agreement on the Scope of Work for the 
program, which has been reduced from $5 million to $3.2 million per 
year. When will these funds be released?
    Answer. Per agreement reached with Congressman Lewis' and your 
staff, as well as Committee staff. USAID has worked with the San Diego 
State University Foundation (SDSUF) staff to refine the scope of work 
for the SDSUF program. We have encouraged SDSUF to focus its program on 
alternative water use and to address the critical policy and 
institutional issues that are too often barriers to the wider 
dissemination and adoption of improved water management practices and 
technologies. USAID understands that the Foundation is currently 
preparing a refined proposal, and we expect to receive the proposal 
from SDSUF in May. USAID will then proceed to either modify the 
existing grant or issue a new grant to SDSUF. Funds should be released 
by the end of FY 2000 or early FY 2001.
    Mr. Packard. San Diego State University needs to assure its 
partners that funding is forthcoming, but it also needs to provide them 
with a timetable. Can you provide a timeline?
    Answer. On March 26-27, 2000, the San Diego State University 
Foundation (SDSUF) convened a meeting of its partners to develop a 
revised proposal. USAID also participated in this meeting. SDSUF is 
currently revising its proposal to incorporate feedback from its 
partners. We anticipate that SDSUF will have a final proposal for USAID 
in May 2000. We expect to review this proposal and make a decision by 
June 2000 and issue a new or revised grant to SDSUF by the fall of 
2000.
    Mr Packard. SDSUF requires assurance of the funding level and 
length of program. Can you provide this?
    Answer. USAID has been encouraging the San Diego State University 
Foundation (SDSUF) to clarify the implementation arrangements for its 
program, which in turn will affect both the funding level and length of 
the program. USAID technical staff, who have reviewed earlier drafts of 
the SDSUF proposal, were concerned that SDSUF and its partners were 
attempting to conduct a research program that covers too vast a 
geographic area and too great a range of topics. SDSUF has heeded these 
concerns and is carefully focusing its program and reducing its budget 
request accordingly. Although we have not seen the finalized proposal, 
we anticipate a request for a two-phase program, beginning with a 
three-year, initial phase that could be extended for two more years if 
the program is achieving its objectives. We further understand that 
SDSUF will be requesting $1.3 million per year for this program. 
Provided Economic Support Funds (ESP) resources are made available, 
this is a funding level that USAID believes is commensurate with the 
scope of the program.
    Mr. Packard. SDSUF needs to move forward in good faith with its 
partners, but it needs commitment from USAID. What commitment can USAID 
offer?
    Answer. USAID is concerned about the water crisis facing the Middle 
East and is committed to providing support to water programs that 
strengthen key water sector institutions, increase access to water 
supply, increase water-use efficiency, and improve alternative water 
use and wastewater management. This commitment extends to an agreement 
to work constructively with the San Diego State University Foundation 
(SDSUF) to support the Foundation and its partners to improve the 
efficiency of water use in arid land agriculture through the Middle 
East and Mediterranean Desert Development Program.
                   HEALTH CARE FOR WOMEN AND CHILDREN
    Mr. Kingston. Thousands of pregnant women die each week from causes 
which were conquered decades ago in the developed world. Many thousands 
more suffer permanent injury. With the exception of the People's 
Republic of China, pregnancy and childbirth are legal in most countries 
in the developing world, and yet there appears to be little progress in 
making them safer for women and their unborn children.
    What types of projects is USAID funding, and how much is it 
spending, to improve prenatal and obstetrical care for pregnant women, 
and pediatric care for newborns?
    Answer. It is currently estimated that about $72.5 million per year 
is dedicated to the issue of safe motherhood and related neonatal 
survival.
    Safe Motherhood and Neonatal Survival are important components of 
USAID's Maternal and Child Survival strategies. USAID programming 
includes maternal health and survival activities that are primarily 
directed to adolescent girls and women of reproductive age and are 
centered on four related areas: Improving maternal nutritional status 
(pre-pregnancy, pregnancy and between pregnancy nutrition): appropriate 
micronutrient interventions, including iron to reduce iron deficiency 
anemia, vitamin A supplementation and others.
    Promoting birth preparedness: including prenatal care; planning for 
a clean and safe delivery attended by a skilled, professional 
attendant; adequate nutrition for weight gain during pregnancy; 
micronutrient supplements; preventing, detecting and treating 
infections including tetanus, malaria, HIV/STDs and others; recognition 
of complications; and planning for emergency transport and payment of 
fees associated with emergency care.
    Managing and treating life-threatening complications: including 
families and community members recognizing complications of pregnancy 
and of abortion and providing obstetric first aid; and timely, high 
quality care of obstetric complications by skilled, professional 
providers using basic medications and manual procedures.
    Providing safe delivery and postpartum care: including clean 
delivery and elimination of harmful practices; management of the stages 
of labor to recognize potential delays and/or obstructed labor; 
recognition, referral and treatment of maternal complications; post-
partum care that includes identification and treatment of post-partum 
complications; and, post-partum and neonatal preventive care, and 
counseling on birth spacing, proper rest, nutrition, breastfeeding and 
hygiene for the mother.
    In addition to these four direct interventions, it has been 
recognized that improving maternal health will protect the outcome of 
pregnancy. Therefore, delay of first pregnancy and child spacing, 
including those activities in which birth spacing efforts are conducted 
as part of a larger child survival effort with the objective of 
reducing infant and child mortality, are also important components of 
the USAID Safe Motherhood and Neonatal Survival approach.
    USAID projects in support of these activities include a variety of 
innovative programs, and support activities with Ministries of Health 
to strengthen capacity, NGOs and community groups to ensure 
sustainability, and research to guarantee the most effective and cost-
effective interventions are selected. These activities are funded 
through bilateral agreements and through central mechanisms, and often 
are planned to complement and synergize the impact of development 
programs funded by other bilaterals, multilaterals, such as WHO and 
UNICEF, and the World Bank. At this point there is no directive or 
special budget category for maternal health, but rather it is 
considered part of the child survival program.
                                 ______
                                 
         QUESTIONS FOR THE RECORD SUBMITTED BY MR. KNOLLENBERG

                  IMPLEMENTATION OF THE KYOTO PROTOCOL

    Mr. Knollenberg. I have serious concerns about the Administration's 
actions, through many Departments and Agencies, to implement the Kyoto 
Protocol without sending it to the Senate for advise and consent, 
pursuant to the U.S. Constitution. USAID is involved in these 
activities. There is currently no place in U.S. law that authorizes 
taxpayer dollars to be spend on carbon emissions trading and the Clean 
Development Mechanism, which were created in the Kyoto Protocol. They 
are solely in the Kyoto Protocol. Unfortunately, there are many 
examples of USAID engaging in those Kyoto Protocol activities. I and 
many other Members of Congress have been concerned about these 
activities and the Administration's attempt to implement the Kyoto 
Protocol. This is precisely the reason why I authored language, Section 
583, in the FY2000 Foreign Operations Appropriations Act. How much 
money has been spent by USAID, to date, on preparation and 
implementation of the Clean Development Mechanism and carbon emissions 
trading?
    Answer. In keeping with the Administration policy, USAID has spent 
no money implementing the Kyoto Protocol, or for activities that 
propose or issue rules, regulations, decrees, or orders for the purpose 
of implementation, or in preparation for implementation, of the Kyoto 
Protocol.
    USAID integrates climate-related concerns into its broad range of 
development assistance programs and has built a strong and effective 
program by promoting an awareness of how development may affect and be 
affected by climate change. In that context, we have supported for many 
years programs that increase energy efficiency, promote the use of 
clean technology, protect natural resources, and reduce urban and 
industrial pollution. Some of these activities also provide climate-
related benefits and these represent the agency's climate change 
activities. USAID has sponsored activities that address issues proposed 
in the Kyoto Protocol while meeting country or central program 
development objectives.
    Mr. Knollenberg. I have serious concerns about the Administration's 
actions, through many Departments and Agencies, to implement the Kyoto 
Protocol without sending it to the Senate for advise and consent, 
pursuant to the U.S. Constitution. USAID is involved in these 
activities. There is currently no place in U.S. law that authorizes 
taxpayer dollars to be spent on carbon emissions trading and the Clean 
Development Mechanism, which were created in the Kyoto Protocol. They 
are solely in the Kyoto Protocol. Unfortunately, there are many 
examples of USAID engaging in those Kyoto Protocol activities. I and 
many other Members of Congress have been concerned about these 
activities and the Administration's attempt to implement the Kyoto 
Protocol. This is precisely the reason why I authored language, Section 
583, in the FY2000 Foreign Operations Appropriations Act. What actions 
do you plan to take to put a stop to these activities?
    Answer. USAID will issue guidance to all operating units to ensure 
that all climate-related activities are in keeping with legislative 
requirements. There are currently no plans to put a stop to authorize 
programs that address issues proposed in the Kyoto Protocol while 
meeting strategic objectives such as increased energy efficiency, 
promotion of clean technology, protection of natural resources, and 
reduced urban and industrial pollution.
    Mr. Knollenberg. I have serious concerns about the Administration's 
actions, through many Departments and Agencies, to implement the Kyoto 
Protocol without sending it to the Senate for advice and consent, 
pursuant to the U.S. Constitution. USAID is involved in these 
activities. There is currently no place in U.S. law that authorizes 
taxpayer dollars to be spent on carbon emissions trading and the Clean 
Development Mechanism, which were created in the Kyoto Protocol. They 
are solely in the Kyoto Protocol. Unfortunately, there are many 
examples of USAID engaging in those Kyoto Protocol activities. I and 
many other Members of Congress have been concerned about these 
activities and the Administration's attempt to implement the Kyoto 
Protocol. This is precisely the reason why I authored language, Section 
583, in the FY2000 Foreign Operations Appropriations Act. What action 
will you take to prevent violations of Section 583?
    Answer. USAID will issue guidance to all operating units to ensure 
that all climate-related activities are in keeping with the 
appropriations restrictions contained in Section 583.
    Mr. Knollenberg. I have serious concerns about the Administration's 
actions, through many Departments and Agencies, to implement the Kyoto 
Protocol without sending it to the Senate for advice and consent, 
pursuant to the U.S. Constitution. USAID is involved in these 
activities. There is currently no place in U.S. law that authorizes 
taxpayer dollars to be spent on carbon emissions trading and the Clean 
Development Mechanism, which were created in the Kyoto Protocol. They 
are solely in the Kyoto Protocol. Unfortunately, there are many 
examples of USAID engaging in those Kyoto Protocol activities. I and 
many other members of Congress have been concerned about these 
activities and the Administration's attempt to implement the Kyoto 
Protocol. This is precisely the reason why I authored language, Section 
583, in the FY2000 Foreign Operations Appropriations Act.
    Please provide the specific legislative language that, according to 
you, would prevent the expenditure of taxpayer dollars on the Kyoto 
Protocol (including carbon emissions trading and the Clean Development 
Mechanism) as distinguished from the UNFCCC.
    Answer. We do not believe Congress intended to bar USAID from 
participating, along with other federal agencies, in the process of 
engaging in dialog with developing countries to shape the Kyoto 
Protocol, if adopted, to reflect U.S. experience using market 
mechanisms for environmental protection and to address U.S. interests. 
As a result, we do not believe it would be appropriate to suggest 
alternative language. We reiterate the commitment made by the 
Administration that it would not implement the Kyoto Protocol until it 
is ratified with the advice and consent of the Senate. In view of this 
commitment, the administration has previously stated that it believes 
the current appropriations restriction is unnecessary. The 
Administration would not support any broadening of the restriction.

                     ASSISTANCE TO NAGORNO-KARABAKH

    Mr. Knollenberg. As you know, Congress has directed USAID to 
provide $20 million to victims of the Nagorno-Karabakh conflict 
residing in that area between January 1, 1998 and September 30, 2000. 
These directives have not been fully implemented. It is my 
understanding only $8.3 million has been allocated for the victims--
well short of the $20 million Congress directed be spent. Furthermore, 
according to the USAID/Armenia strategic plan for FY1999 to FY2003, 
USAID does not anticipate activities in Nagorno-Karabakh, humanitarian 
or longer-term developmental, beyond May 2000.
    What is the current status regarding U.S. assistance programs to 
Nagorno-Karabakh? Will the full $20 million be allocated to Nagorno-
Karabakh by May 30, 2000? How does USAID plan to allocate funds to 
Nagorno-Karabakh? Could you please comment on USAID's future plans in 
Nagorno-Karabakh beyond May 2000?
    Answer. USAID shares the concern of Members of Congress over the 
impact of the conflict in Nagorno-Karabakh (N-K) on the civilian 
population of the region. In response to congressional directives, 
USAID has provided funding to address the humanitarian needs of the 
people in and outside Nagorno-Karabakh and remains sensitive to 
continuing concerns about conditions there. In FY 1998 and in FY 1999, 
USAID obligated $8.3 million and $3.5 million, respectively, for 
projects within Nagorno-Karabakh. As we reported in our fifth report on 
N-K, progress in USAID activities within N-K, largely managed under an 
``umbrella'' grant with SCF (Save the Children), was slow at the 
outset, due in large part to the newness of humanitarian operations 
within the enclave and due to the N-K authorities' lack of experience 
with such assistance. However, by March 1999 we were able to report to 
the Congress that significant strides in implementation had been made, 
despite the slow start.
    As you noted in your question to the USAID Administrator, USAID/
Armenia's March 1999 ``strategic plan'' (for FY1999-FY2003) states: 
``At this time, USAID/Armenia does not anticipate activities in N-K, 
humanitarian or longer-term developmental, beyond the May 2000 end date 
of the current assistance program. Should circumstances change (e.g., a 
peaceful resolution can be reached, additional funds be 
allocated),USAID/Armenia stands ready to address the priority needs of 
the people of NK.''
    The date ``May 2000'' is a reference to the end-date in effect at 
that time for the SCF grant agreement, which was initially for a two-
year period. It should be noted, however, that the second sentence of 
the citation left room for providing more funds. In fact, USAID 
obligated the $3.5 million in FY 1999 funds in August 1999 and extended 
the implementation agreement with SCF through February 2001. These 
additional funds permit a tripling of the number of shelters to be 
rehabilitated, compared with funds provided under the initial grant, 
and will result in the rehabilitation of a significant proportion 
(i.e., 40 percent) of the houses damaged by the conflict. The new end-
date for the SCF program permits the expenditure of funds beyond May 
2000, and at least through February 2001.
    With regard to future provision of assistance to N-K proper, beyond 
the $11.8 million already obligated, USAID has held off on decisions, 
primarily as a result of developments over the past six months. Toward 
the end of last year, the prospects for a peaceful resolution of the 
conflict appeared relatively good and it made sense to wait to see 
whether we would soon be able to provide assistance in other areas. We 
are already working with our Minsk Group partners to send a 
multilateral team which will perform a comprehensive needs assessment 
in the region in order to determine the level of resources for N-K 
conflict victims needed to support a peace settlement. That assessment 
will provide a much more accurate sense of needs--both humanitarian and 
developmental--than we currently have. We are actively discussing, but 
have not yet come to a decision on, the obligation of additional funds 
for humanitarian assistance to N-K. For the moment, we do not perceive 
this to be a problem because our implementers continue to carry out a 
high-level of humanitarian assistance activities in N-K with funds that 
are obligated but not yet spent. We are closely monitoring this 
situation to ensure that the valuable humanitarian work already 
achieved and still required in N-K is not undermined, or does not come 
to a halt.
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           QUESTIONS FOR THE RECORD SUBMITTED BY MR. KINGSTON

                   HEALTH CARE FOR WOMEN AND CHILDREN

    Mr. Kingston. In particular, what is USAID doing to address the 
problem of obstetric fistula, a condition suffered by tens of thousands 
of women and which is brought about by an obstructed birth? The damage 
done to the mother in these cases is so severe that she is rendered 
permanently incontinent.
    Answer. Obstetric fistulae are only one of the many debilitating 
consequences of unsafe, unattended pregnancy and delivery. Prevention 
is the key to addressing many of the health issues in the developing 
country setting. Through USAID efforts in maternal survival--especially 
through programs addressing the ultimate objective of having every 
birth attended by a trained provider--the prolonged labor that can 
result in obstetric fistulae will be avoided.

             LEVEL OF AIDS INFECTION IN SUB-SAHARAN AFRICA

    Mr. Kingston. What is the current level of AIDS infection in sub-
Saharan Africa? Is this level higher than last year?
    Answer. As of December 1999 (the latest estimate) 8 percent of 
adults in sub-Saharan Africa were HIV positive. This proportion for the 
overall subcontinent is unchanged from 1998, but because of population 
growth the number of adults and children living with HIV/AIDS has 
increased from 22.5 million in 1998 to 23.3 million in 1999. In 1999, 
4.0 million adults and children were newly infected. It is important to 
note that HIV prevalence varies by region within sub-Saharan Africa and 
there have been increases in prevalence in some regions. The worst 
affected region is southern Africa. In Swaziland, HIV prevalence among 
pregnant women increased from 26 percent in 1996 to 32 percent in 1998. 
In Botswana, HIV prevalence among pregnant women in urban areas 
increased from 36 percent in 1997 to 43 percent in 1998. HIV prevalence 
among pregnant women in Kwazula/Natal province (the worst affected 
province in South Africa) remained the same from 1998 to 1999 to 32.5 
percent. Unfortunately in other provinces of South Africa there were 
increases: Free State from 22.8 to 27.9, Guateng from 22.5 to 23.9, 
Eastern Cape from 15.9 to 18, Western Cape from 5.2 to 7.1. In other 
countries in southern Africa, the total proportion of the adult 
population infected with HIV remains stable. This means that the rate 
of acquiring new infections also remains high. For every death from 
HIV/AIDS another person becomes infected. In Malawi, HIV prevalence 
among pregnant women in the urban centers has remained around 26 
percent since 1996. In Zambia, HIV prevalence among pregnant women in 
urban areas has also remained around 26 percent since 1992.
    Uganda and Senegal remain the bright spots in sub-Saharan Africa. 
HIV prevalence among pregnant women continues to decline in Uganda. In 
Kampala, HIV prevalence declined from a peak of 30 percent in 1990-92 
to 14 percent in 1998, with yearly declines. In Senegal, HIV prevalence 
among pregnant women has remained below 1 percent throughout the 1990s.

                    TUBERCULOSIS--SUB-SAHARAN AFRICA

    Mr. Kingston. Is it correct that drug-resistant tuberculosis today 
in sub-Saharan Africa is more widespread than it was twelve months ago?
    Answer. Information regarding trends in global drug resistance is 
limited as the USAID funded drug resistance surveillance project only 
recently began collecting data. It is clear, however, that drug 
resistance in Africa, including sub-Saharan Africa, is generally lower 
than that in the rest of the world because Africa has had only limited 
access to the drugs used to treat TB (resistance is caused by 
inadequate or incomplete treatment regimens, and therefore rarely found 
in those areas where TB treatment is scarce). Only Mozambique, among 7 
locations tested in Africa, has reported resistance levels of potential 
concern, and only Botswana has trend data available which shows a 
slight increase in resistance to one TB drug over the past four years. 
There is, however, no increase in the growth of multi-drug resistant 
(MDR) strains, which are of greatest concern.
    The lack of increase in MDR in Africa, despite increasing HIV-
related TB, may result from several factors: (1) as noted above, the 
key drug for treatment (Rafampicin) has only recently become available 
in many African countries; (2) a number of regimens used in Africa do 
not include Rafampicin; (3) Directly Observed Treatment-Short Course 
(DOTS), the most effective way to ensure adequate therapy and avoid the 
growth of resistance, has been increasing throughout Africa. USAID will 
continue its support of DOTS programs to avoid the development of 
resistance, as well as the global surveillance project to monitor 
trends, so that we may better understand and tailor our programs to 
address TB drug resistance.
                 HIV/AIDS AND MOREHOUSE MEDICAL SCHOOL
    Mr. Kingston. I understand that Dr. Louis Sullivan at the Morehouse 
Medical School in Atlanta wants to create an International Center for 
Health and Development to help alleviate these problems and to study 
them in southern Africa before the arrive on our shores. Last year, the 
House managers encouraged USAID to provide assistance to Morehouse to 
establish the Center. Furthermore, last year the full Senate expressed 
its support for the creation of this Center when it adopted a floor 
amendment to the FY 00 Foreign Operations legislation to provide $5.5 
million to the center. To your knowledge, has USAID provided any 
assistance at all to the Morehouse School of Medicine to assist them in 
establishing this center?
    Answer. In response to the Foreign Operations report language that 
encourages USAID to look at funding a proposal submitted by Morehouse, 
USAID's HIV/AIDS program directors met with Dr. Sullivan, Morehouse 
staff, and their Washington representatives on January 28. During this 
meeting, Morehouse presented their rationale and prior USAID project 
involvement. The findings of a formal review of the Morehouse proposal 
is about to be finalized. Preliminary discussions with Morehouse and a 
review of their proposal indicated that the current proposal does not 
fit well within USAID's programmatic direction and emphasis. The 
proposal requests funding toestablish an American center to train 
Africans in the U.S. and disseminate information. USAID's emphasis for 
its use of very scarce resources has been to develop and strengthen 
institutions and capacity in Africa to develop, implement, and monitor 
HIV/AIDS interventions. Moreover, USAID's operations are highly 
decentralized to country-based missions. These missions are best 
positioned to identify and respond to country needs and, hence, program 
the vast majority of our resources.
    USAID has a number of existing partnerships with U.S. universities, 
non-governmental organizations, and private sector groups in furthering 
African medical and health care expertise in HIV/AIDS, implementing 
training programs, and disseminating information. Similarly, USAID's 
field-based programs are working with numerous cooperating partners 
(including universities) to improve the capacity of the host country 
institutions and individuals to provide improved HIV/AIDS prevention 
and care services. During this meeting USAID encouraged Morehouse to 
seek out funding from such USG agencies as the Fogarty Center, NIH and 
CDC as their programs are better suited to funding an American medical 
school-based center.
    Mr. Kingston. Given the White House's commitment to eradicating 
AIDS, MDR-TB, and other infectious diseases in sub-Saharan Africa and 
given the fact that the House and the Senate have expressed their 
support for this initiative, why haven't you assisted Morehouse in 
establishing this center? Will it take a specific earmark to get it 
done?
    Answer. USAID was instrumental in assisting the White House to 
develop, and now implement, the LIFE Initiative as well as other 
initiatives to combat infectious diseases. A basic principle of the 
LIFE Initiative is to provide assistance at the country level to 
implement interventions, including new substantive areas for USAID 
involvement. As such, ideas and proposals such as the one proposed by 
Morehouse are individually reviewed to assess their fit with USAID 
programmatic directions as well as their potential for impact in 
Africa. As noted in the earlier response, the current proposal does not 
fit well with USAID's need to strengthen African institutions.
    Specific earmarks would skew the USAID program so as to 
significantly reduce its results and effectiveness.
                                 ______
                                 
            QUESTIONS FOR THE RECORD SUBMITTED BY MR. LEWIS
    ECONOMIC DEVELOPMENT AND DEMOCRATIC INSTITUTIONS THROUGHOUT ASIA
    Mr. Lewis. Mr. Anderson, I am becoming more and more concerned 
about an increasingly isolationist attitude expressed by Members of the 
House. As the last remaining Superpower, the United States has a 
critical role to play in the world encouraging free-markets and 
fostering economic development in developing countries. As you have 
said, there are no easy answers or silver bullets. These reforms do not 
happen easily or occur overnight. I am particularly interested in those 
countries that many view as potential long-term threats. I believe that 
the United States ought to engage other countries in trade relations 
and economic development. Outline, if you will, AID efforts to promote 
economic development and democratic institutions throughout Asia and 
specifically other countries widely viewed as being potential long-term 
political or military adversaries.
    Answer. USAID is working throughout Asia to support economic reform 
and opening of markets, as well as strengthen democratic governance and 
expand opportunities for civic participation in political and economic 
life. These efforts are mutually complementary and supportive. This 
work is carried out through networks of U.S. and international 
partners, and is especially crucial in countries facing regional 
instability or the arduous transition from a closed to open society and 
economy. For example:
    The Asian financial crisis has generated significant regional 
interest in more transparent and accountable governance. USAID's 
Accelerating Economic Reform in Asia (AERA) program provides technical 
assistance to three targeted countries--Indonesia, Philippines, and 
Thailand that focuses on economic and governance reforms needed for 
sustainable economic recovery. Activities complement ongoing bilateral 
programs and work with a range of governmental and non-governmental 
organizations, ranging from Central Banks, Stock Exchanges, commercial 
courts, governmental integrity commissions to business associations and 
anti-corruption advocacy groups to promote these objectives. For 
example, in Thailand, USAID is helping establish the new national 
Counter-Corruption Commission, and support a network of local NGOs 
engaged in promoting local government transparency and accountability.
    Indonesia is in the midst of major economic and political reforms. 
Failure in either area could destabilize East Asia and likely impose 
significant economic and diplomatic costs on the U.S. Economic and 
democratic reforms are essential to Indonesia's long-term stability. 
USAID is helping support economic and governance reforms through both 
its bilateral program and the regional AERA program.
    Indonesia's first democratically elected government in 45 years is 
now effecting dramatic shifts of political power, from the capital to 
regions and communities and from civilian and military bureaucracies to 
elected officials. USAID is providing extensive support to strengthen 
government and non-governmental efforts to make government more 
participatory, transparent and accountable.
    USAID and its partners provided extensive support to Indonesia's 
free elections in June 1999--including a massive voter education 
campaign that reached tens of millions of Indonesian citizens, 
pollwatcher training, and support for the deployment of over 600,000 
nonpartisan election monitors. USAID's ongoing support for democratic 
governance is helping parliament reach out more effectively to citizens 
and non-governmental organizations to engage with government and 
society on key issues such as campaign finance reform, ethics in 
government, human rights, and civil-military relations.
    Vietnam, as one of the few remaining communist countries, 
represents a political adversary. As a country of almost 80 million 
people, it also represents one of the largest potential markets in 
South East Asia. USAID has provided some limited assistance to the 
Government of Vietnam the past two years to help it integrate modern 
commercial law principlesinto the new Vietnamese Companies Law. 
Recently, through a grant to the U.S. Vietnam Trade Council, USAID 
supported Vietnam's move toward international trade and investment 
standards. This work helped prepare the Vietnamese for a bilateral 
trade agreement with the U.S. and eventual accession to the World Trade 
Organization (WTO).
    South Asia is often described as the most dangerous region in the 
world. USAID is working there through a combination of bilateral and 
regional programs that target economic development, governance and 
human rights issues to promote increased regional confidence, 
stability, and security.
    The new South Asia Regional Initiative (SARI) directly addresses 
the region's (India, Nepal, Bangladesh, Sri Lanka and to a limited 
degree Pakistan) stability and security issues. The Energy component of 
SARI was launched during the President's recent trip to South Asia. 
This component focuses on the development of policies and 
infrastructure for transnational trade in energy resources. Efforts to 
develop cleaner and more reliable energy supplies and transnational 
energy grids will help energize region's economic integration and 
growth, and create opportunities for U.S. investment. USAID is also 
working closely with State on the development of another SARI component 
that will support confidence building measures, targeting specifically 
the India and Pakistan. Supporting activities that create fora for 
dialogue and improved relationships between countries in the region 
will also contribute to regional stability and security.
    In South Asia, USAID also supports efforts to address two critical 
constraints that impact both development and human rights--the 
trafficking of women and children and child labor. Our support to U.S. 
private voluntary organizations and NGOs in India, Nepal, and 
Bangladesh focuses on coordinating efforts with government, industry, 
and media and through education and training to reduce the 
vulnerability of segments of society to exploitative human rights and 
labor practices. In Nepal, for example, USAID is supporting the work of 
an NGO, Maiti Nepal, that helps prevent girls and women from being 
trafficked to India by alerting border guards to suspicious situations. 
The group also provides services to trafficked women and children who 
have returned to their villages--including training in reading, 
writing, and a specific skill to help them become more financially 
independent.
    The USAID programs described above are carried out in the context 
of ever-tighter economic growth budgets and allocational constraints. 
Faced with the challenge of doing ``more with less'', USAID is focusing 
its efforts in key sectors, adopting innovative programming techniques, 
and working cooperatively with partners and customers so as to promote 
key policy reforms, strengthen economic and democratic institutions, 
and improve governance.
                 AMERICAN SCHOOLS AND HOSPITALS ABROAD
    Mr. Lewis. Mr. Administrator, as you may know, I have a deep 
commitment to the importance of education, and I believe higher 
education in particular plays a essential role in developing the 
character and leadership qualities on which democratic values and 
strong civil societies depend. It therefore seems to me that we should 
make support of American educational institutions abroad a central 
feature of our development policy, as well as of our broader foreign 
policy. I cannot think of anything more important to our national 
interests than having foreign leaders who share our most fundamental 
values. For that reason I am surprised that your agency commits only 
$15 million per year to the American Schools and Hospitals Abroad 
(ASHA) program. Many of my colleagues on this Committee have long 
regarded the ASHA program as a wise investment of American dollars.
    As you know, in the 1980s the program had its own line item and the 
Congress appropriated as much as $40 million per year. My understanding 
is that the ASHA office recommended a $20.5 million budget this year, 
but again this funding level was reduced to $15 million during upper 
level agency review. Last year, USAID awarded ASHA grants to 30 
different institutions. With a $15 million budget, the money got spread 
exceedingly thinly. Can you elaborate on USAID's view of the ASHA 
program and provide in some detail the lack of support for what many 
members believe to be a very worthwhile program?
    Answer. The Administrator request for the ASHA program for FY 2001 
is $15 million. This amount is consistent with the FY 2000 agency 
allocation. ASHA is a fine program. We support the program and we 
intend to continue funding ASHA. Budget constraints for FY 2001 will 
not permit the agency to increase the funding level for ASHA.
        MIDDLE EAST AND MEDITERRANEAN DESERT DEVELOPMENT PROGRAM
    Mr. Lewis. Mr. Anderson, as you are aware, water security in the 
Middle East is a critical challenge. The Middle East and Mediterranean 
Desert Development Program focuses on the use of alternative water 
resources in arid land. Congress has supported this innovative program 
and appropriated up to $5 million for fiscal year '96, '97, '98, '99 
and '00. In mid-1998, USAID issued a planning grant of $600,000 to 
finalize the development of the elements for this program, 
incorporating recommendations of USAID. In May 1999, the San Diego 
State University Foundation (SDSUF) submitted detailed country work 
plans and a proposal for implementation. In October, USAID requested 
modifications and an overall reduction in the budget. In December, the 
SDSUF submitted a revised program with a reduced budget. In February 
2000, USAID requested further modifications and an additional reduction 
in the budget.
    In light of this extensive history, Mr. Anderson, when do you 
believe the funds will be allocated to support this program as Congress 
intended?
    Answer. Per agreement reached with your staff, as well as Committee 
staff, USAID has worked with the San Diego State University Foundation 
(SDSUF) staff to refine the scope of work for the SDSUF program. We 
have encouraged SDSUF to focus its program on alternative water use and 
to address the critical policy and institutional issues that are too 
often barriers to the wider dissemination and adoption of improved 
water management practices and technologies. USAID understands that the 
Foundation is currently preparing a refined proposal, and we expect to 
receive the proposal from SDSUF in May. USAID will then proceed to 
either modify the existing grant or issue a new grant to SDSUF. Funds 
should be released by the end of FY 2000 or early FY 2001.
    Mr. Lewis. As you know , a number of modifications have already 
been made. Do you anticipate any additional modifications being 
requested?
    Answer. USAID has worked constructively with the San Diego State 
University Foundation (SDSUF) to improve its Middle East and 
Mediterranean Desert Development Program proposal. USAID assistance has 
included participating in an SDSUF Partners Meeting in Amman, Jordan, 
in March 2000 and sending a USAID representative to work with SDSUF 
this month to finalize its proposal.
    SDSUF has welcomed this assistance and agreed to focus its proposal 
on the critical need to expand the use of alternative water resources 
and wastewater in agriculture. Based on this understanding, we do not 
anticipate the need for any further major modifications to SDSUF's 
program proposal and look forward to receiving a fundable proposal from 
them in the near future.
    Mr. Lewis. The SDSUF needs to assure its partners that funding is 
forthcoming. Can you provide a timetable to this end?
    Answer. On March 26-27, 2000, the San Diego State University 
Foundation (SDSUF) convened a meeting of its partners to develop a 
revised proposal. USAID also participated in this meeting. SDSUF is 
currently revising its proposal to incorporate feedback from its 
partners. We anticipate that SDSUF will have a final proposal for USAID 
in May 2000. We expect to review this proposal and make a decision by 
June 2000 and issue a new car revised grant to SDSUF by the fall of 
2000.
    Mr. Lewis. Lastly, the SDSUF USAID have reached agreement on the 
scope of work for the program which has been reduced from $5 million to 
$3.2 million per year. When will these funds be released?
    Answer: Per agreement reached with your staff, as well as Committee 
staff, USAID has worked with the San Diego State University Foundation 
(SDSUF) staff to refine the scope of work for the SDSUF program. We 
have encouraged SDSUF to focus its program on alternative water use and 
to address the critical policy and institutional issues that are too 
often barriers to the wider dissemination and adopted of improved water 
management practices and technologies. USAID understands that the 
Foundation is currently preparing a refined proposal, and we expect to 
receive the proposal from SDSUF in May. USAID will then proceed to 
either modify the existing grant or issue a new grant to SDSUF. Funds 
should be released by the end of FY 2000 or early FY 2001.
                                 ______
                                 
            QUESTIONS FOR THE RECORD SUBMITTED BY MS. PELOSI

          MONITORING AND EVALUATION OF USAID HIV/AIDS PROGRAMS

    Ms. Pelosi. Given the administration's request for large increases 
in AIDS spending, the key issue becomes how effectively USAID is using 
its increased funding. Last year there was a significant increase in 
funding provided to USAID for global AIDS programs, particularly in 
Africa. Can you explain to this committee how USAID will know if your 
increased programs are having an effect? Specifically what variables--
such as rate of infection or percent of people with HIV obtaining 
care--will you use to gauge your programs?
    Answer. Over the past year USAID has improved its system of 
monitoring and evaluating program effectiveness and impact in the 
following ways: (1) The standardization of program monitoring and 
evaluation indicators. USAID has just published The Handbook of 
Indicators for HIV/AIDS/STI Programs which will enable Regional Bureaus 
and Missions to apply the same indicators--thus, allowing cross-country 
comparisons and the aggregation of country results into regional and 
global estimates. (Copies of this Handbook are available.)
    For the LIFE Initiative, USAID and CDC have agreed to use the USAID 
Handbook as the standard for all of their programs.
    (2) Increased emphasis on reporting ``outcome'' and impact results. 
The most critical and ultimate indicator of program success is a 
measurable decrease in HIV prevalence. However, this measure of impact 
will only demonstrate trends over a period of several years. Therefore, 
USAID utilizes indicators of behavior change, such as condom use with 
non-regular partners and reductions in the number of sexual partners to 
measure short term program impact. (The recent GAO Report HIV/AIDS 
USAID & UN Response to the Epidemic in the Developing World, July 1998, 
concur that the use of behavior change and condom sales are reasonable 
indicators of change in HIV incidence. (pp. 27-28.) These indicators 
will be increasingly utilized to monitor the impact of USAID's programs 
in Africa (LIFE) and around the world.
    (3) International cooperation to standardize indicators and 
reporting requirements: USAID is collaborating with USAIDS and WHO to 
produce A Guide to Monitoring & Evaluating National AIDS Programmes 
which will be disseminated at the International AIDS Conference in 
Durban, South Africa in July, 2000. All indicators, which are common to 
both the USAID Handbook and the UNAIDS/USAID/WHO Guide, are identical 
so that data from USAID and other nationally supported programs will be 
comparable. (Copies of this Guide are available)
    (4) Finally, the new SYNERGY Project (Design, Monitoring & 
Evaluation, Lessons Learned, Dissemination of ``best practices'') will 
be responsible for collecting country level data through sentinel 
surveillance special surveys, etc., and reporting on USAID programs at 
the country and global levels.

                       HIV/AIDS AND HUMAN RIGHTS

    Ms. Pelosi. As you know, I am a strong supporter of USAID's 
activities around the AIDS pandemic. However there are potential 
dangers to people with HIV, particularly women with HIV, as they seek 
care for themselves and their children given the stigma attached to HIV 
in many nations. Just a year ago a woman was stoned to death in South 
Africa simply for stating publicly that she had HIV. Does USAID have a 
formal strategy to address the human rights dangers that are inherent 
in expanded HIV/AIDS activities particularly in providing access to 
care for pregnant women?
    Answer. The crucial intersection of human rights and HIV/AIDS is an 
area in which USAID has been engaged for a number of years. Among the 
steps taken by USAID to strengthen the Agency's response in this area 
have been:
    (1) the hiring of human rights lawyers who provide guidance both 
within USAID, and within the network of implementing organizations that 
USAID supports;
    (2) the creation of a Global HIV/AIDS anti-discrimination 
legislative and regulatory database; and
    (3) a new AIDS Impact Model (AIM) that was modified to include a 
human rights element. This, in turn, assures that human rights issues 
are addressed when designing interventions.
    Moreover, though it has proven to be a hugely complex issue, USAID 
has been able to formulate and pursue some specific strategies for 
addressing HIV-related human rights concerns. These strategies include 
efforts at law reform, development of civil society participation in 
the HIV response, training of NGO HIV/AIDS service providers in 
principles of confidentiality in service provision, and research. The 
law reform strategy has as its focus the reform and strengthening of 
HIV/AIDS anti-discrimination legal and regulatory environments at the 
country level. Within Central America, for example, USAID spearheaded a 
multi-year effort at HIV legal reform in a number of countries, 
resulting in the development of HIV Strategic Plans that are uniquely 
grounded in a human rights perspective.
    USAID has also pursued a strategy of increasing community 
participation in the HIV response, so that civil society organizations 
have the capacity and accept the responsibility for responding 
ethically. USAID is presently intensifying community participation in 
HIV programming through a new NGO and private sector initiative being 
led by a U.S. NGO. USAID is also supporting an innovative community 
participation approach to documenting and addressing HIV human rights 
concerns in Cambodia. If this approach proves effective, USAID will 
support its development and implementation in other countries. USAID 
has long been a leader in refining and promoting the concept of 
confidentiality in the provision of HIV services. The assurance of 
confidentiality assuages fears and anxieties and promotes the 
utilization of counseling and testing services, as well as care 
programs. Thishas proven to be especially effective when such 
confidential services are offered to women within the context of other 
reproductive and maternal health services.
    Finally, USAID focuses its research priorities on prevention 
methods that can be controlled by, and thus help empower, women. The 
most important of these methods have been the ongoing development of 
the female condom and microbicides. Additionally, USAID supports 
research designed to better understand issues of stigma, including 
women's vulnerability, and the appropriate programmatic responses.

                      HIV/AIDS ACTIVITIES IN KENYA

    Ms. Pelosi. USAID has been working on HIV/AIDS in Africa for over a 
decade and has experience in many nations, some positive such as 
Uganda, and others not so positive such as in South Africa. Please tell 
us in some depth about your expanded HIV/AIDS activities in one country 
and the impact you expect to have there over the next few years.
    Answer. USAID supports the Government of Kenya's (GOK) HIV/AIDS 
prevention strategy to reduce the sexual transmission of HIV by 
changing high-risk sexual behavior; expanding condom promotion, 
distribution and effective use; and improving the diagnosis, treatment 
and prevention of Sexually Transmitted Infections (STI). One of USAID/
Kenya's three strategic objectives is reducing the risk of HIV/AIDS 
transmission through sustainable, integrated family planning and health 
services.
    Several examples illustrate recent progress in Kenya. President 
Moi, who has not previously spoken out on AIDS, made several strong 
public statements in 1999, calling AIDS ``a national disaster'' and 
giving explicit approval to condom use as a prevention measure. The 
President established the long-awaited National AIDS Control Council to 
assure a multi-sectoral response to the epidemic. Based on its HIV/AIDS 
strategy developed in 1998, USAID began geographically focused 
community prevention activities and innovative home-based care and 
support programs. Further, sales of socially marketed condoms have 
increased steadily from an average of 200,000 per month in 1994 to an 
average one million per month in 1999. However, in spite of these 
achievements, major challenges remain. The epidemic continues to grow. 
HIV prevalence among adults 15-49 has risen from 4.8 percent in 1990 to 
13.9 percent in 1999.
    In seeking to address these challenges, the USG's new Leadership 
and Investment in Fighting an Epidemic (LIFE) initiative will provide 
significant new funding to USAID's HIV/AIDS portfolio in FY 2000, and 
hopefully, beyond. Planned programmatic expansion in this critical area 
is contingent upon funding increases that reflect the growing impact of 
AIDS on Kenyan social and economic growth. In FY 2000, Kenyareceived 
$2.5 million under LIFE, in addition to $3.2 million in non-LIFE HIV/
AIDS funds, $500,000 from the Displaced Children and Orphans Fund, and 
$600,000 in recoveries. Building on existing USAID efforts in Kenya, 
the initiative addresses four key elements critical to fighting the 
AIDS pandemic: primary prevention; care and support for People Living 
With HIV/AIDS (PLWHA); aid to children affected by AIDS; and capacity 
building. Kenya's planned activities in the four thematic areas are as 
follows:
    In the area of primary prevention, USAID/Kenya will increase 
support for Voluntary Counseling and Testing (VCT); motivate and enable 
individuals in targeted communities to reduce their sexual risk using 
peer education and outreach; and upgrade diagnosis and treatment of 
STDs. In the area of care and support, USAID/Kenya plans to improve 
home and community-based care services; strengthen the national TB 
program; and assist existing support groups to become key points of 
psycho-social support and referral to health and social services. 
Efforts to provide care and support to children affected by AIDS will 
be integrated into the ongoing work to provide care and support in 
local communities. Strengthening families' ability to care for orphans 
will also be supported through collaborative interventions with micro-
finance institutions.
    In the area of capacity building, advocacy and policy work for and 
by people living with HIV and AIDS will be emphasized. USAID/Kenya will 
support work to build and strengthen Kenya's network of People living 
with HIV/AIDS (PLWHA) groups and help the network move forward with its 
advocacy initiatives. USAID/Kenya will also continue to provide small 
grants for innovative work conducted by community-based organizations 
and support the AIDS NGO network. Under LIFE, the Administration seeks 
to further the goals laid out by UNAIDS, in cooperation with other 
bilateral and multi-lateral partners: to reduce the worldwide incidence 
of HIV infection among 15-24 year olds by 25% by 2005; provide at least 
75% of HIV infected persons worldwide with access to basic care and 
support services at the home and community levels; provide orphans with 
access to education and food on an equal basis with their non-orphaned 
peers; double domestic and external resources available for HIV/AIDS in 
Africa from $150 million to $300 million by 2002; and by 2005, ensure 
that 50% of HIV infected pregnant women worldwide have access to 
interventions to reduce mother-to-child HIV transmission.

          HEALTH AND ENVIRONMENT ISSUES IN RUSSIA AND UKRAINE

    Ms. Pelosi. The Committee has consistently urged that more 
resources from the Independent States programs be devoted to health and 
environment programs. Unfortunately our priorities have not been shared 
by either this Administration or the last. Both Russia and Ukraine now 
face serious health crises. The changes in those societies have 
unfortunately resulted in the deterioration of health systems and 
access to basic medicine and nutrition. One small example is that in 
many areas of Russia today there is no ability to buy iodized salt. 
Estimate for all the countries of the former Soviet Union are that as 
much as 40% of the population or 190 million people may be vulnerable 
to iodine deficiency disorders.
    In terms of family planning programs whenever resources have been 
devoted to providing women in Russia with access to family planning 
services, abortion rates have been reduced drastically. Despite this 
success, USAID has not sought to expand these programs to any great 
degree in Russia or the other republics. Given the potential to greatly 
reduce the number of abortions, why has AID not been more aggressive in 
seeking the resources for these programs?
    Answer. We agree with the Committee's assessment that the family 
planning programs in the former Soviet Union have been very successful. 
In Russia, USAID's Women's Reproductive Health Project extended access 
to modern family planning information and services to more than four 
million additional women. Statistical survey findings demonstrated that 
women who lived in a project site (where USAID's Reproductive Health 
Project was active) had significantly fewer abortions than those living 
in the control site (where there was no USAID Reproductive Health 
Project). Evidence from Kazakhstan, Uzbekistan and the Kyrgyz Republic 
indicates that, between 1988 and 1995, use of modern contraceptives 
increased approximately 20 percent in each country and that rates of 
induced abortion declined between 27 percent (Kazakhstan) and 50 
percent (Uzbekistan and the Kyrgyz Republic).
    USAID has built upon the successes of these programs and, in fact, 
has dramatically increased its support to these programs in the 
Independent States. Region-wide, resources devoted to family planning 
and women's health have increased from $10 million in FY 1997 to $14.7 
million in FY 2000. Examples of this expanded support are:
    In Russia, support for family planning and women's health has more 
than tripled, from $1.1 million in FY 1997 to $3.6 million in FY 2000. 
USAID's new Women and Infant Health (WIN) strategy seeks to expand and 
improve the effectiveness of selected women and infant health services 
to reduce maternal and infant morbidity and mortality rates that remain 
several times higher than in other industrialized countries. In 
particular, WIN focuses on reducing missed opportunities to prevent 
abortion, by targeting family planning information and counseling to 
women under-served by current systems.
    In Armenia, USAID support for family planning and women's health 
has increased from $840,000 in FY 1997 to $2.2 million in FY 2000. The 
PVO/NGO Networks Project is expanding information, education and 
communication (IEC) campaigns and increasing access to reproductive 
health information and services. It will be testing three different 
models in three regions of the country.
    In Central Asia, USAID has been very proactive in the area of 
family planning. Between 1998 and 1999, USAID/CAR increased resources 
in this area by more than 25 percent.
    Further expansion of family planning and women's health programs in 
the Independent States is constrained by such factors as: the NIS 
countries' limited absorption capacity for such programs; Congress' 
worldwide funding ceiling on family planning programs; and the need to 
use some portion of the Europe and Eurasia Bureau's very limited health 
budget on other health priorities such as the control of tuberculosis 
and HIV/AIDS.
    Ms. Pelosi. What does USAID plan to spend on TB programs in the 
Independent States in 2001?
    Answer. USAID has increased funding for tuberculosis control and 
prevention programs by approximately 450 percent from 1998 to 2000. In 
1998, $1,060,000 was spent in the Central Asian Republics (CAR). Since 
then, and in response to the increasing threat of tuberculosis in the 
region, USAID has expanded its tuberculosis programs to include Russia 
and Ukraine. USAID anticipates spending approximately $4,750,000 for FY 
2001. The distribution is as follows:

        Country                                                Thousands
Russia........................................................    $1,900
Ukraine.......................................................       700
CAR...........................................................     2,150
                    --------------------------------------------------------------
                    ____________________________________________________

      Total...................................................     4,750

    Ms. Pelosi. What does USAID plan to spend on iodine deficiency 
programs in the Independent States in 2001?
    Answer. USAID agrees that programs to eliminate iodine deficiency 
disease (IDD) have generally been very cost-effective. In Kazakhstan, 
Kyrgyzstan and Uzbekistan, USAID has incorporated IDD activities, which 
are developing outreach materials and training physicians in IDD, into 
its primary health care programs. In Russia, USAID has just completed a 
$300,000 Micronutrient Malnutrition program, implemented in 
collaboration with UNICEF, Kiwanis, and the U.S. Centers for Disease 
Prevention and Control. These micronutrient programs contributed to the 
iodization of up to 30 percent of all salt sold in Russia by early 
1998. However, sales of iodized salt have fallen to around 20 percent 
of the Russian market due to the August 1998 financial crisis and 
insufficient demand from consumers.
    In FY 2000, the USAID's Europe and Eurasia Bureau has been 
encouraging collaboration with UNICEF and Kiwanis. UNICEF has pledged 
to take the lead in promoting efforts to eliminate IDD. In Armenia and 
Georgia, USAID already has agreed to fund specific appeals from UNICEF 
and Kiwanis at levels of approximately $100,000 in each country. USAID 
also is prepared to cooperate with UNICEF in Ukraine, Moldova and 
Belarus. In Turkmenistan, USAID is in discussions with UNICEF about 
urine iodine testing of 2,500 children, to better understand the 
problem of IDD in that country. The total of this support could exceed 
$400,000. We also are exploring the possibility of limited regional 
funding for IDD programs.
    USAID hopes to give comparable priority to IDD programs in FY 2001.

                      DEVELOPMENT FUND FOR AFRICA

    Ms. Pelosi. The Administration is requesting a renewal of the 
separate funding for Africa in the Development Fund for Africa. 
Africa's development assistance programs were separately funded during 
the late 1980's in one account for all programs.
    What [are] the benefits of having a separate development fund for 
Africa, and will it improve or change the management of those programs?
    Answer. The benefit of a separate Development Fund for Africa (DFA) 
is that it strongly signals to our partners the U.S. Government's 
commitment to supporting development in sub-Saharan Africa and 
symbolizes the importance of sub-Saharan Africa to U.S. national 
interests. Funding under the DFA authorities provides needed 
flexibility to implement programs and respond to opportunities, as well 
as complex crises, in a volatile continent. With DFA appropriations, 
funding is assured to remain focused on the long-term problems and 
sustainable development priorities of our African partners.
    Additionally, the separate DFA provides certainty that deobligated 
funds will return to Africa and thus may encourage deobligation of 
activities when implementation is less than optimal and funds can be 
reobligated for more promising results.

                       FY 2001 PROGRAM INCREASES

    Ms. Pelosi. What program increases will the $532 million level 
result in and in what countries? The $532 million level is an increase 
from $448 million in FY 2000 for the same programs.
    Answer. Attached is a table comparing FY 2001 program increases/
decreases from FY 2000 for the Development Assistance/Development Fund 
for Africa account:
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   MOZAMBIQUE HURRICANE DAMAGE RELIEF

    Ms. Pelosi. In terms of southern Africa and particularly 
Mozambique, our understanding is that damage assessments from the 
recent hurricane have been performed. When can we expect a formal 
budget request for those needs, and what can you tell us about the 
specifics of the needs assessment?
    Answer. A formal request for $200 million in supplemental funds was 
sent to the Congress on April 21, 2000. The supplemental request 
includes $10 million in Disaster Assistance Funds; $7 million in USAID 
operating expenses; and $183 million in ESF funds ($131 million for 
Mozambique; $15 million for South Africa; $17 million for Madagascar; 
and $20 million for regional efforts, including other flood-affected 
countries).

                                NIGERIA

    Ms. Pelosi. Nigeria has had a significant change in government, 
which has drastically altered our development strategy. Can you outline 
for us the programs requested for Nigeria and explain how they will 
foster democracy and improve living conditions there?
    Answer. In prior years, due to the military rule of General Abacha, 
USAID activities were restricted to working with very limited resources 
to assist local advocacy groups in the areas of health, child survival, 
HIV/AIDS, and population.
    USAID/Nigeria's current, more far-reaching program provides support 
to: Stabilize democracy and establish an accountable government; 
strengthen the Government of Nigeria's (GON) ability to develop the 
foundation for economic reform and enhance its capacity to revive 
agricultural growth; strengthen the GON's ability to develop the 
foundation for education reform; increase the use of family planning, 
maternal and child health and sexually transmitted disease/HIV 
services; and build the GON's capacity for policy development and 
management of key infrastructure, especially energy and transport 
sectors.
    USAID/Nigeria's program helps to foster democracy through the 
provision of technical assistance and training to both government 
institutions and civil society groups as they work together to increase 
governmental transparency and responsiveness and expand the process of 
democratic governance. USAID's programs in support of health, 
education, and economic progress seek to improve the quality of and 
access to social services for the Nigerian people.

              POPULATION: FY 2001 FAMILY PLANNING FUNDING

    Ms. Pelosi. Last year a limitation of $385 million was imposed on 
family planning programs around the world. This amount was further 
reduced to $372 million when the President invoked the waiver 
authorities on the Mexico City Policy language. The President has 
requested a level of $542 million for FY 2001, which restores family 
planning programs to their 1995 level.
    Can you outline for us first the impacts of being held to the $372 
million level for FY 2000, and comment on what the impacts would be of 
being held to that level in FY 2001.
    Answer. The $372 million level continues a decline in 
appropriations for population activities that began in fiscal year 
1996. Such a decline contributes further to the widening gap between 
global needs for family planning and related reproductive health 
services on the one hand and resources available on the other. Funds 
have scarcely been able to keep up with existing needs, much less 
provide information and services to undeserved populations, especially 
the growing numbers of young people who are just entering their 
reproductive years. Declining funds inevitably translate into 
diminished access to services and greater numbers of unintended 
pregnancies, maternal and infant deaths, and unsafe abortions.
    Programs in Africa are among those that have taken significant cuts 
in recent years. The new priority placed on Nigeria since the elections 
will make it necessary to ``rob Peter to pay Paul'' if the worldwide 
funding level does not increase. Because of the lag time from 
appropriations to field implementation, the impacts of both increasing 
(FY 1993-1995) and decreasing (FY 1996-FY 2000) appropriations take 
time to be felt at the country level.
    Ms. Pelosi. What would be the impacts of receiving the $542 million 
requested? [What] country programs would be enhanced, how many more 
women would have access to family planning and maternal health 
services, and how many abortions would be avoided.
    Answer. The proposed increase restores funding from FY 2000 level, 
capped at $372.5 million, to FY 1995 level, $541.6 million.
    Increased family planning funding will expand services vitally 
needed to save women's lives and health. We estimate that the increased 
funding could prevent 3.5 million unintended pregnancies, 1.4 million 
abortions, as well as thousands of maternal and infant deaths.
    Our greatest concern is young women. The circumstances of many 
young women make them particularly vulnerable to unintended 
pregnancies, unsafe abortions, and HIV/AIDS. 25 percent of HIV/AIDS 
cases are young women. Over the past 5-years, during a period when 
USAID population funding has been reduced for countries in Africa, the 
number of reproductive age womenhas grown by 20 million (13 percent). 
Many of these women have limited access to family planning services.
    A billion young people in the developing world are about to enter 
their reproductive years. Over the next decade, family planning demand 
is estimated to grow by more than 50 percent. Already, many countries 
are having difficulty keeping pace with growing needs for 
contraceptives.
    A Nigerian women's leader told participants at a White House World 
Health Day event of a young woman named Jamela--married at 12, pregnant 
at fourteen, in labor for 3 days. Jamela--and 50 million young people 
like her in Nigeria who are under age 15--need help.
    President Clinton at the same World Health Day event commented 
about this year's family planning budget: it is ``pro-child, pro-family 
(and) I think it's the least we should be doing.''
                                 ______
                                 

            QUESTIONS FOR THE RECORD SUBMITTED BY MRS. LOWEY

                        PALESTINIAN HUMAN RIGHTS

    Mrs. Lowey. According to the State Department's 1999 human rights 
report on the areas under the control of the Palestinian Authority, the 
PA's human rights record has worsened in many key areas. These include 
torture and abuse in prisons, arbitrary arrest and detention, and lack 
of due process in the Palestinian court system. I am also deeply 
concerned about continued limitations on freedom of speech and the 
press--the PA continues to harass and detain journalists, which has led 
Palestinian commentators and reporters to practice self-censorship. How 
are USAID programs in the West Bank and Gaza encouraging the 
development of the rule of law and democratic institutions, and 
bolstering basic democratic freedoms such as freedom of speech and the 
press? Also, how has our assistance helped ensure that the Palestinians 
are living up to their commitments under Oslo and other peace 
agreements, particularly in the area of preventing terrorism and 
incitement of violence?
    Answer: The overall goal of USAID's West Bank/Gaza program is to 
support the peace process by helping Palestinians realize the tangible 
economic and social benefits of peace. By working to improve the 
quality of life for Palestinians, U.S. assistance is meant to increase 
the Palestinian's commitment to peace, thereby reducing the possibility 
of violence and terrorism.
    USAID focuses primarily on three areas: improving access to and use 
of scarce water resources, expanding economic opportunities, and 
facilitating adherence to democratic principles through more responsive 
and accountable governance.
    Palestinian self-rule began in 1994. The Palestinian Authority (PA) 
faces challenges in its transition from an executive-dominated 
organization to a governing body that presides over a polity where 
there are separation of powers and rule of law. USAID is encouraging 
balanced and sound democratic institutions by working to increase the 
participation of civil society organizations in public decision-making 
and government oversight, enhancing the capacity of the PA's 
legislative branch to perform functions of a legislative body, and 
working to improve the administration of justice. In the West Bank and 
Gaza, establishing rule of law is a primary objective.
    USAID takes allegations of human right violations very seriously, 
and that's why USAID is utilizing funds from the Wye Supplemental 
appropriation to expand the democracy and governance program to include 
Rule of Law activities. USAID, working with State and the U.S. 
Department of Justice, is implementing a program to provide rule of law 
assistance, with a goal of improving administration of justice. The 
program will work to reform institutional procedures within thecurrent 
system by assisting in drafting laws, rules and regulations to shorten 
pretrial detention periods and clarify rules for warrant issuance, 
search and seizure, and against use of illegally seized evidence. In 
addition, the program will focus on both short- and long-term training 
for lawyers, judges and prosecutors, and will create an office to 
enforce standards of government ethnics, which would draft and 
disseminate standards of conduct for all justice sector employees.
          QUESTIONS FOR THE RECORD SUBMITTED BY MS. KILPATRICK
                    INSTITUTIONS OF HIGHER EDUCATION
    Ms. Kilpatrick. In FY 99 and FY 00, how much and what percentage of 
USAID funding awarded to institutions of higher education went to 
Historically Black Colleges and Universities (HBCUs)?
    (a) Please describe and list HBCU projects funded;
    (b) Please provide a 10-year comparison of funding for HBCU-related 
programs.
    Answer. In FY 99, U.S. institutions of higher education received 
$156,691,824. Of this amount, HBCUs received $11,683,977, or 7.5% HBCUs 
received USAID funding in FY 99 through the following activities:
    Bureau for Africa (HBCUs that received funding from the Africa 
Bureau's Office of Sustainable Development are listed under the 
strategic or special project objective that funding was awarded).
    The following HBCUs received funding for analytical, research and 
technical services support in sub-Saharan Africa under the 
Agricultural, Natural Resources and Environment (ANRE) strategic 
objective:
    Alabama A&M University
    North Carolina A&T State University
    Tuskegee University
    University of Maryland-Eastern Shore
    The following HBCU provided assistance in locust and grasshopper 
control in sub-Saharan Africa under the Crisis Mitigation and 
Resolution strategic objective:
    University of Maryland-Eastern Shore
    The following HDCUs received funding for partnership activities 
proposed under the Education for Development and Democracy Initiative 
(EDDI) special project initiative managed by the Africa Bureau:
    Howard University
    Langston University
    Mississippi Consortium for International Development (which 
includes Alcorn State University, Jackson State University and Tougaloo 
College)
    University of the District of Columbia
    Virginia State University
    The following HBCU received funding for family planning and 
reproductive health activities in east and southern Africa under the 
Health and Human Resources Development strategic objective:
    Morehouse School of Medicine
    Also in Africa, the Mississippi Consortium for International 
Development received funding from USAID/Angola to assist in providing 
civic and political education to citizens in four provinces of Angola.
    Bureau for Europe and Eurasia--USAID/Romania funded a cooperative 
agreement with Howard University to train pharmacists for expanded 
roles in primary health care in Romania.
    Bureau for Latin America and the Caribbean--Under the Cooperative 
Association of States for Scholarship (CASS) regional participant 
training program, three HBCUs provided training for several groups of 
students from Central American and Caribbean countries in x-ray 
technology, public health, construction management supervision, 
advanced education administration, primary education teacher training, 
electronics technology, computer and medical equipment repair.
    Alamo Community College District (St. Philip's College)
    Harris Stowe State University
    Kentucky State University
    In addition to the participant training activities undertaken by 
these three HBCUs in the Latin America and Caribbean region, the 
following HBCUs were also engaged in providing long-term and short term 
participant training for USAID-funded participants from countries in 
Africa, Asia and the Near East, and Europe and the Newly Independent 
States:
    Alcorn State University State
    Bluefield State University
    Bowie State University
    Central State University
    Clark-Atlanta University
    Coppin State University
    Delaware State University
    Florida Memorial College
    Hampton University State
    Howard University
    Jackson State University
    Morgan State University
    Southern University and A&M College
    Southern University/Shreveport
    Tennessee State University
    Tougaloo College
    University of Maryland-Eastern Shore
    Wilberforce University
    USAID will send a separate letter to Congresswomen Kilpatrick and 
provide a copy of its report on FY 1999 activities with HBCUs which 
provides more details.
    Comparable information for FY00 will not be available until o/a 
January, 2001.
    The following is a 10-year comparison of USAID funding for HBCU-
related programs:

                        [In millions of dollars]
------------------------------------------------------------------------
                                           HBCU      Fiscal
              Fiscal year                 Total       year    HBCU total
------------------------------------------------------------------------
1990..................................      $20.6       1995      $29.2
1991..................................       12.7       1996       13.38
1992..................................       18.2       1997       10.7
1993..................................       25.0       1998       17.3
1994..................................       28.0       1999       11.7
------------------------------------------------------------------------

    Ms. Kilpatrick. What level of funding, and what percentage of the 
FY 01 budget targeting institutions of higher education is proposed for 
HBCUs this year?
    Answer. USAID's FY 01 annual federal plan for HBCUs is currently 
being developed. USAID will provide the information upon completion of 
this report.
    Ms. Kilpatrick. What efforts have been undertaken by the Agency to 
increase the level of contracts and grants to HBCUs, consistent with 
Executive Order 12876, and the recommendations contained within the 
1996 report of the President's Advisory Board on HBCUs?
    Answer. USAID has undertaken the following efforts to increase the 
level of funding awarded to HBCUs:
    (a) In June 1999, USAID established a policy mechanism which can be 
utilized to expand the participation of Minority Serving Institutions 
(which includes HBCUs, Hispanic Serving Institutions, and Tribal 
Colleges and Universities). This policy permits USAID to identify 
activities for MSI participation and, via competition among MSIs, award 
grants and/or cooperative agreements to MSIs.
    (b) In FY 1997, USAID established the International Development 
Partnerships (IDP) program which is administered by the College Fund/
UNCF. The program supports HBCU collaboration with institutions of 
highereducation in USAID countries that propose to work together on 
activities consistent with USAID strategic objectives and host country 
priorities.
    (c) USAID established a Minority Serving Institutions Committee, 
currently chaired by the General Counsel and composed of senior 
representatives from each Bureau and independent office, which provides 
suggestions and recommendations for increasing MSI participation to 
USAID's Administrator.
    (d) USAID established a two-person MSI unit which actively 
participates in various HBCU meetings conferences, workshops, seminars 
and related activities, including those initiated by USAID, the White 
House Initiative on HBCUs, NAFEO, the College Fund/UNCF, and others, to 
increase awareness of USAID programs and activities.
                             AFRICAN WOMEN
    Ms. Kilpatrick. Please describe some of the educational programs, 
specifically targeting the women of Africa, that have been funded by 
your Agency. How much funding has been provided to other non-Africa 
developing countries? Please break down by continent.
    Answer. The Advanced Training for Leadership and Skills (ATLAS) 
initiative which provides scholarships for study in the United States, 
requires that 30 percent of all participants selected must be female. 
(Over the last three [3] years, overall enrollment of women averaged 
forty-eight percent [48 percent]. Some USAID missions such as Guinea 
and Benin have exceeded that goal; 50 percent of their trainees under 
the ATLAS program are women. Guinea developed a special program for 
women school teachers selecting at least 10 women for which they 
provided $1.5 million to the ATLAS program to assist in meeting 
education costs in the United States. Namibia selected undergraduate 
women in non-traditional fields.
    The Leadership and Advocacy for Women in Africa (LAWA) activity has 
provided Masters of Law degrees at Georgetown and a 6 month internship 
in the Washington, DC area. Internships may be at public interest 
organizations such as International Human Rights Law Group, the Center 
for Development and Population Alternatives (CEDPA), D.C. Prisoners 
Legal Services Project, National Women's Law Center, or the World Bank. 
LAWA has trained 20 women lawyers for Ghana, Uganda, and Tanzania. 
While centrally funded from 1993-1998, each USAID Mission in Africa 
continued this program for at least an additional cycle. USAID Tanzania 
will conduct selection next month for 3 more participants to be funded 
by the Mission.
    Additionally, USAID has given a grant to the National Council on 
Negro Women (NCNW) to support rural women's economic development. NCNW 
created regional centers throughout Africa to empower women's economic 
development. These centers were also used as an entry point to support 
local NGOs that focused on women and girls' issues.
    USAID supports the Forum for African Women Educationalists (FAWE) 
through the Associationfor the Development of Education in Africa 
(ADEA). FAWE is an extremely influential organization made up of 
African women ministers and permanent secretaries of education, women 
vice-chancellors and other senior women policy makers. Its goal is to 
close the gender gap at all levels.
    In fiscal year 1999, estimated USAID training funds expended on 
women by region are as follows:

------------------------------------------------------------------------
                                               Women           Total
------------------------------------------------------------------------
Africa..................................      $6,760,000    $16,981,000.
Asia/Near East..........................         843,000      10,237,000
Europe and Eurasia......................      10,415,000      25,216,000
Latin America & Caribbean...............       9,132,000      17,917,000
Others\1\...............................       1,432,000       4,079,000
------------------------------------------------------------------------
\1\ ``Other'' refers to situations in which the identifying country
  codes are either missing or invalid.

             AFRICAN WOMEN AT COLLEGE AND UNIVERSITY LEVEL
    Ms Kilpatrick. What specific activities are supported by your 
Agency that enhance the participation of African women at the college 
and university levels?
    Answer. USAID missions throughout Africa often conduct special 
recruitment efforts just for female applicants to receive training in 
the United States under the Advanced Training for Leadership and Skill 
(ATLAS) program. The ATLAS program averaged fortyeight percent (48%) 
enrollment of African women in the past three (3) years. Additionally, 
the ATLAS program conducts a yearly conference for women participants 
studying in the U.S. These conferences provide an opportunity to 
discuss issues relevant to development and the participation of women 
in that process. These workshops are always hosted by a Historically 
Black Colleges and Universities (HBCU). The next conference will be 
held at Fisk University, Nashville, in May 2000.
          HISTORICALLY BLACK COLLEGES AND UNIVERSITIES (HBCUS)
    Ms. Kilpatrick. To what extent are HBCUs engaged in USAID efforts 
that particularly address the higher education issues affecting the 
women of Africa?
    Answer. HBCU's are engaged in these efforts in a number of ways: 
Clark Atlanta University has done Women in Development (WID) training 
for women entrepreneurs from Francophone Africa and for women from 
Egypt. There is also an Africana Women's Studies program at Clark 
Atlanta doing research on WID issues. Bennett College was a partner in 
the World Women in Development program run by the University of 
Florida. Bennett participated in recruitment and hosted the last WID 
Conference.
    The higher education partnership between Langston University and 
Awassa College of Agriculture in Ethiopia seeks to improve the food 
security, nutritional status, and income-generating ability of 
Ethiopian families by improving the production of goats. The 
partnership will focus the benefits of the training on improved goat 
production, breeding, and distribution to local women's cooperatives.

           CONFIDENCE-BUILDING MEASURES IN THE SOUTH CAUCASUS

    Mr. Porter. The Fiscal Year 2000 Foreign Operations 
Appropriations bill made funding available for the Southern 
Caucasus region to be used for confidence-building measures and 
other activities in furtherance of the peaceful resolution of 
the Nagorno-Karabakh conflict.
    Could you please describe any such activities which are 
currently underway?
    Answer. The FY 2000 Foreign Operations Appropriations 
legislation provides that funds be made available for the 
Southern Caucasus region for ``confidence-building measures and 
other activities in furtherance of the peaceful resolution of 
the regional conflicts, especially those in the vicinity of 
Abkhazia and Nagorno-Karabakh.'' The three U.S. ambassadors to 
the Caucasus and their USAID Mission Directors have met on 
several occasions to discuss regional initiatives. From these 
meetings grew a proposal for a Caucasus Cooperation Forum (CCF) 
to foster cooperative activities among Armenia, Azerbaijan, and 
Georgia. This approach was proposed to the three Presidents of 
the Southern Caucasus nations by the Secretary of State during 
the NATO 50th Anniversary Celebration in Washington in April 
1999. Subsequently Ambassador William Taylor, Coordinator for 
U.S. Assistance to the New Independent States, visited each 
capital to propose establishment of the CCF. Due to divergent 
views among the three governments, it has not yet been possible 
to implement CCF, although some of the ideas originally 
included in the CCF concept are either in the process of 
implementation or are nearing the implementation phase.
    Confidence Building Measures (CBMs) related to the Nagorno-
Karabakh conflict include:
    Eurasia ``Synergy Grants'' program: This program seeks to 
establish points of common ground and collaboration between 
Armenian and Azerbaijani NGOs. This activity has now grown to 
the point where it has a dedicated expatriate program manager.
    AED South Caucasus Women's NGO Leadership Workshops: 
Conducted in all three South Caucasus countries, these 
workshops bring Armenia, Azerbaijani, and Georgian women 
leaders together to address sectoral topics and other issues, 
such as conflict resolution, and to find common ground.
    Baku-Yerevan Weekly Spacebridge TV Program: The Internews 
Network will soon produce a series of 24 interactive video 
links between potential public-opinion shapers in Azerbaijan 
and Armenia to increase mutual understanding and tolerance. 
These programs will be broadcast as a weekly television show by 
non-governmental stations in both countries.
    AED Regional Energy Linkages: Currently underway, this 
activity focuses on providing training, conferences, and 
technical studies, of the potential benefits of regional 
trading of energy, including evaluation of models for regional 
energy dispatch. Participants include Georgian and Armenian 
energy officials and Azerbaijani private individuals and NGOs. 
Section 907 restrictions limit the full effectiveness of this 
program.
    Regional Water Initiative: A scope of work is now being finalized 
between USAID/Caucasus and USAID/ Armenia. This activity will aim to 
monitor competing uses of water (agriculture vs. power generation) in 
the South Caucasus, as well as its quality and quantity, including 
water shed management. Participants include Georgian and Armenian water 
officials and Azerbaijani private individuals and NGOs. Section 907 
restrictions will likely limit the full effectiveness of this program.
    For your information, other activities in the Southern Caucasus 
region include CBMs that address the conflict in Abkhazia:
    United Methodist Committee on Relief (UMCOR) Youth House Grant: A 
four-year psycho-social activity geared towards meeting the needs of 
youth affected by the Abkhazia conflict and in fostering mutual 
understanding between ethnic groups. Three youth houses are run, one in 
Sukhumi (within Abkhazia), one in Tbilisi, and one in Zugdidi (on the 
current line of conflict).
    Academy for Educational Development (AED) Youth Development III: 
Separate summer camps in Abkhazia and Georgia, with a follow-on program 
consisting of selected Abkhaz and Georgian youth having the opportunity 
to meet first in Armenia and then travel to the US for a four-week 
conflict-resolution oriented summer camp.
    AED Youth Leadership Skills Development in Conflict Prevention: 
Youth groups throughout Georgia, including Abkhazia, and connected with 
the Youth Development program receive specialized skills development in 
conflict prevention.
    AED Training of Trainers in Conflict Resolution: Non-governmental 
leaders from throughout Georgia, including Abkhazia, receive training 
of trainers in conflict resolution. This training includes a joint 
session for the Abkhaz and Georgian participants in Armenia.
    CBMs related to the South Ossetia conflict include:
    The mission has approved a Eurasia Foundation proposal to begin a 
small program of CBM grants to South Ossetian NGOs. In a related step, 
USAID funded a small winter relief activity in South Ossetia in 
December 1999.
    Both Internews and ISAR/Horizonti plan to include South Ossetian 
journalists and NGOs in their training programs.
                 SUPPORT FOR CENTERS OF SPECIALIZATION
    Ms. Kilpatrick. Are there any Centers of specialization located at 
any majority institution of higher education that receive support from 
your agency?
    (a) If so, please list and describe the centers and the level of 
funding they receive from your agency.
    (b) Are there any Centers of specialization located at HBCUs that 
receive funding from your Agency? Please list and describe the 
projects.
    Answer. (a) Yes. We do not keep information on support to 
university centers of specialization in any one place. However, let me 
give you a few examples of the universities, FY 1999 funding level and 
purpose of the support.
    University of Nebraska-Lincoln--$2.5 million--improve the 
production and utilization of sorghum and millet.
    Johns Hopkins School of Public Health--$3.6 million--to identify 
new technologies and methods for improving child survival and family 
health.
    Eastern Virginia Medical School--$4 million to develop and improve 
new methods of family planning and other reproductive health 
technologies for use in developing countries.
    (b) Yes. We have provided grants to a number of HBCUs for research 
and development primarily in agriculture amounting to about $2 million 
in FY 1999. For example, USAID provided $1,104,905 to the University of 
Maryland-Eastern Shore, Tuskegee University and North Carolina A&T 
State University to provide analytical, research and technical services 
in agriculture and national resource management in sub-Saharan Africa.
                                 ______
                                 
             QUESTIONS FOR THE RECORD SUBMITTED BY MR. SABO
                           VICTIMS OF TORTURE
    Mr. Sabo. The House report accompanying the FY2000 Foreign 
Operations bill recommended that USAID spend $7.5 million to support 
foreign treatment centers for victims of torture, as authorized in the 
Torture Victims Relief Act. What assistance has USAID already provided 
to foreign treatment centers for victims of torture in FY2000. What new 
assistance does USAID plan to extend to foreign treatment centers in 
FY2000 and 2001?
    Answer. As stated in our 1999 report to Congress, we expect to meet 
or exceed in FY 2000 the $7.5 million funding level authorized by the 
Torture Victims Relief Act of 1998. In fact, USAID intends to provide 
at least $10 million for the treatment and rehabilitation of torture 
victims this year. Example of USAID-funded activities include trauma 
counseling for rape, and training of professionals who work in the 
field of health, education, law and media to raise awareness of the 
particular needs of torture victims.
    The majority of funding for these programs will be obligated by 
USAID's field missions. Our field staff are in the best position of 
identify program opportunities that best address treatment needs for 
individual countries and peoples. Our field missions are well aware of 
the importance of addressing the culture of impunity that allows the 
practice of torture to continue in many countries; and they are fully 
aware of and support Congressional intent to promote the work of 
foreign treatment centers.
    In addition, USAID has launched a new effort this year to 
strengthen the capacity of foreign treatment centers to deliver 
services to torture victims, and has initiated a competitive process 
for a $1.5 million grant to provide such capacity-building.
    For FY 2001, it is too soon at this point to determine precise 
funding of activities, although many of our programs are on going and 
require multi-year funding. We fully intend to continue to meet the 
legislatively recommended funding levels and to support the work of 
foreign treatment centers.
    Mr. Sabo. The House report also suggests USAID give serious 
consideration to 126 treatment programs in 54 countries listed in the 
directory of the International Rehabilitation Council for Torture 
Victims. Dr. Inge Genefke, Secretary-General of the IRCT, visited USAID 
in July and December 1999. In July she provided USAID with a document 
describing 36 centers and initiatives which IRCT recommended for 
possible USAID funding. In December she presented eleven pilot projects 
for consideration by USAID. What action has been taken on these 
recommendations?
    Answer. USAID continues to give serious consideration to proposals 
from members of the IRCT and other organizations to assist victims of 
torture. The proposals contained in the July 1999 document provided by 
Dr. Genefke were distributed to both the appropriate USAID missions and 
the relevant Washington-based USAID regional bureaus. Certain missions 
reported having already assisted IRCT-affiliated centers (e.g., Sri 
Lanka, Bangladesh) and others reported existing relationships with 
centers. Some of these relationships have developed into formal 
support, as in the case of Amani Trust in Zimbabwe. Further information 
on mission activities in FY 1999 may be found in USAID's recent report 
to Congress regarding assistance to victims of torture.
    Information regarding the eleven pilot projects presented by IRCT 
in December has also been provided to the relevant missions and 
regional bureaus. As a result of this effort, for example, funding was 
provided for requested activities in East Timor. With the release of FY 
2000 funds, we intend to determine what additional action can be 
anticipated on these and other proposals that have come to USAID's 
attention.
    Mr. Sabo. I was pleased to learn from the report USAID submitted to 
the Committee that the agency will be issuing a $1.5 million grant to 
support implementation of capacity building programs for foreign 
treatment centers for victims of torture. As described, this program 
would emphasize providing training and technical assistance to improve 
the institutional capacity of foreign treatment centers. While these 
are important activities and some portion of the program could be 
devoted to these purposes, many of these centers desperately need 
financial assistance for their basic treatment services for torture 
victims. How does USAID intend to address the need for supporting basic 
treatment services?
    Answer. Under the provisions of the $1.5 million capacity-building 
grant, the grantee(s) will have the authority to provide sub-grants to 
centers that receive technical assistance. These subgrants could be 
used to fund basic treatment services or other essential operating 
expenses. The capacity-building activities, such as training of 
treatment practitioners, building fundraising and advocacy skills, and 
training in responsible accounting practices, are intended to augment 
the centers' ability to provide basic services to victims of torture in 
the most professional and cost-efficient manner possible. We are 
confident that the capacity building that will be offered will increase 
the centers' abilities to provide services to victims and operate as 
self-sustaining organizations.
                                          Thursday, April 13, 2000.

                       DEPARTMENT OF THE TREASURY

                                WITNESS

LAWRENCE H. SUMMERS, SECRETARY OF THE TREASURY

                      Chairman's Opening Statement

    Mr. Callahan. I am going to go ahead and begin with my 
statement. I saw Mrs. Pelosi on the floor. I have some 
engagements this afternoon that I have to attend to, so in 
order to begin this procedure, I will ask that you listen to my 
statement and I will provide it to the Minority when they get 
here.
    Good morning, Mr. Secretary. I guess this is your first 
hearing before this subcommittee, and I want you to know I am 
on your side regarding free trade and market economies and I 
encourage you to stand firm against those who are trying to 
besiege Washington this week. The committee has questioned many 
World Bank activities over the years, but I don't think it is 
right to blame Jim Wolfensohn for bad debts and mistakes left 
to him by others. It is no surprise to you that a major topic 
this morning will be debt. We want to focus on multilateral 
bank debt in general and on your supplemental and regular 
budget requests for debt in particular. I ask that you focus on 
those matters in your oral testimony and your full statement 
will be placed in the record.
    Over the past several years, the committee has gone along 
with the request to increase the use of private voluntary 
organizations in the delivery of aid. We get more bang for the 
buck that way.
    Now, some of the same private and church groups want us to 
fully fund the HIPC trust fund. These groups need to recognize 
that any funding for the HIPC trust fund will come from their 
bilateral programs. They have no guarantee that one penny for 
HIPC will benefit grassroots development programs. I can 
guarantee that HIPC will have an adverse effect on the United 
States PVOs.
    This committee is sympathetic to the idea that poor 
countries cannot develop while staggering under the heavy 
burden of foreign debt. This committee decided many years ago 
to provide bilateral aid in the form of grants. We have 
discouraged AID from getting back into the loan business. The 
subcommittee has supported bilateral debt relief for Poland, 
Egypt, and many developing countries. We have shown our 
willingness to write off our own bad debts. I am skeptical of 
writing off the bad debts of others. But it seems at a minimum, 
we should expect a time-out on new lending to these troubled 
countries if these debts are erased.
    I look to you, Mr. Secretary, to provide the committee with 
the simple set of facts about the heavily indebted poor 
countries initiative. Who is the direct beneficiary? In other 
words, who actually gets the cash? Poor people, poor countries, 
multilateral banks, or bond holders in North America or Europe? 
What is the difference in each HIPC country's cash flow over 
the next 3 years?
    Tanzania and Bolivia, as an example. Has repayment of their 
bilateral debt been deferred? Were payments of their old 
multilateral debts already being primarily financed by new 
loans from the same banks?
    As far as the other budget requests for IDA, as always, the 
subcommittee will do the best we can with the allocation 
provided to us. From what I know at this time, it will be 
difficult if not impossible to appropriate sufficient funds for 
both IDA and the HIPC trust fund. So I look forward to your 
response on that during your testimony.
    But just let me comment while we are waiting on Ms. Pelosi, 
that while I know the church groups and the people who are 
interested in the HIPC initiative and are lobbying Congress so 
hard have very noble goals in mind, I don't think they totally 
understand the process here in Washington, nor do I think they 
have thought through the consequences of what will happen to 
their goals if indeed we do take money that is now being spent 
to feed starving children or to tend to the poor or tend to the 
sick and give it to banks. In many cases there is no cash flow 
freed up to perform these services that they want. Many of the 
countries we are talking about do not pay principal. They don't 
pay interest. All we are doing is using money that we currently 
are giving to IDA to help these needy people. All we are doing 
is freeing up their books so they can borrow more money.
    So I hope that as we go through this process, those who are 
so interested in this process recognize they are doing in some 
instances a great disservice to the very people they want to 
help, and that is the poor people of some of these heavily 
indebted countries.
    Also Bill Schuerch is with us here today, a former staff 
member of the committee.
    Mr. Secretary, if you will, we will begin your testimony 
now.

                  Secretary Summers' Opening Statement

    Secretary Summers. Mr. Chairman, Congressman Packard, 
Ranking Member Pelosi, I appreciate the opportunity to testify 
about the Administration's fiscal year 2001 budget request for 
Treasury's international programs. I appreciate the interest 
and effort this committee has devoted to these programs over 
the years. I am particularly grateful, Mr. Chairman, for the 
personal interest that you showed by attending and contributing 
at the Inter-American Development Bank's meeting in New Orleans 
a few weeks ago.
    Today I would like to address three issues:
    First, a strong case for continued United States support 
for multilateral development banks and debt reduction.
    Second, the central element of our request for funding for 
treasury international programs.
    Third, our ongoing reform agenda for the MDBs and how it is 
being implemented in the context of debt relief programs.
    I have submitted a longer statement for the record and with 
your indulgence I will deviate from my prepared oral statement 
to answer the questions that you have raised in your very 
thoughtful opening statement. The case for MDBs and debt 
reduction programs rests on the importance of successful 
economic development in the developing world and the role of 
MDBs and debt reduction in promoting such development.
    These institutions promote our core interests in three 
ways:
    They advance our core values in humanitarian goals at a 
time when more than 1.3 billion people live on less than a 
dollar a day.
    They promote our economic and commercial interests. They 
support policy changes such as reduced tariffs in Mexico and in 
India, both of which occurred more through unilateral actions 
supported by the development banks than through trade 
agreements which benefit U.S. producers.
    And they promote our national security. From the experience 
of Germany in the 1930s, to Bosnia and Africa in more recent 
times, history teaches us that conflicts are more likely in 
situations of economic distress.
    Mr. Chairman, you raised the crucial question of leverage 
and trade-offs. What I would highlight is that each dollar that 
we contribute to the multilateral development bank leverages 
$45 to build tomorrow's markets in democracies.
    We gain that leverage for two reasons: We gain it because 
the institutions are able to borrow in the markets, and we gain 
it because U.S. contributions are matched by others around the 
world. It is those two facts together that contribute to the 
45-to-1 leverage.
    For a variety of similar reasons, the multilateral 
character of the debt reduction program and the power of the 
U.S. example, plus the fact that in many cases the loans are 
carried below book value, all these factors mean that debt 
reduction programs similarly can provide leverage of as much as 
20-to-1. As private capital markets have grown and global 
realities are changed, we have successfully reduced our annual 
contributions to the multilateral development banks working 
with this committee by 40 percent, or $700 million in real 
terms since 1995. This is not primarily a matter of increased 
arrears. It is a matter of reduced international commitments. 
Our international commitments today are less than two-thirds of 
the international commitments to these institutions that we 
inherited in 1993.
    At the same time, even with reduced U.S. contributions, 
strong U.S. leadership and advocacy have produced major 
operational and policy improvements. Through their programs and 
policies, the MDBs have had a tangible impact. Think of the 
green revolution, the progress that has been made in allowing 
30 million people to now be protected from river blindness.
    Think about this progress in spite of all of the alleged 
problems in the world development effort. Life expectancy in 
the developing world in the last 20 years has increased by 
nearly 8 years, an amount equivalent to the gain from solving 
cancer three times over.
    Mr. Chairman, let me turn to our request. For fiscal year 
2001 we are requesting a total of $1.6 billion for Treasury 
international programs; $7 million is for technical assistance. 
The remaining two large components are $1.4 billion for the 
multilateral development banks, $1.2 billion of which is for 
our scheduled commitments, and $167 million of which is to work 
off arrears.
    Let me stress that these programs are now operating on a 
sustainable basis. Our $1.2 billion commitments compares with 
the $1.9 billion commitments that were in place in 1993. My 
written testimony details the requests for the specific 
development banks. Let me just highlight that a particular 
concern in the arrears area is our $200 million in arrears to 
the Global Environment Facility. That amount of arrears puts 
the ability of that program to function at substantial risk. 
There is much that is controversial in the environmental area, 
but I believe that the voluntary market-based approaches that 
the GEF supports should be able to command widespread support.
    The second major component is a $262 million request for 
debt restructuring. Let me seek to address the three primary 
questions that you raised in your opening statement if I could, 
Mr. Chairman.
    You asked who the real beneficiaries would be. The real 
beneficiaries would be poor countries and their governments who 
would find themselves with reduced interest burdens and funds 
that could be used for other purposes.
    You asked whether there would be real cash flow reductions 
that could translate into social benefits. Here it is important 
to distinguish between bilateral debt and debt owed to the 
multilateral development banks. It is indeed the case that many 
countries are in arrears on our bilateral debt. So reducing 
that debt does not provide direct cash flow for them. In 
virtually every case, however, countries are servicing their 
multilateral debts. So the reduction in those debts does 
translate into direct cash flow savings.
    I might just mention, to take the two examples that you 
raised in your opening statement, Mr. Chairman, that Bolivia 
saved $77 million in 1999 in debt service as a result of the 
original HIPC initiative, and that social spending in that year 
was $119 million more than it had been in 1998. In Tanzania, 
the current commitment in the year 2000 is to increase social 
spending by some $50 million or more than 10 percent as the 
country benefits from the debt reduction program. That 
commitment comes within the context of an assistance strategy 
that will form the basis for the poverty reduction paper within 
the debt reduction program.
    The third question you asked, Mr. Chairman, is one that is 
very troubling to us: you raised the very understandable 
suspicion that we are all just engaged in a cynical cycle where 
we forgive debt, and lend money again and find ourselves 
forgiving debt again. That is something that is of very real 
concern to us. To address that concern, we have insisted first 
that any debt reduction come in the context of a detailed 
multiyear financial plan that establishes on realistic 
assumptions the country's ability to manage debts during that 
period.
    Second, we have pursued a policy of not initiating new hard 
lending for countries receiving debt relief for a period of 
several years. We think with respect to hard lending that is 
absolutely appropriate.
    Third, we have insisted that there be a framework for the 
national budget and for the various foreign assistance efforts 
that assures that whatever concessional finance is provided is 
provided on terms where it can comfortably be repaid during the 
period following debt reduction. We are very much prepared to 
discuss other measures to assure that these funds are used for 
their proper purpose and to work to the maximum extent possible 
to ensure that we take advantage of this jubilee year to do 
this now and do it right so we don't have to do it repeatedly.
    Let me say that my statement details a variety of steps 
that we have worked to take within the international financial 
institutions to bring about real reform, in many cases to 
highlight values that this committee has stressed. I will 
mention only a couple of examples:
    The decision of the IMF Board last month to insist on 
external audits of all banks receiving IMF funding.
    The decision of the IMF to provide and publish its 
operating budget on a quarterly basis.
    Measures to make the multilateral development banks more 
transparent and accountable.
    To take one example that I think was a particular concern 
to this committee, at the African bank, aggressive U.S. 
leadership--and Mr. Schuerch played a central role in this--has 
produced top-to-bottom restructuring and reform. Seventy 
percent of top management has been replaced in the last few 
years. There has been a complete scrub of the balance sheet, 
new voting rules that cement the control of the donors, and the 
strongest good governance policy in the international financial 
institution system. With Congress having last year authorized 
new U.S. investments in the bank, ours is now the leading voice 
in Africa's leading development institution.
    With respect to broader policy towards the multilateral 
development banks, we have taken an approach of stressing that 
the banks need to recognize that we live in a world where there 
is today a robust private capital market. They need to focus 
their efforts on those projects which complement and support 
that private capital market ratherthan supplant that capital 
market. That means projects that support key social investments. That 
means maintaining a capacity to respond to emergencies when private 
capital flows are interrupted. That means creating frameworks in which 
the private sector flow of capital can function more effectively. It 
does not mean financing the kinds of projects for which private market 
finance is readily available.
    We will be discussing these issues and other issues 
connected with the functioning of the institutions with the G-7 
and with the International Financial Committee and the 
Development Committee this weekend in Washington.
    We will also be discussing a question that I think is of 
particular importance, and that is the question of what we can 
do to promote investments that pay off at the global level but 
not at the level of any single country. Perhaps the clearest 
example of such an investment is investments in vaccines to 
address tropical diseases. The President has put forth a 
program with a number of elements, including working closely 
with Congresswoman Pelosi, support for pharmaceutical 
innovation through the tax system, where I think we have a 
great opportunity to do something that is very important for 
public health.
    Mr. Chairman, at the beginning of this new century I think 
one of the most important sets of decisions our country will 
take is how we will manage our policies with respect to the 
developing world. I think we can all agree that we have an 
enormous stake in seeing success in the developing world, that 
market institutions will have a central role in any success and 
our international policies can make a real difference in what 
happens in the developing world. It is incumbent on all of us 
to work together to find the most effective solutions so that 
we can support what we all seek: effective, inclusive growth in 
the developing world.
    Thank you very much.
    [The statement of Secretary Summers follows:]
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             THE REAL WORLD

    Mr. Callahan. Thank you, Mr. Secretary. Let me just respond 
that many of the things you say sound very good, sound very 
logical, but that is not the real world. If we had unlimited 
amounts of money, we could do some of these things without 
jeopardizing our ability to do other things.
    The real world, however, is that we do not have unlimited 
amounts of money. We have this year an allocation which is 
going to be somewhere in the area of about $2 billion less than 
the administration is requesting for our bill. That is the real 
world.
    The real world is that we probably are not going to get a 
single Democrat vote in subcommittee, full committee, or on the 
floor of the House. That is the real world.
    The real world is that we are going to go to a conference 
with the Senate and we are not going to be able to come up with 
anything that the administration can accept. So the real world 
is that all of this is going to be negotiated with Jack Lew in 
some back room of the Capitol sometime late at night in the 
month of October. The real world is that Jack Lew and I are 
both bullheaded. We couldn't agree on anything, I think, just 
on principle. He is a tough negotiator. And if the past is any 
indication of the future, then ultimately the Speaker of the 
House and Jack Lew along with the Democrat leadership will meet 
and determine the fate and the numbers and the direction of 
this bill. That is the real world.
    But I don't want people who are so active for such a noble 
cause to go down this road that they think is going to relieve 
suffering with any indication that there is not a cost to their 
goal. The real world is that the way CBO scores, we are going 
to have to reduce a portion of that $13 billion from money that 
the United States of America, through private volunteer 
organizations, is providing for the poor, the sick, and the 
starving.
    We are doing that now, and if we take part of our $13 
billion and give it to the Treasury to benefit some bank that 
has made a bad loan, then what we are going to do is to take 
away food and medicine from the very people that these 
organizations are trying to help.
    If that is going to be their mission, with blinders on, so 
be it. They are a God-fearing people and noble people and they 
certainly have their hearts in this thing. But they are not 
knowledgeable about the process because they are not being told 
the real world facts. The real world facts are that we are 
going to have to take away medicine and food and education 
opportunities from poor people in order that some bank sitting 
there with their marble floors and leather furniture is not 
going to have to write off some type of loan that they are 
giving to some country, and then they are going to go in there 
also the next week, they are going to go in there such as they 
did in Uganda.
    You said that hard loans are not a factor. Uganda has had 
some HIPC forgiveness already. They have been back to the 
window for $20 million. That is the African Development Bank.
    What you are saying sounds good, but it is not the real 
world. So God bless these people with Jubilee 2000 and the 
church groups that are for saving the world and the 
environment, but I do wish they would look at what they are 
doing and recognize that without some prohibition we just take 
it from one fund to give it to the rich bankers. The real world 
is that political leaders in these countries borrowed money and 
in many instances took the money to Swiss banks, deposited it, 
and never built the bridges they borrowed it for. And now we 
want to forgive it and to give them the opportunity the next 
day to go right back to these same institutions and say we need 
to borrow some more money to make things better for our people. 
It is not freeing up money, it is not freeing up cash flow that 
can be utilized to benefit the needy people in their countries.
    So let's not go into it with blinders on. In the end, Mr. 
Lew and I will sit down some late night and we will give Ms. 
Pelosi something she is asking for, and Mrs. Lowey something, 
and Mrs. Kilpatrick something.
    Ms. Pelosi, we are ready for your opening statement.

                     MS. PELOSI'S OPENING STATEMENT

    Ms. Pelosi. Thank you. I join you in welcoming our 
distinguished Secretary to our hearing this morning.
    I would note, that the Chairman has chosen an interesting 
day in light of all of the activities on the streets of 
Washington, D.C.
    First, I would like to address the debt forgiveness issue. 
I am in reluctant disagreement with my Chairman on this 
subject. The issue of debt forgiveness, despite all of the 
publicity it has received lately, remains largely 
misunderstood. People can relate to helping the poor and giving 
countries a second chance for a new start but it becomes more 
difficult to translate that into forgiving debt. Most people 
cannot conceive of having their debts forgiven, and if they 
were, they certainly don't expect the same bank or department 
store to lend them money after forgiving their debt. That is 
the point that the Chairman makes.
    Yet despite their instinct, many Americans support debt 
relief for the world's poorest countries and many have joined 
in the initiative of Jubilee 2000 for debt forgiveness, in the 
tradition of the Bible to forgive.
    I want to provide a little background on this subject which 
I think may be useful. In the early 1970s many newly 
independent African countries were enjoying a boom in mineral 
and agricultural exports, and were eager to borrow from western 
banks to expand infrastructure and grow their economies. 
Western banks were only too eager to comply. Millions of 
dollars flowed into these inexperienced and sometimes corrupt 
governments. These funds were spent on huge industrialization 
programs, arms purchases and construction in capital cities. 
Little if any funds were spent to alleviate poverty.
    The problem today is that we did not do enough to make 
alleviation of poverty the chief mission of the international 
financial institutions. Initially all seemed well, but as the 
oil shocks of the 1970s triggered worldwide inflation and 
recession, commodity prices collapsed and prices for basic 
necessities shot up. Because most of the debt at that time was 
held by private banks, by the 1980s big lenders had teamed up 
with the IMF and the World Bank to get their money back. The 
result was a series of reschedulings that made the private 
banks whole, but did nothing for poor countries but trap them 
in a devastating cycle of debt and underdevelopment.
    We should not forget that we were an active participant in 
creating the ruinous cycle of debt for these countries. We 
supported many of the corruption regimes in countries now 
trying to recover. Also, we enabled some of the major banks of 
the world to make themselves whole from their own bad 
investments through our actions at the IMF and the World Bank.
    The question is do we move forward to support the debt 
relief agreed to by the international community or do we demand 
further concessions from these impoverished countries. I will 
submit that Africa has changed vastly and we need to recognize 
that. While we in the West tend to focus on the areas of 
conflict on that continent, we should not ignore the fact that 
many governments in Africa have changed dramatically. 
Mozambique is a shining example of a country that has taken 
steps to democratize and comply with every bit of financial 
conditionality set down by the international financial 
institutions. They have been under the IMF plan for over 3 
years. They need our help now and this is separate from 
disaster assistance that our distinguished colleague has been 
calling for relentlessly and effectively.
    Other countries such as Uganda, Tanzania, Senegal and Mali 
have taken similar steps and need immediate help. It takes 2 or 
3 years for countries to reach the decision point for countries 
to get approval for debt relief. Getting to that point requires 
adherence to a long set of conditions. The fact that there is 
now a consensus among commercial banks, multilateral 
institutions and the G-7 countries to relieve debt should 
demonstrate that this is a pragmatic, not a charitable approach 
and solution.
    Africa is a better place to lend money than it was a decade 
ago. But beyond that, the rules for new lending have changed. 
Banks and countries have put together tougher conditionality in 
place which makes it tougher to get new loans. The framework of 
the HIPC initiative has been carefully woven. I would say that 
there are many vocal critics who still feel that this plan is 
too tough on poor countries. The mantra of our foreign policy 
is going all-out to open markets for western goods. Debt 
relief, followed by renewed economies in Africa, will enable 
precisely that.
    Mr. Chairman, I appreciate your indulgence in putting my 
statement on the record. When we talk about these budget 
priorities, it seems to me that it should not be an either/or--
either our noblesse oblige or their self-reliance.
    We absolutely must help these countries get on their feet 
and solve their own problems, and we also must match the 
compassion of the American people with the resources to help 
stop the spread of disease, which is in our national interest, 
alleviate poverty, creating markets for our products and help 
these countries democratize.
    What we are doing is for us as well as for the world. I 
would hope that we could see the debt relief not as an either/
or, our charity or their self-reliance, but some balance in the 
approach that we take.
    I do want to remind that Secretary Summers and Mr. Armey 
negotiated the debt relief last year, and so hopefully we will 
all be at the table and you will be using your considerable 
leverage on behalf of Mrs. Lowey, Ms. Kilpatrick, and myself.
    Nonetheless, it went to a different place last year, and I 
would hope that the values that I believe the American people 
support in supporting Jubilee 2000 will prevail at the end of 
the day, whoever is at the table.
    I yield back the balance of my time.
    Mr. Callahan. Mr. Wolf.
    Mr. Wolf. Thank you, Mr. Chairman. Mr. Secretary, I have 
two issues. One, I want to express personal disappointment in 
you and the Treasury Department for your lack of action with 
regard to the Chinese National Petroleum Corporation. I want to 
insert all of the letters that I have sent to the Secretary 
over the last 7 months and the actions I think are really very 
disappointing.
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    Mr. Wolf. In that country there is tourism. They tried to 
assassinate President Mubarek. Had they done that, the world 
would be different today.
    Two million Christians have been killed in the south and 
your Department has been silent. There is slavery going on 
today. We could leave this building, fly there, and trek into 
southern Sudan, and you can buy slaves. And because of allowing 
this to go on--and I am not asking you a question, I am making 
a statement--your silence is deafening. And I believe history 
will judge the lack of action of your administration very, very 
harshly.

                                 CHINA

    The question that I have is on another issue. I read that 
you are participating in the so-called White House war room 
with regard to passing China MFN; is that correct? Are you 
participating?
    Secretary Summers. I have certainly participated in 
meetings with my Cabinet colleagues on that issue.
    Mr. Wolf. Are your employees participating?
    Secretary Summers. Certainly there are people in the 
Treasury Department who have worked hard on what the President 
has identified as a major national issue.
    Mr. Wolf. Are any of them civil servant employees?
    Secretary Summers. They have certainly been involved in 
issues relating to trade policy. They have not been involved in 
political----
    Mr. Wolf. Have Civil Service employees been involved in 
meetings in preparation for those meetings?
    Secretary Summers. Congressman----
    Mr. Wolf. Yes or no. Have one of your employees call down 
there and report before you leave. Have Civil Service employees 
been involved in those meetings?
    Secretary Summers. Civil Service employees have been 
involved in policy discussions regarding U.S. trade policy 
towards China.
    Mr. Wolf. That was not the question. With regards to those 
meetings in preparation?
    Secretary Summers. Civil Service employees have certainly 
been involved in preparations for Cabinet level discussions of 
China policy. Yes, they have.
    Mr. Wolf. I asked the GAO to examine this and they have now 
made a request of the White House and the Treasury Department. 
Have you responded to their request, the GAO?
    Secretary Summers. I am not familiar with that GAO request.
    Mr. Wolf. A letter went to Mr. Lindsey and one went to the 
Treasury Department and one went to Agriculture and it said the 
following. ``GAO has been requested by Congressman Frank Wolf 
to review efforts of the administration to garner support for 
permanent normal trade relations with China. Congressman Wolf 
is concerned about whether such efforts may be in violation of 
18 U.S.C. 1913 or any applicable appropriation provision that 
prohibits the expenditure of appropriated funds for publicity 
or propaganda purposes or is used to lobby.''
    Then they go on and say we need to immediately get the 
information, we need to work on this. They are asking for 
meetings and some of the questions that GAO are asking are a 
list of all employees who have been assigned to the working 
group, a list of other individuals who are anticipated to 
assist in a working group's operation, including a legal 
authority, and for each staff employee identified above, please 
provide their employing agency, nonFederal, Schedule C, and 
many other questions. If they are Civil Service employees, they 
may very well be in violation of the law or you may be in 
violation of the law. What we are asking is that someone--your 
smile is sarcasm, is speaking.
    We are asking you to go back and have somebody call and 
give me the legal opinions with regard to this. And if they 
cannot be made, I ask you respectfully to close this war room 
down until we have an opinion from GAO whether or not you are 
doing illegal activities or not. We want to know. Otherwise 
this will not be fair. There are good and decent people on both 
sides of this issue, but it must be a fair contest and not one 
where the law is being violated.
    Secretary Summers. I could not agree with you more, 
Congressman Wolf, on the importance of fully respecting the law 
in this area. Our general counsel has provided all of us who 
work at the Treasury Department with very clear guidelines with 
respect to our conduct and the conduct of those who work with 
us with respect to the code sections that you cited. We do 
participate in policy discussions of the issues relating to 
China. We do explain and support the policy position of the 
Administration in this area. We are extremely careful in 
assuring that the lines you refer to which go to questions of 
lobbying or encouraging others to lobby are respected.
    All of my colleagues at the Department have been instructed 
in the nature of those rules and we are very careful with 
respect to those rules. We will be pleased to respond in full 
to requests that we receive from the GAO. But I can assure you 
that it is an absolutely critical priority of mine as Secretary 
to assure that the Department meets the highest ethical 
standards and that, of course, means not having Civil Service 
employees engage in any activity that is inappropriately 
political. That is an absolutely valid concern and one that I 
share.
    Mr. Wolf. If you can have your general counsel call me 
today. This is not an issue that I am going to let go. Lastly, 
it is a time-sensitive issue because there is a vote scheduled 
for May 22. I don't want to hear on May 20, You are right; we 
are going to change this. This action has to be resolved by the 
end of this week or the beginning of next week.
    Secretary Summers. My general counsel will call you, but I 
want to clarify because you have raised issues that go to my 
integrity, that participation----
    Mr. Wolf. If I may say, I am not. In the letter that I sent 
to the GAO, and I will furnish--I said they may, knowingly or 
unknowingly. I am not questioning anyone's integrity.
    Secretary Summers. Can I request that when Congressman 
Wolf's letters are placed in the record, that my responses are 
also placed in the record?
    Mr. Callahan. Without objection, so ordered. You have one 
of your lawyers with you. Maybe Mr. Wolf and the lawyer could 
meet and begin resolving his questions. Mr. Munk is here. Maybe 
he can give Mr. Wolf some answers this morning.
    Mr. Wolf. I will walk out if you want.
    Mr. Callahan. Mrs. Lowey.

                          EDUCATION FOR GIRLS

    Mrs. Lowey. Thank you, Mr. Chairman. Mr. Secretary, turning 
to an issue where I know there is a lot of support on both 
sides of the aisle, I know there is agreement that a well-
educated population is one of the best ways to ensure both 
political stability and economic prosperity, and although the 
United States supports basic education programs both 
bilaterally and multilaterally, I think we could be doing a 
great deal more, especially for young girls who are less likely 
to be educated worldwide than young boys. It was very clear in 
our trip to India this certainly is the fact and we see the 
results of this.
    I understand during your time at the World Bank you 
conducted groundbreaking research that quantified the impact on 
educating girls: Lower birth rate, lower infant mortality 
rates, and improved nutrition of the entire family.
    Can you discuss the importance of the World Bank and other 
multilateral development banks making girls' education a 
priority? Do you think that we could be doing more to promote 
this important objective? I would appreciate your comments.
    Secretary Summers. Mrs. Lowey, the research that I did with 
my colleagues when I was at the World Bank convinced me that 
increasing primary school education for girls may be the 
highest return available in the developing world because of 
what it means for increased productivity. Girls who are 
educated are likely to have smaller, healthier, happier 
families. Changes in the role of women within societies have 
profound impact on the way they evolve.
    Let me cite, if I could, a rather chilling statistic. In 
most countries if you do a census of the population, there are 
about 104 or 105 women alive for every 100 men. That is a 
reflection of the fact that women have a longer life 
expectancy. In parts of South Asia if you look at that same 
statistic, the ratio is 90 women for every 100 men. This is in 
the total population, and what it reflects is systematic 
mistreatment of women--and girls--starting from birth. The 
evidence is overwhelming that where girls are more educated, 
that is much less likely to happen.
    So I think that more education for girls is----
    Mrs. Lowey. You are talking about where they are in school?
    Secretary Summers. No, no.
    Mrs. Lowey. We misheard.
    Secretary Summers. I wasn't talking about enrollment rates 
in school. I was talking about being alive. In the United 
States, there are 105 women alive for every 100 men because 
women live somewhat longer.
    In South Asia, because there is more infanticide, because 
children receive differing amounts of food, because there is 
unequal access to health care, the number of girls and women 
who are alive is not 105 for every 100 men, but between 90 and 
95 for every 100 men. That is the mark of the most direct and 
immediate human consequence of the discrimination. This is 
something that the Nobel Prize winner Marshal Sighn has written 
about, and I can send you some of his work.
    But to come back to our main thrust here, I think it 
isimperative that the percentage of lending that the banks continue to 
increase for education be increasingly targeted on girls' education. 
The cost of equalizing primary school enrollment rates or making 
primary school enrollment universal is something that is achievable. I 
think we need to make a central priority in the context of the debt 
reduction programs the achievement of universal primary education by 
2015.
    Let me take if I could, Mrs. Lowey, this opportunity to 
respond to the Chairman's question as to whether these debt 
reduction programs are taking food and education away from 
children.
    I would make these points:
    First, in whatever political process we have at the end of 
the year to settle our budget priorities, my hope is that we 
are able to do more both through debt relief and through 
international assistance. We are doing much less as a country 
after correcting for inflation than we were a decade ago.
    Second, debt relief programs provide very substantial 
leverage because we bring in the money of other countries. 
Germany and Japan just this week have followed the United 
States in announcing 100 percent debt relief programs. Because 
the paying off of loans can provide a multiplier effect in 
terms of resources available, we may get more extra money for 
education, for nutrition, out of debt relief than out of 
anything else that we can do.
    Third, the countries themselves and the organizations 
within the affected countries believe that the most important 
thing we can do for them is debt relief as they work to achieve 
their social objectives.
    With all due respect to the Chairman, our analysis suggests 
that the advocates are quite correct in suggesting that debt 
relief does go into increased literacy, increased health care, 
and that it is really not a fair statement to say that this 
goes to support more marble floors in banks or the like. I 
think that it is not a fair reading of the evidence.
    It is true that you could cancel all of our concessional 
programs and use the money to finance debt relief, but that 
would be selling these countries extraordinarily short. If we 
want to relieve debt, there is simply no alternative to 
appropriations for debt relief.
    Mrs. Lowey. I thank you, Mr. Chairman. Your response almost 
made me almost out of time.
    Secretary Summers. I apologize.
    Mrs. Lowey. No, I thank you for your informative response. 
I want to comment, and maybe I will save my questions for the 
next round, but as usual in many of these situations the truth 
is somewhere in between. As many of us recall, several weeks 
ago there was an article in the New York Times attributing so 
much poverty in the world to corruption. In response to our 
Chairman, there is concern about the lack of taxes being paid 
in India, the corruption that we see in many parts of the 
world, the fact that there are so many making hundreds and 
hundreds of millions of dollars and sending the money out of 
the country. In India you see so much abject poverty.
    I would be most appreciative if you could respond to the 
eloquent comments of my Ranking Member, Ms. Pelosi, and to our 
Chair. I think it would be very helpful to us if you can see--
--
    Mr. Callahan. I think he can respond as soon as Mr. Packard 
asks his questions.
    Mrs. Lowey. I would like to have you respond with regard to 
greater transparency, greater oversight and assurances that the 
money is going for the purposes for which it is meant.
    Mr. Packard. Let me ask my questions before I make 
comments, and if there is time I will make comments.
    You are requesting $262 million for HIPC funding this year 
according to your statement. In the supplemental appropriations 
for fiscal year 2000, there is $585 million requested. Are 
these in addition to one another?
    Secretary Summers. Yes.

                              DEBT RELIEF

    Mr. Packard. So we are looking at over $800 million total.
    How will the countries that receive debt relief be chosen? 
What are your guidelines and criteria?
    Secretary Summers. There are a set of internationally 
agreed criteria that go to two broad areas. First, they go to 
an assessment of the debt burden of the country in terms of the 
ratio, the amount of debt in present value terms to the 
country's capacity to export, and whether there is a realistic 
prospect that the country could service these debts in full.
    So the first criterion is that it has to be heavily 
indebted, and it has to be very poor. There are quantitative 
criteria in terms of export to GNP ratio and level of income. 
The first set of criteria are that you have to be poor and 
indebted. The second set is that you have to enter into and 
succeed for some time in an economic reform program that meets 
tests both in terms of being satisfactorily market-oriented, 
confidence engendering in terms of the capacity to keep private 
capital in the country, and adequately oriented towards the 
achievement of health and education indicators and human 
development indicators.
    If all of those conditions are met, a country qualifies for 
debt reduction. There are 36 countries that meet the first set 
of tests and that are attempting to go through the process of 
meeting the second set of tests to become eligible for debt 
reduction.
    Mr. Packard. Your first criteria is of interest to me 
because from first blush it appears that they actually invite 
countries to do the wrong things. If heavily indebted countries 
take more debt upon themselves, and if they are relieved of 
that debt, they will go further into debt. So it invites heavy 
indebtedness, if that is a criteria.
    The second portion of that same one is that they are very 
poor. That would encourage, I would assume, a country to invest 
in export products and agriculture instead of providing for 
their own needs. In other words, if they don't provide for 
their own needs with the money that they borrow, but rather 
invest it to export out of the country, it would appear that 
would encourage remaining heavily indebted. That is kind of a 
dichotomy that is hard for me to understand but I understand 
the rationale.
    Is there any consideration given to the future financial 
stability of a country?
    Secretary Summers. Yes. Let me just say that the criteria 
are designed with the premise that the more a country exports, 
the greater its assumed capacity for debt reduction. Often the 
calculation is done on the basis of information that is 
available or is already calculated with some lag that mitigates 
the kind of moral hazard consideration that you have raised, 
Congressman Packard. In the context of the economic 
conditionality that I referred to, there is a requirement that 
there be what is called a medium-term sustainable plan which 
demonstrates that the cash flows really add up and the country 
has the capacity to be financially stable over the succeeding 
years following its debt reduction.
    Indeed, because you have a capacity calculation over a 
spread of years, based on the availability of resources, the 
concern is that if we are not able soon to make the U.S. 
commitment to these programs, it will be difficult for 
countries to see the sustainable funding path. These efforts at 
debt reduction and the social progress that can follow them 
will be delayed.
    Mr. Packard. Well, it appears to me that debt reduction 
produces greater debt and greater debt produces debt reduction 
or a feeling that they deserve, according to the criteria--a 
forgiveness of greater debt.
    I also think that, as Mrs. Lowey mentioned, that there has 
been very little over the long sustained years, very little 
change in the poverty level of most of these countries that we 
are working with. I don't think that we have seen a major 
change. The loan program has not really brought countries out 
of poverty.
    Secretary Summers. Could I respectfully disagree with you 
on that? If you look in Asia where most of the world's poor 
people live, there have been dramatic reductions in the number 
of people that are living on less than a dollar a day. If you 
look at infant mortality rates, they are half of what they were 
25 years ago. If you look at life expectancy, they have 
increased by amounts that far exceed what you could achieve by 
eliminating cancer. If you look at the percentage of people who 
have access to running water and the percentage of children who 
are diseased, we are certainly not doing well enough. But if 
you look at the condition of poor people around the world and 
compare it with what hearings in this room predicted 20 years 
ago or 25 years ago when mass famine throughout Asia was a 
standard prediction, I would argue that development records 
certainly are very, very far from perfect, but they do show 
some real progress.
    Mr. Packard. One last comment, no question. Most of these 
Third World poor countries that we are helping and now are 
expecting and requesting debt relief are countries that 
repeatedly vote against the United States' interests in the 
U.N. more often than they vote for us. That is very galling to 
some of us that give them money and then relieve their debt 
only to find that they are not supportive of the United States 
when we need them.
    Mr. Callahan. Mrs. Kilpatrick.
    Ms. Kilpatrick. Thank you. The discussion has been quite 
instructive and I am very happy to hear you talk about the same 
things that are needed in other countries, certainly also in 
our own. Education and health care and housing seem to be the 
top three priorities around the world.
    As the discussion has been going on about debt relief, the 
Chairman was very strong, as you heard this morning, on what 
our view of debt relief is and ought to be as we assist other 
countries in the world. You mentioned 36 countries. I would 
like to have a copy of what those 36 countries are and the 
schedule by which you are trying to address those debts.
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    What can you say to this committee regarding debt relief? 
Mr. Wolfensohn said that it is going to be very difficult to 
address the debt relief problem. You did say it is an 
international criteria. I have always believed that it is the 
international community that needs to address the problem, not 
just the U.S.
    What recommendation can you make to this committee, as we 
see that most of the multilateral banks' appropriation is 
decreasing from previous years. Is that a direct result of the 
overall appropriation? How do you rate those numbers? They all 
seem to be less than the year 2000 appropriation?
    Secretary Summers. Congresswoman Kilpatrick, with respect 
to the contributions to the development banks, those amounts 
come from the agreements that we have negotiated to which we 
believe would best serve U.S. interests and would be 
sustainable in the U.S. environment. We have over time reduced 
the scale of those commitments, reflecting in part a greater 
capacity of private markets to finance development, and also 
reflecting the realities of what can be sustainably supported 
within the United States. What I think is important, if we are 
to remain credible in these institutions, is that we continue 
to reduce rather than increase the level of arrearages that we 
have.
    Ms. Kilpatrick. That is happening in some places.
    Secretary Summers. In some places it is up and in others it 
is down. It is down from a peak of $862 million to about $450 
million. That is the good news. The bad news is that the 
arrearages went up last year by over $100 million.
    Ms. Kilpatrick. I know that I am asking about debt relief 
and the multilateral banks, trying to get my question out 
before the bells ring and we have to leave for the vote.
    About the list of countries eligible for debt relief, I 
don't have time to discuss the issue, but I would like to see 
the list and the debt relief schedule. Let me switch to--the 
multilateral banks, I am going to set aside my question for the 
second round of questioning.

                               MOZAMBIQUE

    It is my understanding that Secretary Albright will be 
before the Senate asking for an appropriation for Mozambique. 
Have you been involved at all in that discussion?
    Secretary Summers. I am aware of that and I am certainly 
aware of the tragic situation in Mozambique. Mozambique was one 
of the two most rapidly growing economies in the world. It has 
done a tremendous amount right. All you have to do now is look 
at the pictures. It is facing a profound human challenge. We 
are working to expedite the provision of the debt relief which 
is the piece that we are involved with at the Treasury 
Department. We have urged the international financial 
institutions to do as much as they can and I think the 
supplementary appropriation that Madeleine Albright is 
requesting will make a further valuable contribution.
    Ms. Kilpatrick. Are you there? What is that number and will 
it happen?
    Secretary Summers. It will happen. We are there and it is 
100 percent.
    Ms. Kilpatrick. When?
    Secretary Summers. The decision has been taken. They are 
not currently servicing their interest payments. So they are 
getting all of the cash flow relief, and I would anticipate in 
the next several months that the final stage will be reached.
    Ms. Kilpatrick. Getting the cash relief is good. When will 
the debt be canceled?
    Secretary Summers. Bill?
    Mr. Schuerch. We have made a commitment that at the 
decision point on the bilateral debt we would do 100 percent 
relief with Mozambique. The decision point is not yet set with 
the World Bank and the IMF, but is 3 weeks, a month away.
    Mr. Callahan. We have to go vote. We are going to recognize 
Mr. Lewis and then after Mr. Lewis finishes his questioning--
I'm sorry, Mr. Kingston. Mr. Kingston will be recognized until 
he has to go vote and then Mr. Knollenberg will be back to 
reconvene the hearing.
    Mr. Kingston. Mr. Secretary, I just wanted to ask a couple 
of questions that I would like to get a follow-up answer to 
because of time. I just want to ask them and go vote.
    Relative to what Mr. Packard was headed to, countries that 
vote against us in the U.N. but we give financial assistance 
to, I wonder if we can get something that shows, say, the 
countries that we are giving assistance to and the number of 
times they vote against us; because as supporters, as all of us 
on this committee are, of foreign aid, this is one of the great 
criticisms that we have to answer to the folks back home. We 
are giving American taxpayer moneys to countries that don't 
support America.
    I would like to see something that confirms or denies that. 
If you could send that to me or any other staff or committee 
member--and I yield the rest of my time to Mr. Lewis.
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    Mr. Lewis. Mr. Summers, I appreciate very much your 
testimony. It has been some time since I have been on this 
committee, but in past years I was very much involved in 
questions like debt relief. I think that some very healthy 
questions have been raised today that we would love to hear 
additional comments about for the record, and I will review the 
record with some care.

                                 CHINA

    I wanted to address briefly, however, that side of our 
discussion that was most heated, that involved questions of our 
relations with China. I too am attempting to maintain an open 
mind regarding that question before getting to a point where we 
vote on the issue. In the past I have supported normal trade 
relations with China. It does seem to me that America makes a 
relatively minor budgetary contribution to foreign assistance 
overall. A part of that happens to relate to debt relief, but 
certainly part of it is a reflection of the reality that we are 
the only remaining superpower in the world and we have a 
responsibility to provide leadership as we carry forward that 
effort.
    This is by way of saying to you that on more than one side 
of the aisle there is interest in the testimony that you 
provided today. Far be it for me to suggest that we ought to 
walk away, encouraging private sector development, attempting 
to use the good offices of the multilateral banks to extend the 
private economy.

                                 INDIA

    I would be interested in your view of the role that 
multilateral development banks are playing and Treasury's role 
within those banks are playing to develop effectively private 
sector interests, especially in Asia. But I have in mind India, 
knowing that we have only limited contact with China. So speak 
to me about India if you would.
    Secretary Summers. The approach that the banks take to 
supporting the private sector in India really takes two 
different forms. The first is direct support through their 
private sector arm, the International Finance Corporation, for 
a variety of private projects in India. Increasingly, that 
support is oriented to what the international private sector is 
less likely to do, which is support for small business, support 
for microlending, support for the kind of things that are less 
likely to be done automatically by the private sector.
    The second and, in my judgment, more important thing that 
they do, Congressman Lewis, is support changes in the policy 
framework which allow the private sector to operate. For 
example, they are involved in the Indian financial sector where 
there is an ongoing effort to remove a variety of restrictions 
requiring banks to put a large portion of their assets in 
government debt, and which impose a variety of other kinds of 
restrictions on the activities of private banks.
    We have encouraged, and with some success, the multilateral 
development banks to take an increasing role in private sector 
infrastructure development where they can have a catalytic 
impact in making it possible for the government and the private 
sector, international private sector, to come to an agreement. 
There are projects, I believe in the power sector in India, 
that have that character. But the broad approach is from the 
ground up, through support for individual private sector 
projects that serve as examples, through support to create 
policy frameworks that are frankly more private-sector-
friendly, and through involvement with private sector 
infrastructure.
    Mr. Lewis. I have about a minute and a half left to get to 
the vote. Unfortunately, I will have to run off. Mr. 
Knollenberg is not back so we will have to recess the hearing 
for a few minutes.
    [Recess.]
    Mr. Knollenberg [presiding]. We are going to reconvene the 
subcommittee and I will begin with the questions.
    I do want to first of all associate myself with the 
comments made by the Chairman regarding debt relief. I think 
that is putting 4 pounds of sugar in a 3-pound bag. Let me talk 
about GEF Secretary Summers if I could--and I welcome you.

                                  GEF

    I would like to discuss concerns I have about the GEF. I 
presume that you mentioned this topic in your opening comments. 
I am concerned about GEF's activities as they relate to the 
Kyoto Protocol. I don't want to necessarily get into that, but 
I do want to talk about some of the activities with which GEF 
is involved regarding the so-called climate change initiatives, 
the international mechanisms which include clean development 
mechanisms, emissions trading, et cetera. That is, of course, 
the essence of where I see various agencies crossing the line 
and actually getting involved with the implementation of the 
Kyoto Protocol. I am not going to discuss that today except to 
bring up the situation with GEF.
    I know that there are a number of organizations that are 
associated with GEF that do advocate openly implementation of 
the Kyoto Protocol. I want to ask you about what assurances you 
can provide that your activity won't cross the line and get 
involved in spending dollar one, because we have prohibited 
that via language in the previous FY 2000 bill and the FY 1999 
bill. This year you are requesting $107.5 million. You are 
adding--$68.1 million. Last year we appropriated $35 million.
    I am asking first of all why, because with the priorities 
we have and--as the Chairman discussed--the budget itself is 
down from what the administration requested and who knows what 
other priorities will arise. What assurances can you give me 
that Congress will, within GEF, abide by that prohibition of 
spending limitation?
    Secretary Summers. Let me say, Congressman Knollenberg, 
that I am very much aware and I think we are all aware of, to 
put it mildly, the divided opinion on the Kyoto treaty and on 
Kyoto implementation. I am prepared to pledge to you that we 
will assure that nothing within the GEF is used for the Kyoto 
treaty, for Kyoto implementation, or to advance that agenda. 
The Kyoto treaty has to wait on congressional action. I think 
there is much broader agreement on the idea that where energy 
efficiency makes good sense in purely economic terms, it is a 
good thing to promote, and that is what the work of the GEF is 
all about.
    So letters, certifications, procedures, we can work out 
whatever the right details are, but I very much share your 
concern and your objective and I am committed to your objective 
with respect to the GEF.
    With respect to your other question, the arrears have 
accumulated, and as they have accumulated, the problem of the 
U.S. standing in the GEF has increased. That is why there is a 
larger increase in our request this year.
    Mr. Knollenberg. Isn't that unusual, looking at what we 
didn't agree to in terms of your request, you have added that 
back in for a request this year? Compare the two figures, $35.8 
million with $175 million. The latter figure is what you want 
this year. How do you justify that kind of a raise, arrearages, 
or not, when we have so many other things to fund? Where do you 
think the money comes from for the many priorities? There was a 
suggestion by one of my colleagues that we can do both. We can 
provide debt relief and increase funding for the GEF. I say, 
wait a minute. Where is the money going to come from? Even the 
administration's request is above what we have available now.
    Secretary Summers. I would make these points. First the 
appropriations requests are all in line with things that the 
Congress has previously authorized.
    Second, the requests reflect commitments that the United 
States has made in international negotiations.
    Third, while I appreciate your concern and want to work 
with the committee as constructively as possible, I believe the 
President's budget lays out a suitable framework in which we 
can achieve our national objectives of huge debt reduction, 
provide for Social Security, Medicare, address the challenge of 
providing for appropriate tax cuts targeted to the middle 
class, and have adequate funding to meet all of these 
obligations.
    Mr. Callahan. And increase taxes. You compound all of that 
together, you can do that. But this Congress is not going to 
increase taxes. I don't care what the President requests. We 
are not going to do anything to destroy Social Security. We are 
going to protect Medicare and do all of those things regardless 
of your Administration's directions. Go ahead.

                            FINANCIAL CRISES

    Mr. Knollenberg. Thank you, Mr. Chairman. I just had one 
question that I will bring up now, too. It has to do with the 
financial crises that we have had in the last several years. We 
had the Mexican financial crisis in December of 1994 and $20 
billion in loans was the result.
    Asia and Brazil, the Thailand bailout in August of 1997 and 
Brazil in 1998, Russia early in 1998, in August. American 
companies are doing well, but we have to be concerned about 
what is happening around the world. In this age of 
globalization, there must be confidence in the global economy.
    This may be a tougher question for you, but it seems to me 
if we are going to be the country that tries to help these 
other countries, we ought to be able to discover the path they 
are on. It seems that they fall into a crisis overnight. Part 
of those crises could be telescoped to us in some way so we 
would know as Members of Congress that--we wouldn't necessarily 
not appropriate money but we would certainly do some things 
differently.
    Question. Have you learned anything from these recent 
crises and if so, what? What action are you taking to warn 
countries that are falling into difficulty which will impact 
what we do here in this committee?
    Secretary Summers. Mr. Chairman, I think we have learned a 
great deal from the experiences of the crises that you referred 
to and this is something that Chairman Greenspan and I have 
both spoken to at great length and have acted on, working 
through the institutions.
    Among the most important lessons are the overwhelming 
importance of transparency, and we have seen a change in that 
regard. For example, Mexico publishes its financial figures on 
the Internet once a week instead of publishing them on a 
discretionary schedule three times a year as was the case in 
the early 1990s.
    Second, we have learned about the importance of what I call 
national balance sheet vulnerability, questions of asset-
liability mismatch which are indicators of when crises are 
coming. Surveillance efforts are increasingly being focused on 
those things.
    Third, we have learned about the dangers of the practices 
that have come under what might be called ``crony'' capitalism, 
where you have a combination of implicit or explicit government 
guarantee, and very substantial leverage directing the flow of 
funds, which tends to lead to problems. It was particularly 
serious in Asia. I think we have learned a great deal and the 
international financial architecture has changed in some 
important ways in response to what we have learned.
    I would caution, however, that it is probably always going 
to be impossible to foretell financial crises with great 
accuracy.
    You know, there is enormous private sector effort being 
made around these same questions, because there are enormous 
opportunities to make great amounts of wealth if you can 
predict which countries are going to have crises and which are 
not going to have crises. I don't think that it would be 
responsible for me to hold out the hope that we will be able to 
provide warning with respect to wherever the next financial 
crisis will come.
    Mr. Knollenberg. Just a 10-second follow-up and closure. 
You saluted Mexico as having done some things in terms of 
transparency. How about Brazil, Thailand, and Russia? I don't 
think the transparency is there. I will leave that question on 
the table unless you would like to respond.
    Mr. Callahan [presiding]. Mr. Wicker has been very patient. 
Why don't you respond after Mr. Wicker has his opportunity?
    Secretary Summers. One sentence. Thailand has made real 
progress in transparency. There are some very important 
challenges across many, many fronts in Russia. The new Russian 
government will have to work on it.
    Mr. Callahan. Mr. Wicker.

                        PRIVATE SECTOR FINANCING

    Mr. Wicker. Thank you. Let me ask you about two aspects of 
your prepared testimony. First of all, on page 10 it deals with 
the question of the appropriateness of MDB financing as 
compared to private sector financing. I will quote you here: 
``The World Bank and others need to work harder to ensure that 
their lending is genuinely productive and it supports and 
complements rather than supplants private sector finance. 
Notably we believe there should be a strong presumption that 
the MDBs have no business lending in countries in which 
financing is available on appropriate terms and where there is 
a risk that such lending will supplant private financing.''
    I think that makes a very good argument, Mr. Secretary, for 
the primacy of private financing. What do you mean by 
``appropriate terms'' there, and how do we determine where the 
private sector should be performing a greater role in this 
regard?
    Secretary Summers. Let me say, Congressman, where financing 
can be by the private sector, it should be by the private 
sector. There may be cases where a country has some access to 
the private capital markets, but it is not able to attract 
private sector financing on a long enough term basis for a 
major infrastructure project, or it is not able to attract a 
sufficient volume of financing for a major infrastructure 
project, or where the risks are so great that the private 
sector financing that would be available would be available on 
terms where a project would not be economic. It is those kinds 
of cases that my statement is intended to capture. But the 
principle is that it should be private sector financing where 
it can be private sector financing.
    Mr. Wicker. Can you give me any examples of what you are 
referring to there about where it can be and where it is 
available on appropriate terms? Are you able to cite any 
specific instances where we should be moving toward private 
financing or where this has occurred in the very recent past?
    Secretary Summers. Well, for example, a number of countries 
have over the years, with the exception of the period of the 
financial crisis--Korea would be a clear example--graduated 
completely from World Bank lending because they had 
satisfactory access to private sector financing. Increasingly, 
the multilateral development banks have withdrawn from the 
telecommunications sector, for example, reflecting the fact 
that there is an enormous availability of private sector 
financing in those particular areas.
    At the same time the share of the bank's lending that has 
gone to health and education projects has increased quite 
substantially. We held up making a U.S. commitment to the 
private sector arm of the Inter-American Development Bank for a 
number of years because we believed that it was financing 
projects that were things that the private sector could very 
well finance. We felt that it would be much better financing 
smaller projects where there was more likely to be an 
incremental impact, because small business projects in the less 
well-off countries in Latin America had a hard time accessing 
private sector finance. And after a number of years when there 
was no U.S. contribution, we were successful in achieving the 
restructuring of that entity that focused on small credits in 
small countries.
    So while I am sure that there is a continuing need for 
evolution in the international financial institutions' 
policies, and where there are other shareholders who are less 
committed than we, I believe we are making real progress.

                               CORRUPTION

    Mr. Wicker. Let me just transition then. I don't think that 
you have been asked yet this morning about corruption. On page 
8 you do mention that the issues of good governance and 
corruption, once considered off limits for the institutions, 
are now being considered. And you mentioned technical 
assistance for civil service reform in Senegal and Tajikistan, 
judicial modernization in Venezuela, and legaland tax reform in 
Latvia.
    What about the idea, Mr. Secretary, that some have proposed 
of a moratorium on international aid to governments strongly 
suspected of corruption until an investigation is completed to 
make sure that the money is going where it is intended? If you 
could just comment on what I think is one of the most serious 
problems that we have internationally and that is corruption, 
and give us your thoughts on what the effect of a proposed 
moratorium would be?
    Secretary Summers. I completely share your concern about 
corruption. The technical assistance that I referred to is one 
part of a strategy: much more emphasis on transparency and 
letting market forces operate, because corruption comes from 
diversion between white markets and black markets. I share your 
sense that it is appropriate to condition assistance on the 
situation with regard to corruption. As you know, there have 
been substantial interruptions in the programs of international 
financial assistance for both Russia and Ukraine. There have 
been redesigns of those programs to assure that funding comes 
in ways which makes the funding not susceptible to diversion. 
There have as well been periods of withdrawal of assistance 
from a number of other countries because of concerns about 
corruption.
    As experience in our country demonstrates, one will never 
completely ensure total integrity in any government, but I 
think we do have to make corruption a central priority and it 
is certainly appropriate in the future that we be much more 
selective in our lending, rewarding those who have integrity 
and penalizing those who do not.
    I think the record will show that with strong American 
support, the World Bank's resources, particularly its 
concessional resources, are increasingly concentrated toward 
good performers and away from poor performers for exactly the 
reason you suggest.
    Mr. Wicker. The record will show that--I am asking you to 
submit for the record to this subcommittee the specifics about 
that record.
    You mentioned about conditions being imposed and, from time 
to time, withdrawal. How have you determined that those steps 
have been productive in reducing corruption in the targeted 
countries?
    Secretary Summers. In some cases they have not yet been 
fully productive and the lending has not resumed. In other 
cases we have seen improvements in the quality of governance. 
But I think that we certainly use the U.S. vote in the 
institutions to make the point that while providing technical 
assistance is important and valuable, what is ultimately 
important--what gets people's attention--is changes in the 
quantity of assistance that is available in response to 
corruption. That is certainly our position.
    Mr. Wicker. Thank you, Mr. Chairman.

                               MORATORIUM

    Mr. Callahan. Mr. Secretary, you indicated that the 
Japanese were willing to participate in HIPC. They will not 
forgive any of the their direct debt to these nations without 
some moratorium. Let me ask you this: Do you agree that we 
should have a moratorium, whether it be 30 days, 30 months, or 
30 years, should we have some type of moratorium on giving 
these countries the ability to go right back into debt the next 
day? Should we or should we not?
    Secretary Summers. For hard lending, absolutely.
    Mr. Callahan. What about other lending? What is the 
difference? If you want to go into debt and you cannot pay your 
debt, why should there not be a total moratorium, at least an 
hour or 2 hours or something? Surely the administration would 
like to see some responsibility in this give-away program?
    Secretary Summers. Mr. Chairman, we are very much committed 
to responsibility and we believe the right criterion of 
responsibility is that a country that receives debt relief only 
receive it in the context of a realistic financing plan, not 
just for the next year, but for the succeeding years going 
forward. We do not believe that the receipt of concessional 
loans at interest rates in the 1 to 2 percent range, with grace 
periods on payments for the first several years, is in any way 
inconsistent with financial planning.
    Mr. Callahan. You declare a moratorium on additional 
borrowing for any country that their debt is forgiven or not? 
Yes or no. We don't need a lengthy explanation. We are not on 
television. We can demagogue a thing, which I intend to on the 
floor or at my church or wherever, but do you or do you not 
support a total moratorium on additional borrowing once their 
debt is forgiven?
    Secretary Summers. Mr. Chairman, I don't support a total 
moratorium.
    Mr. Callahan. That is good enough.
    Mr. Wicker. Mr. Chairman, I didn't understand the 
distinction in the answer about hard lending, which was his 
initial response to your question.
    Secretary Summers. Do you want me to clarify?
    Mr. Wicker. If it is all right with the Chair.
    Mr. Callahan. Yes.
    Secretary Summers. I meant to distinguish new commercial 
terms market interest rate lending on which there should be a 
moratorium and on which current U.S. policy is to not support 
new such lending for a period following debt reduction.
    I meant to distinguish that from what are basically foreign 
aid loans where the interest rate is 1 to 2 percent and where 
the--there is a 10-year grace period where the country is not 
asked to pay anything for the first 10 years, which I believe 
can be appropriate in the context of a country that is 
receiving debt relief. I might just mention----
    Mr. Callahan. I am going to have to catch an airplane here 
in about 45 minutes. You are going to have to answer these 
things more concisely. You have learned quickly because it took 
your predecessor probably months, or maybe 2 years of budget 
processing to learn to take 30 minutes to answer one question. 
Then you don't have to yield two.
    Ms. Pelosi. Would the Chairman yield on that?
    Mr. Callahan. She is a master.

                            SOFT-LOAN WINDOW

    Ms. Pelosi. In all fairness to the distinguished Secretary, 
he is responding. There are two windows. You go to soft loan 
window.
    Mr. Callahan. What percentage of the debt forgiveness is 
soft window? What is the percentage factor roughly? Just use 
Tanzania as an example.
    Secretary Summers. Of the multilateral debt, more than half 
is soft. Of the bilateral debt, virtually all is hard.
    Mr. Callahan. Let me go ahead through my questioning, Ms. 
Pelosi.
    Ms. Pelosi. Then you will have great authority because I 
think we are very fortunate to have a Secretary who has the 
World Bank experience and multilateral development bank 
experience that Secretary Summers brings to his job as Treasury 
Secretary.
    Mr. Callahan. I am questioning his Administration's policy 
that, whether Mr. Summers agrees with it or not, he has to 
carry forth. I am not questioning his ability to be Secretary 
of Treasury or to be involved in it because there is nothing 
there to question. I question this administration.
    Let me ask you this, Mr. Secretary. We will go back to the 
real world. I am going to be allocated a certain amount of 
money. Where do you propose that I cut assistance in orderto 
give you the necessary money to give to these banks? Do you want me to 
cut health care in these poor countries? Do you want me to cut food 
help, educational opportunities, or do you want me to bust the budget? 
What is the administration's position?
    Secretary Summers. You should work to enact the President's 
budget.
    Mr. Callahan. We are not going to impose new taxes on the 
American people.
    Secretary Summers. It can be enacted with substantial net 
tax reduction on the American people.

                             BUDGET REQUEST

    Mr. Callahan. I have trouble with the Administration asking 
me and maybe we can even go to the Jubilee 2000 people and 
explain to them the real world. I am allocated a designated 
amount of money, and in order to give them money to give to 
these banks to pay off these bad loans, I am going to have to 
cut assistance to those they are trying to help. Someone is 
going to have to give me this response. My attitude at this 
point is not to give you money to pay off bad decisions made by 
banks, to bail out banks, which is basically all we are doing. 
Maybe we can make this two steps. Maybe we will have the HIPC 
2000 and the HIPC 2005. We will forgive whatever debt they 
incur in the next 5 years.
    Bad loans by banks can be written off. Where is the 
compassion of these banks? These banks have gathered together a 
great deal of influential people in the world community, the 
Jubilee 2000 people, to do one thing, and that is to get the 
banks out of trouble. You are not making these countries more 
solvent when you don't put some restrictions on future 
borrowing.
    So why are these banks not being a little more generous and 
saying to the world, look, we made some bad decisions. If it 
were a commercial bank--you know this from your background and 
certainly as Treasurer of the United States of America--if an 
American bank made a bad loan, even the Federal Government said 
we will let you charge this off to taxes. Get it off your 
books.
    Why don't the banks just make up this declaration and write 
this off their books and if they need more money for bilateral 
assistance, multilateral assistance, or if they need more 
contributions to their capital, let them come back to the 
Congress and get more money for capital. But why go through 
this charade and involve all of these innocent people who have 
been hoodwinked into believing if we come up with the money to 
pay off these debts, to bail these banks out of their financial 
troubles, that it is going to benefit poor people, because it 
is not. There is no cash flow available to benefit the poor.
    We are going to take money out of the mouths of starving 
children, we are going to take away the opportunity to 
eliminate polio worldwide and take away money that goes 
directly to these agencies and give it to these banks who have 
made irresponsible loans and created a problem in the banking 
community. That is my observation. That is what I am going to 
say on the floor.
    Let me ask you one other thing----
    Secretary Summers. In light of your time concerns, how long 
can I have to respond?
    Mr. Callahan. You have as much time to respond as long as 
it doesn't make me miss my plane.
    Secretary Summers. First, these are public institutions.
    Mr. Callahan. I don't think that I said these were 
commercial banks. I said to pay off these banks. I said that no 
responsible commercial bank would be participating in this type 
of a charade whereby if they had loaned money to a company who 
would not and could not pay their debt, if they wrote it off 
under our tax laws, the last thing they would do is tell the 
company to come back down here tomorrow, we will give you more 
money. I know these are not commercial banks. They are the 
multilateral banks that have because of irresponsible policies, 
have gotten themselves in trouble, who have the authority to 
charge this money off anyway, who are looking for a handout 
from the Federal Government of the United States, taxpayers' 
dollars and European dollars, to replenish their own lending 
capabilities.
    Secretary Summers. Mr. Chairman, I will make these three 
points very quickly if I could.
    First, commercial banks in fact have lent money to almost 
all of the Latin American companies for which they reduced 
debt. They actually did lend new money within the 6 months 
after the initial reduction in debt.
    Second, the international financial institutions have made 
the judgment, the countries' governments have made the 
judgment, the NGOs who are active in the countries have made 
the judgment that debt relief provides increased leverage and 
that each dollar devoted to debt relief makes possible more 
than one dollar of extra spending on priorities like the 
nutrition and the anti-disease measures that you have 
described.
    So with the greatest of respect, I would dissent in the 
strongest possible terms from the suggestion that these 
programs operate to take food away from hungry children. Those 
who represent hungry children within these countries and who 
have spent a long time in these countries have made a different 
judgment.
    Mr. Callahan. You know the real world. The real world is I 
am going to have $13 billion. I am going to have to divide that 
money up, and the only place I can take that money is from IDA. 
I can take it from child survival. I don't have your operating 
account within my scope of jurisdiction. I have to take that 
money from someplace else, and the only place I have available 
is to take it, is from IDA. That is the real world.
    What I am asking the Administration is under the 
circumstances, where should I take the money? If they want to 
take it out of my salary, we could do that if that were 
possible. That is not possible under our system. I have to make 
a decision in terms of the real world, and I have asked you to 
go back to the administration, and don't tell them to come tell 
me to take it out of Medicare or don't tell them to take it out 
of Social Security or increase taxes because I am not going to 
do those three things. I am going to distribute the $13 billion 
that is going to be allocated to me and I am asking you to 
prioritize within your area of jurisdiction where you want me 
to take this money from.
    Secretary Summers. Let me say this, Mr. Chairman. As you 
can appreciate in my real world of Cabinet Secretary, one 
Cabinet Secretary doesn't make priority choices within the 
budget that the President has suggested. So I am not able to 
help you out there.
    I would say to you, however, the debt relief account does, 
in the judgment of the President, and does in the judgment of 
all of us who have been concerned with shaping development 
policy, have particular leverage and particular importance and 
a particularly great capacity to aid the development effort, 
and is of particular importance this year in light of its close 
relationship to international commitments made by other 
countries. So we very much want to work with you and work with 
the Congress to find the best ways forward on this. But I would 
underscore the particularimportance of the debt relief 
accounts.
    Mr. Callahan. Ms. Kilpatrick. You want to save Social 
Security, Medicare and you don't want to do taxes?
    Ms. Kilpatrick. I want to implement the President's budget, 
Mr. Chairman.

                              DEBT RELIEF

    I will be brief and I appreciate the discussion and the 
Chairman's passion as well as the situation that we find 
ourselves in. This is not a Congress that looks fairly at 
foreign assistance, although I believe in the global economy 
that we live in that we must be more sensitive to that. The 
Chairman has given us an ultimatum here as well as a challenge. 
And I think we can. Unfortunately, the allocations might not be 
what we want.
    A few miles away there is an American citizen walking in 
front of the World Bank as we speak on the issue of debt 
relief. I have been in many of those countries, as has our 
Chairman, and I do know that the heads of many of those states, 
both in South America and also the European countries, have 
said to me, If we did not have the burden of the debt passed on 
to us by other regimes who are no longer in existence and 
sometimes very corrupt, we could keep our resources in our 
country and take care of more of our education and health care 
needs and feeding children. I found that globally in the 
underdeveloped countries of the Third World.
    What would you say to the people that are demonstrating in 
front of the World Bank today? Do they have a case? What 
options do we have? Anything that I can pass on to them? What 
kind of answers can we give them?
    Secretary Summers. I had a chance, Congresswoman 
Kilpatrick, to meet with representatives of all of the groups 
who were willing to come when we invited them to Treasury last 
Friday. Let me tell you some of the points that I made.
    First, that we share their judgment that development 
success in the rest of the world is profoundly important, both 
morally and to the United States.
    Second, that we believe that debt reduction can make a 
very, very great contribution to the development effort.
    Third, that we believe that they have made a substantial 
contribution in encouraging the international financial 
institutions to be much more transparent, much more involved 
with local people in the way they carry out their assistance 
programs, and that that is a very important priority. That in 
many ways the crucial constraint on how much of the agenda we 
are able to do is how much support we are able to build in the 
United States for our international assistance efforts. It is a 
very troubling fact that these international assistance 
efforts, which represent a kind of forward defense of core U.S. 
interests, have actually declined, after correcting for 
inflation, quite substantially over the last decade.
    But I also made the point to those I met with, as I will be 
this weekend, that if we strongly support, as I believe we have 
to, the development effort around the world, that countries' 
ability to develop depends on their ability to get resources 
which can come through exporting more, which can come through 
attracting private investment, and can come from receiving 
support from international financial institutions. Those who 
want to see the development effort proceed more effectively 
have to want to see more exports from developing countries, 
more private investment and more support from international 
financial institutions in some combination. The approach of 
resisting globalization as some do, of seeking to stop the 
process of global integration from happening, is something that 
puts many of the poorest people in the world at very great 
risk.
    So my plea would be, yes, push and urge us to be more 
transparent, to provide more debt relief, to not restrict 
products that are produced by some of the poorest people in the 
world--but to recognize that the challenge isn't to try to stop 
global integration, which is a King Knute-like effort, but 
rather is to make sure that global integration works for people 
both in our country and around the world.
    Ms. Kilpatrick. Thank you. Thank you, Mr. Chairman.
    Mr. Callahan. Thank you, Ms. Kilpatrick.

                           WORLD BANK PROTEST

    Mr. Secretary, I guess there is no question that I am very 
easily confused, but I am very confused about this situation 
this week. The basic core of the Democrat Party, the people who 
put you and the President into office, are against the World 
Bank, they are against the International Monetary Fund. And yet 
you are coming to me and telling me to fund the IMF and the 
World Bank, to give them more money, and they are the core of 
your supporters. What you are saying is that elect--reelect us 
to office, is what you are telling them; we will get the 
Republicans to handle all of this obnoxious stuff, that we will 
go to them. So what I think I am going to do is to leave HIPC 
out, to leave the World Bank out and to go to the Rules 
Committee, and you go on the Democrat side of the aisle and 
find supporters to put it back in the bill on the floor.
    Ms. Kilpatrick. Mr. Chairman, please yield.
    Mr. Callahan. I will be pleased to yield.
    Ms. Kilpatrick. That was very drastic. I plead with you as 
one member on this side. We have a crisis. The people here are 
not against IMF and World Bank. They are protesting on one 
issue of debt relief, but they are good American citizens.
    Mr. Callahan. What do the signs mean when they say dump--
the mobilization for global injustice. They say dump the World 
Bank. They say defund the fund. Break the bank. Dump the debt. 
That is what they are out there marching about.
    Ms. Kilpatrick. The idea is to address the debt relief and 
the debt burden that impoverished countries experience. 
Protesters come from a gamut of places. But their opposition is 
not against the Bank or the Fund. They are asking for debt 
relief.
    Mr. Callahan. So when these same union people come to my 
office, I can tell them that I am glad that they support 
funding for the IMF?
    Ms. Kilpatrick. I think you can tell the union people that 
we are going to save their jobs.
    Mr. Callahan. They are asking me about funding the IMF and 
the World Bank, and I am telling them no, so they want to march 
in front of my office and vote for the Democrats. I don't 
begrudge them that. But they ought to be up here jumping on you 
guys and telling you that they are not going to support you 
unless you do what they want. They are not going to support me 
anyway. I used to be a member of the Teamsters Union. That is 
what they are up here saying.
    Let me just give you a quote from the administration, too, 
and ask you this, Mr. Secretary: What is your response to Mr. 
Mussa saying that all of the demonstrators that are planning to 
be outside the Fund and Bank should instead go up to Capitol 
Hill, noting that those politicians determine the level of U.S. 
overseas development aid?

                                  IMF

    So now you have the World Bank and the IMF here saying we 
are pure. The problem is that Sonny Callahan responds to the 
request of the President of the United States to give the 
International Monetary Fund $18 billion. So he is the evil guy. 
Quit marching on my building and go up there and picket Sonny 
Callahan. I am confused about this. Should I stop assisting the 
Administration with their requests for the World Bank if I am 
inviting people to march on Capitol Hill and have the 
Administration encouraging them to do that? As I said, I am 
confused, Mr. Secretary.
    Secretary Summers. Could I respond?
    Mr. Callahan. Certainly.
    Secretary Summers. First, Mr. Mussa is an IMF employee who 
came to the IMF following his quite distinguished service in 
the Reagan Administration. He is in no way an employee of this 
Administration or speaking for this Administration or 
expressing the sentiment that this Administration would share. 
We believe that it is very important for there to be 
substantial change at both the IMF and World Bank, and I think 
I have laid out rather detailed visions of what that change 
should be.
    There are a range of views and a range of political 
allegiances among those who will be demonstrating here 
inWashington this week. As I tried to express in answering 
Congresswoman Kilpatrick's questions, there are aspects that we share, 
and there are aspects of their views that we do not share.
    I would say, as one who has participated in the debates at 
least over the last several years, I think it would be fair to 
say that the minority made a very substantial contribution to 
the congressional decisions to support the IMF increase, to the 
congressional decisions to support the multilateral development 
banks through the period of reduction in the arrears that we 
have seen, and certainly it is the Administration's very strong 
view that it is very much in the national interest for us to 
support these institutions. We certainly share the concern, 
that I know you have, with the size of the allotment that has 
come to this subcommittee, and want to work with you to use it 
in the most constructive ways. We would also like to see if we 
can work together to find ways to increase the allotment that 
comes to this subcommittee and hope that you will join us in 
supporting those efforts.
    Mr. Callahan. Let me see if I understood you. I think I 
just heard you say that significant contributions were made by 
Members of the Democrat side to get the necessary money to fund 
the IMF and the World Bank. How many this week--and I can look 
out of my office window and see these masses of people, my 
former colleagues, Teamster brothers out there. I didn't hear a 
single Democrat stand up and say how proud they were to be a 
part of a body of people that funded the IMF and the World 
Bank. I didn't hear that message. I heard quite to the 
contrary.
    Every time--I couldn't hear everything that they were 
saying. I could only hear them screaming. I don't think they 
were screaming for joy, being told part of the reason that the 
IMF and the World Bank have money is because it is a Democrat 
initiative. Did you hear that?
    Secretary Summers. I wasn't part of the discussions that 
took place on the Mall yesterday, Mr. Chairman. But I would say 
that I think all of us who had a role in the decision that was 
taken in 1998 to reinforce the IMF at a critical time can look 
back with some satisfaction at the progress we have made and 
the success with which the U.S. economy has been insulated from 
what many at the time regarded as one of the worst financial--
--
    Mr. Callahan. Leave out the money for the World Bank and 
HIPC and I will accompany you to the Rules Committee. I will 
guarantee you that if you will find a Democrat who is willing 
to stand on the floor and to make the necessary request through 
amendment, that I probably will support the amendment. But I 
certainly will give them the opportunity to fund HIPC debt 
relief and to at the same time recognize that under the scoring 
system, unless they have a reduction of some program somewhere, 
then it will violate points of order.
    We are going to give your Administration the opportunity to 
bring all of these things to the floor of the House and to let 
the Members be able to express on the floor their support for 
the HIPC debt forgiveness and for funding for the World Bank 
and the IMF.
    So we are going to give your side the opportunity to really 
express in very vocal terms, and it will be on national 
television, that this is a Democrat President and that the 
Clinton-Gore Administration wants this done. We are going to 
give you the opportunity to bring it to the floor for a 
majority decision. Whatever that decision is, I will live with 
it. But you are going to have to come up with a Democrat to 
offer the amendment. So tell me one supporter in the House that 
you have who is willing to offer these amendments in your 
behalf and I will guarantee that the Rules Committee will grant 
that authority to him or her.
    In the meantime, it has been fun. You only got flustered 
once and that wasn't when you were talking to me.
    Secretary Summers. Mr. Chairman, we will count on you to 
reserve the resources in anticipation of that amendment.
    Let me say, Mr. Chairman, if we can make a submission to 
the record with respect to the Uganda issue that was raised 
earlier, I would appreciate it.
    [The information follows:]

 Uganda: HIPC Debt Relief and African Development Bank Group Assistance

    Regarding the statement on Uganda's new loans from the African 
Development Bank received shortly after getting HIPC debt relief:
    On May 1, 1998 Uganda reached its completion point (i.e., received 
debt relief totaling $650M) under the HIPC Initiative (HIPC-I).
    On November 24, 1999 the Executive Board of the African Development 
Bank Group (AfDB Group) approved new assistance for rural micro-finance 
totaling $20.6M for Uganda, of which $18.1M was a concessional loan 
from the African Development Fund and $2.5M was a grant. The repayment 
terms of the concessional loan are very generous, i.e., 50 years 
maturity with 10 years grace and charges of 1.25% of which 0.75% is a 
service charge on principal and 0.50% is commitment charge on 
undisbursed principal.
    The rural micro-finance project is expected to provide credit to 
71,000 clients, 47,000 of which will be new clients. Savings mobilized 
by the project are projected to total 12% of the total project ($2.5M) 
and contribute to creation of 150,000 jobs.
    The AfDB Group has had operations in Uganda since 1968. As of late-
1999, AfDB Group has committed a total of $696M for 62 operations in 
Uganda, of which $516M has been disbursed. For the period Jan. 1, 1990 
through end-March 2000, the AfDB Group has not disbursed any funds to 
Uganda on non-concessional terms (i.e., loans from the African 
Development Bank that carry market-based interest rates) and the Bank 
has not approved any new non-concessional loans.

    Mr. Callahan. The record will remain open for 5 days. This 
hearing is adjourned.
    [Questions and answers for the record follow:]
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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Anderson, J. B...................................................    91
Bodner, James....................................................     1
Holum, John......................................................     1
Summers, L. H....................................................   241


                               I N D E X

                              ----------                              

  President's Fiscal Year 2001 Budget Request for Security Assistance
 (James Bodner, Principal Deputy Under Secretary of Defense for Policy 
    John Holum, Senior Advisory for Arms Control and International 
                          Department of State)

                                                                   Page
Chairman Callahan's Opening Statement............................     1
China............................................................    52
Colombia.........................................................    48
Egypt............................................................    77
Embassy Damage...................................................    61
FMF Depreciation Process.........................................    49
Foreign Military Report..........................................    60
Guatemala........................................................    72
IMET.....................................................64, 70, 75, 68
Indonesia........................................................50, 71
Israel--China Weapon Sale........................................55, 68
Jordan...........................................................    54
KEDO.............................................................    55
Middle East......................................................49, 53
Mr. Bodner's Opening Statement...................................    34
Mr. Holum's Opening Statement....................................     6
ms. Pelosi's Opening Statement...................................     5
Peace Agreement..................................................    70
Plan Colombia....................................................    64
Public Awareness.................................................    65
Russia.......................................................52, 62, 66
School of the Americas...........................................    69
Skepticism.......................................................    67
Supplemental.....................................................48, 58
Transfer of Jurisdiction.........................................    63
Turkey...........................................................    69

                  Agency for International Development
                   (J. Brady Anderson, Administrator)

AIDS Preventive Drug.............................................   113
American Schools and Hospitals Abroad............................   226
Atlas Program....................................................   142
Basic Education Funding..........................................   134
Biodiversity.....................................................   170
Budget Allocation................................................   111
Budget Process...................................................   156
Chairman's Opening Statement.....................................    91
China............................................................   117
Development Fund for Africa......................................   231
East Timor.......................................................   133
Eastern European Democracy.......................................   146
Family Planning Funding........................................128, 233
Haiti............................................................   153
Health Programs in NIS...........................................   132
HIV/AIDS.............................................118, 224, 227, 228
Hurricane Mitch Spending.......................................154, 162
India..........................................................117, 157
Indonesia........................................................   133
International Clean Air Initiative...............................   149
Kyoto Protocol............................................111, 120, 175
Microenterprise Program........................................114, 136
Middle East and Desert Development Proram........................   226
Mozambique................................................119, 165, 233
Nagorno Karabakh...............................................140, 176
Nigeria........................................................167, 233
Office of Transition Initiatives.................................   152
Palestinian Human Rights.........................................   234
Russia...........................................................   134
Sierre Leone.....................................................   157
Sub-Saharan Africa.............................................127, 233
Sudan............................................................   164
Taiwan...........................................................   117
Treatment Centers for Victims of Torture.......................122, 239

                       Secretary of the Treasury
            (Lawrence H. Summers, Secretary of the Treasury)

African Development Bank.........................................   325
Budget Request...................................................   304
Chairman's Opening Statement.....................................   241
China..........................................................282, 297
Corruption.......................................................   302
Debt.............................................................   317
Debt Relief....................................................286, 306
Education for Girls..............................................   284
Financial Crisis.................................................   299
Global Environment Facility (GEF).........................298, 326, 330
IMF............................................................308, 322
India..........................................................297, 311
Micro-Enterprise Lending.........................................   328
Moratorium.......................................................   303
Mozambique.......................................................   290
Ms. Pelosi's Opening Statement...................................   260
Private Sector Financing.........................................   300
Secretary Summers' Opening Statement.............................   242
Soft-Loan Window.................................................   304
World Bank Protest...............................................   308