[Senate Hearing 108-518]
[From the U.S. Government Publishing Office]
S. Hrg. 108-518
FOREIGN ASSISTANCE OVERSIGHT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
MARCH 2, 2004
__________
Printed for the use of the Committee on Foreign Relations
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee BILL NELSON, Florida
NORM COLEMAN, Minnesota JOHN D. ROCKEFELLER IV, West
JOHN E. SUNUNU, New Hampshire Virginia
JON S. CORZINE, New Jersey
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
(ii)
?
C O N T E N T S
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Page
Allen, Hon. George, U.S. Senator from Virginia, chairman,
Subcommittee on European Affairs, opening statement............ 101
Brownback, Hon. Sam, U.S. Senator from Kansas, chairman,
Subcommittee on East Asian and Pacific Affairs, opening
statement...................................................... 36
Burns, Hon. William J., Assistant Secretary of State, Bureau of
Near Eastern Affairs, U.S. Department of State, Washington, DC. 20
Prepared statement........................................... 22
Chafee, Hon. Lincoln D., U.S. Senator from Rhode Island,
chairman, Subcommittee on Near Eastern and South Asian Affairs,
opening statement.............................................. 1
Coleman, Hon. Norm, U.S. Senator from Minnesota, chairman,
Subcommittee on Western Hemisphere, Peace Corps, and Narcotics
Affairs, opening statement..................................... 48
Franco, Hon. Adolfo A., Assistant Administrator for Latin America
and the Caribbean, U.S. Agency for International Development,
Washington, DC................................................. 63
Prepared statement........................................... 66
Hill, Hon. Kent R., Assistant Administrator, Bureau for Europe
and Eurasia, U.S. Agency for International Development,
Washington, DC................................................. 109
Prepared statement........................................... 113
Jones, Hon. Elizabeth, Assistant Secretary of State, Bureau of
Europe and Eurasian Affairs, U.S. Department of State,
Washington, DC................................................. 103
Prepared statement........................................... 105
Responses to additional questions for the record from Senator
Allen...................................................... 130
Keyser, Mr. Donald W., Principal Deputy Assistant Secretary of
State, Bureau of East Asian and Pacific Affairs, U.S.
Department of State, Washington, DC............................ 37
Prepared statement........................................... 40
Newman, Hon. Constance Berry, Assistant Administrator for Africa,
U.S. Agency for International Development, Washington, DC...... 85
Prepared statement........................................... 87
Noriega, Hon. Roger F., Assistant Secretary of State, Bureau of
Western Hemisphere Affairs, U.S. Department of State,
Washington, DC................................................. 50
Prepared statement........................................... 56
Rocca, Hon. Christina B., Assistant Secretary of State, Bureau of
South Asian Affairs, U.S. Department of State, Washington, DC.. 2
Prepared statement........................................... 4
West, Mr. Gordon, Acting Assistant Administrator for Asia and the
Near East, U.S. Agency for International Development,
Washington, DC................................................. 7
Additional testimony of Mr. West.............................25, 43
Prepared statement........................................... 9
Yamamoto, Mr. Donald Y., Deputy Assistant Secretary of State,
Bureau of African Affairs, U.S. Department of State,
Washington, DC................................................. 80
Prepared statement........................................... 81
(iii)
FOREIGN ASSISTANCE OVERSIGHT
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TUESDAY, MARCH 2, 2004
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 9:06 a.m. in SD-
419, Dirksen Senate Office Building, and S-116, The Capitol
Building, Hon. Lincoln D. Chafee, presiding.
Present: Senators Chafee, Allen, Brownback, Alexander,
Coleman, and Bill Nelson.
OPENING STATEMENT OF SENATOR LINCOLN D. CHAFEE
Senator Chafee. Good morning. Today we are going to have a
hearing on the budget of the appropriate committees,
subcommittees, and on behalf of the Senate Foreign Relations
Committee I would like to welcome all participants and guests
of this hearing on U.S. foreign assistance.
Today we will hear from Christina Rocca, Assistant
Secretary of State for South Asian Affairs; Gordon West, USAID
Acting Assistant Administrator for Asia and the Near East;
William Burns, Assistant Secretary of State for Near Eastern
Affairs; Don Keyser, Principal Deputy Assistant Secretary of
State for East Asian and Pacific Affairs; Roger F. Noriega,
Assistant Secretary of State for Western Hemisphere Affairs;
Adolfo Franco, USAID Assistant Administrator for Latin America
and the Caribbean; Don Yamamoto, Deputy Assistant Secretary of
State for African Affairs; Constance Berry Newman; USAID
Assistant Administrator for Africa; Elizabeth Jones, Assistant
Secretary of State for Europe and Eurasian Affairs; and Kent
Hill, USAID Assistant Administrator for Europe and Eurasia.
We look forward to the testimony of all our witnesses and
to the discussion of the role that U.S. foreign assistance can
play around the world.
Since the mid-1980s, Congress has not fulfilled its
responsibilities to pass a foreign assistance authorization
act. In the absence of such legislation, the job of providing
guidance on foreign assistance has fallen to the Appropriations
Committee. During the past year, Chairman Lugar has been
pressing forward with attempts to pass a foreign assistance
bill, and I share the chairman's hope that our committee in the
Senate will work during the coming weeks to pass a thoughtful
foreign assistance authorization bill that carefully examines
existing programs and addresses emerging needs.
We appreciated very much the testimony of the Secretary of
State on February 12 on the administration's request to fund
the Department's domestic and overseas operations.
Understandably, many questions at that hearing focused on
broader U.S. policy. Today we will probe foreign assistance
programs in much greater detail.
We hope to learn how the administration's fiscal year 2005
budget request will support U.S. foreign policy interests,
including efforts to combat terrorism, to reconstruct Iraq and
Afghanistan, to advance education and environmental protection,
to reduce the threat of weapons of mass destruction, to bolster
our public diplomacy, and to fight poverty and AIDS.
Today our hearing will consist of six regional segments,
each led by the relevant subcommittee chairman. I will begin
this process by leading the first two segments of our
discussion, which will address foreign assistance for the Near
East and South Asia. The third panel on East Asia and the
Pacific will be chaired by Senator Brownback, and I believe
that portion of the hearing will occur over in S-116 as there
are floor votes scheduled.
After a 1-hour lunch break, we will resume for a hearing on
the Western Hemisphere, which will be chaired by Senator
Coleman, and Senator Alexander will chair our fifth panel on
Africa. Our last panel will focus on Europe and be chaired by
Senator Allen.
I thank all our distinguished witnesses and look forward to
their budgetary insights, and I'll start with the Honorable
Christina Rocca. Welcome, Christina.
STATEMENT OF HON. CHRISTINA B. ROCCA, ASSISTANT SECRETARY OF
STATE, BUREAU OF SOUTH ASIAN AFFAIRS, U.S. DEPARTMENT OF STATE
Ms. Rocca. Mr. Chairman, thank you. Thank you very much for
giving us the opportunity to come and talk about how our 2005
budget request serves U.S. policy priorities in South Asia.
I have a longer testimony which I'd like to submit for the
record and abbreviate the oral version, if that's OK.
Senator Chafee. Without objection.
Ms. Rocca. Since we came together a year ago, U.S.
assistance has helped to establish some dramatic milestones of
progress in the region. In January, Afghans adopted a moderate
democratic constitution. Women and girls have continued to
rejoin schools and the work force. Afghanistan's annual
economic growth rate was estimated at 30 percent for the second
year in a row. A 18-hour journey was reduced to 6 hours by
completion of the first layer of the Kabul-Kandahar road in
December.
NATO agreed to assume leadership of the International
Security Assistance Force for Afghanistan, ISAF, while the
growing national army and police gathered strength and civil
military provincial reconstruction teams extended security in
the provinces.
In Pakistan, 550 al-Qaeda and former Taliban operatives
have now been captured, including al-Qaeda operational
commander, Khalid Shekh Mohammed, and a September 11 plotter,
Ramzi bin al-Shibh. Along the border with Afghanistan,
checkpoints and law enforcement agencies were strengthened. A
second forward operating base was established in Peshawar, air
wing surveillance and transport was supported, and a new access
road construction was begun.
Pakistan's economic recovery proceeded at pace and the
government's education reform efforts continued with a renewed
focus on madrassas. Pakistan is helping to unearth the A.Q.
Kahn proliferation network and we are asking them to share what
they find with us.
In January, we launched our Next Steps in Strategic
Partnership, NSSP, initiative with India. Regional stability
increased as India and Pakistan began a dialog about the
restoration of bilateral ties and regional cooperation. Despite
suspension of formal peace process in Sri Lanka, the cease-fire
and informal cooperation continue, and we are assisting
elections scheduled for early April.
But the situation in Nepal is grim. Challenges remain in
Bangladesh and in other countries, and we cannot rest until we
see a fully peaceful, democratic and prosperous South Asia
entirely free from terror and nuclear threat.
Our fiscal year 2005 budget request for South Asia will
enable us to consolidate hard-won gains and press ahead toward
our goals. Our fiscal year 2005 foreign operations resource
request totals $1.9 billion. Of that, over $1.6 billion
supports our No. 1 policy goal, combating terror and the
conditions that breed terror in the front line states of
Afghanistan and Pakistan.
Total U.S. assistance for Afghanistan this far, including
for accelerated programs, comes to over $4 billion. The
President's 2005 request of $1.2 billion for Afghanistan, which
includes approximately $300 million from the Department of
Defense, will sustain our accelerated efforts. Chief among
these are building new democratic institutions following
elections, training and equipping more army battalions and
police, supporting military demobilization and reintegration,
helping to end the drug trade, and fostering private sector
investment for sustained growth.
In Pakistan, recent attempts on President Musharraf's life
underscore the need to shut down terrorist organizations and
the networks that support them, something the government is
working hard to do. Our fiscal year 2005 request for Pakistan
contains $300 million in foreign military financing funds and
$300 million in economic support funds for the first of a 5-
year, $3 billion Presidential commitment.
The symmetry is no accident. As we facilitate the capture
of al-Qaeda and Taliban remnants with FMF, we will help tackle
conditions that breed terror by providing up to $200 million
for ESF for economic stabilization and growth and at least
another $100 million in ESF will support social sector
programs. Remaining funds in our request support ongoing law
enforcement, education, democracy, and health programs.
The Next Steps in Strategic Partnership with India expands
our cooperation on civilian nuclear activities, civilian space
programs, high technology trade, and missile defense. As the
initiative facilitates mutual economic benefits, we will
maintain all U.S. international non-proliferation obligations
and fund programs for enhanced export controls to India,
Pakistan, and Afghanistan.
As our hopes for India and Pakistan for an India-Pakistan
rapprochement continue, crucial work is needed elsewhere to
promote regional stability. Our fiscal year 2005 request for
Sri Lanka will fund programs that are both an incentive to
peace and a boost to reconstruction and reconciliation in war-
torn areas.
The Maoists broke a 7-month cease-fire in Nepal last
August. By October we imposed financial sanctions against the
Maoists as a terrorist organization under Executive Order
13224. While the United States, India, and the U.K. and others
support the government, we share the view that a military
solution will not work. We are urging the king and the parties
to unite to pursue a political solution to the conflict and
ensure respect for human rights. Our fiscal year 2005 request
will continue to support the government's efforts to counter
the insurgents and reduce underlying causes of the conflict.
Promoting democracy and good governance is a goal firmly
grounded in the President's belief in expanding freedom. Fiscal
year 2005 funds requested for our democracy programs in South
Asia will help bolster counter-terror, conflict prevention, and
development efforts over the long term.
Our human rights programs will help combat trafficking in
persons and support women's rights, religious freedom, and
programs to reduce child labor. As we strengthen good
governance, we will in fiscal year 2005 continue to support
long-term economic growth, diversification, and free trade
throughout South Asia.
Fiscal year 2005 funds requested for our economic programs
will promote macroeconomic reform as well as help ordinary
people to gain access to better education, health care, and
income-generating opportunities.
Of 1 billion Muslims in the world, some 460 million reside
in South Asia. Our public diplomacy and development programs
are building U.S.-Muslim ties and understanding, like the
President's recently announced Greater Middle East Initiative,
now being developed in consultation with prospective
participants. Our bilateral programs support freedom and
prosperity throughout South Asia.
In fiscal year 2004, we retooled our $2 million regional
economic support fund program to serve as an incubator for
innovative or multi-country pilots to foster democracy and
support education, income generation, or conflict resolution in
key South Asian communities.
Thanks again for this opportunity to describe our 2005
budget request for South Asia. It remains crucial to enhancing
our national security and promoting South Asia's stability, and
I welcome your questions.
[The prepared statement of Ms. Rocca follows:]
Prepared Statement of Hon. Christina B. Rocca
ACCOMPLISHING OUR MISSION
Chairman Lugar and members of the Committee, thank you for inviting
me to come here today to talk about how our FY 2005 budget request will
help implement U.S. policy priorities in South Asia.
Mr. Chairman, since September 2001 we have advanced our most vital
security interests in South Asia quite dramatically. A moderate,
democratic Afghan constitution was adopted in January, with national
elections scheduled for June. Estimates now put Afghanistan's annual
economic growth at 30% over the past two years; and we helped the
government institute reforms to facilitate that growth. Completion of
the first layer of paving of the Kabul-Kandahar road in December was a
major step toward extending the authority of the central government and
linking key regions. We are pleased that our NATO allies agreed last
year to assume leadership of the International Security Assistance
Force for Afghanistan (ISAF). With our help, Afghanistan has made
significant progress in establishing a new national army (ANA) and
police force, and we have extended security through a network of civil-
military Provincial Reconstruction Teams in the provinces.
Pakistan remains a crucial ally in the war on terror. Over 550 al-
Qaeda and former Taliban operatives have been captured, including al-
Qaeda operational commander Khalid Shekh Mohammed and September 11th
plotter Ramzi bin al-Shibh. We have strengthened border security
through support for an air wing, checkpoints, new outposts in Quetta
and Peshawar, road construction to improve access, and training for--
and improved cooperation between--law enforcement entities in the
Federally Administered Tribal Areas. Pakistan's economy has moved from
crisis to stabilization. The government continues to pursue education
reform, including for madrassahs, aimed at preparing young Pakistanis
to gain employment and compete in the global marketplace. Pakistan is
making good progress in unearthing the A.Q. Khan proliferation network,
and we are asking them to share what they find with us.
In January, we launched our Next Steps in Strategic Partnership
(NSSP) initiative with India. The rapprochement between India and
Pakistan that began last year has enabled not only a successful meeting
on regional cooperation in January, but the beginning of a composite
dialogue on the issues that divide them. Despite suspension of formal
negotiations between the government and the Tamil Tigers in Sri Lanka
since last year, and a political crisis within the government, the
ceasefire there continues to hold.
Impressive as these developments are, we cannot afford to rest
until we see a fully peaceful, democratic and prosperous South Asia,
entirely free from terror and nuclear threat. Our FY 2005 resource
request for South Asia will help consolidate hard-won gains and enable
us to press ahead against the challenges that remain. Chief among these
are--in the spirit of the Afghanistan Freedom Support Act--assisting
Afghanistan's new democratic institutions, broadening security
(including through the act's Department of Defense drawdown authority),
ensuring a full economic recovery, and helping to end the drug trade in
Afghanistan. In Pakistan, recent attempts on President Musharraf's life
underscore the need to shut down terrorist organizations and the
networks that support them; something the government is working hard to
do. Resources requested for Pakistan will help facilitate the war on
terror on all fronts. We must help Sri Lanka achieve a lasting peace
and rebuild a war-torn society and economy. In Nepal, our resources
will help to counter a brutal Maoist insurgency. Our programs also aim
to help the moderate democracy of Bangladesh address governance,
transparency and economic challenges.
FIGHTING TERROR IN THE FRONTLINE STATES
Over $1.6 billion of our $1.9 billion FY 2005 foreign operations
resource request supports our number one policy goal--combating terror
and the conditions that breed terror in the frontline states of
Afghanistan and Pakistan. Total U.S. assistance for Afghanistan thus
far, including this year's acceleration of reconstruction, comes to
over $4 billion. The President's $1.2 billion request for Afghanistan
in FY 2005, which includes $300 million from the Department of Defense,
will sustain our accelerated programs. Following national elections
this summer, we will help strengthen new democratic institutions from
the national to local levels, and support the nascent civil society and
independent media. We will also support counternarcotics activities,
and provide training and equipment for additional ANA battalions and
train the remaining national and border police. The nexus between
narcotics and terrorism is becoming increasingly apparent, and it is a
top priority of ours, and of our international coalition partners, to
stamp out drug production where we find it. While we will support
continued macroeconomic reforms, invest in private sector development
to create sustained growth and build necessary roads and bridges, at
the grassroots level, we are reaching out to ensure a Bonn dividend. We
will support women's centers that provide health and legal services;
will build hundreds of schools and clinics through Provincial
Reconstruction Teams; will train teachers and provide schoolbooks; and
will help farmers re-establish their livelihoods.
The Government of Pakistan continues to capture al-Qaeda terrorists
and Taliban remnants. President Bush has committed to work with
Congress to demonstrate sustained support for these efforts and for
ongoing economic, education and democracy reforms. Our FY 2005 request
for Pakistan includes $300 million in economic and $300 million in
security assistance for the first of a five-year, $3 billion
commitment. The symmetry is no accident. As we enable Pakistan to
combat terror by providing $300 million in Foreign Military Financing,
we must help tackle conditions that breed terror by expanding education
and economic growth and employment opportunities and by helping to
restore a fully-functioning democracy. The $300 million in FY 2005
Economic Support Funds (ESF) requested will include both macro-
stabilization and social sector elements. Remaining budget resources
requested for Pakistan in FY 2005--including Development Assistance;
Child Survival and Health; International Narcotics, Crime and Law
Enforcement; and Nonproliferation, Anti-Terrorism, Demining and Related
Programs resources--will fund critical border security,
counternarcotics and law enforcement programs, in addition to ongoing
development programs for education, democracy and health that
demonstrate our support to ordinary Pakistanis.
NEXT STEPS IN OUR STRATEGIC PARTNERSHIP WITH INDIA
In January, President Bush and Prime Minister Vajpayee announced
our Next Steps in Strategic Partnership (NSSP), an initiative designed
to cement our strategic ties with the world's largest democracy. This
expanded cooperation on civilian nuclear activities, civilian space
programs, high technology trade and an expanded dialogue on missile
defense will bring significant economic benefits to both sides, while
also achieving our nonproliferation goals through enhanced export
control regimes in India and maintaining all our international
nonproliferation obligations. Our FY 2005 resource request for India
will help complete successful economic reforms, support HIV/AIDS and
child survival programs, and provide aid for her most vulnerable
groups.
REGIONAL STABILITY
Regional Stability is another high policy priority in South Asia.
We credit the vision and statesmanship of Prime Minister Vajpayee and
President Musharraf and their governments for the remarkable progress
recently achieved toward resolving the issues that divide them. At the
same time, India is conducting a simultaneous dialogue with the
Kashmiri group, the All Parties Hurriyat Conference. We will be
watching developments with hopes for continued success and will
continue to support these efforts to resolve the long-running conflict.
Our bilateral interaction with India and Pakistan includes wide-ranging
discussions on how to control the onward proliferation of nuclear
technology. We are urging both countries to bring their export controls
in line with international standards and to enforce them effectively.
Our FY 2005 request includes program support for their efforts in this
regard.
In Sri Lanka, the 2003 suspension of formal peace negotiations
between the government and the separatist Liberation Tigers of Tamil
Eelam (LTTE) was followed by an October LTTE proposal for an interim
administration in the predominantly Tamil areas of the north and east
of the country, which we hoped would help the parties resume formal
negotiations. But a continuing standoff between the Prime Minister and
President has prevented a return to the talks; with parliamentary
elections called for April. However, the Sri Lankan people want to see
their leaders bring an end to this war. The ceasefire continues to
hold. An informal peace process continues, bringing increased
interaction among the ethnic communities, and growing trade and
economic opportunity. Our FY 2005 request for Sri Lanka will fund
short-term, high impact programs that are both an incentive to peace,
and a boost to reconstruction and reconciliation in war torn areas.
Nation-wide development and health programs will support the
Government's economic competitiveness and anti-poverty efforts, while
our democracy programs will support reconciliation and promote
reintegration.
In August, 2003 the Maoist insurgents in Nepal unilaterally
withdrew from a seven-month ceasefire and resumed military attacks and
terrorist activity, leading the U.S. in October to designate the
Maoists as a terrorist organization under E.O. 13224, which imposes
financial sanctions against the group. The United States, India, the
UK, and others in the international community stand with the Government
of Nepal against the Maoists, but also share the view that a military
solution is not possible and that a negotiated settlement is required.
The balance between our FY 2005 requests for security and development
programs in Nepal underscores this point. We are deeply concerned about
suspension of the electoral process and numerous human rights abuse
allegations against the government security forces and Maoists alike.
Political parties and the King must unify under a multi-party
democracy, ensure respect for human rights, and reach a political
solution to the conflict for the benefit of all Nepalis. Our FY 2005
request will provide strategically-targeted economic, governance and
humanitarian assistance in areas vulnerable to Maoist control, while
long-term development programs address the broader conditions of
desperate poverty and lack of opportunity that have bred instability.
GOOD GOVERNANCE
Promoting effective democratic governance is a goal firmly grounded
in the President's belief in expanding freedom. Democratic development
will bolster our counterterror, conflict prevention, and development
efforts over the long term by establishing political stability and good
governance. U.S. democracy programs in South Asia address the historic
challenge of centralized, patronage politics. At one end of the
spectrum, we are supporting Afghanistan's national elections in 2004.
Throughout the region we are working with legislatures, judiciaries,
local government, political parties, civil society and the independent
media to tackle corruption and increase citizen participation. Our
human rights programs combat trafficking in persons and child labor,
while promoting women's rights and religious freedom.
ECONOMIC GROWTH
As we support Afghanistan's economic reconstruction and Pakistan's
economic stabilization, we must help the other South Asian countries to
reduce poverty, and countries dependent on textiles to diversify. Our
bilateral economic programs support macro reforms to spur long term
growth and trade, while helping ordinary people to gain access to
better education, health care and income-generating opportunities.
CONCLUSION
Of one billion Muslims in the world, over 400 million reside in
South Asia. Our public diplomacy and development assistance programs
are building stronger ties and understanding between the United States
and South Asian Muslim communities. Like the President's recently
announced Greater Middle East Initiative--now being developed in
consultation with prospective participants--our bilateral programs
support freedom and prosperity throughout the South Asia region.
Our bilateral programs are complemented by our $2 million regional
Economic Support Fund (ESF) program, which serves as an incubator for
innovative or multi-country pilots to foster democracy or support
education, income generation and conflict resolution in key South Asian
Muslim communities. Projects thus far include expanding USAID Dhaka's
successful community leader training on health, development and human
rights and hopefully, helping to explore a similar program in
Afghanistan. We are taking a regional Muslim women's rights network to
the next level, helping to establish ongoing collaboration across
borders to gain acceptance of women's rights under Islam, using
successful models from Southeast Asia. We are also supporting the
development of Pakistan's new independent radio through a grant to
Internews.
In conclusion, our FY 2005 resources request will enable us to
continue implementing U.S. policy goals that remain crucial to our
national security as well as to the future stability of South Asia. Mr.
Chairman, I thank you and the Committee for your generous time and deep
interest.
Senator Chafee. Thank you, Secretary Rocca. Now we'll hear
from Mr. Gordon West.
STATEMENT OF GORDON WEST, ACTING ASSISTANT ADMINISTRATOR FOR
ASIA AND THE NEAR EAST, USAID
Mr. West. Thank you, Chairman Chafee. USAID appreciates
this opportunity to discuss our programs in the South Asia
region. South Asia, as is well-known, is home to over more than
half of the world's poor. Less known, South Asia is also home
to over half of the world's Muslim population, in fact often
overlooked due to the world's attention to the Middle East.
South Asia is also an area of change and dynamism, and this
has brought both challenges and great opportunities to this
region. Nowhere are those challenges and opportunities more
apparent than in Afghanistan. We're now beginning our third
year of operations in Kabul. We look back to meetings in Berlin
and Brussels and Tokyo in the very early days, the beginning of
the Afghanistan program, and the challenges were almost
overwhelming.
We have seen since those days tremendous strides in the
creations of ministries, of the building of basic
infrastructure, roads, schools, clinics, the basis of an
agriculture sector, the foundations for an operating economy,
and indeed, there is much to be proud of in the accomplishments
that the U.S. and its partners in Afghanistan have
accomplished.
As noted in the upcoming sessions scheduled for Berlin,
there is much yet to be accomplished. Largely we are looking at
sort of a transition phase where the basics are there, but the
capacity is yet to have been developed in terms of the Afghans
taking over their own security, taking over their own role as
head of government and a governing body, of being able to
expand their economy and reach out to the rest of the world, of
being able to expand and improve their services. This will very
much be the attention of the coming years. A lot of the basis
is now there but there's a lot of work to be done, and USAID
looks forward to continuing to work closely with State, DOD,
and the other donor partners of the world in taking on these
challenges.
Clearly, security is one of the major factors that we face
on a daily basis in Afghanistan, particularly in the south and
southeast. And while it does demand our constant attention, it
has not prohibited us from continuing and expanding our
programs.
Pakistan is another of our major focuses in South Asia. We
have now been on the ground for approximately a year and a
half. Our programs started out with a large focus on basic
health and education services. We are encouraged by the
progress in both of those sectors. There is a considerable
dynamism in the private sector, in the NGO sector, and
increasingly in the government as we decentralize and expand
the ability and the capacity to deliver these basic social
services.
This past year has seen us dramatically increase our
support in the democracy sector, focusing on developing the
capacity of women in the legislative sector, on expanding the
role of an open media, and of increasing civil society and rule
of law. We are also initiating programs in the economic growth
area focused on small business development.
In Nepal, we have dramatically shifted the focus of our
program, largely to conflict mitigation. While we do believe
that the Maoists can no longer threaten to overtake the
country, we also recognize that without positive and effective
leadership at the center, there are limitations to what the
outside community can do to really push Nepal forward, and we
hope for better days in the future.
In Sri Lanka, there have been setbacks, but we are still
encouraged by the willingness to overcome the decades and,
indeed centuries of conflict in that country. We are playing a
leading role, along with our partners in the U.S. Government
and the donor community in the peace negotiations and
structure. We have our Office of Transition Initiatives and
many other resources on the ground and we continue to focus on
Sri Lanka as a priority. It is also among the candidates that
may be within the realm of the Millennium Challenge Account
over the coming years.
Bangladesh, a moderate Muslim majority, continues to
progress. It has political challenges, but we have seen great
strides in almost all the sectors we work. We are hopeful that
this program will really be a model for our role in outreach
to--it has been an outreach to the Muslim community in economic
development and in the delivery of basic social services.
In India we continue to see a transformation of our
relationship as India grows as a world power. We are very much
focused on vulnerable populations. We also note that the HIV/
AIDS threat in India is real and growing. There are four states
in particular which are a focus of our attention. We have $13.5
million in HIV/AIDS programs working in India and we do believe
this is a program that deserves and will continue to get
increasing attention.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. West follows:]
Prepared Statement of Gordon West
Chairman Lugar, members of the committee, I welcome the opportunity
to discuss with you the important work that the U.S. Agency for
International Development is carrying out in the Asia and Near East
region. This has been a year of extraordinary challenges for the United
States, and I am confident USAID has helped our nation meet those
challenges.
OVERVIEW
The countries encompassed by USAID's Asia, Near East (ANE) bureau
are at the core of U.S. national interests and foreign policy
priorities. This region faces major development challenges including
terrorism, instability, oppressive governments, HIV/AIDS, widespread
corruption, and persistent environmental degradation. Strongholds of
extremism and fundamentalism prey on poverty-stricken people who see
little hope in the future. Regional pockets harbor terrorists and
radicals who are of significant risk to those countries' governments as
well as to the United States.
The lack of transparency in economic and legal institutions and
severe restrictions on human freedoms impose a sense of fear and
hopelessness that robs people of their dignity and freedoms. Oppressive
regimes impose their will while sanctioning illicit activities that
destroy opportunities for equitable economic growth and human well-
being. These challenges hinder prospects for the millions of people in
the ANE region living in abject poverty and, in many cases, terror.
The USAID missions in the ANE region carry out foreign assistance
programs that meet these challenges while supporting key U.S. foreign
policy interests. The wars in Iraq and Afghanistan have created
challenging and dangerous working environments. On-going hostilities
and random terrorist attacks extract a price, in terms of both dollars
and personnel. Through perseverance, our professionals in the field are
meeting this challenge and accomplishing those things asked of them by
the President and the Congress.
HIV/AIDS is a plague that destroys communities and bankrupts social
systems. In Asia and the Near East, eight million people are HIV
positive, and each year hundreds of thousands die from HIV/AIDS-related
illnesses. This could increase substantially if the epidemic is allowed
to spread from high-risk groups to the general population in countries
like India, China, Indonesia and Thailand.
Millions of girls and women in the ANE region are not allowed to
pursue an education. The ANE bureau believes that education for all,
regardless of gender or religion, is a key element to achieving the
democracy and economic prosperity, goals that contribute to stability.
Rapid industrialization, unsustainable energy policies and growing
populations are straining the region's natural resources and
environmental systems. Urban air pollution levels in Asia are among the
highest in the world. The consumption and destruction of natural
resources is occurring at an unsustainable rate that does not allow for
replenishment.
The programs USAID will implement to meet these challenges are
closely linked to the joint State-USAID Strategic Plan, which aligns
U.S. diplomacy efforts with development assistance. Throughout the
region, USAID strives to ``create a more secure, democratic, and
prosperous world for the benefit of the American people and the
international community.''
PROGRAM AND MANAGEMENT CHALLENGES
Security is the single gravest and most costly concern to the Asia,
Near East Bureau, and yet it is the most difficult to predict. USAID is
grappling with how to plan and budget for unknown threats to adequately
protect the professionals charged with carrying out U.S. assistance
programs.
Iraq and Afghanistan top the list of countries with serious
security concerns, but they are not alone. Jordan, Indonesia, Pakistan,
Lebanon, Israel, and the Philippines, to name a few, also have security
concerns. Virtually every country in the ANE region bears the burden of
increased risk and the attendant security procedures and costs that
accompany those risks. Meeting these challenges and protecting our most
important asset, the people who design and manage these important
programs, requires adequate resources.
In terms of program challenges, Iraq and Afghanistan will remain
USAID's highest priorities in the ANE region. Rebuilding these
countries will improve world stability. In Iraq, USAID efforts will
allow a freed Iraqi people to govern their own country in an atmosphere
of democratic freedom. USAID will require additional program and
operating resources to continue the reconstruction and stabilization
work in Iraq beyond 2005.
In Afghanistan, ANE has made great strides with completion of the
Kabul-Kandahar road and new constitution. The Afghan people are now
looking forward to free and open elections in the near future. ANE will
continue to rebuild infrastructure while improving educational and
economic opportunities that will allow democracy to flourish in these
countries that have not enjoyed basic human rights for decades.
Education is a high priority in ANE. It is recognized that
education is a key factor to stability, democracy and economic
prosperity. New or expanded initiatives are being implemented in some
countries, but more could be done to address radical and anti-American
teachings being provided in some alternative religious schools.
Several countries in the ANE region are battling economically
devastating epidemics of HIV/AIDS. In some countries the prevalence
rate is beginning to slow or even turn around because of the
interventions being taken. Unfortunately, the epidemic continues to
grow in some of the more densely populated countries. For example,
India, with a prevalence of just less than one percent, has the second
largest number of HIV positive people in the world. In Indonesia and
Nepal, the epidemic is showing signs of moving into the general
population and will require intensive efforts to slow or stem its
spread. Additional HIV/AIDS resources will be needed in those countries
to combat the epidemic as it spreads to the general population.
NEAR EAST
Iraq
USAID participated in Operation Iraqi Freedom by moving into Iraq
on the heels of combat troops. In nine months, USAID has achieved
amazing successes in Iraq, in spite of gunfire and direct rocket
attacks. The need for an immediate response to the reconstruction and
humanitarian needs in Iraq this year required a shift of financial and
human resources. USAID diverted resources from other missions in the
region so that people, finances and contractors were ready to act as
soon as they were allowed into Iraq.
Through close coordination with the Coalition Provisional Authority
(CPA) and other USG entities, USAID is playing a key role rebuilding
Iraq's infrastructure, aiding in the establishment of local and
national governance systems, rebuilding the education and health
systems and helping revitalize the national economy. A long-term effort
will be required to rebuild Iraq and establish a democracy with a free,
market-oriented economy in which the Iraqi people have a voice and
choice in their future. A substantial financial commitment will also be
necessary to ensure the safety of our professionals working in such
difficult circumstances.
As the term of the CPA lapses, USAID will continue to work closely
with State and other USO agencies to ensure that our on-going
development efforts are properly aligned and complimentary to political
initiatives. We will continue the relief and reconstruction work that
will allow the Iraqi people to rebuild their lives as we help them
rebuild their country.
Egypt
Egypt and the United States share strategic interests that include
the achievement of freedom, stability and peace in the region. USAID's
programs in Egypt support this goal by helping promote prosperity in
Egypt and facilitating the country's ongoing, but incomplete,
transition from an economy controlled by the state to a free-market
oriented one. The greatest threat to domestic stability in Egypt is
frustration over the persistent lack of economic opportunity. With high
rates of unemployment and underemployment, about one-third of Egypt's
69 million people now live below the poverty line. Without ready access
to peaceful ways to express their aspirations and concerns, Egyptians
may turn to ways that threaten stability.
To help Egypt meet these challenges in 2005, USAID programs will
place special emphasis on three programs. First, the education program
will continue to expand the benefits of community-based education
reform to Upper Egypt and poorer parts of Cairo. Second, the governance
program will continue to expand strengthening the role of
nongovernmental organizations, increasing transparency and
participation in government, and improving the quality of journalism
and the administration of justice. Third, business investment--
necessary for job creation--will be promoted through financial market
strengthening and reform, customs reform, and increased support for
small business development.
ANE recognizes the need to address issues in other Arab countries
to head off growing radicalism and anti-Americanism. Assistance
programs in Morocco and Jordan have been restructured to better respond
to USG priorities and joint State-USAID strategies, with emphasis on
education, democracy, governance and economic growth.
West Bank and Gaza
This past year held moments of anticipation and despair for the
Palestinian people. The establishment of the Palestinian Prime
Minister, implementation of significant financial management reforms by
the Palestinian Authority (PA), and agreement by the Israelis and the
Palestinians to President Bush's Road Map for Peace produced moments of
great anticipation for the Palestinian people. For a time, both sides
undertook limited actions consistent with the Road Map: Israel removed
several illegal outposts and withdrew from Northern Gaza; and the PA
took measures to exert greater security control over areas of the West
Bank and Gaza (WBG), including negotiating a temporary ceasefire, with
Palestinian militants. The breakdown of the ceasefire, a resumption of
suicide bombings, the collapse of Prime Minister Abbas' government, and
the stagnation of PA reforms, however, dashed those hopes.
Now, USAID faces competing demands on its resources. First are the
immediate needs of the population, which are enormous. The fact that a
humanitarian catastrophe has been averted in the West Bank and Gaza is
due only to the large amounts of donor emergency assistance that has
been provided. In spite of the valuable infrastructure projects
planned, USAID has had to reallocate more than $200 million to
emergency response programs. Through these programs, USAID addresses
the basic needs of the Palestinian population through activities that
improve and sustain performance in the health care system, create jobs
and long term employment on an emergency basis, and provide assistance
to rebuild damaged infrastructure and roads.
USAID funds also support political and economic policy reforms, in
line with the President's call for reform of the Palestinian Authority,
including the strengthening of key PA ministries and regulatory
agencies, the legislature and the judiciary, and support for
Palestinian NGOs that promote democratic values and moderation. USAID
activities work to revitalize the private sector, including repair of
damaged small and medium businesses, work with small and medium
enterprises on improved management processes, financial restructuring,
and the development of appropriate private sector and investment laws
and regulations.
Jordan
Jordan faces several critical long-term challenges. Prominent among
these is Jordan's high population growth rate that will cause the
population to double by 2027. This challenge is compounded by high
levels of poverty and unemployment; between 15% and 30% of Jordanians
live on less than $439 per year. Further complicating the situation is
a traditionally low level of participation in civil society, which
leads to a perceived lack of personal freedom.
To address these challenges, USAID promotes Jordanian-led
development. USAID's programs in Jordan are jointly designed and
implemented with the Government of Jordan and thereby promote a stable,
reform-driven Jordan. In so doing, the program not only strengthens a
strong strategic ally in the Middle East but also serves as a model to
less reform-oriented Middle Eastern nations.
Lebanon
In Lebanon, USAID, working primarily through organizations outside
the Government, address the economic, political and environmental
challenges that country is facing. USAID's program concentrates on
improving living standards by revitalizing and expanding economic
opportunities for small entrepreneurs and disadvantaged, mine-affected
people, encouraging trade and investment with WTO accession,
strengthening American educational institutions, and building the
capacities of indigenous groups. USAID programs also aim to improve
environmental policies and practices by developing appropriate waste
management practices, creating environmental awareness, and promoting
water sector restructuring and efficient water management. In addition,
USAID-funded activities encourage good governance and transparent
practices by strengthening municipalities throughout Lebanon.
Morocco
Morocco is a middle-income country with the human and social
development levels of a low-income country. Approximately 48% of adults
are illiterate, placing Morocco 20th among the 22 Arab League countries
(surpassed only by Mauritania and Yemen) in literacy rates. Women are
particularly affected, with a female illiteracy rate of 62%, and higher
in rural areas.
The U.S. Government's highest economic priority in Morocco is the
negotiation, conclusion, and implementation of the U.S.-Morocco Free
Trade Agreement (FTA). The FTA, which is in the final stages of
negotiation, will accelerate the major economic reforms and
restructuring that will attract investment, open global markets, and
create jobs. USAID is providing support to the government of Morocco to
enable it to maximize the positive effects of the FTA and help mitigate
negative impacts such as increased rural unemployment. Over the next
year, USAID will put in place new activities to create jobs, provide
workforce training and assist the Government of Morocco to decentralize
and better meet the needs of its people.
Yemen
USAID opened a new mission in Yemen during this past year. Our
program there will address U.S. foreign policy objectives and,
specifically, the war on terrorism. USAID will assist the Yemeni
Government in improving their health and education systems while
encouraging improved governance and participation.
SOUTH ASIA
Trafficking
Rapid social and economic changes occurring in this region fuel
mobile migrant populations and growth of the sex and drug trades.
Trafficking is one of today's greatest human tragedies. The U.S.
Government estimates that up to a million women and children are
trafficked annually. Some victims are tricked into leaving their homes
with the promise of a better life and a well-paid job.
Some are kidnapped and still others are sold by desperate family
members faced with inescapable poverty. USAID is working closely with
the State Department in multiple countries in South Asia to implement
programs to combat this evil.
Afghanistan
The reconstruction and development of Afghanistan continues at an
accelerated pace, in spite of the continuing dangers there. The most
striking success was completion of the first layer of pavement on 390
kilometers of the Kabul-Kandahar highway, which links Afghanistan's two
largest cities. This achievement reduces transportation costs, improves
economic growth prospects, and expands access to services for one-third
of the country's population. Work in the transportation sector is now
expanding to the Kandahar-Herat portion of this same highway and
rehabilitation of over 1,000 kilometers of secondary roads.
In health and education, USAID is building clinics, supporting NGOs
across the country, building schools, training teachers and providing
textbooks. Agriculture is the livelihood for approximately three-
quarters of Afghans, and USAID is working to improve productivity and
market access as well as helping Afghans to expand into new crops.
Building on a successful currency exchange program, USAID continues to
assist the Central Bank and Ministry of Finance to strengthen the
central government's economic management and budgeting. USAID also
played a key role in December's Constitutional Loya Jirga coordinating
logistics and providing technical assistance. Critical preparation is
now underway for elections in the summer of 2004.
Pakistan
Pakistan is a key ally in the Global War on Terror and USAID-funded
programs are working to strengthen the fundamental social and economic
weaknesses there. One of USAID's foremost programs seeks to improve
primary education. Improved and more accessible education will build
the economy, counter extremism, and promote moderation among the
population. USAID is also assisting the most vulnerable segments of
society, including women, infants, and children, by providing access to
health, including reproductive health services.
USAID's democracy and governance program in Pakistan is working
with civil society organizations, political institutions and the media
to promote and strengthen democratic principles of good governance. An
empowered civil society will create more effective, responsive local
and national governance, making legislative institutions more
accountable to constituents. Finally, a fourth and critical sector is
economic growth. USAID is working to reduce poverty and increase income
and employment for the poor, especially women and young adults. The
program is assisting micro-entrepreneurs to start and expand businesses
by providing a source of credit in some of the poorest, most isolated
regions of the country.
India
India, the world's largest democracy, home to over one billion
people (roughly one-sixth of the world's population) is a key partner
with the United States in the war on terror and an anchor for security
and economic growth in South Asia. Both nations want to dramatically
transform their relationship. The Indian government is intensifying its
economic and social policy reforms to decrease poverty and increase
social equity and is committed to cutting the poverty rate in half by
the year 2020.
USAID programs in India will continue to advance four U.S. national
interests: (1) economic prosperity achieved through opening markets;
(2) global issues of population growth, infectious diseases, and
climate change; (3) development and democracy concerns of alleviating
poverty, reducing malnutrition, and improving the status of women; and
(4) humanitarian response by saving lives and reducing suffering
associated with disasters.
In addition to the bilateral program, ANE's South Asia Regional
Initiative/Energy (SARI/Energy) program encourages regional cooperation
in energy development and the eventual trade in clean energy resources
among South Asian countries. The United States-Asia Environmental
Partnership promotes the adoption of clean and efficient technologies
in addition to policies and practices that support the positive
relationship between economic growth and environmental protection in
India.
Sri Lanka
In Sri Lanka, USAID moved from a program closeout scenario in 2001
to the design and implementation of an ambitious program that supports
a negotiated settlement to the 20-year conflict in that country. U.S.-
funded activities provide transition and humanitarian assistance to
those areas affected by the conflict while working to improve
democratic institutions and processes. Through these programs, the
respect for human rights is promoted and economic growth and stability
through market-oriented interventions are being supported. USAID is
also working with other donors to monitor the upcoming April 2004
parliamentary elections to ensure that they are free and fair.
Nepal
The Maoist insurgency in Nepal has been costly in human terms and
has severely disrupted that country's already fragile economy. The
problems have been exacerbated by the political impasse between the
monarchy and the political parties. By supporting interventions that
address underlying causes of popular dissatisfaction (poverty,
inequality, and poor governance) which contribute to the insurgency,
the U.S. is making an important contribution to fighting terrorism,
promoting regional stability, and diminishing the likelihood of a
humanitarian crisis. The USAID program is aimed at reducing the impact
of the insurgency on individuals and their communities, increasing
household food security, reducing fertility and protecting the health
of Nepalese families, addressing the country's energy needs, and
assisting the Government of Nepal in dealing with critical problems of
poor governance, weak rule of law and inconsistent democratic
practices.
Bangladesh
Bangladesh has progressed significantly during the past decade
achieving self-sufficiency in rice production, lowering infant and
child mortality rates, virtually eradicating polio, increasing girls'
enrollment in schools, and consistently increasing annual GDP. USAID's
program of assistance in Bangladesh is particularly attuned to the
priorities expressed in the joint USAID-State Department Strategic Plan
2004-09. In particular, the program in Bangladesh supports the joint
objective of promoting democracy and economic freedom in the Muslim
world, reducing the threat of famine, and advancing sustainable
development goals. U.S. strategic interests include improving health,
education, economic development, and the environment for the
Bangladeshi population, and minimizing the costs of natural disasters.
EAST ASIA
Regional Development Mission for Asia
USAID's Regional Development Mission/Asia (RDM/A) opened in
Bangkok, Thailand in June 2003. The new mission manages regional and
country-specific programs in Burma, China, Laos, Thailand, and Vietnam,
as well as HIV/AIDS and environmental programs that extend East into
the Pacific and West into South Asia. RDM/A also acts as the regional
hub for services including contracting, administration, and disaster
response. RDM/A will manage four programs: Cleaner Cities and
Industries in Asia, Effective Responses to HIV/AIDS and Other
Infectious Diseases, Improved Governance in South East Asia, and
Special Foreign Policy Interests Addressed in South East Asia.
HIV/AIDS
HIV/AIDS continues to increase in Asia where, in several countries,
the epidemic has moved from high-risk groups into the general
population. This could put 3.8 billion people at risk throughout the
region. Approximately 8 million people in Asia are infected, including
one million who became infected with HIV just during the last year.
Low national prevalence rates in some highly populated countries
conceal serious localized epidemics. In China and India alone, there
are more than 5 million people, adults and children, who are infected.
Unless HIV/AIDS prevention efforts improve, Asia could have 40 million
infected persons by the year 2010. This would make the region the
highest of any infected region in the world. The HIV/AIDS epidemic in
Asia could be contained in Asia if adequate resources and prevention
mechanisms are focused on the region.
USAID programs are supporting HIV/AIDS prevention, care and
treatment in 15 Asian countries, where some notable successes have been
achieved. For example, with USAID support and Government of Cambodia
commitment, HIV/AIDS in that country has decreased from 4% of the adult
population to 2.8%. However, the current flat-lined budget for HIV/AIDS
activities will limit the level of effort USAID will be able to
provide.
With continued funding for prevention, care and treatment,
strategic planning, and support for high-level government policy
support, the HIV/AIDS epidemic in the ANE region could be contained,
thereby mitigating the impact of this dreadful disease on individuals,
families and communities.
The Philippines
The Muslim population of Mindanao has been marginalized
economically for decades and now lacks access to basic social services.
The long neglect and inequities for people in these areas have
contributed to deep seated feelings of resentment and alienation from
the nation as a whole.
USAID has refocused its program to provide more funding to this
fragile area to encourage economic development within the conflict-
affected areas. Local organizations that support peace will receive
support, as will programs for indigenous peoples affected by conflict.
Microfinance initiatives play a key role in supporting small-scale
projects serving the needs of impoverished women. Rural agriculture
will remain a major focus, in tandem with specific interventions
designed to reintegrate former combatants into productive social and
economic roles. USAID is designing programs to improve the Autonomous
Region for Muslim Mindanao's (ARMM) capacity to deliver basic services
(especially in health and education sectors). USAID will continue to
enhance access to justice by supporting programs that build the
capacity of local level community justice systems.
USAID's new education initiative in the Philippines will address
the disparities in education between the ARMM and the rest of the
country. This will demonstrate a commitment to greater equality and
help reduce the widespread sense of alienation and exclusion felt by
many Muslims in the region.
Through these activities, more than 21,000 former combatants of the
Moro National Liberation Front (MNLF) have successfully reintegrated
into the peaceful economy and have not taken up arms again. Over 1,000
homes of former rebels have been electrified, and economic
opportunities in Mindanao as a whole have expanded through producer
organizations and high value crops. The rebel Moro Islamic Liberation
Front (MILF) is now poised to seek a historic peace agreement with the
government, and, according to President Macapagal-Arroyo, this is due
in no small measure to the attractiveness of USG assistance directly
benefiting the MNLF. USG assistance will not go to the MIFL areas until
after the MILF has signed an agreement with the Government and cut all
ties to terrorist groups. USAID's efforts to reintegrate former
combatants have been so successful that the State Department
distributed a video presentation of the program to be used as a model
for U.S. relations with Islamic communities worldwide.
Indonesia
USAID's 2000-2004 assistance program to Indonesia was designed to
support a transition from 1998-era crisis response initiatives to
strategic interventions that establish the foundation for economic,
social and political reforms. These goals have largely been
accomplished. With the planned level of FY 2004 funding, USAID will be
the lead donor supporting transparent, inclusive and peaceful
legislative and the first-ever, direct presidential elections in
Indonesia.
The next step will be to provide assistance that will make it a
more moderate, stable and productive country. USAID is embarking on a
new strategic direction that will address these needs. The new
strategy, which the Mission is currently developing and will carry them
through the next five years, will be presented to ANE in March for
discussion and approval. This strategy will focus on programs that will
improve the quality of decentralized basic education, improve
democratic and decentralized governance, elevate the quality of basic
human services, maintain healthy ecosystems, and increase economic
growth and job creation through assistance.
The education program, which will be initiated in FY 2004, is a new
one based on President Bush's announcement of an Indonesian education
initiative. Program activities will prepare the children of Indonesia
to become productive members of the world economy. USAID programs will
also prepare Indonesians to be effective participants in their own
democratic society, while reducing extremism and intolerance in favor
of democracy, respect for diversity, and resolution of societal and
political differences through non-violent means.
Cambodia
Although the Kingdom of Cambodia continues with democratic
governance issues, it has made progress. The July 2003 national
assembly elections, partially funded by USAID, helped to create the
most open political environment that country has seen in the past
decade. The prime U.S. national interest in Cambodia is to reduce
Cambodia's vulnerability to international terrorism and international
crime (such as trafficking in persons and narcotics) through building
the country's potential to become a democratic state with an effective
legal and judicial system.
While not working directly with the Cambodian government, USAID's
democracy and governance program seeks out and funds NGOs that
challenge the political and judicial system to treat Cambodian citizens
equitably. The Agency's support will continue to sustain the
development of professional party organizations, expand participation
of youth in politics, and provide all democratic parties a presence on
Cambodian airwaves. USAID's health program will continue to increase
the number of health centers that can deliver an integrated health
package, ensuring links between HIV/AIDS and all other health programs.
These health centers will provide services for maternal and child
health, reproductive health, family planning, tuberculosis, HIV
prevention, care and support, and community outreach. USAID's health
programs will also focus on support for orphans and vulnerable children
and prevention of mother-to-child transmission of HIV.
Mongolia
Mongolia has made significant progress over the past twelve years
in establishing the basic framework for a democratic society. An
impressive constitution is in place, along with laws and regulations
that provide the foundation for even further progress in the years
ahead. One of the tests of democracy is the ability to change
governments through regular, free and fair elections and Mongolia has
passed this test with nine major elections over the past decade, three
each at the local, parliamentary and presidential level. Governments
have been elected to power and then peacefully relinquished that power
following the outcome of subsequent elections.
The upcoming parliamentary elections, scheduled for June 2004, will
provide another important test of the democracy taking root in
Mongolia. This is in marked contrast to its five Central Asian
neighbors, each of which is still ruled by the same leader who
inherited power following the breakup of the Soviet Union.
Mongolia's continued progress is by no means guaranteed and
difficulties will almost certainly be encountered in the days ahead. As
economic prospects improve, competition over the country's productive
resources is likely to increase. The stakes will become higher and the
issues more complex. USAID's programs in Mongolia are structured to
build on these initial successes by focusing on legal reform and
political processes.
Vietnam
Recent Ministry of Health reports indicate that between 4 and 6
million Vietnamese (6-8% of the population) suffer from disabilities.
One out of every three Vietnamese children is born with or acquires an
ambulatory, mental, sensory, or intellectual disability. In all, there
are roughly one million children with disabilities in Vietnam.
Recognizing this compelling need, USAID and the international donor
community have sought to mobilize the Government of Vietnam to respond
to this need. USAID's efforts to build the capacity of the government
to address this situation have achieved great successes through the
Leahy War Victims Fund (LWVF) and the Displaced Children and Orphans
Fund (DCOF). These two funds support a number of projects implemented
by NGOs to provide prosthetics and orthotics, promote rehabilitation,
improve advocacy and policies for the disabled, and develop inclusive
education models for children with disabilities to be included in the
regularized school system.
USAID programs also include an active HIV/AIDS program in Vietnam
to contain the epidemic in that country. Prevalence rates are less than
1% but without continued interventions, the epidemic threatens to enter
the general population.
East Timor
USAID will open an office in East Timor in 2004. This nation, which
is only 21 months old, faces enormous challenges to its democratic and
economic development. USAID is providing critical assistance that will
help build a viable economy and strong democratic base for the
fledgling nation. USAID's programs will work to develop the local
economy while establishing an environment attractive for trade and
foreign investments that will create jobs and reduce poverty. USAID
also funds training in basic business and management skills to
encourage small business development. The establishment of small retail
purchasing cooperatives has helped to speed the local economic recovery
in rural areas.
Experience in democratic governance, public administration and
economic development are extremely limited among the East Timorese.
USAID's democracy programs are working to strengthen governance and
improve citizens' access to justice. Continued U.S. support will be
essential to help government, media and civil society fill their
appropriate roles in a free and open democracy.
Burma
Burma is ruled by a highly authoritarian military government. The
Government reinforced its firm military rule with a pervasive security
apparatus. Though resource-rich, the country is extremely poor. Four
decades of military rule, economic mismanagement, and endemic
corruption have resulted in widespread poverty, poor health care,
declining education levels, poor infrastructure, and continuously
deteriorating economic conditions.
USAID co-manages the Burma assistance program with the Department
of State. These activities support democracy in Burma as well as pro-
democracy groups outside Burma. They also meet the needs of Burmese
residing in Thailand by providing access to humanitarian assistance,
primary health care and basic education. Democracy activities include
training of Burmese journalists and public information workers to
improve the quality and dissemination of news and information on
conditions inside Burma. USAID also funds scholarships for Burmese
refugees to study at colleges and universities in Asia, Europe, Canada,
Australia, and the U.S.
Laos
Laos is one of the poorest and least developed countries in East
Asia. Although it is also one of the few remaining Communist states in
the world, reforms underway in neighboring countries and continued
availability of Thai broadcasting may create greater incentives for the
regime to undertake necessary reforms.
USAID programs in Laos will continue to combat the spread of HIV/
AIDS. Because Laos is surrounded by countries such as China, Thailand,
and Vietnam, which have significant numbers of HIV infections, and
given the level of international migration, it is very likely that the
epidemic will continue to spread in Laos. USAID activities will fund
necessary interventions to control the spread of HIV. Other programs in
Laos include USAID's War Victims Assistance Project to reduce the
impact of unexploded ordinance (UXO) in northern and central Laos. In
addition, USAID's child survival and maternal health activities the
Vulnerable Groups Inclusive Education Program strengthens inclusive
education in Laos at both the policy and classroom levels to ensure
that all children with disabilities in Laos are able to attend and
achieve in school.
China/Tibet
USAID coordinates very closely with the State Department on all of
our activities in China. The programs there have two objectives. The
first is to improve China's legal infrastructure so that it is more
compatible with a market economy and better protects its citizens'
rights. The second program assists Tibetan communities in preserving
their cultural traditions, promoting sustainable development, and
conserving the environment. The first objective is being met by
introducing key members of the Chinese legal and judicial system to
constitutional principles that support the rule of law, transparency
and justice.
The second objective is being achieved through activities that
directly assist Tibetan communities in China. This program is
implemented through NGOs headquartered outside China that provide
Tibetan communities with access to the financial, technical, marketing,
environmental, and educational resources they need to sustain their
traditional livelihoods, unique culture and environment, and to avoid
economic marginalization as China develops its western regions.
CONCLUSION
The foregoing summary briefly explains some of USAID's programs,
achievements and challenges in the Asia, Near East region. While much
has been accomplished, much work remains to combat terrorism, promote
stability, advance democracy and human rights and halt the advance of
HIV/AIDS. USAID thanks this committee for their support of USAID's
mission. We are confident that with continued support, we can address
the challenges ahead. Thank you.
Senator Chafee. Well, thank you for your testimony.
As we look at the history of the 2003, 2004, 2005 budgets,
from what I see for the region in 2003, the total is $1.3
billion. Is that roughly accurate? 2004, $2.4 billion, but then
falling back this year to $1.9 billion. Am I reading those
figures accurately?
Ms. Rocca. I believe so, yes.
Senator Chafee. And how, in the age of inflation, how is
the wrestling match back at headquarters as you tried to
confront a declining number for your region?
Ms. Rocca. Well, the declining--I think that the difference
in the numbers there that you're seeing is due to the fact that
in 2004 we got a supplemental, which added a large amount of
money to the Afghan account specifically. We think that with
the $1.9 billion that we're asking for this year, we're going
to be able to consolidate the projects we already started with
the big boost of assistance we got in 2004 and continue to move
those projects forward for 2005. I think there's sufficient
funds there.
Senator Chafee. And that begs the question, do you have any
expectation of a supplemental in 2005?
Ms. Rocca. I don't have the answer to that, I'm sorry.
Senator Chafee. And in examining in 2005, the 2005 budget
per country, as Mr. West was going through, certainly what
jumps out is that Pakistan, $700 million and Afghanistan, $900
million, $929 million, almost $1 billion out of the $1.9
billion total, leaving scarce funding for the other members of
the region. What jumps out at me in particular is India, if I
have this right, $85 million compared to $700 million for
Pakistan. How, as we carry forth our diplomacy between these
two neighbors, how is the dynamics of confronting the disparity
in foreign aid? Do I have this right, $700 million for Pakistan
and $85 million for India?
Ms. Rocca. Do you want to address it or shall I? I'll, just
in general, our relationship with India is a different type of
relationship than that which we have with Pakistan. With
Pakistan we are--Pakistan is one of the front-line countries in
the war on terror, and a lot of the assistance that we're
talking about providing to Pakistan is related directly to that
issue. With India we have a different relationship. It's one
with a growing world power and our assistance there is really
focused on helping them deal with not only the remaining
poverty, but also with some of the economic problems, which are
still holding them back, such as their deficit. So we're
providing technical assistance. It's on a different level from
that which we need for Pakistan, but I'll let Gordon talk about
specifics.
Mr. West. I'd just like to emphasize that the level of
sophistication, educational attainment in India really makes
this a rather difficult comparison. We actually see almost two
countries, with the south being almost a developed country
anymore, and the capacity of the government and the many states
to manage its own affairs really puts it in a category where it
increasingly is able to manage its own affairs.
There are many policy decisions, strategic decisions that
India must take. We are an active partner in many of those
discussions, but increasingly India is seen as a country which
is and should be expected to manage its own domestic affairs.
Ms. Rocca. If I could just add one thing. India is also a
provider of assistance to Afghanistan and in Iraq as well, so
it is also providing a large amount of money in its own right.
It puts it in a different category.
Senator Chafee. Do you get howls of protest from the Indian
Embassy that, how about this disparity? No? And your answer to
the question was, there's more direction toward a military aid,
which isn't as important in India as it is in Pakistan because
of the front on the war on terror. And that also begs the
question, is that a good policy to have to be directing so much
targeted to military aid as opposed to economic aid?
Ms. Rocca. Yes, because it is still, as I mentioned and as
you said, sir, it's still a front line country on the war on
terror, and the military assistance that we're providing is
assistance that directly helps us fight that war, which is why
we've got half and half, because we also want to be able to get
to the root causes of the extremism that exists in that region.
So we've got half in military assistance and the other half in
economic support funds and development assistance, it's a
little--actually, it's more than half and half actually.
Senator Chafee. And getting at the root of the causes of
terrorism, can you talk a little bit about the programs coming
out of State in that direction?
Ms. Rocca. Absolutely. What we're looking at is--well, what
we have done so far is the assistance that we've provided has
gone to social sector reform and to education reform. For the
2005 budget, the $300 million that we're talking about that we
are proposing, $200 million would be for either budget support
or possibly debt relief, and that would certainly--we would
expect and we would work out with the Government of Pakistan an
arrangement whereby equal amounts would go toward the social
sector.
Of the $100 million for the social sector, I have a
notional breakout, but it's still being worked out, which is
$25 million for continuing successful USAID projects, $25
million for university scholarships in Pakistan and in the
U.S., $42 million in new education, health, and water projects,
$7.8 million to train local government and support devolution,
and $.2 million, Department of Commerce trade capacity
building, which we're working with the Government of Pakistan
so that they can open up their economy and that the benefits
that the Pakistani economy is currently reaping can go down to
the average person.
Senator Chafee. To move to the subject now of counter-
narcotics in Afghanistan in particular, we've had hearings in
which that has been highlighted as one of the biggest
difficulties in Afghanistan, the spread of the narcotics
industry once again. I remember at one hearing one of the
witnesses said it's so open that they grow it on the town
plaza, in some of the towns the opium's grown right out in the
open, a corrosive effect on all the establishment of judicial
or military. The narcotics growers have their own militias to
protect their crops and just the corruption that flows from
this illicit trade.
And by looking at the budgets in Afghanistan, if I'm
looking at the line item, INCLE/ACI, the counter-narcotics line
item, in 2003 in Afghanistan it was zero, in 2004 it jumped to
$220 million, and then it slid back in 2005 to $90 million.
That certainly raises some questions, if this is such a growing
problem that it's eroding everything we're doing there, why the
slip back from $220 million to $90 million?
Ms. Rocca. Once again, as in most of the accounts that deal
with Afghanistan, what we're looking at is a difference of--the
2004 money has actually been plussed-up by a supplemental. The
amount that we've actually been working with has gone up, and
in 2005 we've requested $90 million.
There's no denying that the drug issue is a big challenge
in Afghanistan. It's one that we're working hard and putting
renewed effort into, and the 2004 numbers I think reflect also
money that the Department of Defense will be providing to this
effort. It is also an effort that we're working very closely
with our European allies, and the British have taken the lead
on this. We are absolutely cognizant of the challenges that lie
ahead, but we think that $90 million certainly as initial going
number, it will help us continue what we will have achieved in
2004.
Senator Chafee. Could you just talk a little bit more in
detail--this is a fair question--on more of the specifics of
what we're doing. Is it crop substitution, is it eradication?
Ms. Rocca. We're talking about eradication, we're talking
about crop substitution, we're talking about training border
police and border guards to help deal with the movement of the
drugs. We've got agricultural projects, which I'll let Gordon
talk about, but that's where the specific funding would be
going to.
Senator Chafee. And if we've had the $220 million in 2004,
have we seen success with the crop substitution, with the
eradication, with the local military training, some of the
areas that we've said where we spend the money?
Ms. Rocca. I think it's too soon to claim any success yet.
It's an ongoing effort and I think we need a bit more time
before we're able to say what we've been able to accomplish
with the 2004 moneys. But certainly I can tell you that it is
an absolute--it's an issue of absolute intense focus across the
board, because everybody understands the undermining effect
this could have on the stability of the country.
Senator Chafee. And I guess it goes back to the same
question I had before, it begs the question, we must be
anticipating another supplemental then if there's an intense
focus on a subject, it does take resources. And to see it
fallen from $220 million down to $90 million, that doesn't back
up the assertion that there's an intense focus.
Ms. Rocca. Well, first of all, I can't comment on a
supplemental because I don't know. However, I think we also
need to get the 2004 funds moving, and I think the $90 million
will help, I think the $90 million is a very significant number
for us to get out the door by 2005 as well.
Senator Chafee. And, Mr. West, any further comments on our
counter-narcotics efforts?
Mr. West. Just to say that agriculture is one of the three
areas, enforcement, interdiction, and alternative crop
development. There has been great success in the Helmand area
in expanding the areas that are dedicated to wheat and other
crops, so there are other ways to earn a living, so there's no
denying that the poppy cultivation has grown, but there is also
reason for some optimism that as, particularly as markets
develop and as exports start to become more common, that there
are alternatives in the future.
Senator Chafee. Well, I know you have a hard job in
declining revenue to address the myriad problems and the
intense problems, as you said, in your regions. I know we in
Congress, as Chairman Lugar said, we're at least trying to have
an authorization bill to give some guidance to the
Appropriations Committee, and I'm sure you have a difficult
time trying to come up with a final number here, $1.9 billion
for your region, but I commend you for your appearance here. I
don't have any more questions.
Ms. Rocca. Thank you very much, Senator.
Senator Chafee. Thank you.
Mr. West. Thank you.
Senator Chafee. And now we will take on the Near East.
We'll take a short recess.
[Recess from 9:37 to 9:48.]
Senator Chafee. Welcome, Secretary Burns, Mr. West again
for the second half of this panel, the Near East.
Secretary Burns, please proceed.
STATEMENT OF HON. WILLIAM J. BURNS, ASSISTANT SECRETARY OF
STATE, BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Burns. Thank you very much, Senator, and with your
permission I'll submit my written statement for the record and
just summarize my comments orally.
Senator Chafee. Without objection.
Mr. Burns. I very much appreciate this opportunity to meet
again with you to discuss our fiscal year 2005 budget request.
There's certainly no shortage of challenges as well as
opportunities before us in the Near East. I look forward very
much to continuing to work with you and with other members of
the committee in pursuit of a positive agenda for peace,
prosperity, and freedom in the region built on genuine
partnership with leaders and people in the Near East.
I have no illusions about the difficulties ahead, but I
remain confident that such a positive hopeful agenda is the
most powerful antidote to the violent extremism which threatens
us all.
There are four key priorities around which we are trying to
build partnership in the Near East and around which we are
organizing our resources. First is the challenge of helping
Iraqis liberated from the tyranny of Saddam Hussein to build
the secure, stable, and prosperous country that they deserve. A
year ago as we met in this room, American and coalition forces
were advancing toward Baghdad.
We have learned a great deal since then, and there is no
question that we have had to improvise at times, rethink our
assumptions, and adapt our approach to realities on the ground.
But there is also no question that Iraqis today are enjoying a
level of freedom that they have rarely seen in their modern
history. We look forward to the transfer of sovereignty to a
new Iraqi Government this summer and to working closely with
the United Nations in helping Iraqis organize an effective
political transition. With the support of Congress, we also
look forward to further progress in helping Iraqis to rebuild
their economy.
Today's tragic bombings in Baghdad and Karbala are another
reminder of the security challenges Iraqis face and we are
working very hard to build effective Iraqi police and civil
defense forces and to combat violence.
Mr. Chairman, I've been to Iraq five times in the last 6
months and I can't say enough about the extraordinary
commitment and dedication of the people we have on the ground
there, military as well as civilians. The contingent of
American diplomats in Iraq today is by far our largest in any
country in the Near East, and it will increase in the months
ahead. The hard work and courage of my colleagues in Iraq will
only grow more important in the coming period, given what we
have at stake in a successful transition.
A second priority, no less significant than the challenge
before us in Iraq, is resuming progress toward the two-state
vision which President Bush has outlined and which is so deeply
in the interests of Israelis as well as Palestinians. This will
require bold choices for peace from Israelis and Palestinians
themselves, strong leadership from the United States, and
active diplomacy with our friends in the region and throughout
the international community.
We are consulting intensively with the Israeli Government
to determine how the concept of disengagement might serve to
bring us closer to that two-state vision, and at the same time
are continuing to urge the Israeli and Palestinian Prime
Ministers to meet and try to revive the Road Map.
A third priority involves the crucial struggle against
terrorists and their state sponsors, as well as against the
spread of weapons of mass destruction. We have seen a major
advance on both these fronts in recent months in decisions made
by Libya. As we described to this committee last week, the
administration is determined to build on this progress through
patient and persistent diplomacy.
A fourth priority intimately connected to the other three
is the historic challenge of supporting home-grown efforts at
economic and political reform in a region which has for too
long known too little of either. Such changes simply cannot be
imposed from the outside, they must emerge from within. And the
good news is that many societies throughout the greater Middle
East are moving to modernize their economies and open up
political participation as a matter of their own profound self-
interest.
The United States and other friends outside the region can
help in many ways, from assistance programs to trade agreements
to educational exchanges, and it is profoundly in our self-
interest to do so. That's why we are so appreciative of your
support for the Middle East Partnership Initiative and
assistance programs which our colleagues in USAID have been
managing with great professionalism for many years.
Mr. Chairman, I can think of few challenges more
significant in the years ahead for American interests and
American values than turning our positive agenda built around
the four priorities I've mentioned into real progress and real
partnership in the Near East. Our economic and security
assistance in the region has never been more critical, and our
personnel and fiscal resources are stretched to the limit. We
are grateful for the vigorous efforts of this committee and the
Congress to ensure that the significance of what's at stake in
the Near East is matched by the resources we need to succeed.
Thank you again, and I look forward very much to continuing
to work closely with all of you. Thank you.
[The prepared statement of Mr. Burns follows:]
Prepared Statement of Hon. William J. Burns
Thank you, Mr. Chairman. A year ago, as we met in this room,
American and coalition forces were advancing toward Baghdad. We
discussed the challenges we would soon face in helping the Iraqi people
rebuild Iraq as a peaceful, prosperous, and democratic nation. The
challenges were real, and there is no question we have had to improvise
at times, rethink some assumptions, and generally learn some hard
lessons through experience.
A year later, we can look at a record of real accomplishment. I
have traveled to Iraq five times in the past year, Mr. Chairman, and I
can't say enough about the commitment and dedication of the people we
have on the ground there; military and civilian, government and
private. They are doing great things, every day, in Iraq, and it is
paying off.
Together with our coalition partners, our friends and allies in the
region, we have rebuilt infrastructure, addressed humanitarian needs,
and--in full partnership with the Iraqi people--started re-establishing
effective institutions of government and civil society.
Iraqis today enjoy a level of freedom they have rarely seen in
their modern history, and that freedom will soon include the transfer
of sovereignty to a new Iraqi government. We cannot afford to be naive
about the substantial challenges that remain before us. But neither
should we understate how far we have come.
Helping Iraq to rebuild and develop its democracy will continue to
be a major focus of our resources and energy in the coming year. But we
also face a number of issues that must be addressed as part of a broad,
comprehensive approach to bringing peace, stability, and prosperity to
the region. I see four priorities.
First, the challenge of helping Iraqis liberated from the tyranny
of Saddam Hussein to build the secure, stable and prosperous country
that they deserve.
Second, the struggle against terrorists and their state sponsors,
as well as against the spread of weapons of mass destruction.
Third, the challenge of renewing progress toward the two state
vision which President Bush has outlined, and which is so deeply in the
interests of Israelis as well as Palestinians.
Fourth, the historic challenge of supporting homegrown efforts at
economic and political reform in a region which has for too long known
too little of either.
We appreciate the close and fruitful collaboration we have enjoyed
with this committee in shaping our policy responses to these
challenges, and in ensuring the resources are available to get the job
done. With that in mind, I would like to spend a few minutes going over
some of the details in each of the priority areas I have identified.
IRAQ
We continue to work closely with the Coalition Provision Authority
(CPA) and Iraqi Governing Council (IGC) in their efforts to stabilize
the security situation in Iraq, reinvigorate the Iraqi economy, and to
forge a political process rooted in democratic values that will lead
ultimately to a federal, democratic, unified and prosperous Iraq. We
are working, along with the United Nations, our coalition allies,
partners in the region, NGOs, and the international community to lay
the foundations for an Iraq with pluralistic and democratic government
institutions, protections for civil liberties, and equal rights without
regard to ethnicity, religion, or gender.
The transfer of authority from the CPA to an Iraqi government on
June 30 will be a key milestone. The United States will need to
maintain a substantial presence in Iraq after the transition. We are
moving ahead with plans to establish in Iraq what will be the largest
U.S. diplomatic mission in the world. The Baghdad Embassy will draw
staff from across the government to help the newly sovereign Iraqi
government face a dauntingly complex array of challenges. Funding is
our most urgent issue. The current level of program activity in Iraq
exceeds by orders of magnitude the staffing and budgetary levels that
the State Department and other U.S. Government agencies devote to
typical Embassy operations. We have limited funding from the 2003
supplemental to establish Embassy operations in Iraq including $35.8
million for Embassy startup, operational, and security expenses and
$61.5 million for establishing interim facilities. Our operational
needs for FY05, above the $17 million in the President's FY05 budget
request, will need to be addressed in the future.
ARAB/ISRAELI PEACE
No achievement would resonate more in the region right now than
restoring a sense of hope and progress toward realizing the President's
goal of a two state solution to the Israeli-Palestinian conflict. In
order for this to happen, both Israelis and Palestinians will have to
see a different reality emerging than the one they see today. It is
becoming increasingly clear that the emergence of a democratic,
peaceful Palestinian state alongside a secure Israelis not just a dream
of the Palestinian people. It is intimately connected with Israel's
future as well. To make it happen, vigorous U.S. leadership, as always,
will be key. Our assistance package will continue to be a vital part of
our approach. Economic and military assistance to Israel--over $2
billion annually in FMF and, for fiscal year 2005, $360 million in
ESF--helps provide the security and economic vitality for Israel to
take risks for peace. Our $75 million in annual ESF for the West Bank
and Gaza addresses immediate humanitarian needs while developing
essential infrastructure and advancing President Bush's goal of seeing
reformed and renewed Palestinian institutions. In addition to ESF for
the Palestinians, USG contributions to UNRWA typically make up over
one-third of that agency's annual budget (total support for fiscal year
2003 reached $134 million). In this way we address the continuing
humanitarian predicament while working to build the foundations for a
viable, democratic state.
Our efforts at peace reach beyond our bilateral relationships with
the parties and into a variety of tracks that encourage greater
regional interaction and multilateral peace activities. As the 25th
anniversary of the Camp David accords approaches, the Multinational
Force and Observers continues to play an essential role in support of
the Egyptian-Israeli relationship. We remain committed to our long-
standing multilateral programs aimed at encouraging dialog and
cooperation between Israel, the Palestinians, and other Arab States,
although no money was earmarked for it in the FY 2004 Omnibus Bill. The
resources devoted to our Middle East Regional Cooperation program--we
are seeking $5 million in FY 2005--promote scientific collaboration
between regional universities, NGOs, and research centers.
FIGHTING TERRORISM AND WMD PROLIFERATION
We have continued to focus our military and economic assistance
throughout the region toward disrupting terrorist networks, denying
support and sanctuary to terrorists, and, bringing terrorists to
justice. We have sought to help our friends and allies to strengthen
their legal, regulatory, and enforcement capabilities. Together with
the Departments of Justice, Treasury, and others, we have provided
training and technical assistance to help regional governments enhance
their financial oversight and regulatory authority over banks,
charities, and informal money exchange networks, known as ``hawala,''
that have been used by terrorists to fund attacks, obtain fmancing for
their activities, and disguise their assets. These efforts have been
paying off. At our urging, regional states have taken significant steps
to prevent the misuse of charities and informal remittances as sources
of funding for terrorism.
Our FMF programs, and our strong bilateral military relationships
with many regional states, support both our anti-terror effort and our
WMD objectives. Last year, increased assistance to critical frontline
states such as Jordan, Bahrain, and Oman was instrumental in helping us
to stage coalition operations in the region. Assistance to Yemen and
others enhanced anti-terror capabilities, and our ability to work
together with friends in the region to stem WMD proliferation.
Libya is a good example of how far we have come on both of these
issues. Through intensive diplomatic efforts, backed up by multilateral
sanctions--and in partnership with the courageous families of the Pan
AM 103 victims--Libya has finally accepted responsibility for the
actions of its officials, paid appropriate compensation to the families
of the victims, and must make a clear commitment to halt permanently
support for all forms of terror. In the past several months, we have
also been involved in an intensive and highly successful effort by
which the Libyan government has taken steps to disavow and dismantle
its WMD programs and Missile Technology Control Regime (MTCR)-class
missiles as well as ratify the Chemical Weapons Convention (CWC) and
the IAEA Additional Protocol that allows nuclear-related inspections at
any time. Significant challenges continue to face us in Iran and Syria
with regard to their WMD programs, and we will continue to work
directly and in concert with our allies to address these issues.
ECONOMIC MODERNIZATION AND DEMOCRATIC CHANGE
The fourth set of issues on our policy agenda, closely intertwined
with the other three, is the longer-term issue of supporting efforts
from within the region aimed at democratic change and economic
modernization. Political, economic, and educational reform as well as
expanded opportunity for women and youth are essential for the long-
term stability of the region. We must prevent the frustrations of today
from producing the terrorists of tomorrow. To realize this goal, the
President's ``Forward Strategy for Freedom'' includes as components
both the U.S.-Middle East Partnership Initiative (MEPI) and the Greater
Middle East Initiative (GME).
In 2002, the Secretary launched the Middle East Partnership
Initiative as our principal vehicle to enhance economic, educational
and political opportunity in the Arab world. MEPI seeks to establish or
enhance region-led reform efforts that will strengthen democratic
practices, expand political pluralism and the freedom of expression,
promote the rule of law, advance economic reform, and improve access to
and the quality of education in the region, as well as expanding
opportunity for women and youth in the Middle East.
The President's Greater Middle East Initiative is also designed to
respond to calls for reform in the region. We are encouraging states in
the region to develop and agree on a new document or ``charter'' that
lays out basic political and economic freedoms and principles. We
believe the upcoming G-8, U.S.-EU, and NATO summits are opportunities
for these institutions to respond to calls for change from the region
and to act in concert to support the forces seeking positive change in
the Greater Middle East.
LOOKING AHEAD
The great challenge of restoring hope and integrating the Greater
Middle East into a more peaceful and prosperous world is one to which
the United States must rise. But in the end our success will be
measured by whether we are able to achieve a partnership with the
people of the region based on a common vision. To do this, we must
convey a message of freedom, opportunity, and dignity to the region's
people. We must restore hope and confidence as the best antidote to
chaos and extremism.
As always, we will need the guidance and support of this committee,
the Congress, and many others. We certainly appreciate the vigorous
efforts of this committee to ensure we have the resources to meet these
policy challenges. As we move forward, I look forward to working
closely with all of you. Thank you.
Senator Chafee. Thank you, Mr. Secretary.
Mr. West.
STATEMENT OF GORDON WEST, ACTING ASSISTANT ADMINISTRATOR FOR
ASIA AND THE NEAR EAST, USAID
Mr. West. Thank you, Chairman Chafee, Senator Nelson. We
appreciate this opportunity to review USAID's budget and
programs in the Middle East region. Let us start with Iraq,
which represents USAID's largest new undertaking since the
Vietnam war. We've been on the ground now for approximately one
year. We have a staff of about 160 persons in Baghdad. We're
managing a program now of approximately $4.2 billion with more
anticipated in the months to come.
One of the major focuses has been on the power sector. It's
absorbed a lot of our energies, if you will. Our target is to
get to 6,000 megawatts by this summer. We're well on the way to
achieving that target.
Water and wastewater is a major undertaking. Although the
results of all the engineering works is not evident yet, there
are through the summer and fall season roll-outs of many of the
wastewater and water facilities that will greatly improve the
ability to deliver water and to rid of waste, which is a large
issue in child survival rates throughout the country.
Telecommunications is progressing quite rapidly. We have
the opening and the functioning of the Umkasr port. The Baghdad
airport is open. It is not ready for commercial service due to
security concerns, but the facility is ready to go. Roads,
bridges, schools, clinics are well underway in terms of
reconstruction programs. We have rebuilt or upgraded 2,400
schools throughout Iraq.
Child immunization rates are about 90 percent now, which is
where it should be.
We have great success in other areas, but most specifically
I would note the strength of the combination of local
government programs, community action programs through
grantees, our Office of Transition Initiatives, the Office of
Foreign Disaster Assistance, and the tremendous capabilities of
our military civil affairs units, which have combined in a
community development program and strengthening of local
governance, which we believe has really been under-advertised
and is the bedrock for the future of good government and
delivery of services and a new and democratic society in Iraq.
We are very encouraged by what's going on at the grassroots
level.
Meetings were held in Abu Dhabi. We really feel that the
next phase is critical and encouraging. We're working actively
with state military and now the U.N. and other donor
communities to map out the next year in terms of transitions,
both to self-government and to the expansion of the development
of the capacities of the Iraqis to manage their own affairs.
In Egypt, we've seen a time of equally dynamic change and
momentum. We've seen a shift of what was a very much status quo
program to a much more productive dialog between us. It's not
all positive. We've had good results in areas of education,
customs reform, monetary change, civil society. At the same
time we have areas of contention. We currently have a fair
amount of money held up because of issues of privatization,
transparency, intellectual property rights, but we believe this
is a good sign. It's a sign that there is serious dialog and
issues are being addressed that affect the future of the
Egyptian people.
We have a solid program in Jordan. We are very encouraged
by the leadership and the openness, both economically and
politically, that is demonstrated in that country.
We have what was a program that was nearing close in
Morocco, which has now taken on not only free trade but
education, democracy, and other key issues. We are encouraged
and hopeful for a very productive future in our expanded
Morocco program.
We also have a brand-new Yemen program. It's off to a good
start. It's a challenging environment, but we believe it will
have an impact in that country.
Thank you very much.
Senator Chafee. Thank you, Mr. West. I have a question as
to the Iraq line item, and it's probably a simple answer, but I
see it in 2003 but I don't see it in 2004 or 2005. I don't see
any line item for Iraq. You have every other country but I
don't see Iraq. Why is that?
Mr. Burns. Sir, as I recall the figures in the 2004
supplemental, there's a request that has to do with
establishing an interim embassy facility and then in 2005
there's another request that's related to the operating
expenses of State Department personnel in Iraq, but clearly
we're going to need, the administration is going to need to
seek, at a time the White House chooses, greater resources in
terms of setting up and staffing our embassy in Iraq, but
that's a decision at least with regard to timing that hasn't
been made yet. That's just with regard to the issue of the new
American Embassy which we are planning to open the 1st of July.
Senator Chafee. Yes, but my question is, in looking at the
budget as you have broken in down, the various line items into
the various countries and regions, I have Algeria, ATA
regional, Near East Asia, Bahrain, Egypt, Israel, Jordan,
Lebanon, Middle East multilaterals, Middle East Partnership
Initiative, Middle East regional cooperation, Morocco, and on
down, Saudi Arabia, Tunisia, but I don't see Iraq. I do see it
in 2003, Iraq, Iraq opposition, Iraq pre-positioning, Iraq war
crimes tribunal line items, but I don't see anything on Iraq in
2005. Why is that? Why the change from 2003 into 2004 and 2005?
Mr. West. The 2004 numbers do not include what is still an
uncertain figure of what portion would be managed of the
supplemental II by USAID. We know right now there is
approximately $2.6 billion, which has been identified, $1.8
billion has been put into the infrastructure sector, and the
health education, economic growth, and governance----
Senator Chafee. Where do I find those though? They've got
to be in print somewhere.
Mr. West. The 2207 report was the last authoritative report
in terms of budget allocations, but the CPA has yet to make
final determinations on many of the sector allocations, so we
ourselves are hoping soon to have some final numbers. FY 2005
clearly is dependent on similar issues of decisions on what the
appropriate timing of seeking additional funds is. The
supplemental II program was more than a 12-month budget figure,
so to the extent that carries us through 2005, we will likely
be using many of the funds that have been provided in the
supplemental II for the 2004/2005 period.
Senator Nelson. Will the chairman yield?
Senator Chafee. Yes.
Senator Nelson. Mr. Chairman, that is not a clear answer,
and it is a part of what is the problem in a request for funds,
either through an authorization or through an appropriation.
The administration, the executive branch of government, has a
clear responsibility to request funds of the legislative branch
and to state that very clearly what your request is, instead of
saying you're going to refer part of it to a supplemental.
We've been through this drill on the Defense budget as well
where moneys in the President's budget are not even put in
there for the expenditures in Iraq for Defense.
And now you're telling us this is the same thing with
regard to this budget request in the State Department. That's
just unacceptable.
Senator Chafee. Thank you, Senator Nelson. I'll continue my
questioning. Could you--so there is going to be a supplemental
request? Will you go that far for Iraq?
Mr. Burns. Sir, I think with regard, I just addressed the
issue of setting up the embassy, as I said, we've tried to lay
out in the numbers that we've offered some of the costs that we
anticipate, but we anticipate there'll be more costs that we'll
have to request through a supplemental. But I'll leave it to
the White House in terms of the timing of that issue, sir.
Senator Chafee. The timing and the amount? You don't have
any forecast of the timing or the amount?
Mr. Burns. I don't, sir, this morning.
Senator Chafee. OK. And I'll finish a couple questions and
turn it over to Senator Nelson. In looking at the numbers for
the region, it goes from $8.4 billion in 2003 down to $5.5
billion in 2004 and $5.4 billion for the region, the total
region of the Middle East. And the reason for that drop-off
from $8.4 billion down to $5.5 billion and $5.4 billion is that
the money comes in the supplemental? Is that accurate? Is there
any other line item that shows why such a dramatic decrease?
Mr. Burns. No, sir. I mean, as you know, with regard to
the, for example, the Egypt and Israel economic assistance
programs, we've been on a glide path for a number of years, so
in terms of ESF there's been a predictable decrease in the
amounts year by year running through fiscal 2008.
That's one explanation, but in other areas, as my colleague
mentioned, with regard to Morocco, for example, with regard to
the Middle East Partnership Initiative we're seeking increases
for the reasons that I outlined in my opening statement.
Senator Chafee. It seems as though it's such a dramatic--if
a glide path is different from a fall off--a step from $8.4
billion down to $5.5 billion. That's a dramatic, dramatic
decrease, as opposed to a glide path, and I can't find exactly
where in the numbers, I was hoping you could help me, in how
that dropped off, where and what line item, or was it a mix
of--over the course of taking from every account? You can't--
oh, I'm sorry, Mr. West.
Mr. West. It's fairly much exclusively the lack of a
portion of the supplement, the second supplemental funds. As
Assistant Secretary Burns mentioned, we do have some modest
reductions on a continuing basis in Israel and Egypt that is
almost made up for by increases in MEPI funding in Morocco and
others, so the real change there is the fact that the second
supplemental is not reflected in the later year number.
Senator Chafee. OK, fair enough.
Senator Nelson.
Senator Nelson. Thank you, Mr. Chairman, and Mr. Chairman,
you can sense the frustration in my voice and it has nothing to
do with the two of you gentlemen, because you are excellent
public servants and you're doing the best you can under a very
difficult situation, and in many cases you become the
messengers of messages that are delivered to you by the White
House and what I'm saying doesn't have anything to do with
partisan politics, nor does it have anything to do with an
election year. I'd be saying the same thing on the
constitutional responsibility of the legislative branch and the
authorization for expenditures and the appropriations for
expenditures.
And we've seen this now in many instances where there's an
attempt to obfuscate and hold off to the future, and that is
transgressing the constitutional separation and checks and
balances that we have. So I wish you all would heed the
chairman's questions and come forth with the information of
what is requested for this 2005 authorization.
Typically what happens is we don't ever get an
authorization bill, Mr. Chairman, so they don't have to deal
with us. They go and deal with the Appropriations Committee and
do it much later and do it in supplemental budgets, and that's
just not a way to run a railroad. So you'll have to understand
some of the frustration that I have. If I were President, we
wouldn't be running it this way, and by the way, I'm not
running for President. I'm one of the few Senators that's not
running for President.
All right, let me ask you this. What is in the President's
budget to organize and create and stand up what is going to be
the largest embassy in the world, the U.S. Embassy in Baghdad?
Mr. Burns. Sir, what is--as in the 2003 and 2004
supplementals, there's a total of about $96 million, which
we've set aside for various costs connected to beginning to set
up that embassy, and in the 2005 budget there's a fairly modest
initial request of something less than $50 million to do the
same thing.
We clearly are going to need more resources as we move
ahead to set up this embassy. We have now, as I indicated in my
opening comments, well over 100 of my colleagues, American
State Department personnel on the ground working in the CPA in
Baghdad as well as in provinces around the country, and we're
going to need to sustain, as you suggested, a very large
diplomatic presence there, our biggest in the NEA region for
some time to come.
It'll clearly be, as any of our missions are overseas, a
very important interagency effort involving our colleagues from
other agencies throughout the government in order to sustain
our support for successful transition in Iraq. So the figures I
mentioned to you are just a first indication of what we can
anticipate in terms of cost, but this is going to be I think a
big and very important investment, not just for American
diplomacy but for the U.S. Government for some years to come.
Senator Nelson. And that's $50 million that's in the budget
and plus--what was the other figure that you mentioned?
Mr. Burns. The total figure as I recall it in the 2003 and
2004 supplementals is about $96 million. Part of that was set
aside for establishing an interim embassy facility in Baghdad,
and the other has to do with other costs of supporting our
diplomats there.
Senator Nelson. But in the 2005 budget, which starts in
October of 2004, you would anticipate that the expenditures for
setting up an embassy in Baghdad in the period of time from
October the 1st of 2004 to September the 30th of 2005 is going
to be much greater than is put in the budget now.
Mr. Burns. I would expect that there would be a greater
need there, sir. I don't have a precise figure to offer you
today. We tried as best we could to look at predictable
expenses and offered the figure I mentioned to you, and we'll
look forward to staying in close consultation with you on this.
I understand entirely the frustration that you described
before and we're wrestling with the situation as well on the
ground, where it's very important for us to put not only our
best people out there, but to support them in the best possible
way. I don't think there's--there certainly isn't a higher
priority in terms of the policy issues we deal with in the Near
East Bureau than helping Iraqis to make a success of their
transition.
Senator Nelson. Mr. West, you had a comment.
Mr. West. Thank you, Senator Nelson. I'd just like to add a
few observations on the operational challenges and structures
that USAID sees. Currently we have approximately 700 Foreign
Service officers serving worldwide. We used to almost have that
many in India or Brazil or Korea in the 1960s. We have
downsized to the point where when we face challenges such as
Iraq and Afghanistan, the fight against HIV/AIDS around the
world. It is straining every ounce of our fiber to fulfill our
commitments. We have done an outstanding job in Iraq. We will
continue to do that. But it does trickle down throughout the
Agency in terms of the impact on all our operations.
First and foremost I would like to say that our operating
expense structure I think is one of the sources of the issue,
whether it's just a matter that it needs to be increased or
whether we need a new paradigm for our operating expense versus
program funding. There are options. Our bureau is the key
bureau this year in the Agency to look at some experiments, but
the issues are very real. We are not in adequate numbers. We
are not trained nor able to deploy in the manner we really need
to, given the challenges in the role for USAID in the future in
foreign affairs.
On the same vein, Iraq is quite different than the
challenges we faced in the past, for instance, in Vietnam where
we created whole bureaus and structures, the collapse of the
wall and the fall of communism where we had the SEED Act and
the Freedom Support Act, which gave the Agency broad abilities
to not only address the specific country but to gear up as an
institution and address the problems we face.
And we have been able to take into account specific
operating actions on a rolling basis in Iraq, but we do not
have that umbrella structure and we are actually encouraged by
Chairman Lugar and others to look at some of the lessons
learned in Iraq, Afghanistan, and others. We look forward to
continued dialog on how we can do it better in the future.
Senator Nelson. In your report earlier about water systems,
sewer systems, roads and bridges, all of that is very good.
Now, speaking of that, if you would answer, are there attempts
still to sabotage all of that infrastructure as we had seen
early after we had taken over? And tell us, if you will, bring
us up to date, what was the explosion that occurred last night
and what did that relate to?
Mr. Burns. Senator, with regard to the explosions that were
reported earlier today in Baghdad and Karbala which resulted
tragically in a very significant loss of life, dozens of
innocent people killed, most of them Shi'a worshipers. This is
one of the holiest days in the Shi'a Muslim calendar and there
were a series of explosions in both Baghdad and Karbala, one of
the holy Shi'a cities in the south of Iraq, as I said, which
caused a very tragic loss of life.
I haven't seen any claims of responsibilities yet for those
particular acts of terrorism, but it's a reminder, as I said in
my opening comments, of the difficulties of the security
situation, and we're working very hard to help Iraqis get
police forces back on the street and to help stand up their
civil defense forces. And that's going to continue to require a
lot of effort, not just on the part of the United States, put
on the part of others in the coalition as well.
Senator Nelson. And how about the sabotage of
infrastructure?
Mr. Burns. Well, just in general terms, sir, it's still a
threat. I think the incidence of those kinds of acts of
sabotage has actually decreased in recent months, but again, I
don't want to underestimate the nature of the threat. It
continues to be a challenge for the Iraqis and for the CPA and
U.S. forces and coalition forces, which we'll continue to be
very mindful of.
But we've made a great deal of progress, as Mr. West can
elaborate on, in terms of rebuilding and getting back up to
pre-war levels in terms of power generation, oil exports, a
whole range of things. So it remains a threat, but I think
we've made a good deal of progress working with Iraqis to help
regenerate some hope in the economy.
Senator Nelson. On the basis of your answer, it would seem
that you're saying that most of the violence is directed at
individuals instead of at the infrastructure, and if that is
the case, how much effect have those explosions of trying to
create mayhem and fear among the populations, both indigenous
as well as foreign, how has that affected the international
donor effort? And as part of that answer will you tell me how
much has been contributed?
Mr. Burns. Yes, sir. Let me start with the answer to the
question and then turn to Mr. West. I think the international
donor effort, which was manifested last fall in Madrid at what
was historically the single biggest commitment by donors to a
reconstruction effort. That produced a total of $33 billion in
commitments, including the very generous contribution that the
Congress made possible on the part of the United States.
As Mr. West mentioned, there was in Abu Dhabi the last
couple of days another meeting of the donors to talk about ways
in which they can apply those resources to needs in Iraq. A
significant delegation of Iraqi ministers there to explain how
they're using the moneys, what their priorities are. So I think
the donor effort not only hasn't flagged, but I think it's
actually strengthened in terms of the commitment of many
countries, international financial institutions to help Iraqis
rebuild, notwithstanding the continuing security threats that
are out there.
Senator Nelson. And how much is being contributed?
Mr. West. Basically the World Bank trust fund and the UNDP
trust funds have just been created. The United States was the
first to put in its base contribution. There was a very good
meeting of the minds in Abu Dhabi in terms of the areas of
emphasis. The World Bank, UNDP, will be focusing on the level
of donations into those trust funds, has not yet been notified,
it's just beginning. The Japanese really are the first ones out
of the chute, if you will. They have up to $500 million in
terms of designated programs on the ground.
Security is a big issue for all the other donors. They are
very much looking to the United States for guidance on how to
operate successfully in Iraq, and this will be a year of a lot
of challenges in terms of getting more legs on the ground, more
operating units. Many of them will be operating with Amman as a
base and coming in and out. But it is going to be a challenging
but a promising year in terms of expanding donor presence.
Senator Nelson. Mr. Chairman, I'm not accustomed to asking
a question three times. The question I'll ask for the third
time is, how much has been contributed by the international
donor effort?
Mr. West. May we come back with an answer, with a written
answer to you as of today how much has been contributed?
Senator Nelson. Is the implication of your question zero
has been contributed?
Mr. West. No. There have been contributions from the United
Nations, from Japan, but we will have to get back to you with
an answer.
Mr. Burns. Sir, I just add the figures that were committed,
for example, in Madrid, and the meetings in Abu Dhabi are a
continuation of that process, the Japanese committed to a total
of nearly $5 billion. You had commitments made by Saudi Arabia,
for example, and Kuwait of about half----
Senator Nelson. Those are commitments. I'm talking about
contributed.
Mr. Burns. Money that's actually expended on the ground----
Senator Nelson. That's correct.
Mr. Burns [continuing]. We'll have to get you those
specific figures, but that was the purpose, sir, of this
meeting in Abu Dhabi too was to try and translate that.
Senator Nelson. Thank you.
[The following information was subsequently supplied.]
IMPLEMENTING MADRID PLEDGES: NON-U.S. DONOR DISBURSEMENTS
Of the $32 billion in pledges for 2004-2007 at the Madrid Donors'
Conference, $13.584 billion was from non-U.S. sources. Of this, $5.55
billion was pledged by the World Bank and IMF in lending programs. The
remaining $8.034 billion was from 36 countries and the European
Commission.
Now that there is an internationally recognized government in
Baghdad, the World Bank and IMF are discussing with the new Iraqi
Interim Government its interest in their lending programs.
As of June 30, 2004, of the $8 billion in pledged donor assistance,
other donors had disbursed $1.148 billion of their pledges, according
to State Department estimates. This does not include other assistance
these donors already provided to Iraq, such as humanitarian assistance,
military assistance, or other aid to Iraq and the Coalition.
It also undercounts some donors where we do not have detailed
information or confirmation from the donor countries on amounts
disbursed for bilateral assistance. For example, we understand the UK
has disbursed about another $60 million in bilateral project
assistance.
The bulk of the $1.148 billion disbursed by donors has been in the
form of deposits to the International Reconstruction Fund Facility for
Iraq (IRFFI), which is comprised of UN and World Bank trust funds. The
UN and World Bank trust funds are now starting implementation of their
initial IRFFI projects.
Disbursements and implementation have been complicated by the
security situation in Iraq, but nonetheless are continuing.
Disbursements by non-U.S. donor countries of over $1.14 billion in
the first six months of a 4-year pledge of $8 billion indicate a
disbursement rate comparable to disbursement rates by our donor
partners for previous post-conflict assistance efforts, though on a
bigger scale.
The Iraqi Interim Government (IIG) through its Iraqi Strategic
Review Board (ISRB) is playing a central role in coordinating donor
assistance and setting assistance priorities.
For additional information on reconstruction progress, including
examples of progress on the ground attributable to international
donations, you may want to refer to the Quarterly Section 2207 report
on reconstruction progress. This report is posted on the White House
Web site. Appendix 2 includes international donation information.
Senator Chafee. Thank you, Senator Nelson. Secretary Burns,
you're a career Foreign Service officer, speak Arabic, and
stationed Ambassador to Jordan, and the Djerijian report
released in--commissioned by the administration and released in
the fall showed that the anti-Americanism is rising to shocking
levels. In the effort we're making in the Middle East and the
region that you understand well, are we going backward?
Mr. Burns. Sir, there is no doubt, as the Djerijian report
described, that there is deep frustration throughout the
region, throughout the Near East, for a whole variety of
reasons. There's frustration with American policy, there's
frustration with a lack of movement in opening up economies and
political systems in people's own societies. There's deep
frustration, as you well know, with the lack of progress on the
Palestinian issue.
So there are a whole range of sources of that mood, which
can be a very ugly one, as you described. It seems to me that
the best policy approach to dealing with those challenges, and
this is something that the Djerijian report indicated, has to
do with the kind of broad positive agenda that I tried to
describe, in other words, a vigorous effort on the part of the
United States to show that we can work in partnership to deal
with those sources of frustration, whether it's on rebuilding
Iraq, whether it's on the Palestinian issue, Arab-Israeli
issues more generally, or on the historic challenge and the
truly critical priority of helping leaderships and people in
the region open up economies, open up political systems, create
greater opportunities.
All of those issues, it seems to me, are connected, and
changing the mood in the region to the extent that the United
States can help do that is going to be a function of progress
in all of those areas.
Senator Chafee. And do you see the resources following that
goal as we look at the total for the region? As I said, it goes
from $8 billion down to $5billion except for the effort in
Iraq. The Middle East Partnership is a year old and now we have
a chance to look at it, and as you said, the issue that seems
to be the galvanizing one is the Israeli-Palestinian issue. Are
the resources there in this budget to address some of these
critical, critical issues?
Mr. Burns. I think they are there, Senator. I mean, we've
looked very carefully at each of those programs in the Middle
East Partnership Initiative, since, as you did say, it's a new
program and so we've tried to work very carefully with you and
with your staffs to ensure that those moneys are well-spent so
that they provide a good basis for us making expanded requests
in the future.
I believe it's critically important for the United States
to devote far more attention than administrations that I've
worked for over the 21, 22 years I've been in the Foreign
Service have been devoted to issues of political participation,
economic modernization, educational opportunity. It's one of
the great challenges I think, not just for the United States in
the region, but for the peoples and leadership of the Near
East, and there's a lot we can do to help.
So what we want to do is try and demonstrate that that $150
million that we've requested is well-targeted, that it will be
well-spent, and that it is part of a comprehensive effort
that's also connected to the bilateral programs, whether in
Egypt or in Jordan or in Morocco or Yemen or other parts of the
region that we've also identified.
We also want to make sure, and this is something we've
tried hard to do in the Middle East Partnership Initiative,
that we are trying to link together all the various tools of
American policy. The President has laid out a target of a
Middle East free trade area by the year 2013. The bilateral FTA
with Jordan provides a very solid foundation for that.
We're about to announce later today a significant
achievement with Morocco in our FTA negotiations and we're
making very good progress with Bahrain, thanks to the efforts
of my colleagues in USTR. So I think this is in part a function
of assistance levels, but it's also in part a function of
brining all of those different instruments of policy together.
Senator Chafee. And to followup on Morocco, in the budget
it's going this year, 2005, up to $57.3 million up from $19.8
million. Can you explain why that is and why--should that be
part of the MEPI?
Mr. Burns. Yes, sir. On the economic side, I would say
several things. First, King Mohammed and his government have
launched what is in our judgment a very serious and very
courageous program of reform, and so as we look at Morocco,
it's very much in the American interest to invest in the
success of those reform programs.
Second, Morocco itself has come under terrorist attack,
including last May. It's significant, I think, that all of the
perpetrators of that attack came from the same slum in
Casablanca, and what it reinforces to us is the importance of
helping to show some sense of economic and social hope in
Morocco, precisely the kind of goals that King Mohammed has
laid out.
So it seems to us to be very much in the American interest
to look at ways in which we can expand support for serious
efforts at reform and help create a model of success in Morocco
in much the same way that we've tried to do in Jordan and we're
trying to do in other countries in the region.
Senator Chafee. Very good. And the line item for Gaza and
the West Bank, that's gone from 2003, $124 million down to 2004
and 2005 about $75 million. First of all, why the drop? I know
that's a year old, and how is the money being spent?
Mr. Burns. I'd just make one comment and then I'm sure Mr.
West will add to it. The difference has to do with the $50
million in supplemental assistance that you provided for the
Palestinians. The $75 million annual figure in ESF assistance
has been fairly consistent in recent years, and Mr. West may
want to comment on the purposes to which those resources are
put.
Mr. West. Basically our programs right now are largely
directed to humanitarian and, if you will, basic relief
programs. It is a very difficult environment to be operating a
proactive development assistance program, so we're largely
trying to rebuild damaged communities, to keep basic job
creation programs going while issues get resolved at the
political level.
Senator Chafee. Could you go a little bit further on the
success in what we're doing in West Bank and Gaza with that $75
million, rebuilding? Are we getting a return on our investment?
Mr. Burns. Senator, I think we are despite all the
difficulties involved. As you know, the plight of Palestinians
in Gaza and in the West Bank is extremely difficult and getting
more difficult over time. What we've tried to do, as Mr. West
suggested, is focus on not only some long-term infrastructure
projects, water projects in particular in Gaza, which serve a
very important long-term need of Palestinians, but also, given
water scarcity throughout the region, for Israelis as well.
Second, we've tried to focus, particularly in Gaza, the
northern part of Gaza, on emergency programs that help in
rebuilding from some of the destruction of the Intifada in
recent years, put people to work in the course of
reconstructing roads and other kinds of infrastructure
projects. And that also has had some tangible benefit in an
area that's been extremely hard-hit, and we have very high
unemployment rates for Palestinians, again particularly in
Gaza.
Senator Chafee. And just to followup, I'm trying to keep my
questions to the budget. I know when Secretary Powell appears,
we veer off into policy and I'm trying in this subcommittee to
focus just on the numbers, but I do believe it's relevant to
how we spend our money in the questions I just asked as to
where are we on the Road Map. Has Ambassador Wolfe in the area,
is--you talk about investing in the West Bank and Gaza while
the Intifada goes on. Obviously it seems like a poor investment
to rebuild a road that's going to be shelled the next week
potentially or a building or water works or other
infrastructure. Where are we on the Road Map?
Mr. Burns. Well, Senator----
Senator Chafee. Has Ambassador Wolfe been in the region? Is
anybody----
Mr. Burns. No, sir. I was there last week with some
colleagues from the NSC staff and I expected----
Senator Chafee. Can I just interrupt? I'll just ask, is
Ambassador Wolfe still at all involved or is he kind of phased
out of this?
Mr. Burns. Yes, sir. Well, he's, you know, working in his--
--
Senator Chafee. At one point he was the lead person for the
Road Map.
Mr. Burns. In terms----
Senator Chafee. If there was one person to look at, it
would be him, correct?
Mr. Burns. Yes, sir. In terms of the----
Senator Chafee. Has that changed?
Mr. Burns. In terms of the monitoring mission to--that was
set up last summer to try and ensure that we're making
progressing on the Road Map, that's right, that's the role that
Ambassador Wolfe has played. As I said, I was, along with some
colleagues from the NSC staff, in the region last week. I
expect to be traveling again soon.
We remain very much committed to the Road Map. The Road Map
is at a stalemate at this point, as you know. We have strongly
encouraged, including in the meetings I had with Israelis and
Palestinians last week, a meeting between the two Prime
Ministers, between Prime Minister Sharon and Abu Alla, to look
at ways of reviving our progress on the basis of the Road Map.
And we've also, as I mentioned in my opening statement,
been consulting with the Israeli Government about some ideas
that they've put forward with regard to disengagement, ideas
which are interesting and which give us something to work with.
And we're looking clearly at ways in which those kind of ideas
can be applied to promote the two-state vision which President
Bush has outlined and which is so critically important to
Israelis as well as to Palestinians.
Senator Chafee. Can you give me any reason for hope?
Mr. Burns. For all the difficulties in the path to
progress, and you know them very well, Senator, it seems to me
so critically important to both Israelis and Palestinians to
revive hope in a political process, to move away from the
terror and violence which have done so much to undermine not
just the security of Israelis, but the legitimate aspirations
of Palestinians, that I continue to believe that with strong
American diplomacy and leadership working with our partners in
the quartet, our friends in Egypt and Jordan, that we can help
find a way to reopen a pathway toward some greater hope and
political progress.
The Road Map offers a clear pathway to do that. It requires
political will. It also requires some diplomatic activism and
ingenuity on our part, and that's what we're going to continue
to apply, because as I said, there is no greater challenge
before us in the Near East region than trying to revive that
sense of hope.
Senator Chafee. Without a doubt. I'll move to Libya. Do you
plan to come back and request any aid? There is no line item
for Libya. Do you plan to come back if sanctions are lifted?
Mr. Burns. No, sir, not at this point. I don't know of any
plans to do that. As we discussed last week when I appeared
before the committee, I think we've--the Libyans have made
significant progress in fulfilling the WMD commitments that
they've made, and we've announced a number of things that the
United States is going to do in recognition of that.
I'll meet with the Libyans again later this month in March
and we'll look forward to continuing to build on that progress.
But, to answer your question, sir, no specific requests at this
time.
Senator Chafee. And last, I have one more question. Any
requests you have of Congress as to how we should lift any
sanctions or restrictions that might be on any aid or any
action we should be taking on this side of the branch of
government?
Mr. Burns. I don't have any specific requests at this time,
sir, with regard to----
Senator Chafee. Restrictions in Iran or any restrictions on
aid to Iran or any other--no?
Mr. Burns. No, sir, not at this point. On Libya we'll stay
in very close touch with you as we move ahead in that
relationship. But with regard to the other areas we've
discussed, the Partnership Initiative and other areas, as I
said, we're very grateful for the support that you have
provided for the resources that we've requested and we'll look
to expending them in an effective way.
Senator Chafee. Well, thank you. Any comments, Mr. West,
before you're let off the hot seat?
Mr. West. Just one last comment. We didn't go in great
detail on the MEPI partnership. It's been a learning process,
but we have promising signs. We have a strong partnership with
State on this. It's allowed us to operate in many countries
that USAID has not before traditionally worked in, and we are
encouraged by the trend. Thank you.
Senator Chafee. Well, as many have said, the success in the
region, and I believe it firmly, and as the Djerijian report
suggests is looked at and you hear it from so many of the
diplomats from the region is looked at at the ongoing struggles
between the Israelis and the Palestinians. And I believe firmly
that if the administration shows more effort in that arena,
it'll pay dividends in the entire Muslim world, and for some
reason we're just, as Secretary Burns says, in this horrible
stalemate that's hurting our interests in the region.
Thank you, gentlemen.
Mr. Burns. Thank you, Senator.
Senator Chafee. We'll recess until the next subcommittee.
[Recess from 10:37 a.m. to 11:04 a.m.]
OPENING STATEMENT OF SENATOR SAM BROWNBACK
Senator Brownback [presiding].
I'll call the hearing to order. Thank you, gentlemen, for
joining me here today. I appreciate you very much coming
forward. I think we'll just go right into your presentations so
we can hear that. Your written statements will be put into the
record. I appreciate very much your service and we want to do
this as getting some understanding and outlines of where you
hope to put the budget and the funds that you're given.
Two people are testifying today, Mr. Don Keyser, Principal
Deputy Assistant Secretary, Bureau of East Asian and Pacific
Affairs, State Department, and Mr. Gordon West, Acting
Assistant Administrator for Asia and Near East, USAID. I
appreciate your being here and we'll receive your testimony.
Mr. Keyser.
STATEMENT OF DONALD W. KEYSER, PRINCIPAL DEPUTY ASSISTANT
SECRETARY OF STATE, BUREAU OF EAST ASIA AND PACIFIC AFFAIRS,
U.S. DEPARTMENT OF STATE
Mr. Keyser. Thank you very much, Mr. Chairman, for the
opportunity to come here and to discuss the assistance programs
that we in the Bureau of East Asia and Pacific Affairs are
looking at for fiscal year 2005. By way of prelude, let me say
that my boss, Secretary Kelly, would have been very happy to be
here. He will be testifying this afternoon before the committee
on his recent trip to North Korea. This morning he's with the
Foreign Minister of the Republic of Korea, and indeed at this
very minute he's in the White House with the Foreign Minister.
Senator Brownback. Good. No problem.
Mr. Keyser. Thank you. As you said, Mr. Chairman, we have a
fairly long statement that's already in the record, so if I
may, I'll simply skim lightly over some of the high points to
save time.
Senator Brownback. Please. Just hit the key items of areas
that you want to really deal with and delve into as an entity
for this upcoming year.
Mr. Keyser. Right. Thank you, sir. Basically we have put
counter-terrorism at the very top of our list of priorities for
obvious reasons. It has been there, but it is our primary
strategic target for the coming year. It moreover is a
strategic foreign assistance goal, which relates to each of the
other strategic priorities that we have had traditionally in
this bureau and that have taken added importance obviously in
the aftermath of September 11.
So quickly, these are: promoting regional stability;
fostering democracy and human rights; encouraging economic
prosperity; fighting or combating transnational issues and
international crimes, such as trafficking in persons, narcotics
trafficking; and preventing the spread of weapons of mass
destruction. Each of these, in our view, is interrelated into a
coherent whole.
Very quickly, on counter-terrorism the goal is to root out
terrorism throughout the region and to root it out both where
cells exist, as in, for example, the Philippines, and also at
the same time to attempt through our assistance programs to
address the underlying conditions that foster the growth of
terrorism. So a high priority for us is indeed the rule of law
and promotion of institutions of civil society and so forth and
so on.
We are working to this end both bilaterally and through
regional organizations such as ASEAN, the ASEAN regional forum,
and APEC. Increasingly we have attempted to put into the agenda
of those regional organizations that overriding goal of
combating terrorism.
I stress this because even though APEC, for example, is an
organization created to deal with economic issues, increasingly
we have managed to persuade our partners in that organization
to look at the phenomenon of terrorism as one that affects
economic growth, it affects the ability of societies to conduct
the kind of economic activities that they wish to discuss. So
we're working, as I say, both bilaterally and multilaterally to
that end.
Regional stability has long been the bureau and the
Department's main strategic goal in East Asia and the Pacific.
We will do this, of course, through sustaining the alliance
structures we have. We have five major allies in the region,
the Republic of Korea, Japan, the Philippines, Australia, and
Thailand. I would note simply that we have had as a mission
since the outset of the administration the goal of fostering
and strengthening those alliances, and I think that has borne
fruit in the aftermath of September 11 in particular, whether
directly or more quietly in the case of Thailand.
Each of these five strategic partners, treaty alliance
partners, have contributed both to the overriding goal of
combating terrorism and they have also been stalwart partners
in the mission that we've undertaken in Iraq, both in the
military sense and now in the reconstruction sense. So
essentially, regional stability is a major goal. We have many
components to that that we can get into later.
Democracy and human rights. Fundamentally we have seen a
great deal of progress in the region. I think it's a subject
that can and should be remarked upon that we're looking this
year toward five different elections in East Asia and Pacific
of the nations with which we have close relations. In addition,
Taiwan, that we, of course, don't recognize as a nation but
nonetheless is a vibrant democracy and 23 million people will
have an election as well. So we are looking ahead to six free
and democratic elections in East Asia and Pacific during this
year.
I flag this to your attention, Mr. Chairman, because later
today Secretary Powell will be giving a speech before the
Heritage Foundation on the theme of democracy, and in that
speech he will note that, I think 10 years ago, 15 years ago,
to have projected that we would be talking about this degree of
democratic development, this degree of building of the
institutions of civil society would have been regarded as a
very pleasant dream but a very tough dream to realize.
Many of us recall well that 20 years ago we heard leaders
such as Lee Kwan Yew talk about an Asian system of values. By
that, they meant Asians concentrate on economics, others in the
United States and in Europe with their traditions concentrate
on human rights. Well, not so. What we have found, in fact, is
that throughout Asia, as elsewhere, people wish to have
democratic societies, they wish to cast votes, they wish to
have their individual liberties protected.
A large part of what we do in East Asia is to support these
tendencies, both where they already exist and where they are
yet to be achieved, in China, for example.
Another area, very quickly, open markets and economic
development. This is self-evident. We seek to promote open
markets, economic developments, sound economic policies. This
is not only a goal worth being pursued in itself, but it is
also essential, crucial to the war against terrorism. If
nations are developing economically, it seems to us some of the
root causes of terrorism perhaps are mitigated, and it seems to
us that the overall goal of combating terrorism and of
promoting regional stability will be better achieved.
As part of that, I would say that we're looking in
particular at China, a massive issue, and to say it's a big
issue almost sounds like parody since China obviously is the
world's largest nation with 1.3 billion. For us, the issue of
China's compliance with its WTO obligations, in particular with
its commitments to pursue offenders against intellectual
property rights, is a major goal. We have sought to address
that goal through a series of assistance programs that we have
had working and through various and sundry exchange programs
and other programs that we have projected for the future.
Weapons of mass destruction. Again, we have for some time
sought, both internationally and in the East Asia/Pacific
region, to deal with the question of weapons of mass
destruction proliferation. Through last year I think we have
seen considerable strides taken in our relations with China.
China undeniably had been a major concern to us, it remains a
major concern to us in terms of its proliferation activities.
The good news, Mr. Chairman, is that in the past year we
have had some episodes of meaningful, concrete cooperation with
the People's Republic of China, including, I suppose it can now
be revealed in a public setting, one instance involving
proliferation or possible proliferation toward North Korea.
The Chinese cooperated closely with us in response to our
provision of certain information. This was a story broken by
Asahi Shimbun about 2 weeks ago, and I'm delighted to say that
the Chinese saw fit to confirm it, so it's now something that
the Chinese not only were prepared to do with us quietly,
they're prepared to, I think, bask and take some credit for
what they've been doing.
That having been said, there are still a great many
entities in China that have been involved in activities of
concern to us. We have sanctioned them when necessary. We will
continue to sanction them. So we have in that connection
requested another $2.6 million in fiscal year 2005 in order to
address export control issues. We think we are making some
headway on that. We hope to make more.
Beyond all that, there are various areas highlighted in our
presentation this year where some slight adjustments from
previous years are marked. One of those I would call to your
attention, Mr. Chairman, is in Cambodia. Cambodia has had an
election as you know. They've not yet been able to form a
government. We have been counseling, we have been urging the
various parties in Cambodia to come together as quickly as they
can to form that government.
One goal of most in Cambodia has been to form a tribunal, a
war crimes tribunal. For many in Cambodia, for many in
Southeast Asia, there has been a goal of bringing to justice
those who are still alive who participated in the atrocities
that took place under the Khmer Rouge regime, and to bring
closure to a horrific episode in that nation's history.
We have, as a government, said that we believe that such a
thing will be useful, such a thing deserves support, and we
have said that we have been interested in making a due
contribution toward such a tribunal if one is constituted and
if there are the right conditions attached to that. So we have
marked that and I mark it here today, sir, as something that we
do look forward to contributing toward. It remains
controversial, however, and I won't deny that.
I think with that I'll simply close. I've spoken enough and
the formal testimony is on the record. I'd be happy later to
answer any questions you might have. I want to thank you again
for the chance to be here.
[The prepared statement of Mr. Keyser follows:]
Prepared Statement of Donald W. Keyser
Mr. Chairman, I am pleased to share with the Committee our
priorities for foreign assistance programs in the East Asia and Pacific
region for fiscal year 2005.
OVERVIEW: U.S. INTERESTS
EAP has placed counter-terrorism at the top of its list of
strategic foreign assistance goals for FY 2005. In light of a continued
terrorist threat in Southeast Asia, evident in major bombings in Bali
and Jakarta in the past two years, efforts to combat terrorist activity
have been central to the pursuit of EAP's strategic goals that
encompass the following: our traditional, primary long-term goal of
promoting regional stability; fostering democracy and human rights;
encouraging economic prosperity; fighting transnational issues and
international crime; and preventing the proliferation of weapons of
mass destruction.
Counter-terrorism: Terrorism in the Asia-Pacific region is a
serious threat to U.S. national security interests, including the
welfare and security of American citizens in the region and the
security of friends and allies. It poses a direct and immediate threat
to regional trends toward stability, democratization, and prosperity
that are otherwise generally positive. The Bureau's goal is to root out
terrorism and address the underlying conditions, including the absence
of rule of law, that make the region vulnerable to terror.
EAP will work with countries in the region bilaterally and through
regional organizations to strengthen their capacity to combat terrorism
and to foster the type of international cooperation needed to fight the
global war on terrorism.
In Indonesia, for example, we intend to build on the successful
efforts, funded by the NADR account, to continue training and to expand
the Indonesian National Police's Counter-terrorism Task Force.
And, we will use the increase in FY 05 ESF funds for Indonesia to
support basic education through our USAID program as a key element in
the effort to combat terror. This initiative, announced by President
Bush in October of 2003, will prepare Indonesia's children to be
effective participants in their own democratic society while reducing
extremism and intolerance, and supporting democracy and respect for
diversity.
The bureau will leverage U.S. efforts through cooperation with
friends and allies, particularly those with the capability to help
build regional CT capacity, including Japan, Australia, Korea,
Singapore, Thailand, Malaysia, and China.
Regional Stability: Regional stability has long been the Bureau's
main long-term strategic goal. In FY 2005, regional stability will be
advanced through success in attacking terrorism. EAP will sustain
alliances with our five treaty partners in the region while promoting
their increased integration into U.S. regional and international
strategy; promote stability in Northeast Asia, including on the Korean
Peninsula; support the positive integration of China into regional and
global institutions; strengthen regional institutions for managing
political and economic challenges, including the ASEAN Regional Forum
(ARF), ASEAN, and APEC; and pursue regional growth and integration
through FTAs, Trade and Investment Framework Agreements (TIFAs), market
openings, and other economic liberalization measures, as well as
through democratization and rule of law programs.
The ASEAN Cooperation Plan is an essential tool for building long-
term stability in Southeast Asia. To support activities under the ASEAN
Cooperation Plan, we have requested $2.5 million for FY 05. The funds
will be used to bolster the ability of ASEAN to play a constructive and
stabilizing role in Asia, to facilitate cooperation to address
transnational issues, to foster economic and political integration, to
spur development and to enhance our influence in a region of
significant economic importance to the United States.
We are requesting $250,000 in FY 05 for Regional Security to
support U.S. efforts in the ASEAN Regional Forum to shape regional
views on issues such as arms control, counter-terrorism, and maritime
security through seminars, workshops, and exchanges and to promote
regional stability through strengthening regional institutions in which
the United States participates.
Democracy and Human Rights: The relative stability of the EAP
region has allowed democracy to take hold in many areas, including
South Korea, the Philippines, Mongolia, Thailand, and Taiwan as well as
many Pacific Island states. This year will see citizens of five nations
in the EAP region--namely Indonesia, Korea, Philippines, Malaysia and
Mongolia--plus Taiwan go to the polls.
EAP will continue to promote democratization and improvements in
human rights throughout the region and will work closely with EAP
countries, including Indonesia as it continues its democratic
transformation. With our help and that of other major donors,
Indonesia--a secular state with a diverse and predominantly Moslem
population--could become an example of tolerance and democracy and a
model for other countries.
Through our USAID programs, we are assisting NGOs in Cambodia in a
wide range of areas, including human rights, labor rights, good
governance, rule of law, and an independent press. In Indonesia, we
will support programs that advocate public tolerance and strengthen
local governments, in addition to our basic education initiative.
The situation in Burma remains grim, as we have just made clear in
our human rights report. Human rights abuses continue; Aung San Suu
Kyi, other NDL leaders, as well as other political prisoners remain
under detention. The government has given no indication how it will
involve the democratic opposition and ethnic groups in its plan for
national reconciliation nor has it outlined a timeframe for these
discussions.
Our FY 05 assistance to Burmese citizens inside Burma and Burmese
refugees in neighboring countries, particularly Thailand, is intended
to strengthen grassroots democratic institutions and to press the
Burmese government to improve its human rights record and to cease
persecution of religious and ethnic minorities.
Open Markets/Economic Development: Promoting open markets, economic
development, and sound economic policies is not only a critical
regional goal, it is also a vital element of the war on terrorism.
Economic prosperity reinforces democratic institutions, fosters
stability, encourages the peaceful resolution of differences, and
supports U.S. commerce and trade.
The Asia-Pacific region is key to global economic growth. While the
region has moved a long way down the path of recovery since the
economic crisis of 1997-98, resumption of dynamic growth rates will
require significant financial and corporate restructuring and improved
economic and political governance, including an end to endemic
corruption, and expanded trade and investment. The U.S. role--through
bilateral assistance, free trade arrangements, support for reforms and
regional programs in APEC and ASEAN--will be critical to the success of
this transformation.
Free trade arrangements with the U.S. will be an important vehicle
for driving competitive trade liberalization in the region. We are
moving ahead with the Enterprise for ASEAN Initiative (EM), which
offers the prospect of FTAs between the United States and ASEAN
countries that are committed to reform and openness. The goal is to
create a network of bilateral FTAs which will increase trade and
investment, tying our economies more closely together. The EAI has
already resulted in an FTA with Singapore, which came into force in
early 2004. We have completed negotiations with Australia for an FTA,
and we have announced intentions to enter into FTA negotiations with
Thailand. We continue to support granting normal trade relations (NTR)
to Laos.
China's compliance with its World Trade Organization (WTO)
obligations, its transition to a market economy and its emerging
economic influence are economic developments that EAP will monitor
closely. The bureau will also use multilateral regional bodies such as
APEC as a way of promoting market-oriented reforms and open trade and
investment regimes. In addition, to fulfill our obligations under the
South Pacific Multilateral Fisheries Treaty, we are requesting $18
million in ESF in FY 05. This treaty ensures continued access for U.S.
commercial fishing vessels to the Pacific Ocean Tuna fishing areas. In
the Philippines our funding through USAID will support micro-financing,
anti-corruption, civil society, governance, and other programs to
promote economic development in empoverished areas. Our ESF request for
East Timor of $13.5 million will support the development of its civil
society and new democractic and economic institutions.
International Crime and Transnational Issues: Transnational issues,
including terrorism, narcotics, human trafficking, and infectious
diseases, are a serious threat to regional stability. EAP works with
INL, OES, USAID and other agencies on these transnational challenges to
develop multilateral approaches to supplement existing bilateral
efforts.
One of the most important contributions we intend to make in FY 05
is in the area of human trafficking. We have requested $1 million in FY
05 assistance for EAP's Regional Women's Account to support a regional
approach to combat the scourge of trafficking in persons (TIP). As TIP
is a problem that crosses and takes advantage of national borders, we
must mobilize a regional effort to counter it. Funding will focus on
empowering women through political participation, economic
independence, and the elimination of violence against women. Our
efforts will concentrate on TIP projects in Tier 2 countries where
trafficking problems are most severe.
Weapons of Mass Destruction: FY 2005 placement of WMD proliferation
as a strategic goal is based on the assumption that current positive
trends in nonproliferation cooperation with China will continue. We are
working to pursuade China to adhere fully with its existing bilateral
and multilateral nonproliferation commitments and to cooperate fully in
pre-licensing and post-shipment verification checks related to U.S.
dual-use exports. EAP will also work to obtain Chinese cooperation in
encouraging other countries to adhere to the guidelines of the
international non-proliferation regimes. EAP is working within the Six
Party Talks process to secure the complete, verifiable, and
irreversible elimination of North Korea's nuclear programs. In FY 2005,
the bureau will continue the effort to prevent, contain, and reverse
the possibility that any WMD or their means of delivery might become
available to rogue nations or non-state terrorist organizations.
For FY 05, the Department has requested $2.6 million in export
control assistance for the EAP region. The recent accounts of a black
market in sensitive nuclear-related goods involving companies in the
EAP region make this funding critical to our efforts to end WMD
proliferation.
modifications of current restrictions
EAP would like to expand programs for a small group of EAP
countries, including Cambodia, in the future.
In Cambodia, Public Law 108-199 for FY 2004 restricts assistance to
the central government, with limited exceptions. There are several
areas where closer cooperation with the central government would be in
the U.S. national interest: enhancing counter-terrorism capabilities;
promoting rule of law and justice; developing a smaller more
professional military; and supporting a credible Khmer Rouge Tribunal.
Cambodia needs training in immigration, border security, and other
areas critical to our global fight against terrorism. We need to be
able to train and work directly with the government agencies concerned
with CT. All individuals and units we work with will be carefully
vetted.
Many of Cambodia's problems stem from or are exacerbated by the
shortcomings in its legal and judicial system. U.S. assistance for
judicial reform and anti-corruption efforts would promote our interests
in a number of areas, including: combating trafficking in persons,
resolving human rights abuses, improving international adoption
procedures and bringing Cambodia into compliance with WTO legal
standards.
Public Law 108-199 also prohibits funding for any tribunal
established by the Government of Cambodia. It has been the longstanding
policy of this and prior Administrations to seek accountability and
bring to justice those responsible for the genocide carried out by the
Khmer Rouge regime from 1975-1979. In June 2003, the UN and Cambodia
signed an agreement to establish a credible Khmer Rouge Tribunal. We
have urged all parties to work to ensure the Tribunal will execute its
jurisdiction in accordance with international standards of justice,
fairness, and due process and would seek to make an appropriate
contribution to such a tribunal.
CONCLUSION
The foregoing represents a brief overview of EAP bureau goals and
objectives, and the resources necessary to meet them. It incorporates
our best assessment of the region-wide demands and requirements we
should work to meet, but as we mentioned in last year's testimony, it
cannot incorporate resource requests for major, unanticipated events
that could emerge without warning in the region, including on the
Korean Peninsula.
Senator Brownback. Thank you very much. Mr. West, do you
want to put anything forward or----
Mr. West. Briefly, if I may.
Senator Brownback. Yes.
STATEMENT OF GORDON WEST, ACTING ASSISTANT ADMINISTRATOR FOR
ASIA AND THE NEAR EAST, USAID
Mr. West. Thank you, Mr. Chairman. We see in East Asia in
particular some encouraging news in terms of the 5-year
economic straits, difficulty straits are gradually lifting. At
the same time, we see a region that perhaps is not as
competitive as it was before and certainly has political
insecurity challenges, which, certainly on the security side
were not a part of the fabric of USAID's attention in some of
these areas.
Our biggest priorities in the region are the Philippines
and Indonesia, where we have large presence countries. In the
Philippines we have almost totally directed our assistance to
focus on the issues of development and separatism and terrorism
in Mindinao and the souther islands.
We've had an ongoing program for 10 years now. More
recently, we have directly engaged, as you know, with the MNLF,
with considerable success in terms of being able to create
livelihood opportunities, beginnings of civil society. This
year we have added initiatives in education, basic education
and exchanges that will allow us to address the poor state of
both public and private education facilities throughout the
country but especially in the Mindinao area.
We have on the shelf funding that would allow us to engage
with the MILF should there be a break. We are not at the moment
going forward with any of those programs, but there are some
positive signs. We don't know if anything would happen before
an election. We are prepared to work very closely with the
State Department and others on the ground should those
opportunities come forward.
We are prepared to put a modest amount toward the election
that's coming. Those will largely be helping the institutions
in the monitoring process for those elections.
In Indonesia, we also, as Mr. Keyser mentioned, there is a
major election this year. We have put substantial resources
toward preparing for these elections. This will be a very
active year on that front.
We have also engaged in a substantial increase in our
commitment to education. We had some fairly low-level programs
before, largely through the Asia Foundation. As a result of the
announcement by President Bush, we have committed to a 5-year,
long-term program in education. It's focusing on decentralized
authorities building the local capacity to manage education. We
are looking at centers of excellence on a district basis, a
large emphasis on community, women's involvement. Many of these
areas will also include areas where we have Islamic schools to
generally upgrade the capability of registered and qualified
schools across the board. This is a very important initiative.
We also continue with economic reforms and Indonesia is one
of the potential countries that face an HIV/AIDS threat, so we
are active in trying to protect the country from that, from
HIV/AIDS.
In mainland Southeast Asia, we largely focus increasingly
on transnational issues. Those include HIV/AIDS, infectious
diseases, trafficking in persons, corruption, trade capacity
and development. We're also engaging increasingly with ASEAN to
strengthen its ability to bring together the Southeast Asia
region.
These transnational issues, to the extent they also involve
areas of crime, whether it's trafficking, drugs, also have a
clear intersect with terrorism. It's clear that the criminal
and terrorist worlds are increasingly intertwined in countries
that are either weak or failing, such as Burma. The weakness of
governance in Cambodia do offer opportunities for terrorist
elements. We've seen resurgence in the Malaysian border. We see
issues on the Burma/Bangladesh border.
In response, we are increasingly working closely together
with State, not only on a bilateral but on a regional basis. We
have created a regional mission in Thailand that will
increasingly take on many of these transnational issues.
That's all I have.
Senator Brownback. Thank you, gentlemen very much. I have a
series of issues I want to raise with you, and we're going to
have a series of rollcall votes, so I don't think there's
probably any way you can address all these, but what I'm going
to mention to you is things that I'm going to be pressing on
here and in the Appropriations Committee as well on areas that
intersect your region that you're working on.
And first, I really applaud and appreciate your efforts. I
think there has been an incredible movement of liberty and
freedom in that region, as you noted of what Secretary Powell's
going to speak on. You really couldn't have imagined this being
at this level, to the point that in December of this last year
I was in Hong Kong calling for democracy and to a rousing crowd
and a--what, about 2 weeks earlier there had been 100,000
people out in the streets of Hong Kong calling for democracy.
Wow. I mean, that's pretty significant, to the point that
North Korea, that during most of my tenure has been a
hermetically sealed place. We haven't known what's going on
before now. We're getting out virtually daily new information
from refugees that are coming out, chemical weapons testing,
Gulag system, much of it's just horrific, but we're finally
hearing and knowing some of the things going on, and a lot of
that's due to the pressure really the administration's placed
on them, and I think that's important.
To Vietnam, where the trade relationship has grown
dramatically, and I was just back there in January, but some of
the human rights issues haven't moved along as well. Religious
freedom in the State Department's annual report was really just
citing problems with Vietnam and religious freedom, and I
stated to the officials in Vietnam, this relationship is
growing, it should, that's as it should be, but here is a big
impediment if you don't start addressing it, and there's no
reason for you not to address it, and I'm hopeful they will
receive that well.
Several areas that are also on my list, Burma and putting
in the officially elected government. I tried to get into Burma
this year and was denied a visa by the Burmese not allowing me
to go into that country. It has to remain a strong, hard focus.
And then it's not just Burma. When I was on the Thai-
Burmese border a couple of years ago, what the Burmese junta
has done has forced a number of people into--just on that Thai
border--and the people are just prey for traffickers and
criminal elements. So you're seeing all these little girls
getting trafficked into brothels that just is a death sentence
on them. That is a disgusting thing that the military
government and what it's pushing has then had this huge human
side effect on it.
I want to draw your attention to something that we're going
to try to press through that's tied with that. We take in
refugees into the United States and it's an admirable thing we
do. We don't take in near as many as we could. I think last
year we took in about 25,000. We funded to 75,000.
I have introduced a bill called the Widows and Orphans Act.
Of the 25,000 we took in, only 1,000 were widows or young
orphans, and of the refugee population around the world, it's
estimated that population of widows and orphans is about 34
million. In other words, most refugees are widows and orphans,
and yet the ones that can fight through the system to make it
here are generally young, healthy males, because they're the
ones that can rigorously dig through the system. The ones most
subject to trafficking, to raid, to refugee camp crimes are
widows and orphans. They're the most vulnerable. This bill
would allow a new category for State Department to identify
people that are in vulnerable categories, and instead of
requiring them to swim up through the stream to make it, it
allows us to pick them out and say, you know, this is somebody
that ought to be moved to the United States for safety purposes
and keep them from being trafficked. We're going to try to
press that on forward.
On the trade front, I do agree with you on the WTO
accession by China and that we've got to press them to live up
to their obligations. They have created an economic juggernaut
and done a brilliant job of it. You really got to tip their
hats to them. I was up in the North Korea-China border region a
year and a half ago and they cracked open a four-lane limited
access road into a fairly remote region of the country, wasn't
anybody on the road, we turned around and went the wrong way
for about a half mile because somebody behind us had a flat
tire, it was a snowy day, so that also contributed to a lack of
traffic. But I was saying, you know, as an economic activity,
you got to give it to them. They are cracking open regions of
that country just left and right. It's a wise economic
strategy. But they've got to live by their WTO obligations and
that impacts our people here.
I've been pressing hard that we get the beef markets open
back up in Asia. That's a particular concern of my State with
Japan, the BSE case. And I understand why they did that, but it
is time that we open that market and really press them to get
that moving open again.
Two final issues I just want to point out to you, because
they're ones we're going to be working on. I hope you get soon
resolution. There is a group of Vietnamese refugees in the
Philippines that are left over from the Vietnamese boat people.
I think it's about 1,200 to 1,800. I called the head
coordinator of that last week to say the issue of these people
needs to be resolved, this is 15 years old now, and it's a
limited population pool and I think they need to be allowed
into the United States, but just let's get it examined, let's
get it determined where these folks are going to.
Then the final issue is we've got a bill pending on North
Korea. It would allow asylum and refugee status to North Korean
refugees seeking status in the United States. Currently there's
a legal coefficient against that because they can by
constitution go to South Korea. If we're to support the
freedom, we need to be able to take some as well, and that
would be a narrow authorization issue for State Department. We
would try to get that authorization to State Department.
The broader issue is on the six-party talks if those move
forward that--I agree with trying to deal with the nuclear
issue, but this is the worst humanitarian situation in the
world. The numbers I've seen, about 2\1/2\ million people have
died in the last 10 years in North Korea. That's a tenth of the
population, a little more than a tenth of the population, and
if we do the deal where they stop developing nuclear weapons
and we pay money to prop up the regime and these people are
left to die, you talk about a weapon of mass destruction.
Killing 2\1/2\ million people in 10 years is a weapon of mass
destruction and I disagree with that, and if the administration
comes to the Congress and says, we want money for this
agreement, and does not address the human rights issues in
North Korea, I will be opposing that, even thought it is a
laudable goal that you're after to get rid of the nuclear
weaponry in North Korea and we need to do it. But if the price
is leaving these people in a gulag to die where food aid that
we pay for doesn't get to the targets and when they're not
allowing us to monitor it to get to the targets, I do not agree
with that, and that is not a humanitarian way for us to go.
We now know what's going on inside of North Korea. We
didn't for a long time but we do now. And so for us to say,
well, it's going on but we've got this objective here, I can't
abide by it. That's too high of a price to pay in human lives
and their suffering. We're not seeing North Korean refugees all
over China, we're now seeing them in Vietnam, in Burma I'm
told, in Thailand, you know, as they keeping walking out trying
to get to some freedom. We really need to stand with them.
That's a long discussion, but I wanted to tell you of some
things that we are working on that hopefully will by and large
be very helpful to your mission, but other items that may have
some impact on your work. I appreciate any response or you
don't need to respond to it at all. It's really your choice,
but I wanted to let you know those things.
Mr. Keyser. Thank you, Senator. Let me start with the last,
the Korean situation part, because Jim Kelly, my boss, has just
come back from there and will be testifying this afternoon, and
then part because I've had the privilege of meeting with you
previously on some of these issues.
I'll simply say that I know my boss, Jim Kelly, will say
that we look forward to working with you and with the
committee. We, as an administration, appreciate the passion,
the conviction, and the spirit of American values that you
bring to this whole question about what to do about the people
who are suffering in North Korea. I think we share very much
the goals that you have outlined. I think we certainly are more
than prepared to work with you to figure out how to do that
correctly.
On the question of how this fits into the current six-party
talks process, I'd like to reassure you, sir, that every
presentation by Jim Kelly at the outset of these talks features
a comment on the human rights situation in North Korea as one
that we must address should we ever get to the point of talking
about normal relations with the DPRK. As you say, in the six-
party talks, we are focusing laser-like on the nuclear issue,
but the other is not forgotten. We have made plain both that we
have looked with horror at what takes place in North Korea. We
didn't use the word gulag, but among ourselves we did use the
word gulag, that's what it is undeniably.
We've made plain that where the North Korean regime
abducted Japanese citizens, Deputy Secretary Armitage has said
on the public record that we regard that as an act of state-
sponsored terrorism. North Koreans have not appreciated that
particular parlance, but as the Chinese would say, seek truth
from facts. It was that. This was a bizarre thing to do by any
standards, a brutal thing to do, it must be solved. So the
Japanese are putting that forward in these talks as well and
we're making plain that we support the Japanese in that. This
kind of thing must be dealt with.
In terms of the refugees, we certainly support the intent
of the legislation that you are proposing, Senator. We are
featuring in a set of bilateral talks we have with the Chinese
a segment to address that overall situation. We've not yet had
the progress that we hope to have in that, but we remind the
Chinese of their obligations to the U.N. High Commissioner for
Refugees. We tell them that while we understand their
definition of many refugees as economic migrants, and indeed,
many may be seeking a better economic life and a way of sending
money back across the border, the fact remains there needs to
be a mechanism to screen these individuals to see what their
circumstances are, to ensure that they're not persecuted or
tortured or killed if they are sent back to North Korea.
So we are, I think, trying quite hard to persuade the
Chinese that they have an obligation by way of their signing on
to the relevant convention in 1951, and they have a moral
obligation to this as well. So we do try to engage them in
this. We are working with them, we are working with the U.N.
High Commissioner for Refugees on this, and certainly I think
we would be--if we could find a way to do it, we would indeed
come forward to request assistance, moneys to support whatever
kind of intervening effort, what ever kind of relocation, a
resettling effort. Sorry for that very long answer.
Senator Brownback. That's a good answer. I appreciate that.
Any other items, Mr. West, that you'd care to respond to?
Mr. West. No, sir.
Senator Brownback. The way I look at it is that we're
really in synch on most of these issues and see great
opportunity. I really am amazed at the window that we have. If
we can stay the course, you can really see your way through to
a real burst of freedom in a region that impacts several
billion people through it, so I look forward to working closely
with you on pressing your budget so that we can get that, that
you can have the adequate resources that you need to move these
items on forward.
Gentlemen, thank you very much. Is there anything else, Mr.
Keyser or Mr. West?
Mr. West. No.
Mr. Keyser. Thank you very much.
Senator Brownback. Well, I appreciate you being here. For
the record, other members of the committee and I may have
additional questions for the record. Therefore, I'd like to ask
that responses to questions for the record be made in a timely
manner so as to help guide members during the foreign
assistance mark-up that's on Thursday. The record will be kept
open for 24 hours to accommodate any additional questions that
members might have.
Gentlemen, thank you very much. God speed to you. You can
bring freedom and liberty to a lot of people.
Mr. Keyser. Thank you, Mr. Chairman.
Senator Brownback. This part of the hearing is ended. We
will recess until 1 p.m.
[Recess from 11:37 a.m. to 1 p.m.]
Senator Coleman [presiding].
OPENING STATEMENT OF SENATER NORM COLEMAN
Senator Coleman. We're going to reconvene this hearing of
the Senate Foreign Relations Committee on the President's
budget for foreign assistance, this panel focusing on the
Western Hemisphere. Assistant Secretary Noriega, Assistant
Administrator Franco, we are pleased to have you here with us
to testify about the President's foreign aid budget for Latin
America and the Caribbean, particularly at a time when I know
both of you have been so busy.
Latin America and the Caribbean are strategic to U.S.
national interests. Besides geographical proximity, these
nations by and large share our values, democracy, economic
freedom, and human rights. We hope to see these nations
flourish economically and politically, and I'm pleased to see
these priorities evident in the President's budget.
Democracy is not without its challenges in this hemisphere,
however. In the last 5 months, we have seen two Presidents
resign under popular pressure. That these were not military
coups is a sign of Latin America's progress in recent decades.
Still the threat of instability casts a shadow on the future
throughout the region.
Jean Bertrand Aristide's decision to end his Presidency
concludes a difficult chapter in Haiti's history. Now is the
critical moment for the U.S. and the international community to
put ourselves to the task of supporting Haiti's future. We must
act quickly to help through this transition and we must
consider long-term support for Haiti so that Haiti's future
will be an improvement over its past.
I know there has been considerable debate in Washington
over the issue of Haiti, and with the events of the last
weekend, that division has only intensified. Some blame the
Clinton administration for placing too much trust in the
untested Aristide in 1994. Others accuse U.S. policy of
neglecting Haiti and abandoning Aristide. Making the debate
more explosive, there are even those who attempt to explain
U.S. policy based on race.
For the record, let me lay out my view on today's hot
topic. I have absolutely no reason to believe that President
Aristide was kidnaped and I do believe that his departure from
Haiti will ultimately help that nation move forward.
I think it's very regrettable, by the way, for members of
this Congress to give any credence whatsoever to the statements
of Aristide himself regarding what transpired here. President
Aristide was democratically elected, but that does not mean
that he governed in a democratic way. Aristide broke and
politicized the Haitian police. He chose to rely instead on a
paramilitary group of supporters to harass and even kill
opponents. He has been accused of drug trafficking and
corruption and lost the confidence of Catholic priests, from
whose ranks he had risen. Rigged Haitian elections in 2000 were
never resolved and Aristide has been ruling by decree.
Having lost the trust of the Haitian people, Aristide
decided to resign from the Haitian presidency. He was not
overthrown by a coup d'etat and the United States did not
conspire toward his ouster.
Secretary Powell assures us that the U.S. did not
intimidate Aristide into leaving, but that we did help him
escape. If Aristide is changing his story now, I'd urge my
colleagues to consider who they trust, a failed leader who owed
his survival to thugs and paramilitary gangs, or the United
States Secretary of State.
While Congress has an essential role in holding the
administration accountable on foreign and domestic policy, I do
believe we do a disservice to the people of Haiti if we spend
too much time turning the latest crisis into a political
rallying cry in this country. Haiti has had a troubled 200-year
history and Haiti's problems have persisted regardless of which
political party held power in Washington. Today I think we
ought to be more concerned about Haiti's future than our own
varying interpretation of Haiti's past.
I think there is an incredible moment of opportunity here
for the U.S. and the international community to join together
to make a sustained and long-term investment in Haiti. Haiti
needs our help, it does not need our bickering. The deployment
of Marines is a good start, but that must be accompanied by
political reform, humanitarian aid, institution building. We
have the opportunity to act in concert with the international
community and I commend the unanimous passage of the resolution
on Haiti by the United Nations Security Council. America and
the world must not waiver on our commitment to Haiti's long-
term stability.
Through a serious approach I believe we can help Haiti turn
away from its difficult past. That will require pro-Aristide
and anti-Aristide Republicans and Democrats black and white to
put our heads together rather than to point fingers at one
another.
Next week the Subcommittee on Western Hemisphere, Peace
Corps, and Narcotics Affairs will hold a hearing to review
Haiti's recent crisis, but also and more importantly, to find a
way forward for Haiti and the U.S.-Haitian relationship. I look
forward to hearing my colleagues' wealth of experience and
constructive ideas for Haiti's future at that hearing.
Moving to other regions, other areas in the region, the
hemisphere, recent events in Venezuela are also troubling.
President Chavez's increasing rhetoric is not helpful, nor is
the coercion of the Venezuelan electoral commission. Venezuela
is undergoing a democratic test today and the international
community fully expects President Chavez, as well as the
electoral commission, to abide by international norms as well
as the Venezuelan constitution.
Colombia remains the largest recipient of foreign aid in
the Western Hemisphere. Colombia is a country that knows what
it is to engaged in a war on terrorism and we in the United
States should continue to support President Uribe's bold
efforts.
U.S. anti-narcotics efforts in the region also support
Colombia's neighbors, Peru, Bolivia, Ecuador, Brazil, Panama,
and Venezuela. In the case of Bolivia, recent unrest resulted
in the resignation of President Gonzales Sanchez de Lozada.
Many of us remain concerned about stability in Bolivia, and I
hope the witnesses will address in their statements how our
foreign aid budget will encourage stability in Bolivia under
the Carlos Mesa government.
The nations of Central America have made remarkable
progress in the last 20 years, but continue to struggle with
crime and poverty and deserve our support and partnership. In
the Caribbean, the U.S. supports such important shared goals as
transnational crime prevention and border security.
Last year, Congress enacted two new global foreign aid
initiatives which I was proud to support, the global HIV/AIDS
initiative and the Millennium Challenge Account. I know both of
these programs are just getting started, but I would like the
witnesses to speak briefly about their impact on Latin America.
The President's budget also includes an increase for the
Peace Corps to keep them on track, for which a doubling of the
number of volunteers. I strongly support this increase and
would note that the President's budget also includes funding
for the first ever Peace Corps program in Mexico.
I believe in the foreign assistance budget. I believe it is
an important tool for our foreign policy. I also believe in the
importance of congressional oversight. I am pleased to have two
distinguished witnesses here to talk about our foreign aid
budget for the Western Hemisphere. When my distinguished
ranking member, Senator Dodd, on the subcommittee comes, I will
defer to him for a statement, but at this time I will then just
proceed with the testimony.
Testifying on the foreign aid budget for Latin America and
the Caribbean are two men who are no strangers to this
subcommittee, Assistant Secretary of State, Roger Noriega, and
Assistant Administrator for the U.S. Agency of International
Development, Adolfo Franco.
Assistant Secretary Noriega, before you begin I want to
thank you for all your efforts to manage Haiti's ongoing
crisis. I know this has been a demanding time for you. I also
know Assistant Administrator Franco has been very busy
overseeing humanitarian aid to the Haitian people, so we begin
by thanking you both and look forward to your testimony.
Secretary Noriega.
STATEMENT OF HON. ROGER F. NORIEGA, ASSISTANT SECRETARY OF
STATE, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF
STATE
Mr. Noriega. Thank you very much, Mr. Chairman. I have a
prepared statement, which we've made available, and I offer it
for your making part of the record.
Senator Coleman. It will be part of the official record.
Mr. Noriega. Thank you very much, Mr. Chairman. I have a
brief opening statement. Let me emphasize that in our work with
the region, we definitely work as a team, USAID, State, the
other agencies that have a direct role on this, and we
emphasize communication with the Congress, and let me just say
that we are always available to you and your staff to
communicate on the important issues and welcome this
opportunity to do so in a more formal setting.
The Western Hemisphere has a unique place in our foreign
policy and assistance programs. Our own destiny is uniquely
bound to that of our neighbors in the north and the south
through their constant movements of goods and people across our
long shared borders. Our open societies, however, are
vulnerable to external and internal threats, crime of all
kinds, internal conflict, and as September 11 made very clear,
dangerous new forms of terrorism as well.
Our foreign assistance programs address these
interconnected problems. We aim to encourage continued progress
throughout the hemisphere toward effective participatory
democracy with broad-based economic growth, human development
in both personal and national security.
In 1980, fewer than half of the countries of the hemisphere
had freely elected democratic leaders. Although some
democracies in our hemisphere are troubled, Haiti comes to mind
immediately. Today 34 of our 35 countries have freely elected
governments. Only Cuba does not.
As we have seen in country after country the return to
democracy, in some cases after an end of long internal
conflicts, has raised expectations that have not been fully
fulfilled. While some gap in performance is unavoidable, in
many countries the gap remains dangerously wide or is even
growing, so we have to respond to this crisis of rising
expectations. The institutions of government are simply not
organized or sufficiently funded to be able to respond
effectively to the reasonable demands of the people.
Haiti is in the midst of yet another crisis. While the
manifestations of Haiti's ills are poverty and misery, the
roots causes are political and institutional. A government that
has failed its people in every way in recent years. We are
working very hard with our international partners to seek a
solution to the political crisis in Haiti that respects
democratic rule. We have a resolution of the U.N. Security
Council, as statement of the OAS. We are working with our
people and counterparts on the ground to support a formation in
the very near term of an independent government headed by the
new President and a new Prime Minister, and we are very pleased
by the offer of several countries in our hemisphere and outside
our hemisphere to make security forces available in the very
near term to accompany this process of democratic and political
normalization under a new constitutional leader.
Meanwhile, our assistance programs promote the development
of democratic processes in Haiti for training and the positive
engagement of civil society groups in the issues of governance.
This will be particularly important as we go ahead in Haiti.
Bolivia and Venezuela remain causes for considerable
concern and interest. A principal objective of our democracy
program in Bolivia is to draw the long-marginalized indigenous
population into political life in Bolivia. That is a policy of
the Bolivian Government today and we support it. It was a
policy of the previous administration and it is a policy of
President Mesa. We hade a Bolivia support group along with
Mexico. It brings many donors around the table and others who
offer political support from inside the hemisphere, from
outside the hemisphere that are looking for ways to accompany
the efforts of Bolivia to address the fiscal gap that plagues
that country, to address the issue of governance and the
confidence of its people, so we have a very active engagement
and a very good team working to support Bolivia.
In Venezuela, we continue to support efforts to find a
peaceful, constitutional solution to the political impasse,
which is now entering its third year. Venezuela is plagued by
an extraordinary level of polarization, which is on a daily
basis exacerbated by President Chavez. However, the Venezuelan
people are by and large taking advantage of the constitutional
means that they have available to them to have a say in their
own future, to contribute to a peaceful resolution of the
political crisis and to reach national reconciliation. It's a
long, complicated, difficult process, but we hope that people
will choose the political recourse rather than any sort of
violent means.
Our foreign assistance resources will be used to strengthen
the operations of democratic political parties and democracy-
related non-governmental organizations in Venezuela.
In Cuba, our policies to encourage a rapid peaceful
transition to democracy are characterized by strong support for
human rights and an open market economy. The President has
named an executive branch commission which will make a report
to him before May 1 or on May 1. That is a commission that is
determined to make recommendations on hastening the democratic
change in Cuba, but also determined and prepared for a change
so that we can respond agilely and decisively to ensure that
there is a remarkable, profound, broad change in Cuba that will
give the Cuban people a chance to make a decision about their
own future.
These are but a few examples of how our policy will support
democracy, and our foreign assistance programs are tailored to
the circumstances in our individual countries that we deal
with. The second pillar of our Western Hemisphere strategy is
economic growth. This is a process that is by consensus in the
hemisphere. It's a multilateral process. The programs and the
policies that we're supporting are really reached by consensus
and consultation with our neighbors.
At the special Summit of the Americas held in Monterrey in
January, the leaders discussed the social issues, poverty,
alienation, and equitable growth. They agreed on a host of
concrete actions to fight corruption and to promote
transparency, invest in health and education, and promote
growth through trade and economic reforms.
Our assistance programs will help implement the commitments
that were made by our neighbors. These are practical
commitments that don't all look for what other countries can do
for them, what donor countries can do for them, but just as
importantly, I would suggest more importantly, what they can do
for themselves to take full advantage of the resources that
come to them through the income generated by trade, through
remittances, and through investment. They have to retool their
economies so that they are able to make the best use of these
resources and to spread the economic opportunity that is
manifested by these resources, to spread it to people from all
walks of life. For example, we'll support legal and regulatory
reforms that will help small- and medium-sized enterprises and
property owners and to bring informal businesses into the
formal sector so that they can have access to capital, will be
subject to regulation that's a wise regulation, will pay their
taxes, and again, be in a position where they are able to
expand their operations and employ more people, because
overseas as well as here, jobs are the best sort of social
program.
We will help countries develop the capacity to provide
business services, including access to credit and markets and
to enable them to compete in the global economy, and USAID does
a remarkable job in emphasizing this trade capacity-building.
As international standards increasingly require attention
to the environment, we will promote the best use of
environmental management practices, including access to
financing for their implementation. We will also promote
transparency and accountability in government institutions so
that people have confidence in the first instance in the
government.
We remain firmly convinced that trade is the most effective
means of increasing prosperity in the hemisphere, to create
economic growth, to spread that economic growth to people
across all walks of life. The summit declaration in Monterrey
reaffirmed the commitment to complete the FTAA on schedule,
that is to say, by January 2005. We are also moving forward
with several bilateral agreements with the Andean countries,
with Central America, with the Dominican Republic, with Panama,
and these are extraordinarily important too, but we do have our
sights set on the regional trade agreement, because we think
that's important that we all grow together in every sense of
that expression.
At present, too many in the hemisphere are trapped in
poverty and suffer from malnutrition. Consequently, we are
continuing to dedicate significant resources to improve
nutrition and health care in specific countries in regions.
Haiti, Nicaragua, and the impoverished coca-growing regions of
Bolivia and Peru are among the recipients of that sort of
assistance.
The United States is the largest bilateral donor for HIV/
AIDS prevention and care in Haiti, and one of the President's
HIV/AIDS initiative focus countries. We also do an awful lot of
work in combating HIV/AIDS in the Caribbean region and in other
parts of the Americas.
We look forward to the initiation of programs through the
Millennium Challenge Account, which will provide an important
new source of financing for lower income countries and
establish sound economic policies, invest in their people, and
demonstrate the political will to establish transparency in
government and to conform with the rule of law.
You asked how this is going. I think it's already had an
impact, because countries recognize that this is a source of
financing that will be made available if they meet certain
requirements, so these countries are taking special care to
adopt the kinds of policies that they need to make them more
eligible, more likely to be a recipient of that sort of MCA
financing.
I believe personally that the countries of the Western
Hemisphere that are led by democratic re-elected leaders who
are committed to market policies that are our trade partners,
that are in the natural market for us, are uniquely qualified
really for that sort of MCA assistance. That sort of investment
will make all the more difference in the lives of these people
because it's an investment along with the people of these
countries, along with their governments that are adopting the
right policies. So we believe that the MCA has great promise
for the Americas.
We anticipate several countries in the hemisphere will
qualify for that sort of assistance in the very first year and
we hope that the Congress does provide the President's request
for the MCA for the second year as well, because we will be
prepared to move very quickly, particularly in this hemisphere,
to present programs that are well-developed and have good
partners and will leverage the kinds of results that we want to
see in the Americas.
While the hemisphere is making progress in the development
of effective democratic institutions and open economies, this
progress is threatened by the inability of countries to control
crime and demonstrate to all citizens the value of the rule of
law. Indeed, the lack of personal security is now recognized in
many countries as the primary threat to the stability of
democratic re-elected governments.
The goals of democracy and security are thus two sides of
the same coin. We cannot pursue one without the other, and both
are critical to our own security here at home.
Much of our assistance to the region focuses on
strengthening criminal justice institutions and processes,
development assistance, ESF, and INCLE funds are also used for
such purposes. Assistance ranges from training and equipping
counter-narcotics and other specialized units to sector-wide
efforts aimed at implementation of new criminal procedure
codes.
The rule of law is at the basis of everything we do. It's
the heart of economic growth and it has to be part of our
program. In many countries, such efforts are proceeding at a
parallel and are coordinated by our country team, USAID, State,
and others. Many countries also need to give greater attention
to crime prevention and victim assistance.
Colombia continues to present the most urgent case for law
enforcement and other assistance in the region. Colombia
supplies 90 percent of the cocaine consumed in the United
States. Terrorist organizations moreover fund their activities
with the proceeds of drug traffic, making a unified response
absolutely necessary.
We appreciate the expanded authority that Congress has
provided to allow our assistance program to support Colombia's
unified campaign against drug trafficking and terrorism. Our
Andean counter-drug initiative for 2005, our request would
provide $150 million for programs to address underlying social
and institutional issues and $313 million for narcotics
interdiction and eradication in Colombia.
The alternative development and institution-building
programs include emergency and longer-term assistance to
vulnerable groups and displaced persons, as well as programs to
promote the rule of law, local governance, and human rights.
The total Andean counter-drug initiative request for 2005,
including Colombia, is $731 million. These funds are needed to
support a unified Andean regional campaign against drug
trafficking and narco-terrorism.
In other countries, INCLE funds are used to help
governments build strong law enforcement and related
institutions that can stop the threats of international drug
trafficking and transnational organized crime before they reach
U.S. soil. For example, in Mexico we have built trust and an
unprecedented track record of U.S. law enforcement cooperation
over the last 4 years. We will develop a comprehensive law
enforcement training plan with our Mexican counterparts to
enhance police and prosecutorial capabilities to combat serious
crimes affecting citizens of both countries. We will support
initiatives such as the U.S.-Mexico border partnership to
improve security along our southern border.
Mr. Chairman, in the wake of September 11, we have
refocused our anti-crime programs to emphasize and sharpen
their counter-terrorism impact. The administration of justice
programs throughout the region generally address problems in
the criminal justice systems. Because of the serious street
crime problems in Central America, including violent gangs,
some of which have reached into this community as well, we are
also looking for ways to enhance crime prevention efforts with
the work of enforcement agencies and community organizations.
On the military side, our FMF military financing request
for fiscal year 2005 will provide professional training and
equipment to meet three distinct requirements: to support the
efforts of the Andean region to establish and strengthen
national authority over remote areas that shelter terrorists
and illegal narcotic activity; to reinforce homeland security
by controlling approaches to the United States; and to improve
the capability of security forces in the region to participate
in coalition--in peacekeeping operations.
I visited El Salvador recently and met with the family
members of Salvadorean troops that are over in Iraq, and these
people want to be part of the new future for Iraq, want to be
part of a new world where there is a multilateral response to
help countries out of tough times and through terrorism.
When El Salvador, Honduras, Nicaragua, and the Dominican
Republic volunteered troops for these operations, they did not
have the equipment or the training to enable them to be
incorporated immediately into our programs. We proposed to
address such deficiencies through FMF to allow their continued
participation in peacekeeping operations.
Training provided under the IMET program will expose
foreign students to U.S. professional military organizations
and procedures and the manner in which military organizations
function under civilian control.
To summarize briefly, Mr. Chairman, our objectives in the
hemisphere are clear: to strengthen broad-based economic
growth; strengthen democratic institutions; to provide for
basic human needs in most urgent conditions; and to protect
people from both internal and external security threats.
Our foreign assistance programs, and specifically our
fiscal year 2005 budget request, provide an accurate overview
of the many challenges still before us. We are engaged
intensely with the countries of the hemisphere across a wide
spectrum of issues to bilateral and multilateral mechanisms. We
must also offer concrete assistance as they work toward our
common objectives, and I ask your support for full funding for
the administration's fiscal year 2005 budget. Thank you very
much, Mr. Chairman.
[The prepared statement of Mr. Noriega follows:]
Prepared Statement of Hon. Roger F. Noriega
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to discuss the Administration's
foreign assistance priorities for the Western Hemisphere. The Western
Hemisphere has a unique place in our foreign policy and assistance
programs. Not only is it our home, but we also share with the other
countries certain defining events and values that have given form to
our political institutions and culture. Our own destiny is uniquely
bound to that of our neighbors to the north and south--through the
constant movement of goods and people across our long borders seeking
markets, education, jobs, or simply new experiences. Our open
societies, however, are vulnerable to both internal and external
threats--crime of all kinds and dimensions, internal conflict and, as
September 11th made clear, dangerous new forms of terrorism.
The most encouraging development in the hemisphere over the last
two decades has been the decisive shift to democratic governance. In
1980, fewer than half the countries in the hemisphere had freely
elected leaders. Although some democracies in our hemisphere are
troubled--Haiti comes immediately to mind--today thirty-four of our
thirty-five countries have freely-elected governments. Only one--Cuba--
does not. Beginning at the 1994 Summit of the Americas, thirty-four
Heads of State and Government have repeatedly endorsed democracy and
free trade as guiding principles. They have also approved ambitious
work plans to achieve these and related goals. The Summit action
plans--which both orient and reflect major components of our foreign
assistance program--describe the broad spectrum of activities still
needed to ensure that democracy's promise of freedom and prosperity
reaches all who reside in the Western Hemisphere.
We recognize that the path toward true democracy for all nations of
the hemisphere has not been smooth. But we must continue to invest in
the Hemisphere's future. Democratic, prosperous nations make the best
neighbors. They are likely to maintain peaceful relations with others
in the region and safeguard the rights of Americans living within their
borders. They are likely to foster favorable investment climates for
U.S. firms and open their markets to U.S. products. They are likely to
work with us to combat trans-national threats and to advance views
similar to our own in multilateral fora such as the UN, the OAS, and
the international financial institutions. We must continue to
strengthen this Inter-American community.
DEMOCRACY
To take root, democracy must provide much more than free elections.
As we have seen in country after country, the return to democracy--in
some cases at the end of long internal conflicts--has raised
expectations that have not been fulfilled. While some gap in
performance is unavoidable, in many countries the gap remains
dangerously wide or is growing. The institutions of government are
simply not organized to be able to respond effectively to the
reasonable demands of the people. The avenues for participation that we
take for granted in the United States--an active civil society,
established political parties, and a free market economy that
encourages entrepreneurship, among other things--still are not fully
developed in many countries in the region. These structural impediments
are compounded by world economic trends and national fiscal problems,
as well as crime and other threats to security, all of which have
placed further demands on elected leaders.
Our foreign assistance program addresses these interconnected
problems. We aim to encourage continued progress throughout the
hemisphere toward effective democracy with broad-based economic growth,
human development and both personal and national security. Let me give
you some examples.
Haiti most dramatically illustrates the perils of democratic
government. The country is in the midst of yet another crisis despite
the dedicated efforts of the international community, including the OAS
and the United States. After years of undemocratic governance,
President Aristide became the victim of his own repressive and
autocratic rule. President Aristide voluntarily resigned when he
realized that he could no longer depend on armed gangs to maintain him
in power. And in the end, those were the only elements of possible
support left to him. He alienated the democratic opposition in 2000
when he refused to remedy fraudulent legislative elections, despite
requests from opposition leaders and the international community.
Violent suppression of peaceful protest demonstrations, sometimes with
the complicity of the Haitian National Police, further polarized the
political landscape, as did intimidation of journalists and the
credibly alleged participation of local officials in extra-judicial
killings.
While the manifestations of Haiti's ills are poverty and misery,
the root causes are political. President Aristide's government failed
its people in every way. Now we can make a new beginning in helping
Haiti to build a democracy that respects the rule of law and protects
the human rights of its citizens. The U.S. and its partners in the
international community will work intensively with Haiti's interim
government to restore order and democracy. We are participating in the
multinational force authorized by UN Security Council Resolution 1529,
and will also work with our international partners in efforts to reform
the Haitian National police. Restoring democracy and the rule of law in
Haiti will require lots of work for us and the international community,
but we are committed to the task.
Just a few months ago, Bolivia was in the headlines. When Gonzalo
Sanchez de Lozada was elected president of Bolivia in August 2002, we
looked forward to working with him to implement, among other things,
market-oriented economic reforms he had previously developed. However,
he was forced to resign this past December by popular demonstrations
against some of those very policies. While there was a constitutional
transfer of power to Vice President Mesa, Bolivia's indigenous majority
remains underrepresented in the government and deeply suspicious of
institutions which provide little of benefit to the poor. A principal
objective of our democracy program in Bolivia is to draw the long-
marginalized indigenous population into political life. We are also
assisting the Government's anti-corruption campaign, continuing to
support improvements in the administration of justice, and helping to
increase the Government's responsiveness to citizen needs through
support for decentralization as well as for the national legislature.
The consolidation of democracy in Bolivia is our top performance goal
for the country. We believe that a stable democracy is a necessary
condition for success in the fight against illegal drugs.
Venezuela remains a cause for considerable concern. The crisis of
governance--brought on by President Chavez' increasingly anti-
democratic actions and the strong opposition of the traditional
elites--is now entering its third year. The National Electoral Council
will announce soon whether sufficient signatures have been verified to
convoke Presidential and National Assembly recall elections. The United
States has a major interest in preserving and regenerating democracy in
Venezuela and facilitating a peaceful, constitutional solution to the
ongoing political crisis. Foreign assistance resources will be used to
improve the functioning of institutions that underpin democracy, in
particular stronger, more democratic political parties and democracy-
related NGOs. The absence of such dependable actors has greatly
increased the distance between Chavez and his detractors and prolonged
the crisis, with devastating effects on the national economy as well.
We will also be dedicating resources to help Venezuela reverse this
long-term economic decline and promote sound growth-oriented
macroeconomic policies.
Other examples of assistance to strengthen democratic institutions
include a five-year project in Peru focused on the national
legislature, judicial reform, and decentralization and activities in
the Dominican Republic to support civil society advocacy for political
reform and training for the media. In Ecuador, a decade has passed
since a president has completed his term of office. Our challenge there
is to work at all levels--both within and outside the government--to
reinforce the message that politics must stay within constitutional
bounds. Assistance will include training on civil-military relations,
exchange programs on constitutional democracy, and support for selected
civil society groups to demand effective democratic government. In
Paraguay, where more orderly constitutional processes are the goal, we
will promote consensus between the executive and legislative branches
on issues of rule of law, state reform, and protection of human rights.
Mexican democracy too is at a critical stage in its transition toward
more open and participatory government. Assistance there will
strengthen the rule of law through judicial reform and support greater
transparency and accountability in government.
In Cuba, the one country in the region that does not have a freely
elected government, our policy is to encourage a rapid, peaceful
transition to democracy characterized by strong support for human
rights and an open market economy. With increased ESF resources, we
will augment our support for Cuba's embattled civil society and
increase our efforts to break the information blockade Castro has
imposed on the island. We will provide a voice to Cuba's independent
journalists and human rights activists. In this way, we will help
Cuba's strongly motivated civil society to work for freedom in
political, economic and other fields. We intend to help create the
conditions that will bring to an end the hemisphere's only totalitarian
government and reintegrate the Cuban people as members of the community
of the Americas.
PROSPERITY
At the Special Summit of the Americas held in Monterrey, Mexico,
this past January, the democratically elected. Heads of State and
Government declared their commitment to economic growth to reduce
poverty. Called in response to problems that have arisen since the
Third Summit in April 2001, the Special Summit focused on private
sector-led growth to reduce poverty and fighting corruption. There was
much discussion in the lead up to the Summit and at the Summit itself
around social issues and economic equality for all members of society.
Hemispheric leaders agreed on a host of concrete actions to fight
corruption and promote transparency, invest in health and education,
and promote growth through trade and economic reforms.
Among these specific commitments, leaders agreed to reduce the time
and cost of starting a business and to strengthen property rights by
the next summit in 2005. Leaders agreed to triple lending by the Inter-
American Development Bank through private sector banks to micro, small
and medium-sized enterprises by 2007. They also agreed to create
conditions for reducing by at least half the average cost of remittance
transfers by 2008. All these steps are intended to facilitate
entrepreneurship and increase access to capital. The Summit declaration
welcomed the progress achieved to date toward the establishment of a
Free Trade Area of the Americas (FTAA) and reaffirmed the commitment to
complete the FTAA on schedule, that is, by the January 2005 deadline.
The declaration contained numerous other statements of support for
sound macroeconomic policies, prudent fiscal management, and public
policies that stimulate domestic savings, meet the need for creation of
productive jobs, and contribute to greater social inclusion.
As with democracy as a form of government, there is broad agreement
throughout the hemisphere on objectives, on the principles that
determine overall economic success and prosperity. The problem is once
again a performance gap, the gap between political declarations and
reality. After decades of government control of basic industries and
other mercantilistic policies, the structure of the economy in many
countries cannot readily be reoriented to a free market system, which
also needs regulatory and other support mechanisms to ensure a level
playing field. Our assistance programs will help support legal and
regulatory reforms to help small- and medium-sized businesses and
property owners and to bring informal businesses into the formal
sector. We will also help countries develop the capacity to provide
business services, including access to credit and markets, to enable
them to compete in the global economy. As international standards
increasingly require attention to the environment, we will promote the
use of the best environmental management practices, including access to
financing for their implementation.
An overriding issue in the quest for equitable growth is
corruption. Corruption undermines the rule of law and distorts
economies and the allocation of resources for development. In
Monterrey, the leaders pledged to intensify efforts to combat
corruption and other unethical practices in both the public and private
sectors. They pledged to strengthen a culture of transparency and deny
safe haven to corrupt officials and those that corrupt them. They
called for promoting transparency in public financial management. They
called for robust implementation of the Inter-American Convention
against Corruption, and its follow-up mechanism, and committed to
develop specific measures to strengthen international cooperation
toward this end. In addition, Leaders pledged to hold consultations if
adherence to their transparency and anti-corruption objectives is
compromised to a serious degree in any Summit country.
In support of the transparency commitment, U.S. assistance programs
will promote transparency and accountability in government
institutions. In Bolivia, we will provide technical assistance to
support civil service reform and anti-corruption training for police,
military, prosecutors and judges. In the Dominican Republic, we will
help mobilize a civil society coalition for transparency in government
and support the development and implementation of a national anti-
corruption plan. In Nicaragua, we will support reform of the law
governing the operation of the Office of the Comptroller General and
continue to provide assistance to the Attorney General and National
Police to support prosecution of public corruption cases. These
examples illustrate the different approaches being taken by individual
countries toward the same objective of greater transparency in
government.
We remain firmly convinced that trade is the most effective means
of increasing prosperity in the hemisphere. The United States already
imports from Latin America and the Caribbean goods valued at more than
120 times the total amount of its assistance to the region. We will
work to expand trade--and the prosperity it brings--through the FTAA,
the Central America Free Trade Area, and bilateral agreements as
appropriate. We will call upon the United States Senate to help us make
this vision a reality by providing advice and consent to ratification
of these agreements at the appropriate time. Trade related assistance,
such as that just alluded to, is an integral part of our trade
strategy. My colleague Adolfo Franco of USAID will discuss in greater
detail our current efforts to build trade capacity throughout the
hemisphere.
INVESTING IN PEOPLE
While I have been talking about political and economic structure
and processes, people are the intended beneficiaries of all our
programs. We aim to facilitate the development of open political and
economic systems that serve the needs of the people and enable them to
prosper and pursue their own individual objectives within the framework
of a rule of law. At present, too many in the hemisphere are trapped in
poverty and suffer from malnutrition. Without attention to their basic
human needs--food, basic sanitation and quality education and
healthcare, they will never be able to participate in the gains
generated by economic growth and expanded trade. Consequently, we are
continuing to dedicate significant resources to improve nutrition and
healthcare in selected countries and regions.
In the poorest country in the hemisphere, Haiti, two-thirds of the
population lives below the absolute poverty line, unable to meet
minimum daily caloric requirements. This fact alone is enough to launch
thousands of undocumented migrants toward our shores each year in
unseaworthy vessels. Haiti is also the country most severely affected
by HIV/AIDS, with a prevalence rate of between 4.5 and 6%. U.S.
assistance to Haiti, channeled largely through nongovernmental
organizations, focuses on the most vulnerable--those suffering from
chronic malnutrition, communicable disease and illiteracy. The U.S. is
the largest bilateral donor for HIV/AIDS prevention and care in Haiti,
using a public/private partnership to provide a comprehensive set of
prevention and education activities to reduce the rate of new
infections, as well as programs to provide care and support for those
already infected or affected by the disease.
In Nicaragua, the second poorest country in our hemisphere, our
programs address fundamental obstacles to development, including food
aid to ameliorate the impact of rural unemployment. We are also
providing assistance to diversify agricultural production and link
agricultural products to local, regional and global markets, giving
small farmers a stake in the national economy. We are working with the
Nicaraguan Government to expand access to primary education and improve
the infrastructure and quality of schools, to reform public policy and
management of health issues, and increase access to sustainable health
care for low- and middle-income families through the private sector
health market. All these activities aimed at helping individuals meet
immediate needs bring those people into the economic and political life
of the country, expanding prosperity and participation in democratic
governance.
Examples of other programs we ask you to fund include assistance in
Bolivia and Peru, particularly in high poverty coca-growing regions, to
improve nutrition and enhance the capacity of public and private sector
organizations to meet the population's health, nutrition and education
needs. In the Dominican Republic, programs focus on health sector
reform, improving reproductive health services, and controlling the
spread of HIV/AIDS and tuberculosis. In Honduras, we are supporting
President Maduro's Poverty Reduction Strategy, developed as part of the
Highly Indebted Poor Countries Initiative and designed to improve
access and opportunities for low-income Hondurans via an improved
investment climate, better social services and more effective municipal
governments. As the center of the HIV/AIDS epidemic in Central America,
Honduras will also receive assistance to improve prevention and care
for people contracting the disease. A regional program for the Eastern
Caribbean works with NGOs, community-based organizations, and
governments toward the same ends.
We look forward to the initiation of programs through the
Millennium Challenge Account, which represents a major departure from
past practices in distributing U.S. economic assistance. The MCA will
provide an important new source of financing for lower income countries
that establish sound economic policies, invest in their people and
demonstrate the political will to establish transparency in government
and conform to the rule of law. This month the Millennium Challenge
Corporation will propose eligibility criteria for nations to
participate, and in May the MCC will select a final list of countries
to receive assistance. We hope that several countries in the Western
Hemisphere will qualify in the first year, and that additional nations
will become eligible in the future. We will be working to ensure that
the initial ftmding provided by Congress delivers the promised results:
reducing poverty by significantly increasing economic growth. As the
President has stated, the MCA will provide people in developing nations
the tools they need to seize the opportunities of the global economy.
SECURITY
While the hemisphere is making progress in the development of
effective democratic institutions and open economies, this progress is
threatened by the inability of governments to control crime and
demonstrate to all citizens the value of a rule of law. Indeed, the
lack of personal security is now recognized in many countries as a
primary threat to the stability of the democratically elected
government. The goals of democracy and security are thus two sides of
the same coin. We cannot pursue one without the other, and both are
critical to our own security here at home.
For many people in the region, the immediate perceived threat is
common crime--theft of property, assaults, kidnapping, and murder--and
is a direct reflection of some governments' inability to provide
adequate police services. However, this is the tip of the iceberg.
Intermingled with these same local criminals--and taking advantage of
the same gaps in the criminal justice systems--are those engaged in
international organized crime. The drug traffickers, alien smugglers,
and traffickers in persons, among others, all, thrive in the same
fertile ground of inadequate laws, often untrained and inexperienced
personnel throughout the justice system, and a long history of not
enforcing the laws on the books. While there are certainly variations
among countries, in too many countries only the poor are incarcerated,
generally for long periods of time without trial and without access to
counsel. To reverse this situation and establish criminal justice
systems capable of prosecuting high visibility crimes against prominent
defendants on a regular basis is a monumental task. The countries of
the Americas must meet it to secure the rule of law and sustain
democratic governance.
Much of our assistance to the region focuses on strengthening
criminal justice institutions and processes. ESF and INCLE are the
primary source of funds for such programs. Assistance ranges from
training and equipping of counternarcotics and other specialized units
to sector-wide efforts aimed at implementation of new criminal
procedure codes. The latter reach out at a policy level to all elements
of the criminal justice system--police, prosecutors, judges and public
defense services. In many countries, such efforts are proceeding in
parallel and are coordinated by the Country Team. We feel that it is
critical to look at justice systems as a whole to identify the weak
points in coordination between agencies. These are the critical gaps
that need to be filled for successful prosecutions. Both the lack of
competence in investigative techniques and competition among police,
prosecutors and judges over investigative responsibilities are serious
obstacles to the effective prosecution of crimes in the region today.
Many countries also need to give greater attention to crime prevention
and victim assistance.
Notwithstanding Haiti, Colombia continues to present the most
urgent case for law enforcement and other assistance in the region.
Counternarcotics remains at the center of U.S. relations with Colombia,
which supplies 90% of the cocaine consumed in the United States.
However, as Colombia's three terrorist organizations--the FARC, ELN,
and AUC--fund their activities with the proceeds of drug trafficking, a
unified response is necessary. We appreciate the expanded authority
that Congress has provided to allow our assistance program to support
Colombia's unified campaign against drug trafficking and terrorism. Our
FY 2005 request for funding builds upon the successes of programs begun
in FY 2000 with the Plan Colombia Supplemental and sustained by
subsequent Andean Counterdrug Initiative (ACI) appropriations. Our ACI
request for FY 2005 would provide $150 million for programs to address
underlying social and institutional issues and $313 million for
narcotics interdiction and eradication. The alternative development and
institution building programs include emergency and longer-term
assistance to vulnerable groups and displaced persons, as well as
programs promoting the rule of law, local governance, and human rights.
The total ACI request for FY 2005 (including Colombia) is $731
million. These funds are needed to support a unified Andean regional
campaign against the drug trade and narco-terrorism. In Peru, coca
cultivation has already been reduced by 70%. Our FY 2005 request ($112
million) will support the further eradication of illicit coca and opium
poppy cultivation, interdiction, maintenance of USG-owned air assets,
and the development of rural infrastructure to prevent the spread of
illicit economic activities linked to narcotics trafficking. We will
pursue similar activities in Bolivia at a somewhat lower level ($91
million). We are seeking $26 million for Ecuador, where programs will
aim primarily to stop spillover from Colombia and the transit of drugs
destined for the United States, and $9 million for Brazil, to support
an interagency operation to fortify the northern border through
riverine control. We also request $6 million and $3 million for Panama
and Venezuela, respectively, for interdiction and other law enforcement
activities. Given Panama's strategic location and its well-developed
banking sector, our goal is to help Panama develop its own capabilities
to protect itself from criminal exploitation of all kinds. We also
propose to increase support for port, canal, and maritime security.
Mexico is the major transit country for cocaine entering the United
States. Mexican opium and marijuana cultivation is also a serious
threat, and Mexican traffickers figure prominently in the distribution
of illegal drugs in this country. Over the last few years, we have
built trust and an unprecedented track record of law enforcement
cooperation with the Mexican Government. Successes have come by
targeting individuals involved in criminal activity, the goods they are
trafficking, and the assets they accrue. With INCLE funds, we intend to
sustain the progress made since 2001 in interdiction capacity while
supporting eradication, surveillance, and intelligence capabilities. We
will develop a comprehensive Law Enforcement Training Plan with Mexican
counterparts to enhance police and prosecutorial capabilities to combat
serious crimes affecting citizens of both countries. We will support
initiatives, such as the U.S.-Mexico Border Partnership, to improve
security along our southern border. We will also continue to work with
Mexican authorities as they reevaluate their domestic legislation,
including the proposed introduction of oral proceedings in criminal
cases. Complementary administration of justice activities will be
funded with ESF.
In other countries, INCLE funds are used to help governments build
strong law enforcement and related institutions that can stop the
threats of international drug trafficking and transnational organized
crime before they reach U.S. soil. In the wake of September 11, 2001,
we have refocused many anti-crime programs to emphasize and sharpen
their counter-terrorism impact. For example, we are stepping up
cooperation with Argentina, Brazil and Paraguay with a view toward
decreasing use of the tri-border area as a hub for terrorist financing.
Administration of justice programs throughout the region, including
ESF-funded law enforcement development activities, generally address
problems in the criminal justice system. Programs in El Salvador,
Guatemala, Honduras, and Nicaragua all seek to develop good working
relationships between police investigators and prosecutors, to improve
the quality of criminal cases presented to judges and the possibility
of conviction on the merits. Because of the serious street crime
problems in Central America, including violent gangs, we are also
looking for ways to enhance crime prevention efforts--through the work
of enforcement agencies and community organizations. Projects in
Central America, Mexico and the Caribbean address the need for better
management systems and training for all participants in the judicial
process. A new international organization has been established in
Santiago, Chile, with a mandate from the Summit of the Americas to
support judicial reform throughout the hemisphere. The ESF account is
the source for U.S. financial contributions to the Justice Studies
Center of the Americas.
On the military side, our Foreign Military Financing (FMF) request
for FY 2005 will provide professional training and equipment to meet
three distinct requirements. Most of the requested assistance will
support efforts in the Andean region to establish or strengthen
national authority over remote areas that shelter terrorists and
illegal narcotics activity. Despite impressive improvements, Colombian
security forces will still require significant U.S. assistance in the
key areas of mobility, intelligence, sustainment and training. Our FMF
request for FY 2005 would provide $108 million for such programs,
including the provision of interdiction boats, infrastructure
improvements and support. for Colombia's C-130 transportation fleet.
FMF support is also critical to Colombia's neighbors to preclude
spillover of narcotics and terrorism into their territories.
A second objective of the FY 2005 FMF request is to reinforce
homeland security by controlling approaches to the United States. We
will provide countries of the Caribbean and Central America
communications equipment, training, spare parts, port security
enhancements and logistical support to complement U.S. interdiction
efforts. Our intention is to reinforce each country's own sovereign
ability to address the continuing terrorist threat, illicit drug
trafficking and illegal immigration into the United States.
The third objective for FMF financing is to improve the capability
of certain security forces in the region to participate in coalition
and peacekeeping operations. Chile, Uruguay and Argentina are committed
and well-trained to participate in international peacekeeping
operations but lack support in aviation logistics, specialized
individual equipment and infrastructure. Providing this support through
FMF will enable their continued participation in peacekeeping efforts,
reducing the possible requirement for U.S. forces in such operations.
Similarly, when El Salvador, Honduras, Nicaragua and the Dominican
Republic volunteered troops for stability operations in Iraq, they
demonstrated the political will to support U.S. objectives. However,
deficiencies in equipment and training remain, which we propose to
address through FMF to allow continued participation in peacekeeping
operations.
Training provided under the IMET program will expose foreign
students to U.S. professional military organizations and procedures and
the manner in which military organizations function under civilian
control. In the Western Hemisphere, such training focuses on junior and
mid-grade officers, who still have a significant military career ahead
of them and whose development can be positively influenced by exposure
to U.S. practices. The largest programs are in Colombia, El Salvador,
Mexico, Argentina, the Dominican Republic and Honduras. Our total FY
2005 request is $14,390,000. Continuation of these programs is intended
to enhance regional security by consolidating gains Latin American
militaries have made in subordinating themselves to civilian control.
GAPS AND AUTHORITIES
Your letter of invitation asked specifically whether, in my
opinion, there were any critical gaps in the Administration's foreign
assistance request for the Western Hemisphere. Needless to say, there
are always choices that must be made in putting together a budget of
this kind. Our request level is sufficient to address the highest
priority needs in our hemisphere. As is the custom, however, we expect
to make some adjustments in individual country or program levels to
meet actual requirements when FY 2005 appropriations are made
available.
You also asked whether we needed any new authorities. Last year on
this occasion, Acting Assistant Secretary Struble identified aspects of
existing legislation that hampered programming in the region. The areas
identified--the need for year-to-year extension of special authorities
for Colombia and administration of justice programs, and the confusing
array of exceptions to section 660 to authorize police assistance--
remain issues of concern to us today. We would like to have permanent
authorization language to support the unified campaign in Colombia
against narcotics trafficking and activities by organizations
designated as terrorist organizations. We would welcome elimination of
the sunset and other revisions in FAA section 534 to bring it into line
with the annual appropriations language. However, more fundamentally,
we continue to believe that police assistance authorities should be
reevaluated with a view toward developing new affirmative legislation
to replace section 660 and its numerous exceptions. The limitations of
our authority to work with law enforcement personnel under section 534
have become particularly apparent in connection with the need for
general crime prevention activities in Central America. We are
discussing these issues internally and look forward to sharing an
Administration position with the Committee in the near future.
CONCLUSION
In conclusion, our objectives in the Western Hemisphere are clear--
to strengthen democratic institutions, to improve conditions for broad-
based economic growth, to provide for basic human needs in the most
urgent situations, and to protect people from both internal and
external threats. Our foreign assistance program and specifically our
FY 2005 budget request provide an accurate overview of the many
challenges still before us. While there have been many positive
developments--and I would call your attention once again to the strong
consensus demonstrated through successive Summits of the Americas on
diverse issues of longstanding importance to the United States--there
are very real problems that require our ongoing attention. The
institutions of government, social services, and the free market
economy we enjoy in the United States were not created overnight. We
cannot expect that other countries in this hemisphere, most of which
have a much shorter or inconsistent experience with democratic
governance, will achieve a similar institutionalization of rights and
freedoms in a few short years. We are engaged intensely with them
across a wide spectrum of issues through bilateral and multilateral
mechanisms. We must also offer them concrete assistance as they work
toward our common objectives. Their success will not only benefit their
own citizens but also redound to our benefit. As they become more
stable partners in international endeavors and more open markets for
our goods and services, we will become better friends in the broadest
sense of the word. That is the overall objective we seek through our
assistance program. I ask your support for full funding of the
Administration's FY 2005 budget.
Thank you for your attention.
Senator Coleman. Thank you, Secretary Noriega.
Administrator Franco.
STATEMENT OF HON. ADOLFO A. FRANCO, ASSISTANT ADMINISTRATOR FOR
LATIN AMERICA AND THE CARIBBEAN, USAID
Mr. Franco. Thank you very much, Mr. Chairman. It's a
pleasure to appear before the Committee on Foreign Relations to
discuss USAID's Bureau for Latin America and Carribean's
request for fiscal year 2005 and to share with you briefly the
President's vision for the Western Hemisphere.
Before I begin, Mr. Chairman, I just wanted to say that I
fully concur with your opening statement in every regard. I
also want to underscore what Secretary Noriega has said, that
the relationship between USAID and the State Department, and
the team started with Secretary Powell and Administrator
Natsios, is excellent. We work in concert together to promote
the foreign policy interests of the United States, so it's very
much a team effort.
In that regard, I really believe Secretary Noriega has
outlined very clearly and very articulately the priorities of
the President, the Secretary of State, and Administrator
Natsios for our region for the coming fiscal year. Therefore,
with your permission I'd like to just summarize very briefly
rather than repeat the Secretary's commenst. My comments
summarize them, and I ask that my statement be a part of the
record.
Senator Coleman. It will become part of the official
record.
Mr. Franco. Thank you, sir. Mr. Chairman, Secretary Noriega
has noted that the countries of the Western Hemisphere have a
shared destiny by virtue of our geography, our history, our
culture, and the economics of the region. The President's
vision for the hemisphere is premised on the concept of a more
prosperous neighborhood anchored on free trade. He has
expressed this in his national security strategy that links,
``The future of our hemisphere to the strength of three
commitments: democracy, security, and market-based
development.''
I realize that much attention, as you noted, Mr. Chairman,
and rightly so, is currently focused on the crisis in Haiti.
However, I believe that political stability in the region
overall has increased over the last several decades, as
Secretary Noriega has noted, with the growth of democracy and
its continued promotion in the region.
As the current crises in Haiti and Bolivia, to which you
alluded, Mr. Chairman, and the polarization in Venezuela
demonstrate clearly, we still have challenges in the Western
Hemisphere. To address these challenges, USAID has developed
three key priorities, and they're all premised on what
Secretary Noriega has said. Rule of law is at the heart of all
of our efforts, but the three key priorities are, No. 1, to
improve good governance, to combat crime, and to reduce
corruption. These are also enshrined in the President's
Millennium Challenge Account proposal that is now the
Millennium Challenge Corporation.
Second, we are also working to increase economic growth and
free trade, and last to combat the counter-narcotics
trafficking in the region which undermines the rule of law and
democracy. In addition, as you noted, Mr. Chairman, we're
working on a number of Presidential initiatives. They range
from the President's Emergency Plan for HIV/AIDS to Centers for
Excellence in Teacher Training that address education needs in
the region, to an Initiative Against Illegal Logging in Latin
America.
Mr. Chairman, I would like to give you just a few details
on the priority programs I've outlined, the three priority
programs. On good governance, crime prevention, and reduction
of corruption, our justice sector modernization efforts remain
the largest focus of USAID's governance programs in the region.
We work closely with governments to draft new criminal
procedure codes and anti-corruption programs that promote
transparency and attack entrenched transpolitical institutions
that threaten democracy and the belief in democracy, as well as
poor public sector management that creates in citizens a sense
that democracy is not delivering what's promised.
In the area of economic growth, USAID plays a significant
role, as noted by the Secretary, in preparing countries for
free trade and the benefits of free trade. We've done that with
Central American countries as we've moved forward the CAFTA
initiative, which is premised on opening markets and creating
opportunities for the United States, as well as for our
neighbors to the south.
For the Free Trade Area of the Americas process, we are
requesting and we have received a Hemispheric Cooperation
Appropriation Program of $10 million from the Congress that
will assist us in our work with the U.S. Trade Representative
and other agencies to target trade capacity-building assistance
that's consistent with our hemispheric country priorities.
These are efforts to make the countries of the region more
competitive, but more importantly, to increase incomes and to
create the climate for foreign investment and ultimately
greater exports from the United States.
In the area of counter-narcotics, Mr. Chairman, despite
bold efforts by Colombia, Bolivia, and Peru to combat narco-
trafficking, a lack of state presence has allowed illegal
narcotics production and armed terrorist organizations to
flourish. You've correctly noted, Mr. Chairman, President's
Uribe's bold leadership. We've made great strides in Colombia,
and we continue to pursue our agenda vigorously in Peru and
Bolivia.
In Bolivia and Colombia, our alternative development
programs promote licit crop production, rural competitiveness,
improved social, physical, and productive infrastructure,
access to justice, and an increased state presence in coca-
growing regions. Now, that's a mouthful, Mr. Chairman, but what
we're trying to do, as President Uribe has outlined in his
democratic security proposal for Colombia, is to create a state
presence, security, and then bring in the necessary investments
with our development programs and partners to create the
infrastructure and identify market linkages so people have an
alternative, not a substitution, but an alternative to illegal,
illicit production. And most people seek that given the
opportunity. But we need the state presence, and Colombia is an
example in the south where we can and have had success, which
we can replicate elsewhere in the region. In fact, thousands of
farm families have eradicated their coca on thousands of
hectares and they've done so voluntarily when state presence
has been there and when there are alternatives to coca
production.
I'd like to mention two countries of special concern. The
first, of course, is Haiti. We are continuing to monitor the
humanitarian situation very closely, as we have prior to this
most recent crisis. Based on the assessments that we are
carrying out by USAID staff in Haiti currently and as well as
our non-governmental partners to date, I can state for the
record, there is no humanitarian crisis as we know that term in
Haiti, and there are sufficient food supplies in Haiti to feed
the population for the time being. In addition, Mr. Chairman, I
wish for you to know that up to 20,000 metric tons of
additional food is available for us to transport from Lake
Charles, Louisiana in very short order should the need arises.
We continue to monitor distribution and security issues
very closely now that we have U.S. and foreign military
presence in the country. We believe the situation will improve
dramatically in terms of the distribution and security of food.
Some food aid was looted from warehouses in recent days. It
has not been, from our assessment, a large amount of USAID food
that has been looted. The greatest impediment is again the
security situation for our staff and for transportation. We're
also monitoring the medical situation very closely. We've sent
additional resources totaling $537,000 directly and through our
partners to attend to low supplies in Port au Prince hospitals
and throughout the rural areas.
I plan to travel to Haiti as soon as possible. I hope early
next week to assess the situation personally. We are, Secretary
Noriega and I and the rest of the team, obviously in daily
contact with our mission in Haiti.
In Bolivia, USAID has launched a job creation initiative in
volatile communities that have not been previously serviced by
USAID to help the Carlos Mesa government address economic and
social inequities in Bolivia. Administrator Natsios and I
visited Bolivia several weeks ago. I can report to you that
President Mesa is fully committed to our efforts to continue to
combat counter-narcotics and to address questions of inequity.
I can tell you, Mr. Chairman, it is not window dressing. Mesa
is a democrat fully committed to support not only the
democratic process but the participation of all of Bolivia's
population.
In conclusion, Mr. Chairman, I'm pleased to report that we
continue to help governments of the region that are dedicated
to the promotion of democracy. I can't underscore enough what
Secretary Noriega has said about, what you've mentioned, the
importance of the Millennium Challenge Account. It has been an
incentive for the region that investing in people, as the
President stated in his speech 2 years ago at the Inter-
American Development Bank, is what the United States will
respond to.
So it's been an extraordinarily positive tool. Secretary
Noriega mentioned its impact is already being felt, and this is
something that we're looking forward at USAID to work very
closely as its operations come to full speed.
I'd be pleased to answer any questions you or Senator
Nelson may have.
[The prepared statement of Mr. Franco follows:]
Prepared Statement of Hon. Adolfo A. Franco
Mr. Chairman, Members of the Committee, it is a pleasure to appear
before the Senate Committee on Foreign Relations to discuss with you
how USAID's Bureau for Latin America and the Caribbean (LAC) is
promoting the President's vision for the Western Hemisphere.
The countries of the Western Hemisphere have a shared destiny by
virtue of geography, history, culture, demography, and economics. As
stated by Secretary Powell in September 2003, ``there is no region on
earth that is more important to the American people than the Western
Hemisphere.'' A prosperous LAC region provides expanded opportunities
for increased trade, and a peaceful hemisphere is paramount to our
national security. USAID is fulfilling its development and humanitarian
mandate in LAC countries as it continues to respond to the U.S.
National Security Strategy, which, as stated by President Bush, links
``the future of our Hemisphere to the strength of three commitments:
democracy, security and market-based development.''
On balance, political stability has greatly increased over the last
several decades and governments have shifted from mainly authoritarian
rule to representative and constitutional democracies. Throughout the
region, official human rights abuses have diminished, civil society
oversight of public institutions is increasing, and elections are held
under the management and supervision of professional electoral
commissions. Governments are taking steps to stamp out corruption,
establish mechanisms for transparency and accountability, and attract
foreign investment.
The region's economic situation is improving and LAC countries are
closer to trade liberalization and integration with their neighbors
than they have ever been. The World Bank and the U.N. Commission for
Latin America and the Caribbean estimate that the region's gross
domestic product (GDP) grew by 1.5% in 2003 (slightly more than the
population growth rate of 1.3%-1.4%), compared with a 0.4%-0.8%
contraction in 2002. Those LAC countries that have adopted sound fiscal
policies and oriented their economies toward greater foreign investment
and rules-based trade proved more resilient to the recent global
economic downturn than those that did not take such outward-looking,
market-based steps. The region's GDP is expected to continue to expand
by 3.5% in 2004, with growth predicted across the region. However, the
region's economic recovery rate is still not enough to reverse the
effect of recent years of economic stagnation. Approximately 44% of the
region's population lives under the poverty line of two dollars a day,
and unemployment averages 10.7%, with underemployment significantly
higher.
CONTINUING CHALLENGES IN LAC
Despite gains in human rights and democracy, and increased economic
linkages across the region, threats to the development achievements of
the last decade persist. Popular dissatisfaction with tepid economic
growth, public sector inefficiencies, and failure by elected
governments to perform effectively and responsibly have led to numerous
setbacks--economic instability and political crisis in Venezuela,
abysmal poverty and alarming levels of political instability, and
violence in Haiti, and growing civil unrest in the Dominican Republic.
President Bush noted that ``. . . when governments fail to meet the
most basic needs of their people, these failed states can become havens
for terror . . . No amount of resources transferred or infrastructure
built can compensate for--or survive--bad governance.'' (March 2002).
Thus, sustained efforts by the United States to work in partnership
with our neighbors are essential to promote democratic and economic
integrity in the Western Hemisphere.
Great inequities remain in access to and delivery of quality health
care and education. These impediments weaken economic growth, labor
productivity, and the ability to compete globally. Maternal and
neonatal mortality rates remain unacceptably high, and resistance to
accessible medicines is on the rise. The LAC region has the second
highest HIV/AIDS rate in the world, with over two million people living
with HIV, including the estimated 200,000 that contracted the deadly
virus in 2003. Diseases such as dengue and malaria are posing an
emerging threat as well. In education, nearly one-half of the children
who enter primary school fail to make it to the fifth grade, and only
about 30% graduate from secondary school. Access to education
especially affects poor, rural, and indigenous children, particularly
girls.
The lack of effective rule of law threatens business interests and
puts citizens, including Americans, at risk. Narcotics wealth gives
large trafficking organizations a practically unlimited capacity to
corrupt. In economically weak countries, the drug trade's wealth makes
it a great threat to democratic government. Terrorist organizations
overtly seek to topple governments by force, while drug syndicates
undermine them surreptitiously from within. In recognition of this
threat, the U.S. government is committed to improving security overseas
so that threats never arrive on our shores. This calls for targeted
foreign assistance and complementary institutional reform programs in
countries where organized crime exploits weak governance, especially in
the justice sector.
USAID PRIORITIES IN THE LAC REGION
USAID's strategic priorities in the LAC region are to: 1) improve
good governance and reduce corruption; 2) increase economic growth and
free trade; and 3) reduce narcotics trafficking. These themes give
paramount importance to the implementation of policies that address key
constraints to development, with the overarching goal of advancing the
U.S. foreign policy agenda. In addition, USAID is addressing critical
transnational issues such as HIV/AIDS and other infectious diseases, a
deteriorating natural resource base, and trafficking in persons.
DEMOCRACY AND GOVERNANCE
LAC will continue to expand its support for deepening democracy,
concentrating on issues of anticorruption, government transparency and
accountability, and human rights. Fragile and politically troubled
states such as Bolivia, Haiti, and Venezuela will continue to receive
special attention.
Justice sector modernization remains the largest focus of USAID
governance programs in the LAC region. In addition, governance programs
promote accountability and transparency in government institutions;
increase the capacity of local governments to manage resources and
provide services; and strengthen civil society organizations to
advocate for citizens' rights.
Without a reliable and fair justice system, investor confidence and
a stable trade environment are jeopardized. Likewise, impunity for
crime and corruption undercuts social and economic growth. USAID
efforts to advance criminal justice reform, strengthen judicial
independence, expand access to justice, and improve administration of
justice are underway in 12 LAC countries. New criminal procedure codes
and other criminal justice system reforms, developed and enacted over
the last decade with USAID support in Nicaragua, Honduras, Guatemala,
El Salvador, Bolivia, Colombia, and the Dominican Republic, are
introducing profound changes. USAID is helping the government of Peru
to increase judicial accountability by introducing reforms to make
judicial selection more transparent and improve oversight of the
courts. In Colombia, USAID has established oral procedures in a
reformed criminal justice system, strengthening the public defense
system to guarantee due process, expanding access to community-based
legal services, and promoting widespread use of alternative dispute
resolution mechanisms.
New efforts in justice reform are examining commercial codes. This
fiscal year, USAID helped the Nicaraguan Chamber of Commerce launch a
joint initiative with the government of Nicaragua to draft an
alternative dispute resolution law aimed at providing an accessible
mechanism that meets international standards for resolving commercial
disputes. This law will help prepare Nicaragua for CAFFA implementation
by improving the environment for trade and investment.
USAID anticorruption programs in 15 countries emphasize citizen
oversight and build local capacity to attack weak governance,
entrenched political institutions, and poor public sector management.
USAID provides assistance to citizens groups and nongovernmental
organizations to devise anticorruption plans and monitor government
officials and agencies. USAID supports local initiatives to establish
special commissions and investigative units to expose and prosecute
cases of corruption by public officials. The United States is the only
country providing help to the Dominican Republic in handling the
complex bank fraud cases currently under investigation and in the
courts. USAID helped establish a coalition of over 50 Dominican civil
society organizations which is actively engaged in ensuring that the
Baninter and other bank fraud cases are investigated and prosecuted.
With direct election of local mayors and devolution of authority to
municipalities, USAID is helping citizens and elected leaders devise
community development plans that respond to local needs and generate
growth. In 14 countries USAID helps mayors establish transparent
accounting and fiscal management procedures to create a framework for
greater revenue generation for roads, schools, health centers, and job
creation. In turn, citizens monitor the use of public funds and devise
``social audits'' to track spending in accordance with local
development plans and to hold officials accountable. USAID provided
assistance to national and local Colombian government entities to
standardize accounting and internal financial control systems according
to international standards, as well as assistance to 100 citizen
oversight groups to oversee close to $1.5 billion in public funds.
Colombia's ranking in the Transparency International Corruption index
improved 17% between 2000 and 2003, the greatest improvement among the
more than 40 medium and low-income countries surveyed.
ECONOMIC GROWTH
USAID is assisting LAC countries to enact legal, policy, and
regulatory reforms that promote trade liberalization, hemispheric
market integration, competitiveness, and investment, which are
essential for economic growth and poverty reduction. USAID's trade
capacity building programs focus on helping LAC countries to prepare
for trade negotiations and implement obligations stemming from trade
agreements such as sanitary/phytosanitary measures, customs reform, and
intellectual property rights. In addition, USAID works with the
region's smaller economies to help them join the global trading system
by developing specialty markets and providing assistance for business
development and rural product diversification. Increased support is
envisioned to respond to increasing demands for assistance.
Although economic growth is still weak, governments increasingly
understand the benefits of free trade and are willing to take steps to
make it happen. The recent signing of the U.S.-Central American Free
Trade Agreement (CAFTA) demonstrates the commitment by Guatemala,
Honduras, Nicaragua, El Salvador, and Costa Rica to implement policy,
trade, and economic growth reforms. We are currently working with the
Dominican Republic so they can join this important agreement. Lessons
learned from Mexico and shared with the Central American countries
indicate that more open trade leads to improved policies, export
diversification, political reform, stable exchange rates, increased
foreign direct investment, employment generation, greater public
investments in the social sector, and a more open society.
Under the Free Trade Area of the Americas (FTAA) process, the
Western Hemisphere countries are working together to implement the FTAA
Hemispheric Cooperation Program (HCP). Under the program the smaller
economies and developing countries of Latin America and the Caribbean
have prepared national trade capacity building (TCB) strategies that
USAID and other resource partners are using to effectively target TCB
assistance in line with country priorities. USAID worked very closely
with USTR, other USG agencies, and donors to launch the first HCP
donor-country coordination meeting last October in Washington. USAID
has also worked closely with this group to provide support for specific
FTA negotiations with the Dominican Republic, Panama, Peru, and
Colombia scheduled for 2004. In order to support this important
process, sustained TCB funding will be paramount.
In FY 2003, USAID provided technical assistance and training in
support of CAFTA negotiations to Central American government officials,
and assisted Bolivia, Peru, Guyana, and Suriname to prepare national
trade capacity building strategies. USAID also assisted governments in
Central America, the Caribbean, and Brazil to raise the public level of
understanding about the benefits of free trade under CAFTA and the Free
Trade Area of the Americas (FTAA). In coordination with the Government
of Nicaragua, USAID implemented a public outreach program to
disseminate information about CAFTA negotiations, as well as the
opportunities and challenges associated with free trade. An opinion
poll, taken a few months after the program began, showed that awareness
of CAFTA among those surveyed increased from 2% to 82%. In addition,
USAID support was instrumental in ensuring a highly successful round of
CAFTA negotiations hosted by Nicaragua in September 2003.
The progress with CAFTA bodes well for the success of the Free
Trade Area of the Americas (FTAA), which will further strengthen and
expand economic partnership in the Americas, a vast market of over 800
million people producing nearly $14 trillion in goods and services
every year. For example, the political and economic liberalization
encouraged by the United States and successfully adopted by El Salvador
has made El Salvador a model for post-conflict developing countries.
The United States is El Salvador's most important trading partner,
receiving 67% of its exports and providing 50% of its imports. By
promoting prosperity in El Salvador through USAID programs and
mechanisms such as CAFFA, the United States can help strengthen the
Salvadoran economy, thereby improving the living standards of
Salvadorians and reducing the number that feel the need to escape
poverty by moving to other countries, such as the United States.
USAID has played a major role in helping the U.S. Government shape
and launch the FTAA Hemispheric Cooperation Program. USAID will use the
NAFTA and CAFTA experience to help the hemisphere reach agreement on
FTAA by the end of 2005. In the Caribbean, a sub-region with small
island economies that lack diverse sources of income, USAID is
conducting outreach programs that describe the benefits of free trade,
providing assistance for small business development, and assisting
eight Caribbean Community (CARICOM) countries to prepare national trade
capacity building strategies and achieve a Caribbean Single Market and
Economy by 2005. In Jamaica, USAID is helping the private sector to
identify and address key regulations and legislation that constrain
business operations. Two improvements made last year include a new
electronic payment system introduced at the Jamaica Customs Department
that allows importers and brokers to make direct payments through the
bank, and an electronic manifest transmission system implemented by the
Shipping Association of Jamaica to make this process more efficient.
The United States is working with the Government of the Dominican
Republic to have it become an active partner in CAFTA.
USAID has also developed a regional program to help Andean
Community countries address rules of trade and competitiveness issues,
including customs reforms, sanitary and phytosanitary measures, and
competition policy. USAID has begun an aggressive program in Peru to
improve the regulatory and institutional framework to facilitate trade
and investment and help Peru's private sector take advantage of the
Andean Trade Preferences and Drug Eradication Act, and prepare for FTAA
accession. Our Mission in Peru, which is managing the regional program,
is coordinating closely with the USAID missions in Bolivia, Colombia,
and Ecuador to ensure that USAID regional and bilateral support for TCB
effectively responds to the needs that these countries have articulated
in their national strategies.
In response to the coffee crisis in Central America, consequent to
the devastating drought in 2001 and the decline in coffee prices, USAID
helped Central American coffee farmers apply best practices to increase
sales to the high-value, niche coffee market through expanded
partnerships with U.S. and European coffee traders and roasters. This
project is resulting in increased rural competitiveness, incomes, and
employment, all crucial to poverty reduction. USAID's programs to help
farmers diversify agricultural production, increase yields, and obtain
better access to markets helped Nicaraguan producers to meet local,
regional, and international market demand for various products, and
generated more than $17.5 million in sales during FY 2003. In Honduras,
USAID support for technology transfer and training in market-led
production and post-harvest handling successfully linked small-scale
growers, processors, exporters, and supermarkets. This assistance has
generated $31 million in new sales, and increased small farmer incomes
by an average of 177%. Success is evidenced by an almost $4 million
increase in exports of the main seasonal crops.
Numerous USAID programs support development of regulatory
frameworks and innovative approaches to widen and deepen financial
intermediation in the small and microenterprise sector. As a result,
marginalized business people have greater access to borrowing capital,
increasing the number of self-employed entrepreneurs, especially women,
and their profitability. USAID's demonstrated successes in microfinance
have made other prominent donors eager to replicate its approaches. One
of several microfinance models developed through USAID support in Haiti
has been internationally touted as exceptionally innovative and well-
directed, and our microfinance models have been adopted by local
commercial banks.
USAID is also working with governments to improve economic
policies. USAID technical support to the Nicaraguan National Assembly
on economic policy contributed to the passing of the Law on Tax Equity,
which allowed the Government of Nicaragua to collect $366 million in
taxes in 2003, which was 23% above 2002 collections.
USAID is supporting cutting-edge efforts to increase the
developmental impact of remittances to the LAC region, which were
estimated at $32 billion in 2003--more than all other development
assistance combined. A pilot program supports the development of a
remittance transfer service between Caja Popular Mexicana and credit
unions in Texas and California. The program taps into one of the
largest sources of private capital flowing into Mexico and should both
lower transfer costs and leverage remittances as savings and productive
investment. USAID's pioneering efforts have influenced other regional
institutions such as the Inter-American Development Bank, which has
unveiled a plan that would allow relatives of U.S. migrant workers to
use remittances as collateral for real-estate loans in their home
countries. The program is expected to begin later this year, on an
experimental basis in Mexico, Colombia, Ecuador, and El Salvador. On
average, relatives of migrants in those countries will be eligible for
loans up to $25,000 to buy a home, start a business or pay for school.
Overall, USAID is programming its development assistance in the LAC
region to help our trading partners to prepare for trade negotiations,
and implement trade agreements. Additionally, USAID-supported programs
help to ensure that all USAID investments in areas such as small
business development and rural diversification maximize the economic
growth and poverty reduction benefits from their participation in free
trade.
USAID is implementing the President's Initiative against Illegal
Logging, which seeks to address the negative impacts of the illegal
timber trade on economic, social, and political stability. In Peru,
where illegal loggers have developed a symbiotic relationship with
resurgent terrorist groups in remote areas, USAID is supporting
national efforts to enforce laws and regulations related to protected
areas, assisting communities to manage forests and certify wood
products, and promoting alliances with U.S.-based mahogany retailers
and Peruvian mahogany exporters. In Brazil's Amazon Basin, a largely
unexplored biodiversity treasure, USAID is helping to develop
management systems that maintain a balance between development and
protection of natural resources. Other USAID programs have contributed
to the conservation of millions of hectares of land and passage of key
laws such as the Special Law for the Galapagos. USAID's sustained
support helped develop sustainable timber harvest, and reduced
significantly the rate of deforestation in several South American
protected reserves.
INVESTING IN PEOPLE
The U.S. Government is a key player in combating the HIV/AIDS
pandemic. President Bush, speaking to Congress in April of last year,
said the fight against AIDS is ``integral to our nation's security''
and called HIV/AIDS a ``threat to the stability of entire countries and
regions of our world.'' USAID's HIV/AIDS programs work with
governments, nongovernmental organizations, and the private sector in
six main areas: awareness and prevention; care and treatment;
epidemiological surveillance; capacity building; developing legislation
that forbids discrimination against people living with HIV/AIDS; and
program coordination to ensure a coordinated multi-sectored, multi-
donor response.
Adult HIV/AIDS prevalence rates in the Caribbean Basin are second
only to those in sub-Saharan Africa. HIV/AIDS affects the most
economically productive segment of the population and the economy as a
whole. For example, in Jamaica, complications from AIDS are the leading
cause of death in men and women between 30 and 34 years of age. As a
result of USAID assistance, affected countries are more willing to
openly discuss HIV/AIDS. Haiti and Guyana, two Presidential priority
countries in LAC, have initiated national programs to prevent mother to
child transmission of HIV/AIDS. This year alone, USAID established 22
new voluntary counseling and testing and prevention of mother to child
transmission centers across Haiti, giving rural Haitians access to
services previously available only in select areas.
USAID has made significant progress in raising vaccination coverage
and reducing or eliminating major childhood illnesses such as measles.
While progress is being made to apply proven, cost-effective protocols
for combating malaria, tuberculosis, and other infectious diseases,
rates remain unacceptably high. Because diseases do not respect
geographic boundaries and due to the high numbers of legal and
undocumented immigrants to the United States, USAID's health-related
assistance to LAC countries is critical to the security and health of
the United States.
The quality and relevance of primary and secondary schooling in LAC
countries continue to cause concern, as the majority of students attend
weak and under funded schools and fail to acquire basic skills in
mathematics, language, and science. Fewer than 30% of students in the
region complete secondary school, and many of those who do finish lack
the skills to compete in the workplace, let alone in an increasingly
competitive global economy. USAID education and training programs are
improving educational systems by developing innovative pilots and more
effective service delivery models, many of which are being expanded by
host governments and multilateral development banks. USAID will
continue to improve the skills of teachers and administrators through
the Centers of Excellence for Teacher Training, an initiative announced
by President Bush in April 2001. Three sub-regional training networks
established in Peru, Honduras, and Jamaica will train up to 15,000
teachers who will serve 600,000 students. USAID has been a leader in
education policy reform through efforts such as the Partnership for
Educational Revitalization in the Americas. In addition, USAID is
supporting advancements in workforce training and helping youths
prepare to enter the workforce. For example, USAID's Training,
Internships, Exchanges, and Scholarships program in Mexico is enhancing
the capacity of Mexican scholars and institutions to respond to the
emerging U.S./Mexico Common Development Agenda.
ALTERNATIVE DEVELOPMENT
The scourge of narcotics threatens the social and economic fabric
of the Andean countries and poses a threat to the United States.
Despite bold efforts by Colombia, Bolivia, and Peru to combat narco-
trafficking, the lack of a state presence in some areas has allowed
illegal narcotics production and armed terrorist organizations to
continue to flourish. Drug-related spillover crime makes Ecuador's
northern border with Colombia vulnerable. Further, experience has shown
that intensive eradication efforts by one country increase pressure by
the narco-trafficking industry in another. Alternative development
programs emphasize licit crop production; rural competitiveness;
improved social, physical, and productive infrastructure; access to
fair justice; and an increased state presence in coca-growing regions.
USAID is working in partnership with the Andean region's leadership,
who are actively pursuing policies to fight narco-terrorism and expand
the reach of government and rule of law.
In Bolivia, USAID is providing viable income-earning alternatives
to coca cultivation and developing sustainable infrastructure, national
and export markets, and organizations to ensure sustained economic
growth in coca-growing regions. Successful new strategies have
increased domestic sales and exports from the Chapare. In 2003, banana
exports rose by more than 30% and pineapple exports increased 250%. In
the Yungas, more than 5,100 farmers improved their coffee harvest and
post-harvest techniques, thereby increasing their incomes by an average
of almost 40%.
Radio, press, and face-to-face communications have convinced over
15,000 families to enter agreements with the Government of Peru to
voluntarily eradicate their coca and remain coca free. Between October
2002 and December 2003, Peru's newly established voluntary coca
eradication program resulted in the elimination of 5,445 hectares, with
459 communities and over 19,000 families participating in the program.
Voluntary eradication constituted 40% of total eradication for CY 2003,
and approximately 40% of that was high density or managed productive
coca, the same amount obtained previously through forced eradication.
Since some coca growing areas are not suitable for sustainable
agriculture due to agronomic or security reasons, USAID works with the
private sector to increase licit income opportunities, making coca
production less attractive. In Colombia, the combined tactics of
eradication, interdiction and alternative development resulted in a
coca crop reduction of 37.5% between 2000 and 2002 and an additional
43% between 2002 and 2003, exceeding Plan Colombia goals. In addition,
USAID completed 406 social infrastructure projects, including
construction of roads, bridges, schools, and water treatment
facilities, in 13 municipalities to provide short-term employment and
access to markets necessary to sustain a licit economy.
SPECIAL EMPHASIS COUNTRIES
Haiti. The United States is the largest donor in Haiti, providing
roughly one third of the total bilateral and multilateral assistance
last year. USAID's assistance has been focused on humanitarian
assistance, including alleviating poverty and food insecurity,
increasing access to health care by the majority of underserved
Haitians, fighting HIV/AIDS, generating rural competitiveness-based
employment, and strengthening civil society. USAID is closely
monitoring the humanitarian impact of the current political crisis that
has led to the resignation of President Aristide. Haiti's Supreme Court
Justice Boniface Alexandre was sworn in as the interim president as
stipulated in the Haitian constitution. USAID is working closely with
other agencies and implementing partners to develop a post-conflict
program strategy. This strategy will ensure the provision of emergency
relief, continue to provide improved basic services, and generate
employment over the immediate, short and medium-term. Also, USAID is
cooperating with other donors to jointly identify long-term priorities.
Colombia. USAID will continue to support President Uribe's new
Democratic Security and Defense Policy aimed at guaranteeing the
security, freedom and human rights of the population, consolidating
state control over national territory, eradicating drug trafficking,
defending democratic order and the rule of law, promoting economic
prosperity and social equality, and reconstructing the social fabric.
Colombia has one of the largest internally displaced persons (IDP)
populations in the world (about 2.5 million) since 1985. Most displaced
families are reintegrating into urban settings from a rural
environment. One of USAID's most successful activities enables IDPs to
regain or obtain income-generating opportunities through training in
basic business practices such as accounting, finance, and basic market
studies. The program has had particular success in involving the
private sector and has established public/private partnerships. The
training programs have led to the job placement of thousands of IDPs
and the creation of successful micro and small businesses managed by
IDPs. Job creation and skills training is one of the primary strategies
in helping IDPs regain financial independence and long-term economic
stability. In addition, USAID finances community infrastructure
projects such as schools, health centers, water and sanitation systems,
roads, and housing. USAID has provided relief to about 1.2 million IDPs
since the program began in 2001.
In July 2003, the Colombian Government reached agreement with nine
paramilitary groups numbering some 18,000 combatants (roughly 82
percent of the estimated paramilitary combatants in the country) to lay
down their arms in exchange for Colombian Government support for their
demobilization and reincorporation into Colombian society. In December
2003, two groups were demobilized, one in Medellin totaling 871 former
combatants, and one in Cajibio (Cauca), totaling 155. Negotiations are
ongoing with the remaining groups. The current estimated costs for
complete demobilization of all illegal armed groups in Colombia
(including the country's two largest groups, the Colombian
Revolutionary Armed Forces or FARC and the National Liberation Army or
ELN) is between $254 to $298 million. The projected shortfall that the
Colombian Government will look to the international community to fill
is estimated at $138-$182 million. USAID has provided planning
assistance to the Office of the High Commissioner for Peace, and
subject to the resolution of legal policy and funding issues, is
prepared to deepen and broaden assistance to the Colombian Government
in this critical area. A broad, comprehensive demobilization and
reincorporation program would provide tangible benefits by eliminating
a significant source of human rights violations and creates potential
for the future demobilization and reincorporation of other illegal
armed groups.
Bolivia. In CY 2003, USAID/Bolivia provided $10 million in FY 2003
and $8 million in FY 2004 ESF funds as cash transfers to meet
Government of Bolivia obligations with International Financial
Institutions. This served to relieve pressure on the government's
fiscal situation and encouraged other donors to follow suit. USAID/
Bolivia refocused at least $12 million in its current program to
initiate a series of ultra fast activities in the conflict areas of El
Alto and the altiplano, enabling temporary jobs, improved roads and
schools, and expanded health services. This shows that the Government
of Bolivia and the United States Government are attentive to the
problems of neglected areas, and is providing political space for the
Mesa administration to advance needed economic and social reforms.
USAID will continue to implement quick impact, high visibility
activities designed to demonstrate the responsiveness of the Mesa
Government and its concern for the economic inequities in Bolivia.
These will be augmented by activities and policies aimed at relieving
the social and economic pressures in Bolivia and helping the Mesa
Government address the needs of vulnerable citizens. Support for
alternative development will remain strong.
ALLIANCES
Private investments in Latin America, including contributions from
civil society and faith-based organizations, far exceed official
development assistance levels. Linking United States Government
investments with private investments will assure a greater impact for
both, as was articulated by President Bush at the Monterrey Conference
last year. The Global Development Alliance and the Development Credit
Authority (DCA) are exciting business models by which USAID has given
U.S. resources much greater impact by partnering with businesses,
municipalities, universities, and philanthropic groups. Key alliances
in LAC include working with coffee companies and small-scale producers
to address the crisis in this sector, cutting-edge work on remittances,
and a new alliance for the chocolate industry. Using DCA authority to
provide guarantees to microfinance institutions, commercial banks,
rural savings and loans, and municipalities, USAID leveraged more than
$30 million in private capital in 2002.
MANAGEMENT
LAC is undertaking mission management assessments to make informed
decisions on ways to work smarter, reduce the process workload, and
ensure Operating Expense and staff allocations respond to Bureau
priorities. Four mission management assessments were completed in 2003,
resulting in measures to improve efficiency by consolidating financial
management and other support services in four LAC missions to serve 16
country programs. This year we plan to conduct seven more mission
management assessments, thereby fulfilling the LAC Bureau's mandate,
and we will continue to follow through on recommendations from earlier
assessments. By responding to initiatives in the President's Management
Agenda, including Strategic Management of Human Capital. USAID is
maximizing the impact of foreign assistance. USAID Administrator Andrew
Natsios recently approved staffing levels to better allocate staff in
overseas missions and ensure best use of personnel. Steps will be taken
to begin the process of implementing the Agency's Direct Hire staffing
template while adhering to the spirit and intent of the FY 2004
Appropriations Bill. Furthermore, we will finalize the regional
services platform for Central America and more thoroughly analyze the
options for South America.
Senator Coleman. Thank you very much.
Senator Nelson, do you want to make a statement?
Senator Nelson. Well, I don't need a statement. I'll just
ask some questions.
Senator Coleman. Why don't I begin. You talked about the
AIDS initiative in Haiti. Secretary Noriega, you talked about
other countries have offered to make security forces available
in the very near term. What does very near term mean?
Mr. Noriega. Mr. Chairman, may I briefly walk through the
process that's underway right now? Haiti, of course, has a new
President now. The Prime Minister, Yvon Neptune, is the Prime
Minister at present in Aristide's government. He continues to
be the head of government. He has agreed to serve for a few
days while a process in underway for appointment of the new
Prime Minister.
That process is modeled on a plan that was proposed by the
Caribbean community a number of weeks ago, where there will
be--the international community will work with sectors of
Haitian society that we hope will be represented in sectors,
including some of Aristide's party and others, to form a
council of 7 to 9 persons that will advise the President on the
appointment of a new Prime Minister, and the Prime Minister
will return once he's appointed by the President, begin to form
a cabinet of neutral, independent persons who are above all
technically competent to head the various ministries of the
Haitian Government.
This council sort of steps in for the absence of a
Parliament in Haiti and we believe it's important that there be
some sort of a representative body to advise the government as
it goes ahead. That process is underway and the time tables are
very short. We want to move very quickly to put some people in
place that can start making decisions for the new government.
The U.N. Security Council resolution is the basis of our
engagement, Resolution 1529, which was approved unanimously on
Sunday. The United States has forces on the ground. Others are
moving very quickly to put people on the ground. The French are
in there.
Senator Coleman. In addition to the French, anyone else?
Mr. Noriega. There are a couple of others that have--and I
would be pleased to talk to you about them privately, but the
problem is some of these countries are just proposing these
deployments to their Congresses, and if our Congress finds out
before theirs does, I think we might make folks upset.
Senator Coleman. I respect that.
Mr. Noriega. But they all understand this is a very short
fuse and we need to start seeing some people arrive very, very
quickly. Some have said that they'll participate in current
deployment and others will participate in the longer term.
After about 3 months, we participated in a longer sort of
traditional U.N. peacekeeping-type operation. But the numbers
are anywhere from 5,000 in the current period and 7,000 offered
up over the longer period.
So we're going to have a robust presence and it's very
important that one of the first things they do is stand up the
Haitian national police to get some of these people who
abandoned their posts because they didn't want to die for
Aristide and to come back with the support of the international
community, start patrolling the streets, start manning their
police barracks again throughout the country. This will take a
period of time, but we think that this--we're confident that
this process can begin and it will be effective.
Haiti is, has always been under-policed, but we think that
this presence, the international presence, we can start to
stand up a Haitian national police to start to maintain order.
We have to do the basic things that were never done to make
Haiti more attractive to investment and trade. Our aid programs
need to continue in earnest and we need to look for additional
sums and sources of assistance to accompany this process.
All of this is underway. We have a meeting tomorrow at
Southcom to talk about the security component and USAID and
State have a working group to look at the long term--longer
term, medium and longer term aid program, what are the
priorities, how will we, what are we--what sorts of resources
we are going to bring to bear.
Something that might be of particular interest to Senator
Nelson is, I think a mistake that we've made in recent years in
Haiti is not involving the Haitian diaspora. So at 3 p.m.
today, I'm going to have a conference call with leaders of
broad, various groups of Haitian-Americans to get them more
involved in the process and encourage them to do what they can
do and to accompany us, inform our programs, and complement the
programs that we're going to have to strengthen Haitian society
across the board. And if Senator Nelson has any ideas of
particular organizations, if his staff wants to pass them,
we'll get them on this call today or reach out to them in the
future. Thank you very much.
Senator Coleman. I have a lot more questions about Haiti,
but we have an hour for this segment and the subcommittee will
have a hearing on Haiti at the end of next week, but clearly
there are a lot more questions. Just one narrow question. Are
we talking about using--reprogram existing funds for our
efforts or is there any funds to asking for additional funds
for Haiti?
Mr. Noriega. My sense is that we're going to see what we
can do with current resources, and if we need additional, if we
can justify it, we'll have to go up through our policymakers
and see if that's possible.
Senator Nelson. May I ask something of a clarification?
Senator Coleman. Yes.
Senator Nelson. Just on what Secretary Noriega has said. In
the last 2 hours, rebel leader Philippe is claiming that he is
in control of the Haitian national police. What is the opinion
of the U.S. Government?
Mr. Noriega. He's not. He's not the head of anything and
we've said----
Senator Nelson. Not the head of or in control of----
Mr. Noriega. Exactly. He's not in control of anything but
of a ragtag band of illegally armed persons. As the
international community presence has built up, we will make his
role less and less central in Haitian life, and I think he will
probably want to make himself scarce. But we have sent that
message, Senator, too, and without talking about anything that
might impact the security of our own forces on the ground, rest
assured that we have sent that message to him and he obviously
hasn't received it, but we'll be working with our military and
the military of others who have people on the ground to make
his presence in the capital less and less, has to do with use
the word necessary, but certainly he will want to make himself
scarce.
Senator Nelson. And that's going to come when? When are you
going to have sufficient troops on the ground in order that
that kind of claim rings home?
Mr. Noriega. Within the next few days, sir.
Senator Nelson. Would it be your pleasure to--I have a
couple of questions on Haiti, or do you want to go on to other
subjects and them come to me? What's your preference?
Senator Coleman. I'd like to--let me just get to a couple
of other issues and then we'll come back to you. Again, I think
it's important to touch upon some other areas, though clearly
the hot topic right now is Haiti and I respect that.
Administrator, now you talk about rule of law and obviously
that's absolutely critical to all of Latin America. We're not
going to get investment without rule of law. How do we
prioritize with all the needs that are out there? How are you
prioritizing what's the critical steps here you're trying to do
for--in terms of rule of law?
Mr. Franco. Well, in terms of rule of law, Mr. Chairman, we
prioritize things very much in line with what the President
outlined early on when he actually spoke about the Millennium
Challenge Account, and that is those countries that are
committed to an agenda to attack corruption. And our
investments, if you will, in terms of our development
assistance, are prioritized in those countries where we have
the leadership at the top for transparency to reform
governmental institutions, to insist upon a system that
respects the sanctity of contracts, and that have minimum equal
protections for citizens.
So our priorities are based on those countries that are
showing demonstrable progress and commitment at the top. I know
we are focused in on Haiti, and we should be, along with a
number of other places where we have difficulties. But we have
a good number of enlightened, committed leaders, I venture to
say virtually all of the leaders of Central America, and
President Uribe. So we have an opportunity in the region to
really bring about necessary reforms, and we are expanding
those programs and making those allocations based on
performance and commitment, and that's how we go about making
allocations.
Senator Coleman. Getting back, touching upon Haiti for a
second, but tying it to the rule of law and the economic
development question, in the present proposed budget there was
no funding in Haiti for economic support, ESF funds, nothing
international narcotics and law enforcement. With the change in
the political environment in Haiti, do you anticipate that
those funding requests will be revisited?
Mr. Noriega. I would expect that we will have to revisit
everything we've been doing on Haiti, because as you know, Mr.
Chairman, we had reoriented our programs to deal with non-
governmental organizations in all of the Haitian state. Our
ability to work with the police was severely limited because of
the narcotics corruption within the police and the
politicization of the police. That is going to change obviously
and we're going to have to find the resources to be able to
work with them.
Senator Coleman. Let me turn to Colombia briefly. I read
about another attempt on President Uribe's life just recently.
Two questions, one a political question. He suffered a setback
last fall in the referendum effort on the budget. An assessment
of his political situation today and then a second question
about our commitment to a plan in Colombia and your assessment
as to whether those funds are being well-spent and should we
keep proceeding in that direction.
Mr. Noriega. I think right after the fall of--the defeat of
this referendum on some reforms, he seized the initiative, he
made some changes in his government, he adopted some reforms
using executive authorities. I think he adopted some very bold
moves vis-a-vis the guerrilla organizations and I think he's
fully recovered, quite frankly, his political footing. He did
probably within a couple or 3 months of that, that setback, and
it's clear that he has the support of the Colombian people.
He's made some fiscal reforms that are absolutely necessary to
fund the programs, security programs that he has in mind.
I think that our decision to provide the bilateral trade
agreement has also been helpful to him. It gives some more hope
in terms of economic development and attracting investment. So
I think he has, he's fully recovered.
We've made significant strides on fighting coca
cultivation. We expect significant progress to continue in
making a real dent in the cultivation in the coca that's coming
out of the region. He's working better with his neighbors than
ever before, particular Ecuador. He's treating this
transnational threat as a shared one, where the United States
is not the only country that's helping him, but there's really
a regional--subregional support for his efforts.
We need to keep the pressure on. He recognizes that these
narcotics, the traffickers, and the terrorist groups work hand
in hand. The terrorist groups are more and more directly
involved in trafficking themselves, and so that by attacking
that, by applying a robust military pressure on these groups,
we're seeing more and more people deserting, thousands of
people from, for example, these AUC terrorist groups deserting
and saying they want to surrender.
And now he has to have--develop very effective,
comprehensive programs for disarming and resettling,
demobilizing those people, so that--I mean, that's actually a
good thing that he has this new task to take on, because it
shows that his policy of applying the rule of law is making a
difference. So it's making a dent in the security situation, in
the coca cultivation situation, in the rule of law, and in
Colombia's fiscal picture.
The economy needs to continue to grow and he understands
that, but I think he has a very effective strategy and we need
to stick with it obviously based on what our request is.
Senator Coleman. I have many, many more questions, but I'm
going to defer to my colleague, Senator Nelson, and if there's
any time left I may come back.
Senator Nelson. It's a tough subject to cram in in less
than an hour. First of all, I'm going to ask you a couple of
difficult questions, and if you cannot answer them, just tell
me that you can't answer them and I will respect that.
First of all, I think we would all agree that Aristide was
certainly lacking in leadership and clearly in some cases had,
if not himself corrupt, certainly the vestiges of corruption
around him. Going forward, and I made a speech on the Senate
floor in which I just poured my heart out yesterday, the United
States is going to have to be involved, and you two are in a
position to make a difference, and I hope that it's going to
be--the last 2 years of the Clinton administration it was
dropping in support for such things as economic support,
military assistance, food aid, Peace Corps, dropping from $83
million to $73 million. The first year of the Bush
administration, $55 million went up to $71 million down to $54
million in its present fiscal year, and next year it's
estimated at $54 million. That's not going to cut it for us to
establish the institutions, help them, pick them up by the
bootstraps, right.
Those are not the questions. That's what we all agree. And
this Senator is going to try to help you, because that's what
we've got to do. What I want to ask you about is the policy,
since we've been talking about rule of law, the policy of the
U.S. Government of a regime change. Now, the first question I
want to ask is, I want you to tell me what was the Santiago
Declaration in 1991?
Mr. Noriega. The Santiago Declaration was Resolution 1080
of the foreign ministries meeting there of the General Assembly
meeting there.
Senator Nelson. And what did it say?
Mr. Noriega. That said that a government that comes to
power through a sudden or irregular interruption in
constitutional order, that we would have a meeting of foreign
ministers for the purposes of addressing this, for sudden or
irregular interruption in constitutional order.
Senator Nelson. And was it followed by the Inter-American
Democratic Charter in 2001?
Mr. Noriega. Yes, sir.
Senator Nelson. And what did that say?
Mr. Noriega. That defined what the essential elements of
democracy were and it set up a system where the inter-American
community agreed to work together to support countries in
overcoming threats to these essential elements of democracy.
A key element it included was a self-help mechanism where a
country could ask for support, article 17, where a country
could come and say, my institutions are under threat.
Interestingly enough, President Aristide never used that
mechanism.
Senator Nelson. Did it not say that a democratically
elected government in the Western Hemisphere, when calling upon
another democratically elected government, that one would come
to the aid of the other?
Mr. Noriega. It did. In a general sense it said that we
would support one another and it's interesting again that
President Aristide never invoked article 17. I have a feeling I
know why, because he felt that he would become accountable for
his lack of respecting the essential elements of democracy, so
they studiously resisted invoking article 17.
Senator Nelson. So all the calls that he made, whether we
agree or not, which I think we know that he was a bad actor,
all the calls that he made internationally calling for help,
our U.S. Government interpretation of both of those documents,
which would have the patina of the rule of law, was that we
were not going to come to the aid of that democratically
elected government.
Mr. Noriega. Senator, we were confronted with a very
difficult situation. We knew that he was a constitutional-
elected--constitutional President. The election has--it's
barely an election, but I think maybe 8 percent of the people
voted, but we knew--we recognized him as a constitutional
President.
But we also knew a few other things about him from
experience. I was working for the State Department in 1991 when
it was a part of our policy to put him back in power, and since
then we've watched him sow the seeds of the disaster that fell
upon him. We saw him undermining basic institutions,
undermining the security apparatus with drug corruption,
putting his thugs in charge of the Haitian National Police, and
this eventually made the HNP, the Haitian National Police fall
apart.
Senator Nelson. Here's what worries me, since we're talking
about the rule of law, that in our judgment we will suspend two
declarations, one in 1991 and another one in 2001 at our own
interpretation when another democratically elected government
calls on our help. And not only that, that we don't respond,
but that we respond in a way that the outcome is inevitable,
which in my discussion across a witness table with Secretary
Powell last week, I said the abdication was foretold, that the
way we were withholding any kind of support.
And it's not the question of the purse, Secretary Noriega.
It's the question of the process and the rule of law. And, Mr.
Chairman, as we get into the hearing on Haiti, I want to
continue with that, because what we want to protect more than
anything in our country is that we not rule by men and women,
but that we rule by law.
Mr. Noriega. Mr. Chairman, Senator, I want to point out
that there is a constitutional process underway, a new
President is sworn in. The last one resigned, notwithstanding
what he's saying now, he resigned. It's interesting to note
that 3 days ago when people were clamoring for us to go in, we
would have been going in to prop up a person who is now
accusing those same people of having kidnaped him. It shows in
spectacular relief that he was an irresponsible, untenable
leader.
We have an obligation to recognize him as a constitutional
leader, but we do not have an obligation automatically to put
American lives at risk to prop him up. The international
community has moved in to support the constitutional succession
that's underway. I described the policies of President
Aristide, and I think this question boils down to whether it is
better to have the international community keeping thugs in the
national palace 3 days ago, or keeping them out of the national
palace today, and it boiled down to that.
Senator Nelson. Well, if we don't watch out, thugs who are
taking over Port au Prince right now will be in the national
palace if we don't get down there. And, Mr. Chairman, my
question obviously needs to be explored, because if Haiti, why
not Venezuela in a regime change as a policy of the United
States Government? And that's something that shakes the very
legal foundations of this country.
Senator Coleman. Senator Nelson, I appreciate your
comments. I would note we do have a hearing scheduled on March
10. I would suggest, and I think it's quite obvious, that your
decisions are going to have to be made way in advance of March
10 addressing some of the concerns that you've just raised. I
anticipate that there's a lot of thought going into that right
now.
This hearing is scheduled from 12 to 1, to 1 to 2. With
that, I will adjourn this portion of the Foreign Relations
Committee review of the President's budget and I want to thank
the witnesses for your testimony. I look forward to future
conversations. There were many, many, many questions and areas
unexplored. I am hopeful that we'll have some other opportunity
to do that.
Mr. Noriega. Senator, if you'd like to submit questions for
the record, we'll be glad to----
Senator Coleman. I anticipate we will do that. This portion
of the hearing is adjourned.
[Recess from 2:02 p.m. to 2:06 p.m.]
Senator Alexander [presiding]. Good afternoon. The hearing
of the Committee on Foreign Relations is called back to order.
This is an important day for us as a continuation of our
hearing on foreign aid. The next hour we're going to discuss
sub-Saharan Africa.
Senator Feingold, who's very active on the subcommittee, is
not here right now. Hopefully he'll be here, maybe he won't.
They're in the Budget Committee this week getting things put
together, so we'll certainly understand if he can't come.
I might add last night I had a chance to have dinner with
President DeKlerk who was in town talking about some of his new
initiatives, which was a very interesting experience for me. We
talked a good deal about the world, but also of course about
sub-Saharan Africa.
Our most commonly employed foreign policy tool is foreign
aid, and so it makes a big difference in what we do in sub-
Saharan Africa. This is an area of increasing interest to the
United States because of the President's interest. A lot of us
can be interested, but when the President takes an interest,
the world takes more of an interest, and the President's focus
along with that of the U.S. Congress on HIV/AIDS, on the
development of democracies in Africa, on conservation in
Africa, all those things have caused, I think, Americans to
become more familiar with it and our Congress to be more
interested in this tremendous continent.
Rather than my making an opening statement, I think we'll
make better use of our time if I ask the witnesses to make
their statements and then that'll leave me time for questions,
or if Senator Feingold comes he'll have a chance to ask
questions and make comments as well.
We have two administration witnesses today, Don Yamamoto,
whom I first met 20 years ago when he worked for Ambassador
Mansfield in the U.S. Embassy in Japan and I was traveling
there every year recruiting Japanese industry for Tennessee.
He's Deputy Assistant Secretary of State for African Affairs.
He's filling in for the acting Assistant Secretary, Charlie
Snyder, who I understand is out of the country.
Connie Newman, the USAID Assistant Administrator for Africa
since 2001. We served together in the first Bush administration
a few years ago where she was the Director of the Office of
Personnel Management.
I want to welcome you both, and Mr. Yamamoto, why don't you
go first, and then Ms. Newman. Say what you'd like to say and
then we'll have a conversation about that.
STATEMENT OF DONALD Y. YAMAMOTO, DEPUTY ASSISTANT SECRETARY OF
STATE, BUREAU OF AFRICAN AFFAIRS
Mr. Yamamoto. Thank you very much, Mr. Chairman, and
members of the committee, and it's indeed a great honor to be
invited here today to testify before you on the Department of
State's budget priorities. I will summarize my statement and
submit the rest of it for the record.
The State Department's $1.6 billion budget request for sub-
Saharan Africa will contribute to meeting our national
strategic interests of security and economic prosperity by
addressing five core goals in Africa, and they are: enhancing
the region's capacity to fight terrorism; promoting private
sector-led economic growth, reducing regional conflicts and
promoting regional stability; promoting good governance,
democracy, human rights, and the rule of law; and finally,
improving health care, education, and the environment.
We are doing this because what happens in Africa matters to
the United States and significantly affects our interests. We
are in partnership with many African nations to combat
terrorism, a threat to U.S. national security interests as well
as to African stability.
Africa provides 15 percent of our oil needs, possess
abundant natural resources, and holds commercial opportunities
for U.S. investors who have already invested some $340 million
in the past 3 years. The HIV/AIDS crisis affects sub-Saharan
Africa like no other region in today. Twelve of the 15 focus
countries in the President's emergency plan for AIDS relief are
in this region, and the administration has requested a total of
$2.8 billion in fiscal year 2005 to combat global HIV/AIDS,
tuberculosis, and malaria.
Of that request, $1.45 billion will fund activities in the
focus countries to expand comprehensive and integrated
prevention, care, treatment programs. It is vital to the U.S.
interests and to the health and well-being of our citizens that
we defeat this plague.
The fiscal year 2005 request also helps the United States
support African efforts to protect its rich biological
diversity and improve natural resource management with such
programs as the Congo Basin Forest Partnership.
Unless we mitigate the political, social, and environmental
crises that plague the African Continent, these countries will
not be able to participate effectively in the global community
of nations. The result will be chronic poverty and unrest that
undermines stability, creates havens for criminal elements and
terrorists and others would threaten the United States'
interests.
We will face continued political unrest and humanitarian
crises, health problems that will replicate more quickly in the
United States, and irreplaceable environmental resources that
can help fight some of these problems will also be lost.
Fortunately, there are reasons for optimism. Several
African states are market-oriented democracies and many others
are on the right road. Our assistance to sub-Saharan Africa has
helped them resolve conflicts, strengthen democratic
institutions, and create market economies. A robust public
diplomacy program underscores our effort to strengthen ties and
raises awareness of the various ideals that the African people
share with the United States.
In sum, our budget proposals will send the important
message to our African partners that our priorities in Africa
remain consistent and that our shared commitments to security,
economic development, reform, and progress remain strong. This
message reinforces our political, economic, and security
interests.
And, Mr. Chairman, I thank you and your committee's
interest in sub-Saharan Africa, and you, Senator, for your
personal support and interest. Thank you.
[The prepared statement of Mr. Yamamoto follows:]
Prepared Statement of Donald Y. Yamamoto
Mr. Chairman and members of the committee, thank you for inviting
me to testify on our budget priorities for sub-Saharan Africa in
FY2005. The African Continent faces today, as it has in years past,
many grave challenges. Terrorists have hit targets in Africa and states
that are willing to confront terrorism often lack the means to do so.
Serious conflicts that, while in some cases are close to resolution,
remain a threat to stability. Soaring HIV/AIDS rates, hunger, and
drought are crippling Africa's nations, while corruption, regional
conflict, and human rights abuses threaten to undermine the progress we
have made to enable African governments to fulfill the potential that
exists in their people and natural resources.
Our $1.6 billion FY2005 budget request addresses the most urgent
concerns facing U.S. interests in Africa today and funds several
programs that specifically seek to empower African governments'
capacities to respond to emergencies and long-term problems. This
request includes $101 million in Economic Support Funds (ESF), $22
million in Foreign Military Finance (FMF), $11 million in International
Military Education and Training (IMET), $60 million in Peacekeeping
Operations (PKO), and nearly $1 billion in Child Survival and Health
(CSH) and Development Assistance (DA) monies. My colleague USAID
Assistant Administrator Connie Newman will address the details of
development assistance in her testimony.
We are making this request because events in Africa affect the
interests of the United States. For sub-Saharan Africa, our five most
important goals are to: increase African capacity to fight terrorism;
promote private sector-driven economic growth; reduce regional
conflicts while increasing African capacity to respond to
contingencies; promote democracy, human rights, rule of law, and good
governance; and improve the health and well-being of Africa's people
and environment.
These priorities reflect the reality that Africa's problems are
increasingly linked to our own and to those of the international
community. Corruption, civil unrest, and poor governance weaken states
and prevent them from addressing the most critical needs of their
people. In many cases around Africa, central governments have no or
little ability to govern large portions of their territories. Weak,
failing, and failed states breed chronic poverty and serve as potential
havens for terrorists and terrorist networks that seek to attack the
United States, its interests abroad, and its allies. Yet terrorists are
not the only entities that take advantage of porous borders and weak
governments in Africa. Disease, drug trafficking, and the spread of
illicit arms constantly threaten to move among Africa's states and
travel to other continents. Even human rights and environmental abuses
on African soil have repercussions for the international community at
large.
Our assistance to sub-Saharan Africa benefits U.S. security. Many
sub-Saharan African nations are solid allies in the Global War on
Terrorism, and our partners in the region gladly embrace U.S. counter-
terrorism programs and training. The potential need for hosting forward
operating sites for U.S. and coalition forces, and an existing
willingness to apprehend terrorist suspects are advantages of
maintaining strong ties with responsible governments in Africa. The
President's FY05 request for assistance to sub-Saharan Africa
simultaneously addresses terrorist threats to the United States through
counter-terrorism programs, while also empowering these governments to
address their own economic, social, and security needs, thereby
reducing opportunities for terrorist networks to take hold. Our public
diplomacy efforts in the region work to strengthen these ties and raise
awareness of the values and ideals African people share with Americans,
increasing understanding and support for U.S. foreign policy objectives
and utilizing modern technology to reach wider audiences. The State
Department request for African public diplomacy (programs and non-
American salaries, but not exchange programs) in FY05 is just over $20
million. In addition, the Bureau of Educational and Cultural Affairs
has indicated it expects to fund educational and cultural programs in
Africa in FY05 at approximately the FY04 level, that is $35 million.
U.S. leadership is critical to Africa. To cite one example, in
Liberia, the United States has played a crucial role ensuring that
country's transition to democracy. Following the removal of Charles
Taylor from power and the end of more than 15 years of civil unrest and
violence, Liberia today has a promising chance for a better future.
Congress's appropriation of $200 million in FY04 supplemental funding
for Liberia reconstruction and $245 million for CIPA to support the UN
Peacekeeping Mission in Liberia (UNMIL) is playing a critical role in
Liberia's reconstruction. U.S. assistance to Liberia goes beyond our
economic pledges--this Administration has played a leading role in the
international community's overall response to the Liberian crisis, co-
hosting last month's Liberia Reconstruction Conference with the UN and
World Bank, and coordinating international efforts to reform Liberia's
security sector.
However, Liberia's success does not depend only on efforts from
outside Africa. It is the responsibility of African people to address
their problems. Chairman Gyude Bryant of the National Transitional
Government of Liberia said it himself at the recent reconstruction
conference: Liberia's stability and security depend foremost on the
actions of Liberians and their ability to effectively and transparently
use the aid the international community is willing to provide. Just
across Liberia's borders, its neighbors have an important role to play
too. Individual neighboring states like Sierra Leone and Cote d'Ivoire
must work to contain their own conflicts, while sub-regional
organizations like the Economic Community of West African States
(ECOWAS) must continue to display strong leadership through effective
peacekeeping operations.
The President's budget request for the State Department, USAID, and
other agencies working on assistance to sub-Saharan Africa addresses
this need to build the capabilities of individual governments and
African regional organizations.
The Bureau has requested a total of $84 million in bilateral ESF
funding in FY 2005 for 12 focus countries. These include five countries
(Djibouti, Ethiopia, Kenya, Nigeria, and South Africa) identified as
strategic--due to their size, economic power, military strength,
importance to counter-terrorism initiatives, or ability to have either
a significant impact on their region. Our assistance to the additional
seven other focus countries (Angola, Burundi, the Democratic Republic
of Congo, Liberia, Sierra Leone, Sudan, and Zimbabwe) will bolster
efforts to resolve serious and generally long-running conflicts or
instability. In the case of Zimbabwe, ESF will of course be aimed at
bringing democracy to this nation that once gave so much promise, but
which has been so badly misgoverned.
Our remaining requested ESF funds ($17 million) are for three
regional programs: the Africa Regional Fund, Safe Skies for Africa
(SSFA), and regional organizations. The Africa Regional Fund ($11
million) strengthens the rule of law, promote trade and investment, aid
judicial reform and the development of civil society, improve
administration of borders, combat money laundering, and support African
efforts to manage its environment and natural resources. Through the
SSFA program ($5 million), we will continue to enhance airport security
in order to promote U.S. investment opportunities and combat
international crime and terrorism. Some $1 million in assistance will
help strengthen the capabilities of regional organizations in Africa,
including the African Union, the Southern Africa Development Community
(SADC), and ECOWAS. ESF will finance initiatives and programs that
contribute to regional and global economic integration, especially
programs to open markets and harmonize tariff structures.
Strengthening the capabilities of key African states to combat
terrorism is one of our highest priorities. The President announced his
$100-million East African Counter Terrorism Initiative (EACTI) last
June, which funds 14 programs designed to train and engage East African
governments in intelligence sharing, limiting free movement of
terrorists, augmenting host nation security forces, countering
extremist influence, and disrupting terrorist financing networks. These
programs are up and running and build a strong foundation for continued
U.S. engagement to strengthen our African allies' capacity to fight
terrorism in the region. Moreover, DA and ESF funds serve our interests
by promoting the well-being of African citizens and encouraging
goodwill toward the United States. East Africa's proximity to the
Arabian peninsula, its large Islamic population, history of terrorist
attacks, and the failed state of Somalia all underscore credence to the
necessity of prioritizing this sub-region in our Global War on
Terrorism. Roughly half of our $22 million request for FMF funds is for
EACTI countries, which will also receive significant ESF funds in the
President's 2005 request.
Economic prosperity is another key U.S. goal in Africa. In FY05,
the Africa Bureau will continue to encourage African governments to
pursue economic reforms, establish sovereign credit ratings, and
develop functioning capital markets in order to enhance growth in the
private sector. As our trade and commerce with the African region
expands, it is critical that economic growth on the continent continue
to grow. The President's FY05 budget reflects the Administration's
belief that economic growth in Africa is linked to creating
opportunities for private sector activities and reinforcing successful
government policies.
In three years, the African Growth and Opportunity Act (AGOA) has
helped to create more than 190,000 jobs and $340 million in new
investment in Africa, while also spurring broader economic reforms and
building favorable political will among Africans toward the United
States. AGOA sets high standards for market-based economies and
progress on democratization and human rights issues. Some 37 countries
in sub-Saharan Africa were AGOA-eligible for 2004, and we hope more
will meet eligibility criteria in 2005. The State Department welcomes
Chairman Lugar's recently introduced legislation to extend AGOA until
2020, and we look forward to working with Congress to develop the
specific provisions of that legislation.
We also welcome Congress's authorization of the Millennium
Challenge Account, a performance-based program administered by the
newly formed Millennium Challenge Corporation (MCC). The MCA aims to
reduce poverty by spurring economic growth. The MCC will provide
funding to poor countries around the world that have demonstrated their
commitment to governing justly, investing in their people, and
encouraging economic freedom. We expect the MCC Board in May of this
year to identify countries to participate in MCA, and anticipate that
some African countries will qualify for support. The total FY05 MCC
request is $2.5 billion.
Promoting regional stability is one of our top priorities in FY05,
and this budget request will help advance our diplomatic initiatives in
Liberia, Sierra Leone, Sudan and elsewhere continue moving those
countries toward a more promising future. Over the years we have
learned that regardless of location, in anywhere in the world chaos
breeds more chaos, and that stability promotes more stability in
neighboring countries. At the Liberia Reconstruction Conference last
month, we heard the same message again and again from our allies, UN
Secretary General Kofi Annan, and Liberia's leaders themselves:
Liberia's successful transition to peace and democracy depends on
stability in Guinea, Sierra Leone, and Cote d'Ivoire. Instability
spills over borders, triggers fighting among African governments, their
proxy forces, and rebel groups, putting their populations at risk and
creating millions of refugees and internally displaced persons.
Problems persist in Africa, with some long-time conflicts simmering
just below the point of open hostilities, yet refusing to reach a
peaceful conclusion. Ethiopia and Eritrea, to cite one example, remain
on the verge of renewing their bloody border dispute, despite the best
efforts of the international community and African leaders to outline a
path toward peaceful resolution. We have held numerous meetings with
Ethiopian and Eritirean representatives in Washington and in the
region. In addition to our ambassadors pressing each side to meet their
obligations under the Algiers Agreement, I have traveled personally to
the region twice to deliver the same message to Ethiopian Primer
Minister Meles and Eritirean President Isaias. The United States also
publicly supports the efforts of United Nations Secretary General Annan
to appoint a Special Envoy to help effect the demarcation of the
border. Despite these efforts, the situation remains tense and the
prospects of a durable peace uncertain.
But elsewhere on the continent, the pieces of stability are slowly
falling into place. Our work to build peacekeeping capabilities with
the African Contingency Operations Training and Assistance (ACOTA)
Program continues. We have requested $15 million to support ACOTA in
FY05. The nearly $11 million in IMET funds the President has requested
for sub-Saharan Africa will help us train Africa's armies to handle the
stewardship of African stability. These funds will help African
militaries contribute to the democratic evolution of their societies by
thwarting or not conducting coups and avoiding human rights violations.
In West Africa, our work with ECOWAS to increase its conflict
resolution and peacekeeping capabilities has led it to become a key
player in coping with African crises. ECOWAS troops have been central
participants in restoring and maintaining order in Sierra Leone,
Liberia, and Cote d'Ivoire. Nigeria has proven itself to be a very
helpful partner who is willing to respond to help smooth instability in
West Africa. A final, comprehensive peace agreement in Sudan is
agonizingly close, and the instability that emerged in Cote d'Ivoire is
now largely contained.
In Central Africa, we have seen significant progress toward
resolving long-running conflicts in the Democratic Republic of the
Congo and Burundi. In Congo, despite continuing violence in the east,
former combatants have come together to establish a transitional
government of national unity and elections are planned for next year.
In Burundi, where elections are planned for this fall, the largest
rebel group has joined the government. Only one rebel group in Burundi
remains outside of the peace process.
To continue our work mitigating civil strife and violent conflict
in Africa, our budget includes funding requests to promote good
governance, the rule of law, respect for human rights, and increased
democratization. In FY05 and beyond, the Africa Bureau will work to
increase the number of states with effective legislatures, independent
judiciaries, and active civil societies. In our ESF Africa Regional
Fund, we have requested funding for programs to promote democracy and
human rights programs in countries that are not included among the 12
focus countries, including those that currently lack a USAID presence,
such as The Gambia, Togo, and Niger. These funds also include a request
for $2-$3 million to increase the capacity of the Rwandan judicial
system to prosecute genocide cases transferred from the International
Criminal Tribunal for Rwanda and for investigation and prosecution of
other crimes against humanity committed in 1994.
The HIV/AIDS crisis affects Africa like no other region in the
world today. Of the estimated 40 million people infected with HIV
worldwide, more than 25 million live in Africa. The President's
Emergency Plan for AIDS Relief (PEPFAR) is the largest international
initiative ever dedicated to combat HIV/AIDS-related health issues. The
Administration released a five-year strategy to implement the Plan on
Feb. 23 and set out how it intends to achieve the Plan's ambitious
targets, both in the 15 focus countries, which represent at least 50
percent of HIV infections worldwide, and in more than 100 countries
throughout the world. Twelve of these focus countries are in Africa.
Moreover, the President has requested a total of $2.8 billion in FY
2005 to combat global HIV/AIDS, tuberculosis and malaria. Of that, the
Administration has requested $1.45 billion to fund activities in the
focus countries under the Plan to expand comprehensive and integrated
prevention, care, and treatment programs. The bulk of those resources
would be devoted to African countries. Some $1.2 billion would be used
to continue and strengthen HIV/AIDS, tuberculosis and malaria in many
other countries throughout Africa and $200 million is requested to
continue our support to the Global Fund to Fight AIDS, Malaria and TB.
CSH and DA funds account for more than half of our request for sub-
Saharan Africa-related programs, with $478 million and $499 million
requested in FY05, respectively.
The President's budget supports African efforts to promote improved
health systems, build human capacity in the health field, and work to
prevent the spread of other infectious diseases. The budget will also
support efforts to enhance food security, promote broad-based economic
growth, increase access to basic education, primarily for girls, and
promote responsible use of natural resources. The centerpieces of the
FY 2005 DA/CSH program continue to be the four initiatives launched in
FY 2002--the Initiative to End Hunger in Africa (IEHA), the Trade for
African Development and Enterprise (TRADE) Initiative, the Congo Basin
Forest Partnership (CBFP), and the President's Africa Education
Initiative.
The FY05 request will help the United States support African
efforts to protect its rich biological diversity and improve natural
resource management in areas such as the Congo Basin. Poor conservation
practices and conflict over resources undermine stability and hamper
prospects for economic growth. We will use our resources to help Africa
achieve more sustainable use of natural resources, protect habitats and
species, promote involvement of all stakeholders in decision-making,
build local capacity, and create economic opportunities for communities
that will promote and reinforce conservation efforts.
Mr. Chairman, I thank you for your and this committee's ongoing
interest in Africa. I would be pleased to discuss our budget request
and other issues of concern with you and members of the committee at
this time.
Senator Alexander. Thank you.
Ms. Newman.
STATEMENT OF HON. CONSTANCE BERRY NEWMAN, ASSISTANT
ADMINISTRATOR FOR AFRICA, USAID
Ms. Newman. Yes, Mr. Chairman, I am most pleased to appear
here before your committee to discuss the fiscal year 2005
foreign affairs budget for Africa. Africa's future continues to
look brighter. That's contra to what is often covered in the
media, and this can be shown in terms of measurable progress in
several indicators, economic, political, and social since the
beginning of the millennium.
New avenues for growth are emerging. There's greater
political stability in parts of the continent as lengthy
conflicts are being resolved, and many of the countries are
beginning to adjust their priorities to take advantage of
expanded opportunities.
What is also worthy of note is the change in the policy
environment on the continent affecting the region because
leaders of the region have put forth a New Partnership for
Africa's Development, NEPAD it's called, which does provide a
positive framework for good governance as a guiding principle.
It is a Road Map. There's a key litmus test though for NEPAD,
and that will be the completion of the peer review, political
and economic, and the corporate governance. Seventeen countries
have agreed to take part in this, and the United States
continues to affirm its endorsement of NEPAD, but we'll be
watching the impact of this peer-review process.
The positive trends in my submitted testimony cover
cessation of major conflicts, spreading of democratic values,
promising news in the fight against HIV/AIDS, the President's
initiative, the $15 billion that was mentioned earlier.
Despite these positive trends, however, sub-Saharan Africa
continues to face enormous development challenges. It remains
the world's poorest region, with half of its population of 690
million living on less than $1 per day. The food security
situation remains precarious in many parts of the region, and
as a matter of fact, if the United States had not intervened in
Ethiopia and southern Africa in the last year and a half, there
would have been humanitarian disasters there. Education levels,
particularly for girls, are the worst in the world.
So while some of the key indicators have improved, we have
to say that the HIV/AIDS pandemic has compromised the efforts
to combat other diseases, reduce life expectancy, and has an
impact on every sector. Major challenges remain as the region
contains 45 percent global biodiversity, yet has the highest
rate of deforestation in the world. And it's also true that
Africa is urbanizing at the highest rate in the world, creating
new environmental challenges. Finally, conflict and a difficult
transition to stability in post-conflict states still exact a
huge toll on politically fragile democracies.
I'm just going to take my remaining moment to highlight six
ways in which USAID and this request intend to respond to the
challenges of the continent, and I will do this in the context
of the joint Department of State/USAID strategic plan and the
administration and congressional initiatives that complement
core programs.
Initiative to End Hunger in Africa. This 5-year program
launched in 2002 is designed to harness science and technology,
to unleash the power of market forces, and to increase small
holder productivity. It's designed at the local level to stress
that better quality control, wider access to rural finance,
stronger producer associations will lead to, can lead to
greater food security. The request in this budget is for $44.5
million for that effort.
The trade initiative, a 4-year, $70 million initiative, is
promoting U.S.-African business linkages. It's designed to
inform the governments and the businesses how to alter their
regulatory environment in order to encourage foreign direct
investment, in order to encourage a greater trade between
Africa and the rest of the world. We've established three hubs,
one in each of the regions, so this request is to help us
strengthen those hubs so that technical assistance can be
available to the people on the continent to improve economic
growth and trade.
The education initiative, a third initiative of the
President, is centered on improving the quality of the
teachers; providing scholarships for girls, 250,000 of them;
$4.5 million for much-needed textbooks; and training for
teachers, who unfortunately represent one of the professional
groups hit the hardest by HIV/AIDS.
The Congo Basin Forest Partnership, the centerpiece of
USAID's efforts in the environmental sector in Africa is this
partnership, 3-year, $53 million effort that I know you know
about because of your legislation. We are prepared to convince
you that we're moving steadily into implementing the
partnership agreement and that already people are beginning to
feel that the communities and the countries in which the forest
exist will have a turnaround in terms of protecting the
environment.
The fifth is the President's Emergency Plan for AIDS
Relief, his response to the pandemic, and I won't take time on
this because the Ambassador has talked about it. The only thing
I do want to say is that the approach being followed is one
that has been successful in Uganda, so that there is a great
emphasis on ``ABC.'' There is evidence to show that prevention
is key to turning the numbers around so that in every instance
the programs are stressing abstinence, be faithful, and correct
and consistent condom use.
There's also call for voluntary counseling and testing care
for people living with AIDS, including anti-retroviral therapy,
and then there are the programs begun under the prevention of
mother to child transmission, so that the President's
initiative, which is, as we all know, the largest in the world,
is designed to follow what has been shown to have worked in the
past.
Finally, we have in the budget a request for anti-conflict
and anti-corruption efforts. There is no question but that
conflict and corruption have a negative impact on development
throughout the continent, and unless these activities are
turned around, unless citizens become more aware, unless
government is more transparent and the people are held
accountable for the governments on the continent, all the work
that we will do will be for nought. So it is in our view that
this proposal, and probably a number to come, should include
plans for anti-corruption and anti-conflict activities.
So I thank you very much and look forward to your
questions.
[The prepared statement of Ms. Newman follows:]
Prepared Statement of Hon. Constance B. Newman
Africa Overview
THE DEVELOPMENT CHALLENGE
Background
Mr. Chairman and Members of the Committee, I am pleased to appear
before your committee to discuss the President's FY 05 foreign affairs
budget for Africa. Africa's future continues to look brighter as the
region has achieved measurable progress in improving several important
indicators of economic, political and social development since the
beginning of the millennium. New avenues for growth are emerging as key
countries in the region move toward greater political stability, as
lengthy conflicts are being resolved, and as many countries continue to
adjust their policies and priorities to take advantage of expanded
opportunities created through globalization.
What happens in Africa is of concern to the United States and our
engagement addresses U.S. interests. The overarching goals of U.S.
policy in Africa are to: enhance African capacity to fight terrorism;
create favorable conditions for U.S. and African trade and business
opportunities while developing the foundation for sustained growth;
reduce regional conflicts while increasing capacity to respond to
contingencies; promote democracy, human rights and good governance; and
improve the health and well being of Africa's people and environment.
A change in the policy environment affecting the region is the
African Union's New Partnership for Africa's Development (NEPAD),
launched in 2001, that provides a positive framework and good
governance as a guiding principle for development in Africa. NEPAD is
deepening its support among African government leaders and its road map
for African development is gaining wider credibility. A key litmus test
will be the completion of peer reviews of political, economic and
corporate governance in those seventeen countries that have now agreed
to undertake the process. The United States continues to affirm its
endorsement of NEPAD.
Of the many positive trends in Africa during the first years of the
decade, perhaps the most significant has been the cessation of major
conflicts in Angola, Sierra Leone, Liberia, the Democratic Republic of
the Congo (DRC), Burundi and Sudan, conflicts that had sapped the
vitality of much of the continent. As these countries become more
politically stable, the prospects for increased economic growth and a
better standard of living for their citizens are much enhanced and
their recovery will have beneficial repercussions for the entire
continent.
The spread of democratic values is also a positive sign for
improving the living standards of millions of Africans. The rapid
growth of new communications media and expansion of a free press have
empowered civil society to hold governments more accountable for their
actions and made ordinary citizens increasingly aware of their basic
human rights. Nigeria, Africa's most populous country, took a major
step forward in 2003 with free elections and the new governments in
Kenya and Zambia have taken very positive strides to address the
rampant corruption that had colored the previous administrations.
According to Freedom House, over the last decade, the number of free
democracies in Africa has almost tripled from four to 11 and more than
half of the countries in the region are in the transition process
toward full and free democracy.
There is extremely promising news in the fight against HIV/AIDS.
The President's Emergency Plan for AIDS Relief (PEPFAR), which proposes
$15 billion over a five-year period for prevention, treatment and care,
combined with an unprecedented international commitment to increasing
resources, now offers real hope that serious inroads can be made
against the spread of HIV/AIDS.
Several key indicators of economic growth also create room for
optimism. GDP growth in Africa remained constant at 3.2% between 2001
and 2002, despite the worldwide economic slowdown, and is projected to
increase to 3.8% in 2004, higher than all other developing regions
except East and South Asia. Sub-Saharan Africa had the highest returns
on net foreign direct investment of any region in the world in 2001.
Despite these positive trends, sub-Saharan Africa continues to face
enormous development challenges. It remains the world's poorest region,
with half of its population of 690 million living on less that $1 per
day. Of the 32 countries with the lowest levels of human development,
24 are in sub-Saharan Africa. While economic growth trends in many
countries are positive, with an overall regional population growth of
2.4% a year, achieving the Internationally Agreed Development Goal of
reducing poverty levels by 50% by 2015 will require almost a doubling
of current rates, to 6% a year. This represents a formidable challenge,
but it is nonetheless possible, provided encouraging trends continue in
democratic governance and economic policy reform, conflicts are
mitigated or resolved, natural and man-made disasters are managed
effectively, economies diversify from over-dependence on agricultural
production, trade continues to expand and the spread of the HIV/AIDS
pandemic is slowed.
The food security situation remains precarious in many parts of the
region--only a massive intervention by the international community
averted a humanitarian disaster in Ethiopia last year and significant
levels of food assistance were required in much of southern Africa.
There are early indications that food security may continue to be
problematic in the southern Africa region this year. Education levels,
particularly in the rural areas and for girls, remain well below world
standards and despite the rapid growth of information and
communications technology (ICT), the digital divide between the region
and the rest of the world remains vast. While some key indicators of
health have improved, the HIV/AIDS pandemic in many countries has
compromised efforts to combat other diseases and has dramatically
reduced life expectancy. The shrinking labor pool caused by AIDS will
slow the continent's economic growth by as much as 2% a year. Gender
inequities, such as access to credit and inheritance rights, remain a
serious development constraint. Finally, conflict and the difficult
transition to stability in post conflict states still exact a huge toll
on politically fragile democracies.
Meeting these challenges will require redoubled efforts on the part
of African governments, civil society and the international community
across a broad spectrum: increasing agricultural productivity;
preserving the richness and diversity of Africa's natural resources;
broadening the economic base; improving the competitiveness of African
products; building human capacity at all levels; expanding ICT
networks; improving the enabling environment for increased trade and
investment; curbing the spread of HIV/AIDS, malaria, tuberculosis and
other infectious diseases; increasing African capacity to deal
effectively with natural disasters; and improving the transparency and
accountability of government. USAID will structure its assistance
programs to take advantage of its inherent strengths in addressing
these challenges.
THE USAID RESPONSE
FY 2005 Program
The proposed FY 2005 USAID program for sub-Saharan Africa will
support a broad range of programs which address the most pressing of
the regions' development challenges. In FY 2005, the Agency proposes to
invest $1.028 billion in development assistance, child survival and
health, and PEPFAR funding in Africa, approximately the same as in FY
2004 ($1.020 billion). The PEPFAR funding will be programmed through
the Office of the Global AIDS Coordinator at the Department of State.
USAID anticipates that it will be one of the key implementing agencies
for PEPFAR. USAID programs in Africa will contribute directly to the
priorities outlined in the joint State/USAID Strategic Plan for FY
2004-2009, particularly those which advance sustainable development and
global interests, including regional stability and counterterrorism.
The centerpieces of the FY 2005 program continue to be the four
Presidential Initiatives launched in FY 2002; the Initiative to End
Hunger in Africa (IEHA), the Trade for African Development and
Enterprise (TRADE) Initiative, the Congo Basin Forest Partnership, and
the Africa Education Initiative (AEI), as well as PEPFAR, a five year
initiative launched in FY 2004. Other key elements of the program
include the continuation of the African Anti-Corruption Initiative, the
Africa Conflict Initiative and the Leland Initiative to increase the
spread of and access to information and communications technology.
Agriculture
Agriculture is the mainstay of most sub-Saharan economies,
supporting over 70% of the population and contributing an average of
over 30% to GDP. Increasing agricultural productivity is therefore
critical to the region's efforts to achieve food security and to reduce
poverty levels. Despite the adoption by many countries of policies to
stimulate rural agricultural-led growth, agricultural yields in Africa
remain the lowest in the world and per capita food production has
actually declined to 1980 levels. The major constraints to increasing
agricultural productivity include low usage of improved technologies
and information, limited access to credit, inefficient land use, market
distortions which discourage production, poor rural infrastructure and
the debilitating effects of the HIV/AIDS pandemic. The flagship of
USAID efforts in the agriculture sector is the Initiative to End Hunger
in Africa (IEHA), a five-year program, launched in August 2002,
designed to harness science and technology and unleash the power of
market forces to increase small holder productivity. The IEHA
Initiative will expand from the current three to at least six countries
in FY 2004. IEHA has made notable advances, including distributing more
than twenty agricultural technologies from research systems to
countries in Eastern Africa, through the Association for Strengthening
Agricultural Research in Eastern and Central Africa. For example, in
Uganda, more than 3,000 demonstrations of improved rice and maize
technologies were established, benefiting more than 140,000 small
holder farmers. In East Africa, the Regional Agricultural Trade
Intelligence Network was launched, providing real-time price and trade
information through radio, web and cell phone systems, which reached
more than 10 million listeners. In livestock trade, nine countries are
developing harmonized livestock movement permits and common procedures
for diagnosis and quarantine of livestock diseases. The Regional
Agricultural Trade Expansion Support Program was established in East
Africa. And, the Regional Agricultural Market and Trade Information
System program was established in West Africa. In addition to IEHA,
bilateral programs at all USAID Missions in the region will implement
programs to boost agricultural productivity and rural incomes. Programs
will stress the use of improved technologies, better quality control,
wider access to rural finance, stronger producer associations, small
scale rural infrastructure (in conjunction with P.L. 480 Title II
Programs), increased access to information and improved functioning of
agricultural markets. Related efforts will be made to promote private
sector-led diversification of the rural economy, such as agro-
processing, and to increase agricultural exports. At the national
level, policy dialogue will target changes to provide better incentives
to farmers and reduce market distortions.
Economic Growth and Trade
The globalization of the world economy offers Africa genuine
opportunities to attract resources for development. Through the African
Growth and Opportunities Act of 2001 (AGOA), the U.S. has shown
worldwide leadership in efforts to transform African economies through
increased trade and investment. AGOA is demonstrating ever more
encouraging results. U.S. total trade with sub-Saharan Africa rose 36%
in the first half of 2003 over the same period a year earlier and AGOA
imports during the same period increased by 66% to $6.6 billion. In
2003, the enactment of AGOA II further expanded trade opportunities and
the President has recently proposed to extend AGOA up to seven years
beyond its original expiration date of 2008.
Sub-Saharan Africa has enormous potential to become a much more
significant player in the international economy, yet the region
accounts for just 2% of world trade. Although a number of countries in
the region have begun to take measures to increase their
competitiveness, trade is still hampered by systemic constraints such
as high transaction costs, capacity limitations, poor infrastructure,
and market distortions. Foreign Direct Investment (FDI) decreased
dramatically by almost 50% between 2001 and 2002, to $7 billion, due in
large measure to the global economic downturn, and remained highly
skewed toward extractive industries in just a few countries. This
nonetheless represents a modest increase from 2000 and was higher than
FDI flows to either the Middle East or South Asia.
USAID's primary response to the challenge of increasing trade and
investment in the sub-Saharan Africa region and supporting AGOA is the
Trade for African Development and Enterprise (TRADE) Initiative,
launched in 2002. This four-year $70 million Initiative, which began
full-scale implementation in FY 2003 is promoting U.S.-African business
linkages, expanding the role of trade in poverty reduction strategies,
and building African capabilities for more sophisticated trade
analysis. It will also improve the provision of public services
supporting trade (e.g. customs procedures), strengthen the enabling
environment for African business and enable African business to take
even better advantage of opportunities under AGOA. In partnership with
other U.S. Government Agencies, including the Department of Commerce,
the Office of the U.S. Trade Representative (USTR) and the Department
of Agriculture, USAID is providing technical assistance, policy advice,
economic analysis and training to African countries through three
``Hubs for Global Competitiveness,'' which became fully operational in
2003, in east, west and southern Africa. In FY 2005, USAID proposes to
invest $229 million, or 22% of its program resources in efforts to
promote economic growth and to support agriculture and trade, including
$44.5 million for IEHA and $25 million for the TRADE Initiative.
Education
An educated population is fundamental to sustaining democracy,
improving health, increasing per capita income and conserving
environmental resources. Although literacy rates have increased from
50% in 1990 to 63% in 2001, Africa continues to lag behind the rest of
the world in investment in its people. Access to formal education has
risen in most African countries during the past several years, yet 39%
of boys and 43% of girls still are not enrolled in primary school.
Drop-out rates remain high, with just 20% of all children completing
primary school. Educational quality is also poor, with large class
sizes, significant numbers of poorly qualified teachers, a severe
shortage of textbooks and teaching aids and inadequate facilities. HIV/
AIDS also continues to decimate the ranks of teachers. Systemic
education reform is critical if Africa's children are to compete
successfully in today's world. USAID bilateral programs focus on
educational policy and systems development, decentralized decision
making and greater involvement of parents and civil society, with an
emphasis on basic education, particularly for girls, which has proven
to yield higher returns.
USAID's commitment to education in Africa is centered on the
President's $200 million Africa Education Initiative, launched in FY
2002. In FY 2004 this initiative will expand to reach students in 23
countries in sub-Saharan Africa. The initiative will provide 250,000
scholarships for girls and other vulnerable children, 4.5 million much-
needed textbooks and training for 420,000 teachers over a five-year
period. This program is 2 years old now. To date, AEI, has upgraded the
skills of over 50,000 teachers through in-service training programs and
provided initial teacher training for 11,000 new teachers, and this
year will provide 650,000 textbooks and 180,000 readers to African
schools in Benin, Ethiopia, Guinea, and Senegal and deliver
scholarships to nearly 25,000 girls. In FY 2005, USAID will invest
about 10% of its program resources available for Africa, or $105.2
million, in education programs, including $53 million for the Africa
Education Initiative.
Environment
Africa has a diverse and abundant natural resource base which if
prudently managed and protected can contribute to sustainable economic
growth as well as to worldwide efforts to improve the global
environment and maintain bio-diversity. Experience has demonstrated
that community-based natural resource management programs, such as
those supported by USAID in Madagascar, Guinea and Namibia, have
successfully preserved valuable environmental assets while extending
their economic benefits to a broader range of households. For example,
in Madagascar, 29,000 hectares of natural forest were transferred to 25
community management associations, and USAID helped establish farmer
associations in 882 villages where about 26,000 farmers have agreed to
stop destructive slash and burn farming around critical biodiversity
habitats. In Namibia, contributions made to the national economy by
community-based Natural Resource Management enterprises are
conservatively estimated at $5.5 million, and there has been an 81%
increase in the number of hectares under conservancy management since
2002. In Guinea, the national government has devolved the management of
87,247 hectares in five classified forests to local communities, who
now share the responsibilities for and the benefits of sustainable
management of the forests with the Guinean Forest Service. Villagers
have taken actions to protect these forests, which are important
watersheds for three major West African rivers. Major challenges remain
however, as the region contains 45% of global bio-diversity yet has the
highest rate of deforestation in the world. Africa is also urbanizing
at the highest rate in the world, creating new environmental
challenges. By 2016, half of all Africans will reside in urban areas.
The centerpiece of USAID's efforts in the environmental sector in
Africa is the Congo Basin Forest Partnership (CBFP), a three-year $53
million effort, announced at the World Summit on Sustainable
Development in 2002, to provide a six-country network of national parks
and protected areas, well managed forestry concessions and assistance
to communities in the world's second largest tropical forest. Proposed
funding for USAID's environmental programs in Africa for FY 2005 is
75.9 million, or 7.3% of total available program funding.
Health
A healthier population is critical to Africa's efforts to reduce
poverty and improve living standards. However, during the past decade
health status gains have been undermined in many countries of the
region by increasing poverty, civil unrest and the rapid spread of HIV/
AIDS and other infectious diseases, such as tuberculosis (TB), malaria,
meningitis and cholera. The disease burden in Africa is the highest in
the world and life expectancy has continued to decline, to less than 50
in many of the countries most affected by HIV/AIDS. Over 90% of the
world's 600 million yearly malaria cases occur in Africa and this
disease alone causes over 2.3 million deaths a year, mostly of young
children. TB rates have also jumped by 95% between 1995 and 2000. While
under-five mortality rates are continuing to decline, the rate of
decrease has slowed over the last decade. AIDS is driving this trend,
as well as that of the TB increases, and the highest HIV/AIDS
prevalence countries are seeing an actual increase in their under-five
mortality rates. Despite progress, immunization rates for children
under one year are still below 80%, leaving significant numbers
vulnerable. Malnutrition in children has also increased in many
countries due largely to conflict and natural disasters, resulting in
alarming numbers of stunted children in the most affected countries.
Investment in health systems and basic health interventions has not
kept pace with need.
USAID is implementing broad based health interventions in every
bilateral country program in the sub-Saharan Africa region. USAID
health programs focus on increasing the availability, effectiveness and
access to quality health care. Programs address the leading causes of
child mortality and morbidity, such as malaria, TB, malnutrition,
respiratory diseases, diarrhea and vaccine-preventable illnesses. USAID
programs increase immunization coverage, strengthen surveillance and
build human capacity to provide quality care. Spectacular results from
Malawi, where sales of treated bed nets to reduce the risk of malaria
reached almost one million people in 2003, almost a five fold increase
over 2002, provide a proven model for future programming. Successful
efforts to create alternative new community based health care financing
systems, such as those underway in Senegal, Rwanda and Zambia, also
offer promise to hundreds of thousands of households and provide
excellent models for replication. As funding levels are clearly linked
to improved health outcomes, it is expected that new funding from
USAID, other donors, the Global Alliance for Vaccines and Immunizations
(GAVI) and the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria
will result in more positive trends in the near future. USAID will
invest 15.5% of its FY 05 program funding available to Africa in health
and child survival programs.
HIV/AIDS
The HIV/AIDS pandemic continues to ravage the continent, although
there are hopeful signs that prevention measures, treatment, and care
are beginning to slow its spread. Prevalence rates remain extremely
high in all of southern Africa, reaching 25% in Zimbabwe and almost 40%
in Swaziland and Botswana. Of the estimated 34-46 million people
infected by HIV worldwide, 25-28 million reside in sub-Saharan Africa.
Over 80% are in their productive years and two thirds are female. The
number of AIDS orphans is expected to rise from 11 million to 40
million by 2010. Average life expectancy will continue to decline over
the next decade, falling below 35 in several high prevalence countries,
significantly impacting prospects for economic growth and further
straining household incomes. However, the experience of Uganda, where
infection rates have decreased by 50% from 1997-2001 and promising
results among certain groups in Zambia and elsewhere demonstrate that
strong leadership and a comprehensive approach to prevention can be
effective in stabilizing and/or reducing prevalence rates.
HIV/AIDS is the single highest health priority for USAID in Africa.
USG global AIDS activity and policy is coordinated by the newly created
Office of the U.S. Global AIDS Coordinator at the Department of Sate,
coordinating the $15 billion, five-year, PEPFAR Initiative. In FY 2005,
in addition to a substantial increase in PEPFAR funding, programmed
through the Global AIDS Coordinator, $231 million of Child Survival
HIV/AIDS funding will be made available for combating HIV/AIDS in
Africa. USAID anticipates playing a key role in the implementation of
PEPFAR. USAID Missions will maintain their focus on preventive primary
health care and expand service coverage, including those for orphans
and vulnerable children. Programs will build on successful efforts in
Uganda, Senegal and Zambia. The key approach from Uganda being used for
PEPFAR is the ``ABC approach'' where ``A'' is for abstinence, ``B'' for
being faithful, and ``C'' for correct and consistent condom use. Also
the approach calls for voluntary counseling and testing and care and
support for persons living with AIDS, including anti-retroviral
therapy. Programs begun under the Prevention of Mother to Child
Transmission Initiative will also be expanded. Missions in Africa are
integrating HIV/AIDS mitigation programs throughout their development
portfolios.
Population
With a growth rate of 2.4% a year, the highest in the world,
Africa's population of 690 million will swell to over one billion by
2025, despite the effect of the HIV/AIDS crisis. This will place its
natural resources, public services and social fabric under enormous
stress and compromise per capita income growth. Though the majority of
women say they desire fewer children, contraceptive prevalence rates
remain under 20% in all but five countries and above 50% only in South
Africa and Zimbabwe. Dramatic increases in contraceptive prevalence
rates in Botswana and Malawi over the past 15 years, however, offer
proof that reproductive health programs, such as those supported by
USAID, can indeed promote behavioral change. USAID Missions support a
broad range of family planning programs, including public education,
advocacy and outreach through traditional and community structures,
community-based distribution and marketing of contraceptives and
encouragement of sound child spacing practices.
For FY 2005, USAID is proposing $536.8 million in overall funding
for all child survival and health accounts, including HIV/AIDS and
population, or 51.8% of its total available program funding.
Democracy, Conflict and Humanitarian Assistance
Routine accountability in government, observance of the rule of law
and respect for human rights mitigate against civil strife and violent
conflict. They are also critical to equitable economic development.
Good governance, coupled with improved economic well-being and better
social services, also diminish the appeal of extremist ideologies and
terrorist agendas. The past year has witnessed a series of extremely
positive achievements in conflict resolution with the restoration of
peace in Liberia, Sudan, the DRC, and with the continued progress of
reconciliation in Angola and Sierra Leone after years of bitter strife.
The United States has played a seminal role in international efforts to
assist these processes. However, the conflict in the Cote d'Ivoire and
the continuing instability in northern Uganda are reminders that peace
is fragile. Through the Conflict and Peace Building Fund, begun in
2003, USAID is implementing a multi-faceted approach to strengthen
African capacity to manage and mitigate conflict.
Democratic governance and improved governmental accountability have
continued to expand throughout the region. A major milestone was met in
Nigeria, when for the first time in its history a civilian government
successfully and relatively peacefully transferred power to a
succeeding civilian government. In addition, over the past five years,
Ghana, Senegal, Kenya, Mauritius, South Africa, and Botswana have held
free and fair elections. Since the Kenya elections in late 2002, the
new government has moved aggressively to address the corruption issue
and taken several concrete steps to improve the transparency and
accountability of the public sector. Zimbabwe has unfortunately
continued to be a problem with increasing disrespect for the rule of
law and for human rights.
USAID's efforts to improve democratic governance and promote
increased accountability advance the national security goal of creating
the conditions for peace and improved security. In the DRC, USAID
assistance for a national workshop of civil society delegates for the
Inter-Congolese Dialogue resulted in the drafting of a unified position
paper for civil society. This paper identified issues including power-
sharing, elections, constituting a new army, police and public order
matters, social and financial reconstruction issues, and peace and
national reconciliation. Members of the opposition and civil society
are now sharing four vice-presidential positions and other key
government posts in a transitional government.
USAID programs promote representative political processes, free and
fair elections, the strengthening of democratic institutions, the rule
of law, the growth of a vibrant civil society, the decentralization of
governmental functions, improved accountability of the public and
private sectors and the respect for human rights. USAID assistance
increased civil society's capacity to lobby for reforms and to monitor
government, leading directly to peaceful, free and fair elections in
December 2002 in Kenya. In Ghana, USAID assistance has enhanced the
interaction between civil society and local government and broadened
public input to decision-making. Electricity, water, telephone
services, judicial corruption, and health have been discussed in
Parliament and have seen widespread interest from Ghanaian citizenry.
Public hearings on judicial corruption were attended by more than one
thousand people.
Many USAID Missions have integrated the principles of transparency,
participation and accountability throughout their development
portfolios. Twelve Missions are participating in the Anti-Corruption
Initiative, launched in FY 2003, which promotes public access to
information, citizen awareness and advocacy, transparency and
accountability of government procedures and public-private dialogue. In
FY 2005, USAID will extend its efforts to manage and mitigate conflict,
promote community reintegration and strengthen African networks to
identify and respond to potential crises. In FY 2005, USAID will invest
$89.5 million, or 8.7% of its program resources available to Africa, in
efforts to strengthen democracy and governance.
USAID's humanitarian assistance programs have been vital to
international efforts to mitigate the effects of several natural
disasters during the past year, the most severe being in Ethiopia and
parts of southern Africa. Humanitarian assistance programs have also
been critical to post conflict recovery in several countries, including
the DRC, Sudan, Liberia and Burundi. USAID Missions will continue to
strengthen their linkages with the Office of Foreign Disaster
Assistance (OFDA) and the Office of Transition Initiatives (OTI) to
better prepare for the relief-to-development transition in countries
under stress.
Millennium Challenge Account
The President has recently signed into law the Millennium Challenge
Account Act, which provides the authorization for the MCA and $1
billion in appropriations for FY 2004. In FY 2005, the Administration
has requested $2.5 billion for the MCA. The MCA will be administered by
the newly formed Millennium Challenge Corporation (MCC), an independent
U.S. Government Corporation and will provide development assistance for
selected poor countries that demonstrate a commitment to governing
justly, investing in people, and encouraging economic freedom. It is
anticipated that some African countries will qualify for participation.
The legislation also provides for up to 10 percent of the MCA funds is
authorized to be made available to countries that demonstrate a
commitment to the criteria but fail to meet the full requirements for
MCA eligibility so that they may become eligible in the future (so-
called ``threshold'' countries). Also, the MCA Act states that this
assistance may be provided through USAID.
USAID's relationship to the MCA is evolving. The USAID
Administrator is one of nine MCC Board Members. At a minimum, in
approving MCA proposals for assistance, the MCC will consult with
Congress, USAID and other donors. USAID also may play a constructive
role in assisting the threshold countries to qualify for MCA in future
years.
Global Development Alliance--Public-Private Alliances
Public-private alliances enable USAID to enhance the impact of its
programs by mobilizing the ideas, efforts, and resources of the private
sector with those of the public sector and non-governmental
organizations. In FY 2003, USAID created 41 public-private alliances
through 15 bilateral missions and all three regional programs in sub-
Saharan Africa. USAID missions leveraged $37.5 million of their own
resources to generate $135 million from its partners. Alliances were
created in almost every sector of development, including health,
agriculture, the environment, education, information technology and
small enterprise development. A major new alliance brings together
Shell Oil with USAID in a $20 million effort to spur agricultural
growth in Nigeria.
Debt Issues
With the advent of real reductions in external debt resulting from
the international Heavily Indebted Poor Countries (HIPC) Initiative,
the overall debt picture in sub-Saharan Africa has begun to brighten
appreciably. The continent's total debt service ratio (debt as a
percentage of exports of goods and services) has fallen from 13.9% in
1999 to 10.7% in 2002, well below the critical 15% mark that is
generally viewed as unsustainable. The debt service savings enable the
30 African countries benefiting from HIPC debt relief to free up public
resources for other priority sectors, such as education and health.
Other Donors
The United States remains the largest bilateral provider of
Official Development Assistance (ODA) to sub-Saharan Africa in 2002.
The United Kingdom, France and Japan follow as the other major
bilaterals. The largest ODA levels continue to be provided through the
multilateral organizations, primarily the World Bank group, which lends
almost exclusively in Africa through its concessional International
Development Association (IDA) window. The European Union, the African
Development Bank and the various U.N. agencies are also significant
multilateral donors in the region. The United States has become an
active participant in discussions to better harmonize ODA procedures
and policies among the donor organizations.
PROGRAM AND MANAGEMENT CHALLENGES
Security Issues
Security remains an ever-increasing concern at most USAID missions
in Africa. Five of 23 bilateral missions exist in critical or high-
threat security situations. Missions continue to take steps to improve
security within the limits of available funding. USAID missions are
required to co-locate with new embassies as they are being built.
Staffing and Operating Expenses
Using the Agency-wide ``workforce template'' as a base, the Africa
region has developed a plan to make the best use of its human
resources. Overseas direct-hire field staff levels will be at 227 in FY
2005, including nine new HIV/AIDS professionals. The Africa Bureau will
continue to look at re-deploying staff among Missions over the next two
years to maximize performance. In 2003 a new Mission was established
for Sudan, based in Nairobi, but may move to Sudan as conditions
improve. USAID also established a presence in Djibouti last year and is
in the planning stages of establishing a USAID Representative Office in
Sierra Leone.
Senator Alexander. Thank you very much. Now, we're in the
midst of three more votes, and I'm going to ask Matt to let me
know when I need to leave to go vote but I can go right up and
vote and come right back. Let me go through several areas and
just ask both of you, and let's start with the HIV/AIDS that
you were talking about. Most of that we can talk to Ambassador
Tobias about when he comes around, but Senator Frist led a
group of six of us to sub-Saharan Africa last August, which was
a good educational tour, in four countries, South Africa,
Mozambique, Botswana, and Namibia.
One of the things that we saw was that we have a reassuring
number of very talented U.S. Government people already on the
ground who have been there for a while. They may be USAID or
they may be from the Centers for Disease Control and Prevention
but they're there and they know what they're talking about and
they're able to help.
But everywhere we went the greatest need seemed to be for
infrastructure, for we all focus on cost of drugs and the
availability of drugs, but the greatest need seemed to be on
the people who could come and fit within a structure and
provide the counseling, provide the nursing, train the doctors,
train the medical people.
And when I came back we talked about an AIDS Corps idea,
the idea of tapping the great volunteer spirit of the United
States and trying to find an effective and easy way to funnel
that too toward the HIV/AIDS priority. We talked about whether
to try to do it through the government, which usually is
complicated, or whether just to encourage the private sector to
do it, which sometimes can get it done pretty fast. We
uncovered in the White House an existing program or two that
sounded like it might fit into this and I talked to the Peace
Corps director about it.
So my question is, can you report anything about progress
toward finding a way to help Americans who want to help in sub-
Saharan Africa with HIV/AIDS, an easy way for them to plug in
or to volunteer and to go and be of some help?
Ms. Newman. Part of the challenge in addressing HIV/AIDS,
as you said, has to do with the weak, fragile, sometimes non-
existent health care systems, and therefore there is dependence
on expatriate organizations. But many of these organizations
are recognizing it is important to build local capacity. In
doing so, the existing organizations are not going to be able
to do it with the limited resources that they have, so that if
there were a way to plug volunteers into the system, I think it
would be an excellent idea.
I was the director of VISTA at one time, and I will give
one major caution, it's something that I found at the time
weakened the volunteer effort. If the organization or the
people to whom the volunteers are assigned don't have a clear
understanding of what they want the volunteers to do and are
not able to provide the proper direction in support, you lose
the ability to get the very good volunteers and for them to
make a difference. I would say that if something like this were
to be done, the volunteers should first be assigned to
organizations or to governments for whom there is already
information that they're strong enough to manage the
volunteers.
Senator Alexander. Well, my question really is, is that
already going on? Do we have something going on in the
government right now?
Ms. Newman. Peace Corps is doing some work, but not to a
major extent. Now there's a new volunteer program within USAID
to help just generally volunteers in development activity. It
could be attached to that or it could be attached to Peace
Corps. And I would encourage your talking with the Peace Corps
director, I would encourage that. But the health care systems
are a challenge. You know, Senator Frist does a great deal and
has done it for quite some time of volunteering in health care
systems in Africa.
Senator Alexander. We just saw lots of institutions who
said they could use the volunteers and we didn't know the kinds
of structures that you mentioned and it looked to me like it
was a matter of identifying them and connecting them with those
institutions.
Mr. Yamamoto, do you have anything to add?
Mr. Yamamoto. I think another aspect is really, given the
spirit in the United States, is interlink between NGO groups
and others in Africa working. What we have done, let's say in
East Africa and some areas, for instance, in Kenya there is an
AIDS orphanage operated by a Catholic organization. They come
to the United States, raise awareness, and collect funding and
materials. And one of the big problems that we found in Uganda,
and please correct me, is the issue of financing and taking
their retroviral drugs, which are very, very expensive, so the
thing right now is the financing, is the major issue. And, of
course, these interlinks with the United States and groups in
the United States really help.
Senator Alexander. We had a hearing on public diplomacy
last week in this committee and there was a good deal of hand-
wringing about how around the world the United States is not
very well understood. Is it your sense that in Africa, sub-
Saharan Africa, Africans understand what the President and the
country is trying to do with HIV/AIDS and appreciate it, or is
it not understood, or is it resented? How would you assess
that?
Ms. Newman. I spend a great deal of time on the continent
and I was a part of Secretary Thompson's trip, and I think that
Africans understand what the United States has done and is
doing. I hear very positive things about the fact that not only
has the United States stepped up to the plate, but the United
States is a leader attempting to convince the rest of the world
to do much more in HIV/AIDS.
The fact that Secretary Thompson is the chair now of the
fund gives the United States even a greater role and a greater
opportunity for others to see what it is that the United States
does.
I do not note negative views of the United States on the
continent of Africa. It's very interesting. I think that, you
know, the people wish the United States would do more, not just
in HIV/AIDS, but in other ways. But the most negative
comments--I probably shouldn't say this--the most negative
comments have to do with some of our trade policies and
subsidies, but in terms of what we do with health and
education, it's very positive feedback.
Senator Alexander. Mr. Yamamoto.
Mr. Yamamoto. Interestingly, you know, in Africa, we have
now 16 countries where Muslims are a majority, and that means
43 percent of the entire population in Africa are Muslim, and
if you--considering the contents of the world, 27 percent of
all Muslims live in Africa. In the issues that there is an
outreach to try to find ways to--simple things from improved
child education, health care. For instance, Djibouti, where we
have 96 percent of the population is Muslim, is one of the most
proactive supporters of the United States. It's also the base
of the only U.S. military camp in Africa.
But the issue comes in--as on HIV/AIDS, there's a lot of
misunderstanding, and those are issues that we need to interact
with local communities to overturn a lot of prejudices,
misinformation, and to work with these communities. And in all
these communities there is a desire to interact with the United
States and other countries to help, you know, fight not only
HIV/AIDS, malaria, but others, illiteracy, poverty.
Senator Alexander. One other question on HIV/AIDS. We
Senators were impressed, although some knew it already, Dr.
Frist, for example, that a byproduct of spending that much
money on HIV/AIDS in Africa will be to create a lot more clean
water in Africa for a lot more people, and I wonder if you were
thinking about it that way. We were all very impressed with how
relatively inexpensive it was to help people have clean water
and how much it did to help relieve disease and death, not just
HIV/AIDS, but malaria and other diseases.
And I wonder if you and Ambassador Tobias would be keeping
track over the next 5 or 10 years of how our involvement with
HIV/AIDS and our other programs might actually move us along
the track to helping more Africans have clean water to use?
Ms. Newman. I did note on our trip with Secretary Thompson
many of the HIV/AIDS projects that were funded by the U.S.
Government included clean water as part of the project, but not
all HIV/AIDS projects include water or nutrition as part of the
project, and they should. And this last fiscal year, began
discussions with the Water Alliance for projects in Ethiopia
and we're talking with them about other projects. So that the
point is that, yes, to a certain extent it will happen as a
result of HIV/AIDS programming. I think we're also going to
have to be more aggressive and put more seed money into water
projects in order to expand the opportunity of people on the
continent to clean water. And we all know that really is key,
one of the keys to good health.
Senator Alexander. OK. We have about 6 minutes left in the
first vote, so what I'm going to do is ask one more--well, I'll
ask the question and then I'll recess----
Ms. Newman. And then you'll leave.
Senator Alexander [continuing]. The hearing. And what I'm
going to do is go up and cast this vote and then stay and cast
the second vote because my name starts with an ``A'' and I can
get out of there fast, so that will give us less interruption.
But what I'd like to explore next is your comments about
conservation. You mentioned the Congo Basin Forest Partnership,
and I know that's a priority of the Secretary and of the
President, and I think of it as not just an environmental
program. I think of it as a way for African nations to identify
something that is special about themselves and then create
institutions and structures to celebrate that and to preserve
it and to be proud of it, and in doing so, find ways to work
together on other things.
I think successful towns and cities and countries usually
do that. You know, in Nashville it might be music and in
northern California it might be wine and in Italy it might be
art and in Africa it might be the great outdoors and the
unusual environment, but any nation or country that rallies
itself to celebrate what makes it special usually is a fairly
successful place.
So I'm thinking, quite aside from all the environmental
benefits, I'm thinking of it that way, and I'd be interested in
your comments when I come back about how this budget advances
the administration's priority on helping African countries use
conservation, not just for environmental purposes but for
really nation building and building stronger structures and
stronger countries.
We'll recess for about 10 minutes.
[Recess from 2:35 p.m. to 2:50 p.m.]
Senator Alexander [presiding]. The hearing will resume. My
strategy didn't exactly work. I got one vote in but the other
one will come after 3, and I believe the next segment of our
hearing starts at 3, so let's take 5 minutes or so on
conservation and 5 minutes on Liberia. And who wants to start
on the conservation question?
Ms. Newman. I think, Senator, that there are two examples
of programs funded by USAID that begin to do what you are
suggesting, which is going beyond protection of the environment
into involving the people in the management of the resources in
a way that improves their livelihood and improves the quality
of their lives.
The first example is the one in the Congo Basin. Even
though the partnership just started, a program has been going
on there for some time. What has happened is that the people
living in the area have become much more interested in managing
the bush meat problem. People have become much more interested
in engaging in protection of the land, understanding that they
have an opportunity for more income, and that is part of that
program.
Now, on the partnership of the eleven landscape effort will
also include the people, although they won't be actually on the
land themselves. Namibia, on the other hand, has people
actually on the land, it's communal land, and that has been
going for quite some time, to the point that people have been
able to measure an increase in animals coming back into the
area, which also increases tourism. There's greater income and
training in natural resource management that is often done in
cooperation with how to do this. What has happened is that the
protection of the environment is, as you suggest, only part of
what is attempted to be accomplished in these projects, and
actually the environment is probably not going to be that
protected if the people themselves are not a part of it and
don't understand the direct benefit.
That has to be an effective part of these programs.
We're wanting to extend our experiences in these two
regions to other parts of the continent.
Senator Alexander. Mr. Yamamoto.
Mr. Yamamoto. Another aspect to the environmental issue is
that it establishes mechanisms and ways to avoid and to
minimize conflict. One of the examples that we have is the
transborder cooperation, the so-called four corners, which
involve Botswana, Namibia, Zambia, and Zimbabwe, to support
sustainable economic growth.
When you have power in local communities and you do so not
only within one nation but within a multiple of nations, it
creates mechanisms whereby you have dialog. And as you know,
the Congo, one of the root causes for a lot of the conflict is
their resources, and if we had, you know, the transborder
dialogs, we had the local communities empowered, it could
minimize and in many ways help support conflict resolution.
Senator Alexander. Well, I'd like to keep a particular eye
on that, and during my visit in August, and maybe in the Congo,
maybe in Namibia would sound like two good places to go. I saw
something of what USAID was doing in Namibia when I was there
last August, I mean I heard about it but I didn't get to see
it.
Let me switch to Liberia now. Liberia to me is an
especially interesting example in the way we weren't going to
be nation building and suddenly we are, in Afghanistan and
Iraq, and in a sense Liberia, but all with very different
experiences. We appropriated $200 million there and we're all
delighted to see that $500 million was pledged in the donors'
conference.
Are we measuring our progress? Do we have a way to
benchmark our progress in Liberia? How much more money are we
going to be asked for for Liberia in this next year? As I say
benchmark, the New York Times had recently a benchmark for
Iraq, and it was simple enough that you could read it. It might
not have been everybody in the administration's favorite list
of indicators, but it said, security indicators, 55 top
Ba'athists at large, April, July, October, January, we went
from 40 to 18 to 15 to 12.
So I think one of the issues that we have when we're in
war, we have daily briefings and everybody sees the objectives
and sees the progress toward the objectives. When we're winning
the peace, we forget that most taxpayers and Senators and
others would like to see clear indicators of what our
objectives are and what our progress is toward the objectives,
so how are we doing in Liberia? What are our objectives and
what progress are we making toward our goals?
Mr. Yamamoto. We've met our first major objective, which is
to get Charles Taylor out of Liberia, and given the deep, rich,
and historic connections we have with Liberia, that commitment,
we tried to stabilize the nation and also to develop economic
development in that country is in our national interest and
also for the region.
When you ask do we have benchmarks? Yes, we do. We have
ways to gauge development and progress. Right now the first
part is to get Charles Taylor out. Next is international
community support. The next step, of course, is to move forward
on DDR, disarmament, demobilization, and reintegration. That's
to begin again in mid-March we hope.
The other issue is that with the other $200 million, $114
million already has Presidential determination, and we have
various CNs now up to Capitol Hill, but those will set the
basis and lay the ground work for creating structures and
moving forward on economic developments and progress in
Liberia.
Senator Alexander. Yes, but this gets it down a lot
further--average daily tax on troops, accuracy of intelligence
tips, number of security forces, number of troops, number of
other coalition troops. Do we have objectives and benchmarks
for winning the peace is what I'm trying to get at.
Ms. Newman. May I just say that there have been series of
meetings and involvement of all of the donors in determining
which objectives are measurable. The resources will not flow to
Liberia without their being able to assure the donors that
they, along with the donors, are going to measure the
effectiveness. I think that----
Senator Alexander. Well, the effectiveness of what?
Ms. Newman. The effectiveness--let's just take the
different activities. Let's say one is that there will be
agriculture and food for work activities. So then you decide
what are the best measures for that, not just input, but impact
measures, and we have a tendency to look solely at input. But--
--
Senator Alexander. So I guess you're saying we don't have
any objectives or measurements yet?
Ms. Newman. We are working on them. If I took each of the
activities, I could tell you, for example, the Liberian
community infrastructure project, could tell you what it is
that people propose to do and how you normally measure that
type of infrastructure project. Each one of the initiatives now
requires that we not only measure the effectiveness, but it be
a transparent process that is available to the public, not just
to Congress----
Senator Alexander. Well, excuse me, if I may say, all I'm
asking is what are those objectives and what are the benchmarks
and how are we doing?
Ms. Newman. The money is just now flowing.
Senator Alexander. Well, it shouldn't flow before there are
objectives?
Ms. Newman. We will come to you with each of the sections
of our proposal, and what the objectives are. We will do that
because that is the only way we're going to feel satisfied that
the money will be well-spent.
Senator Alexander. Well, thank you.
Ms. Newman. And I will add that it's not just the donors
who are concerned about it. The Government of Liberia is now
putting into place a monitoring and evaluation program and they
are seeking technical assistance on how to go about doing that.
Senator Alexander. Do you anticipate we'll be asked to
incorporate more money for Liberia in the next year?
Ms. Newman. I don't think beyond the $200 million, until we
are all satisfied of the impact of this money, that there will
be a request from USAID for additional money, because it's not
just our $200 million. As you mentioned at the outset, the
world has come up with $500 million and we have to manage that
properly. We have to measure it, and before more resources flow
and more requests are made, I think we ought to know much more
about what impact this has had.
Mr. Yamamoto. And, Senator, just one point to add too is,
having gone to Liberia and spoken with Gyude Bryant during his
inauguration is we have, not only a leader but a government
which is extremely supportive of the United States, and to try
to balance his needs, his desires, his goals and objectives
with what we're trying to achieve as well with the
international community. And so right now you have a tremendous
amount of goodwill and support on both sides.
Senator Alexander. I'm informed the 2005 budget does
request $30 million more for Liberia, but here's what I would
like to suggest on any future hearing about Liberia or any
other place we want to spend money. What I'd like to know is,
if we're going to spend money, or since we've already
appropriated $200 million and others are spending $500 million
with us in a lead position, it would help me if we could say
our objectives in Liberia are 1, 2, 3, 4, 5, and here are the
indicators of our progress toward those objectives. If one of
the indicators of progress is the number of schools reopened
April, July, October, January, I'd like to know what that is.
Child immunization rate, if that has anything to do with what
we're trying to do, I'd like to know what that is.
And I think most Members of Congress would and most
taxpayers would, and my suggestion is, on any of these programs
where the U.S. Government and taxpayers are asked to fund
winning the peace in far-away places, it will build support for
those objectives if, when asked about it, if our government can
say, yes, we have objectives for winning the peace that are as
clear as winning the war, here are the objectives, here are the
indicators, and here is the progress we're making toward those
goals. And it may not all be good news, but at least we'll know
we have a plan.
And I would recommend whoever wrote this for the New York
Times is a good adviser on how to write one. The Defense
Department has been working on such a thing for the Iraq war,
but it's not as good as this. I gave this to Secretary Rumsfeld
as an example of what I thought could be done. This kind of
thing tends to focus oil production, 0, 9, 2, 4, megawatts of
electricity, 3, 3,200, 3,900, 3,600, and that's the kind of
thing that would be helpful.
Ms. Newman. May I make a commitment?
Senator Alexander. Yes.
Ms. Newman. There is a conference in Liberia to develop an
action plan and the action plan is being put together with the
other donors where there will be measures. And what we will do
then, once that action plan is put together, ensure that copies
are here, because I know you are interested in our--doing it
for ourselves, but we will inform you and the staff of the type
way in which we plan to measure this.
Senator Alexander. Thank you very much, Ms. Newman. And I
do understand that a plan is likely to be more effective for
Liberia if Liberians make the plan. The Marshall Plan was a
plan adopted, we named the plan, but it was a plan really
developed by the recipient countries, but still, I think they
should be told that the people who are sending $700 million
would like to have some way of measuring progress toward goals
so that we can make adjustments.
I want to thank the two of you for coming today and
apologize for that interruption caused by the vote. I'll look
forward to our next visit and I hope if you have issues or
questions along the way about Africa, you'll get in touch with
me or with our staff. Thank you very much.
Ms. Newman. Thank you.
[Recess from 3:05 p.m. to 3:22 p.m.]
OPENING STATEMENT OF SENATOR GEORGE ALLEN
Senator Allen [presiding]. I call this hearing of the
European Affairs Subcommittee to order. The purpose of this
afternoon's hearing is to examine the Bush administration's
foreign assistance budget request for Europe and Eurasia. Thank
you all for being here. You understand we're having votes, so
thank goodness we have this room in the Capitol to hold this
hearing.
Providing testimony for us today on the administration's
foreign assistance priorities and objectives are Beth Jones,
the Assistant Secretary for Europe and Eurasian Affairs at the
Department of State and Kent Hill, the U.S. Agency for
International Development's Assistant Administrator. Welcome to
both of you, and we look forward to your testimony.
Let me make a few remarks and then we'll hear from you
first, Ms. Jones. When analyzing the current concerns in Europe
and the policies that are needed to implement the best
interests of the United States vis-a-vis our friends in Europe
and emerging democracies in Europe, I believe there should be a
strong focus on the emerging democracies in the southeastern
part of Europe and the countries of Eurasia.
Most of Europe is well-settled and prospering, as democracy
has been there for centuries. There are others where democracy
is just taking root, particularly in southeastern Europe, and
there still remain challenges that we're facing and the people
there are facing.
Now we have, as we all know, tight budgets. When you have
tight budgets, you have to make priorities. The focus in my
view ought to be foreign assistance programs where you're going
to get the best bang for the buck.
Analyzing our programs in Europe I think is very sensible.
It's a continent generally speaking where there's great
symmetry between their sentiments, their philosophy and that of
the United States in principles as well as specific tactical
policies. Our friends in most of Europe enjoy relatively strong
economies with stable governments that ensure the rule of law
and equality of their citizenry.
With these limited resources, I think the United States
ought to be focusing or should focus on those European states
that appear trending away from democratic governance and market
reforms. With concerns about the rates of corruption, organized
crime, and political unrest high among the states in the
Balkans and the former Soviet Union, I think it's in the
interests of the United States to promote grassroots
democratization and sound governance programs as well as
economic initiatives that strengthen capitalism, boost trade
and investment, all within the rule of law, which I think is
absolutely key for the people as well as investment and
stability in those countries. Rule of law is not just mindless
adherence to law, but it is a fundamental framework for
protecting individual rights, protecting property, having a
stability and an understanding that there will be fair
adjudication of disputes, thereby making it a more likely place
to entice investment into those areas for the jobs and
prosperity that flow therefrom.
Now, as this subcommittee learned in October of last year,
transnational crime and corruption is a problem throughout
Europe, but it has a significant impact on this country. It's
not over there, across the Atlantic Ocean. Trade in persons,
narcotics trafficking, the proliferation of weapons all
compromise the security of the United States and our allies,
and it also often can line the pockets of those opposing our
reform efforts in Europe and around the world.
Renewing our commitment to southeastern Europe is, in my
view, in the interests of the United States. And even as
economic circumstances have forced us to be more frugal in our
assistance, I do believe a continued diplomatic and strategic
foreign assistance campaign in the troubled nations of
southeastern Europe will yield positive results and will
provide both short- and long-term benefits to both Europe and
the United States.
Insofar as Eurasia is concerned, the states of Eurasia
continue to represent an area of concern for the United States
in our foreign policy, from concerns with democratic reform in
Russia to political upheaval in Georgia to continued
hostilities between Armenia and Azerbaijan, our government, I
believe, must carefully consider the implications of our
policies.
Democratic and economic reform has occurred, in fits and
starts in many of these countries, and our mission must be to
strongly advocate for and assist in realizing consistent
credible progress. I do have a particular concern and I think
it probably will be shared by most of my colleagues in how the
administration's budget request would provide dramatically
different amounts of foreign assistance to Armenia and
Azerbaijan. Requesting $8.7 million in military assistance for
Azerbaijan and only $2.7 million for Armenia sends a
questionable message and could threaten to undermine progress
that has been made finding peace between two countries and
bringing stability to that region.
The relations between Azerbaijan and Armenia continue to be
tenuous at best even with a fragile cease-fire in place. And so
by placing the needs of one much higher than that of the other,
the United States could be construed to be taking sides, which
I know we don't want to do, in this ongoing dispute between
these two countries. I don't want this perception to provide
any incentive for either side to walk away from the negotiating
table, which clearly is not in the interest of the Caucasus and
clearly not in the interest of the United States.
So that's an issue of importance I know to myself. I'll
speak for myself but I think I do speak for other members of
the committee as well, and I hope our witnesses will address
this concern during this hearing.
Let me just close by saying that we view the progress with
Europe, the progress in the last 60 years with Europe as an
example of the best of engagement. If you look at the last 60
years, it's an example that's always given for the United
States to be involved. Europe is growing and freedom's growing
in Europe. It's great that there are new countries from central
Europe joining in.
There are some fits and starts obviously in the former
Soviet Republic, in Georgia and Ukraine and Belarus, countries
with different problems in different areas. However, freedom is
on the march in Europe. It's spreading eastward. It's good for
the people, it's good for our security, and where the roots
have not taken hold is where you want to apply the fertilizer
so to speak or the assistance or the proper care to weed out
the corruption or any of the negative influences in those
countries. I wish every continent was in as good a shape as
Europe where freedom is clearly on the march, but more work has
to be done and we look forward to hearing from our witnesses
here today.
I may have to break for a vote, and so if you'll all bear
with me, rather than wait for us to stop voting we want to move
forward. So I thank both our witnesses. Thank you for your
dedication, your determination, for being here, and so we'd
like to hear first from Secretary Jones on your views.
STATEMENT OF HON. ELIZABETH JONES, ASSISTANT SECRETARY OF
STATE, BUREAU OF EUROPE AND EURASIAN AFFAIRS, U.S. DEPARTMENT
OF STATE
Ms. Jones. Thank you. Thank you, Mr. Chairman, for inviting
us here today. I couldn't agree with you more that engagement
is exactly what we do the best and we accomplish a tremendous
amount through that. We think that American security and
development assistance is a key tool, it's an important tool.
It is the way we achieve many of our foreign policy goals in
Europe and Eurasia.
For fiscal year 2004, our request is $1.03 billion in
Freedom Support Act money and SEED. It is $220 million for FMF
and IMET and we very, very much appreciate your support, Mr.
Chairman, and the support of Congress in appropriating this
money for us.
We believe that in the Bureau of European and Eurasian
Affairs we have a very tight link between foreign policy
objectives and our assistance programs. Furthermore, we are
very proud of the excellent collaborate relationship we have
with USAID represented here by Dr. Kent Hill. We actually think
that our region is a model for the partnership between State
and USAID that Secretary Powell has been promoting.
The primary message that I bring today to this hearing is
that the money we've invested in foreign assistance in Europe
and Eurasia is paying big dividends very much along the lines
that you have already mentioned. But we do have work to do and
challenges to overcome.
To begin with, most of the countries of Central and Eastern
Europe and the former Soviet Union are valued partners in the
global war on terrorism. Of the 27 transition countries, all of
which have received substantial assistance since the early
1990s, 24 are active supporters of Operation Enduring Freedom
and OIF. Three of the central Asian countries actually provide
basing for our troops.
Military assistance has also helped these countries to
contribute to peacekeeping in the Balkans and has facilitated
NATO enlargement. There's a tremendous success story that can
be enumerated with those countries.
Overall we're contributing to the stability and prosperity
of democracy in former Communist countries. Eight of the
countries in north Central Europe no longer receive any of this
transition assistance. Three others in the Balkans will join
them in the next several years.
Probably the most dramatic example and a recent example of
our assistance making a difference is in Georgia. The
``revolution of roses'' did not happen because of our
assistance. It was a choice exercised by the Georgian people,
but our assistance was key to building the capabilities of
Georgians and Georgian organizations so they could make these
choices for themselves. We had developed in them the habit of
relying on these new institutions and the habit of relying on
themselves and the choices that they were capable of making
themselves.
President Saakashvili and 14 members of his new cabinet are
alumni of U.S. exchange programs. That is a dramatic statistic
and one that we see evidence of even in the work that they're
doing right now in Georgia.
The assistance that we provided in the November balloting
in Georgia, training of election monitors, funding of exit
polls, made the scale of election fraud immediately clear and
allowed the Georgian people to make the decisions that resulted
in the election of President Saakashvili in early January.
If Georgia is a prime example of what assistance can
accomplish, it's also an example of what remains to be done.
The success of the rose revolution isn't assured. We believe we
need to work intensively with the new government as they attack
deeply entrenched problems, particularly corruption, a decrepit
energy system, and lack of economic opportunity.
We are focusing on four of the most pressing assistance
priorities right now, and we would enumerate them as follows.
The first is cultivating partners in the global war on
terrorism. Here our partnerships are just beginning, but we can
help these countries become much more reliable partners through
FMF, the military training, IMET, and peacekeeping assistance.
The technical assistance we provide and the economic and
financial aid also enhance their ability to combat terrorist
financing.
The second priority on which we're focusing is supporting
the democratic process, especially including civil society. We
have elections coming up in 15 of the transition countries in
the next year. We want to make them as free and transparent as
possible. In order to do this, we must empower civil society to
monitor the elections to promote accountability. We need to
support independent media also. This not only enhances civil
society, but it also is what we consider an anti-corruption
measure.
One of the key mechanisms for supporting democracy is
exchange programs. The change in this region is generational.
We need to invest in the next generation. We now have more than
100,000 graduates from exchange programs in southeast Europe
and Eurasia. This was a policy that we implemented and
instituted right at the beginning of the break up of the former
Soviet Union.
One of the primary examples that we also have is that
Islamic leaders in Central Asia have gone home from U.S.
programs stunned by America's religious tolerance and ready to
spread the word to their own communities on how to go about
doing this.
The third priority on which we're focused is creating jobs
and supporting the new middle class. Jobs we believe are a
force for stability. Property ownership gives citizens a stake
in their countries and their communities. We are helping cut
excessive regulation, rationalizing tax policies, privatizing
land, and making loans available to small business owners.
But we have to do more. When we contemplate large pools of
unemployed young men, particularly in areas like Bosnia or the
Fergana Valley in Central Asia, there's a risk that extremist
ideologies will find fertile ground unless we have employment
for all of these people.
Our fourth priority is in fighting transnational threats.
This is another challenge, a scourge that does not respect
national borders, that is narcotics smuggling. We have a flood
of heroin from Afghanistan which transits through the former
Soviet Union and Southeast Europe on its way to Western Europe,
but unfortunately it doesn't just pass through, it leads a
trail of crime, brings trafficking in persons, disease, and
corruption in its wake.
We can only barely dent the problem with the resources that
we have available now. The President's fiscal year 2005 budget
request for the Freedom Support Act includes a $16 million
increase in resources to fight illicit drug flow, but this is a
very long-term effort that we have underway.
In summary, we think these foreign assistance investments
are crucial and this committee, and in particular you, Mr.
Chairman, have been stalwart supporters of this and we're very
grateful for that and we look forward to discussing some of the
issues you've already raised.
[The prepared statement of Ms. Jones follows:]
Prepared Statement of Hon. Elizabeth Jones
Mr. Chairman and other distinguished Committee members, I am
pleased to participate in your examination of U.S. foreign assistance
programs. U.S. assistance is key to achieving our foreign policy goals
in Europe and Eurasia, and we greatly appreciate your current and past
support in providing us with this important diplomatic tool. I am
pleased to have with me today Dr. Kent Hill, my counterpart from the
U.S. Agency for International Development. Also, sitting behind me is
Ambassador Carlos Pascual, the Coordinator of Assistance to Europe and
Eurasia. We are fortunate to have in our Bureau a Coordinator with
statutory authority over assistance in our region; we think this helps
maintain a strong link between foreign policy objectives and assistance
programs.
ASSISTANCE ADVANCES AMERICAN INTERESTS
In the region covered by my bureau, there is strong evidence of how
foreign assistance can serve U.S. national security interests. Our
military assistance, through the Foreign Military Finance (FMF),
International Military Education and Training (IMET) and the voluntary
Peacekeeping Operations (PKO) accounts, is helping us gain capable
allies in the war on terrorism and it strengthens the capabilities of
our new NATO allies. Our political and economic transition assistance
through the FREEDOM Support Act (FSA) and Support for East European
Democracy (SEED) Act is expanding Europe's zone of democracy and
prosperity eastward. The intense engagement we achieve through our
assistance, with governments and the broader society, is building
strong ties that will help anchor U.S. relations with these countries
for years to come. Moreover, the support we give to nurture grassroots
nongovernmental organizations will help these indigenous groups sustain
the impetus for open and competitive political and economic systems,
even beyond the lifespan of formal American assistance. No other donor
is as active as the United States in this area, and we will continue to
support civil society organizations as they strive to implant
themselves.
Since this Committee examined our foreign assistance in Europe and
Eurasia a year ago, the countries of Central and Eastern Europe and the
former Soviet Union have demonstrated that our assistance pays large
dividends. They support U.S. foreign policy priorities and are valued
partners for the United States in the global war on terrorism. Of the
27 transition countries, all of which have received substantial U.S.
assistance since the early 1990's, 24 are active supporters of
Operation Iraqi Freedom (OIF) and/or Operation Enduring Freedom (OEF)
(Albania, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria,
Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, the
Kyrgyz Republic, Latvia, Lithuania, Macedonia, Moldova, Poland,
Romania, Serbia and Montenegro, Slovakia, Slovenia, Tajikistan,
Ukraine, and Uzbekistan). Three Central Asian countries have provided
some form of basing to our troops. Our overall foreign assistance has
played a key role in cementing bilateral relations. Our military
assistance has allowed these countries to contribute effectively to
OEF, OIF, and the war on terrorism.
Our military assistance has also made it possible for many of these
states to be part of critical peacekeeping efforts in the Balkans. Our
security aid through the FMF, IMET and PKO accounts enhances
interoperability of European and Eurasian militaries with NATO. We have
helped new NATO entrants build capabilities that they will contribute
to the alliance. We have strengthened the ability of other nations to
contribute to United Nations peacekeeping missions in Lebanon, Sierra
Leone and Liberia. Increasingly, these countries are not just consumers
of assistance but contributors to our global security interests.
The United States has a strong national security interest in
fostering stability, prosperity and democracy in those European and
Eurasian countries that lived under Communism and Soviet domination.
The picture is mixed and the challenges are complex. This can be seen
very clearly by examining another significant development of the past
year that I know this Committee followed closely--the regime change in
Georgia. While Georgia is a relatively small country, the ``Revolution
of Roses'' that took place there last November had huge reverberations
in the former Soviet Union. It has caused governments throughout the
region to take stock of their internal political situation.
U.S. assistance did not play a role in the choice exercised by the
Georgian people for a change in leadership--nor should it have. But
U.S. assistance organizations so that they could make choices for
themselves about their future. Newly elected President Saakashvili is
an alumnus of a Freedom Support Act graduate fellowship at Columbia
University. Fourteen members of his cabinet, including Prime Minister
Zhvania and the ministers of Foreign Affairs, Defense, Agriculture,
Economy, Interior, Justice and Finance, also participated in U.S.-
funded exchange programs. U.S. assistance in Georgia's November
balloting, particularly our funding of exit polls and contributions to
the training of 2,500 domestic election monitors, made the scale of
election fraud immediately and abundantly clear. The sustained and
ultimately effective response of Georgia's political parties and NGOs
to the fraud was also a testament to the vibrancy of Georgian civil
society. Ultimate credit goes to Georgians themselves. That is as it
should be. But there is no question that the training, grants, and
exposure to new ideas provided through U.S. assistance programs helped
create the foundations for Georgians to exercise their political will.
EMERGING PROGRESS, CONTINUING CHALLENGES
With strong Congressional support for SEED and FSA over the years,
we have made considerable progress in many of these countries. Eight
countries in Central and Eastern Europe no longer receive transition
assistance, and three more will join them in the next several years.
Three countries (Poland, Hungary and the Czech Republic) have joined
NATO and seven more countries that have received SEED assistance
(Estonia, Latvia, Lithuania, Slovakia, Slovenia, Romania and Bulgaria)
will join NATO this year.
Over the past several years, many of these transition economies
have remained resilient in the face of a sluggish world economy.
Economic growth across all 27 transition countries in 2003 is estimated
by the European Bank for Reconstruction and Development (EBRD) to have
averaged 4.7 percent. Most of the economies of the former Soviet states
have finally reversed the painful economic contraction that occurred
after Soviet structures collapsed and before market policies took hold.
Their GDPs are estimated to have grown by an average of 6.2 percent in
2003, but some of these economies (Russia, Kazakhstan, Azerbaijan)
still remain overly dependent on energy sales.
Most countries of Southeast Europe and Eurasia remain poor. Ten
have a per capita GDP under $1,445, the World Bank cut-off for low-
income countries. Unemployment remains a scourge in the Balkans, the
Caucasus countries and much of Central Asia, with jobless rates
(especially among youth) ranging from 20 to 30 percent, and in some
cases much higher. Such high unemployment in politically volatile areas
can threaten stability. Small and medium enterprise development is a
key tool to combat this issue. Countries also need to rebuild broken
trade links within the region.
The process of democratic reform has also been uneven across the
region. While every leader in the region claims legitimacy through a
democratic process, the quality of democracy ranges from countries like
Estonia, Latvia, Lithuania, Poland, Hungary, the Czech Republic,
Slovakia and Slovenia, which have had over a decade of free and fair
elections, to the dictatorships in Belarus and Turkmenistan. In between
there are countries that improve from election to election. In the
former Soviet Union we have seen a trend toward less outright
manipulation of elections but use of strong central controls to
manipulate the pre-election environment and access to media.
Judiciaries are weak--salaries are low--and are subject to corruption.
We must train judges and instill standards that will make the judicial
branch of government a check on oligarchic rule. This process in some
countries will be generational.
Since the beginning of our SEED and FSA programs, we have invested
heavily in the creation of a vibrant civil society. Nonexistent during
the Soviet period, groups that advocate for business, environment,
health, human rights, media, and hundreds of other causes are emerging
as communities organize themselves and address their most basic
problems. These groups allow for broad citizen participation in civil
society and help educate communities, citizens and voters. These NGO's
are essential to making govermnent accountable.
Many of the greatest obstacles to a full economic and democratic
transition in the region are transnational. Virulent organized
criminals who traffic in narcotics, human beings and weapons are a
growing problem in the region and threaten the forward development of
rule of law and good governance systems. Corruption is a stubborn
problem in many countries, particularly when there is no clear message
from the most senior government officials that it must stop. HIV/AIDS
is poised to ravage these transition countries, particularly Russia,
Ukraine and the Baltic States.
In the Balkans, SEED assistance has contributed to stability in an
area torn by a decade of violent ethnic conflict that ended just a few
years ago. As Southeastern Europe advances toward Euro-Atlantic
integration, we are hastening the day when the international military
presence in the region can be reduced and ultimately withdrawn. Serbia
and Montenegro, in many ways the linchpin in the Balkans, made a
dramatic turn-around several years ago. We want that to continue and
see the country develop as a positive regional player. Its full
cooperation with the International Criminal Tribunal for the former
Yugoslavia is of course key to its continued progress in this regard.
LOOKING FORWARD: STRATEGIC PRIORITIES
These complex trends present us with complex foreign policy
challenges. American assistance programs are a crucial tool to help
these transition countries become stronger partners with shared values.
I would like to outline four sets of assistance priorities to advance
our foreign policy interests:
Partners in the Global War on Terror. As I have mentioned, many
countries are already contributing to international peacekeeping
efforts and to the global war on terrorism. These partnerships are
nascent, and it is in our interest to help these countries do more. For
this purpose, our FMF, IMET and PKO assistance accounts play a crucial
role. This assistance helps build capabilities that countries use to
advance peace and stability. If not for the participation of these
countries in the Balkans, OIF and OEF, the burdens on American troops
would be greater. We need our partners to be interoperable with the
United States and NATO. It helps when we train these troops in modern
military practices. In today's world of global security challenges, we
need reliable partners. Our FMF and IMET assistance is an investment in
our own security.
Support for Democratic process, including civil society. There are
important elections in 15 transition countries in the next year,
including Presidential elections in Russia, Slovakia, Ukraine, Romania
and Macedonia, and Parliamentary elections in Belarus, Slovenia,
Uzbekistan, Kazakhstan, Tajikistan, Georgia and Romania, as well as
Kosovo. We have learned that it takes at least a year to address
electoral issues and can take generations to make societal changes. We
rely heavily on an experienced and dedicated cadre of partners to
monitor these elections and try to make them increasingly fair,
transparent and democratic. The National Democratic Institute, The
International Republican Institute, the International Foundation for
Electoral Systems, the National Endowment for Democracy, the
Organization for Security and Cooperation in Europe, to name just a
few, all help to advance our efforts to see free and fair elections
held in the transition countries. We increase our funding in the year
prior to municipal, parliamentary and Presidential elections in the
transition countries where we are active.
More than ten years ago we understood that the transitional
challenges in this region would be generational, and that we needed to
invest in the people who could carry the torch of reform forward in
their own societies. I mentioned the Georgian example. There are now
more than 100,000 graduates from exchange programs in Southeast Europe
and Eurasia. The greatest asset we offer them are American values--an
appreciation for freedom, a respect for human rights. Islamic leaders
in Central Asia have gone home from U.S. programs stunned by America's
religious tolerance, and ready to spread the word in their communities.
Creation of jobs and support for the emerging entrepreneurial
class. Quite simply, jobs for a middle class are a force for stability.
Property ownership gives citizens a stake in their country. Support for
job creation may seem unexciting. In this region it is radical.
In each of our transition countries, we are putting together
financial and regulatory packages key to freeing up the private sector.
Lending facilities and the creation of capital markets, deregulation,
rationalization of tax policies, commercial law reform, promotion of
regional trade, identifying areas of competitiveness and privatization
of land--especially in rural areas--are the keys to the creation of a
vibrant market economy. Mortgage programs have also helped free up
large amounts of capital. In the Baltic states, through the Enterprise
Fund, and in Kazakhstan, through a USAID program, we have had two
highly successful mortgage programs.
Elsewhere in the economic sector, we have focused on the growth of
small and medium enterprises and an emerging middle class of
entrepreneurs. In Ukraine, twenty ``one-stop shops'' for business
registration reduced registration time from 30 to 14 days. In
Kazakhstan, technical assistance and training for mortgage lending have
facilitated $200 million in mortgage loans and another $67 million in
secondary market transactions. Throughout the region, the United States
has partnered with the European Bank for Reconstruction and Development
to support micro and small-business lending. A U.S. government
investment of $71.3 million, coupled with $600 million in capital from
other donors has produced over 300,000 loans worth in excess of $2
billion for small and micro lending in 13 different countries.
Repayment rates are averaging over 99 percent.
Fighting Transnational Threats. We are devoting increasing
resources to combating trafficking in humans, and HIV/AIDS, seeking to
focus increased resources to efforts to fight both those scourges. With
regard to combating trafficking in persons (TIP) across Europe and
Eurasia, I want to note that we have raised our funding levels for
anti-TIP activities considerably over the past three fiscal years and
we are hopeful that our assistance and diplomatic efforts in this area
will help those countries of the region that face significant TIP
problems to deal with them successfully.
But I want to focus today on another serious transnational problem,
narcotics smuggling and the linkages to organized crime. Heroin from
Afghanistan is flooding into the former Soviet Union and Southeast
Europe, but it is not just transiting these states. It is contributing
to crime, disease and corruption to such an extent that it threatens to
overwhelm recent gains, particularly in Central Asia. Russia, Ukraine
and the Balkans have also been victims of this scourge, which is the
principal cause of escalating HIV infection. For FY 05 we are asking
for an increase in the FREEDOM Support Act account of approximately $16
million for programs that combat the drug trade in Central Asia. We are
actively coordinating with the European Union and the United Kingdom.
We are drawing on the resources of all key American agencies including
the Department's Bureau of International Narcotics and Law Enforcement
Affairs Matters, the U.S. Drug Enforcement Agency, the Federal Bureau
of Investigation, the Department of Defense, and our intelligence
agencies. At this point, we can barely dent the problem with available
resources.
CONCLUSION
I want to leave time for Dr. Hill, who represents the major
implementer of our assistance programs, USAID, to give his views.
But before I conclude, I want go back to the point I highlighted at
the beginning of my remarks: the overwhelming support we have received
from the recipients of SEED and FSA assistance in the global war on
terrorism. It is worth pointing out that this support is not just based
on the policies of governments currently in power. I truly believe that
in many cases it is based on shared values that go deeper into these
societies. These shared values have been promoted by our foreign
assistance--including, very importantly, our public diplomacy and
exchange programs--for the past 15 years since the fall of the Berlin
Wall. Through our aid programs, Americans are engaging with non-
governmental organizations, educational institutions, private
companies, students, scientists, and many, many others. And this
engagement is helping to form a network of linkages between our society
and their societies, a web of linkages and shared values strong enough
to withstand the ups and downs of bilateral relations in the long run.
That is an excellent return on the investment of our foreign assistance
dollars, and it is one that members of this Committee, and particularly
you, Mr. Chairman, can be proud to have supported.
Senator Allen. Thank you, Secretary Jones. I appreciate
your testimony.
Mr. Hill.
Mr. Hill. Thank you.
Senator Allen. Good to have you with us. Would you share
with us your testimony.
STATEMENT OF HON. KENT R. HILL, ASSISTANT ADMINISTRATOR, BUREAU
FOR EUROPE AND EURASIA, USAID
Mr. Hill. Indeed. Chairman Allen, it's a privilege to be
here and to be asked to testify, I have fond memories of
meeting with you before my confirmation over 2\1/2\ years ago,
and so it's good to be back with you again. And it is a
privilege to be here with Ambassador Jones, my colleague from
the State Department. I want to mention that also in the room,
though not testifying today, is Ambassador Carlos Pascual, who
is the person with whom we deal at USAID several times a week,
the coordinator of all assistance for Europe and Eurasia, and
someone who knows this region extremely well because he spent
the last 3 years as the Ambassador to Ukraine. We consider it a
privilege to work with Ambassador Pascual.
Senator Allen. Welcome.
Mr. Hill. I couldn't help but think when you made the
observation, Senator Allen, that so much has happened in this
part of the world these last decades that when November the 9th
comes we will celebrate the 15th anniversary of the coming down
of the Berlin Wall. We couldn't have predicted that happening
as quickly as it did and we've been trying to deal with that
ever since, and that raises the issue of what do we have to
show for what we've tried to do during this period.
I want to just say one quick word about several items that
I think the Congress can be proud of that have been
accomplished with U.S. taxpayer dollars. First, we know that
there has been a phase-out to our assistance to eight of those
countries. Indeed, tonight I'm flying off to Warsaw to meet
with the representatives of eight of those countries in the
northern tier of Eastern Europe to talk about what's happened
since we left, since they graduated in 1996 to 2000, and they
have not only done well, but they've done very well since that
assistance ended.
We have returned finally to positive growth rates in the
economies in Europe and Eurasia for the most part, averaging
about 5 percent a year for these last 4 years. Of course, that
doesn't tell the whole story because it doesn't tell you the
breakdown within the countries, but still it's a positive
trend.
There have been strides, as you correctly noted, in the
area of democracy, and 21 of our recipient countries are marked
by Freedom House as being either free or partly free at this
point. The integration of our region into global organizations
is very encouraging. Eight of our recipients will be joining
the European Union this year and two more are anticipated to
join in 2007. Seventeen have become members of the World Trade
Organization and 10 will have become members of NATO by the end
of this year. That's quite an accomplishment for those
countries, and part of that, I think, rests on the shoulders of
the assistance that was provided by this Congress.
But it would be an incomplete story not to address the
question that Senator Lugar raised in his letter about these
hearings when he asked about the continuing challenges. He
asked, what the most pressing issues are in Europe and Eurasia
in light of the reductions in FSA and SEED funding levels. So
let me just suggest what the major challenges are for us.
I want to say something first about the slow pace of
democracy development in much of Eurasia. You'll notice that
virtually every place I've talked about to this point was not
in Eurasia, but rather was in Eastern Europe. In Eurasia the
progress has been much, much slower, and in fact if you graph
democratically where these countries are based on indicators of
civil society, elections, et cetera, you'll find that the peak
moment was about 1991 about the time we began our assistance in
many respects. That was a high point for Russia and many of
these other countries.
Not a single year since then have the indicators of
democracy or civil society actually gone up. Sometimes it's
plateaued. Sometimes it's gone down in places, like Russia,
where the last 2 or 3 years, the decline has been more steep.
But the answer to this as to why this is happening is
because the historical pull of what I call the authoritarian
past in these countries has been very, very powerful, and I
think what we're really doing with our assistance is that we
are planting seeds that we hope one day will grow, or at least
slowed a backward trajectory, but it's been disappointing to
see the struggle that we've had these last years in these
countries.
And, of course, some of the countries, if you talk about
Turkmenistan or Belarus, are very resistant to change. But even
Russia and Ukraine and Moldova have been disappointing in what
they've been doing lately. So that's the first major challenge.
The second major challenge has to do with HIV/AIDS, and
despite the fact that the funding levels have been going down,
the percentage of our portfolio and the actual dollars that we
are spending on HIV/AIDS prevention in this part of the world
have actually gone up.
What we've accomplished with that is that we have slowed
the rate of increase of the infection, but we have not stopped
it. And so the consequences for a place like Russia could be
catastrophic demographically if it is not stopped, and it could
have major impact on the stability of Russia and of course
international relations could be affected as well. So that's
the second major challenge that we face.
A third major challenge that we has to do with
unemployment, and of course, the cold hard facts are that in
the post-Communist transition period, in many of these
countries the transition to democratic and free and
economically free societies has been very slow, and this has
been a major problem.
But this is not just a problem because of the suffering
that ensues when people do not have jobs and have economic
duress. This is a problem because wherever there are these
kinds of problems, particularly when you are dealing with
countries that border Afghanistan or Iran, you're dealing with
creating a fertile soil, a fertile place for terrorist
advocates to gain ground.
And they have a particular advantage in a post-Communist
situation, where even though many of our countries are Islamic
historically, because of the Communist years, they haven't
really been given an opportunity to know the history of Islam.
And when they hear Islamic radical rhetoric, they are not
inoculated against knowing that that doesn't necessarily speak
for, and does not speak for, a more moderate tradition within
their own areas like Central Asia, and so this is of concern.
Senator Allen. Let me just interrupt. Could you elaborate
on that? Muslim countries, they hear this radicalism, they're
not prepared to know the----
Mr. Hill. During the Soviet period, religious instruction
was not allowed for Christians, for Muslims, for Jews, for
anybody, even people with historical tradition and religion
simply were not allowed to know anything about their tradition.
That means that there are millions of unemployed youth in
Central Asia who know very little about Islam. They may be in
historically Islamic areas but they know little about Islam.
If a person who comes from outside the area and says, let
me tell you what Islam is, and their interpretation of Islam is
a radical variety of that--maybe they've come from Pakistan or
Afghanistan or Saudi Arabia--those people who hear that message
at age 17 have nothing in their memory bank to say, wait a
minute, that's not what I was told the Koran says, that's not
what the tradition of the 15th and 16th century of Islam in
Central Asia is.
That's why we argue, and we had a discussion recently with
the Uzbek Foreign Minister and the Uzbek Ambassador to the
United States this week for lunch, and I said, if you continue
to have a policy that discourages religious instruction in the
mosques, you are depriving your people of an opportunity to be
inoculated against radical terrorist rhetoric.
So that is a particular problem to this part of the world
because of the Communist past, which makes them more vulnerable
when you combine it with the economic duress of this particular
period.
Senator Allen. Is that your testimony?
Mr. Hill. Yes.
Senator Allen. Well, thank you for answering.
I should not have interrupted you. Thank you, Mr. Hill. But
the way you were saying that I would have asked you a question,
but it would have been better in the midst of it all as you've
given us further concerns. Carry forward.
Mr. Hill. Well, I actually like it because it gives me an
excuse to talk about what I would have otherwise had to leave
out.
Senator Allen. You may proceed.
Mr. Hill. OK. Another problem is corruption, and it is so
pervasive in this region, another legacy of the Communist era,
and what it means is, because of the porous borders, the
problems with narcotics and trafficking of people are very,
very pervasive. And many people do not realize, but from this
region come 25 percent of all of the victims of trafficking
worldwide. They come from Europe and Eurasia. And so this is an
area that's going to take a lot of work.
Now, you mentioned the funding declines and how it affects
our work, and it is fair to note, as Ambassador Jones did, that
there are declines. In fact, concerning the proposed 2005
moneys that are given to us, when they are--if they are given
at the level we have asked, that would represent a 6 percent
decline. But if you go back to 2001, you find that our numbers,
collective numbers for SEED and FSA accounts have actually
declined by 35 percent, and the USAID portion of that, which is
usually between 65 and 70 percent have gone down by 31 percent.
So indeed we do have less dollars to deal with these
problems, which makes absolutely central the next point I want
to make. Is there a rational, systematic way to think through
how we apply funding cuts to the countries? And it's at this
point that I am proud to note that we have been using and are
using a monitoring phase-out device with Ambassador Pascual
that was developed in the Bureau for Europe and Eurasia at
USAID a number of years ago, which allows us to chart economic
and democratic progress in all of our countries. You can see it
on the graph.\1\
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\1\ The graph and chart referred to by Mr. Hill, during his
testimony, can be found in his prepared statement on page 113.
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We've got another chart which shows how they're doing in
terms of social development, and you can tell exactly how
countries are doing and we can tell at what point countries in
the past phased out of assistance. And when those countries
that are now receiving assistance start to approach that point,
we know that we can start talking about phase-out. It's very
rational, it's very systematic, it allows us to deal with
changes in situations from year to year, to adjust the
portfolios, or to decide who should phaseout.
Finally, I just want to thank you again for the support
that the Congress and the Senate gives to our efforts in this
part of the world although it's not in the headlines as much as
other parts of the world right now. We all know from the 1990s
and what happened in the Balkans and Kosovo that it can get
difficult again quickly. And we appreciate the support. We
think there's a lot of important work yet to be done, and I'm
glad to be here as a part of what we are doing. We'll be
pleased to answer questions and I would also ask that my full
written testimony be included in the record.
[The prepared statement of Mr. Hill follows:]
Prepared Statement of Hon. Kent R. Hill
INTRODUCTION
Chairman Allen and other distinguished members of the Committee on
Foreign Relations, thank you for the opportunity to testify on U.S.
foreign assistance programs in the countries of Europe and Eurasia.
It has been over 14 years since this Committee authored the Support
for East European Democracy (SEED) Act of 1989. Not long after the U.S.
Agency for International Development (USAID) and other U.S. agencies
began operating in central and eastern Europe, the Soviet Union
collapsed. This Committee responded by passing the Freedom for Russia
and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support
Act (FSA) of 1992. From the very beginning of the transition, USAID has
been the main Federal agency managing programs to promote democracy, to
introduce and institutionalize a market economy, and to alleviate the
social and humanitarian problems in the former communist states of
Europe and Eurasia.
I am happy to report that tremendous progress has been made since
1989, especially in central and eastern Europe. Yet great challenges
remain, especially in those states that endured longer periods of
communism, centuries of authoritarian rule, or recent civil wars.
Peace, prosperity, and regional stability are the underlying objectives
of USAID engagement in this part of the world.
The specific challenges that most concern our assistance programs
in certain countries, as detailed later in this report, include
declining quality of democracy and governance, increasing prevalence of
HIV/AIDS and other infectious diseases, excessively high unemployment
levels, continuing corruption in both public and private institutions,
and trafficking in persons. Also, we appreciate Congress's support in
providing the Agency with our full operating expense request and new
program authorities enabling us to increase staff and capacity.
THE GEOPOLITICAL AND SECURITY CONTEXT
During the second half of the twentieth century, the main threat to
the United States emanated from Central Europe and the Soviet Union.
Congress understood the geopolitical and security importance of the
region when it first authorized foreign assistance to the region more
than a decade ago. The world has changed dramatically, but the Europe
and Eurasia (E&E) region continues to be of geopolitical importance.
The United States has many new allies. Czech Republic, Hungary, and
Poland have joined the North Atlantic Treaty Organization (NATO).
Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia
expect to join NATO this year.
The 1990s were marked by the internecine warfare accompanying the
collapse of the former Socialist Federal Republic of Yugoslavia. These
events not only caused humanitarian catastrophes, but threatened the
peaceful democratic and economic transitions in neighboring post-
communist states. The United States and its NATO allies intervened with
military, diplomatic, humanitarian, and technical assistance to protect
human rights, establish peace, and lay the foundation for sustainable
democracies and open market economies. While marked progress has been
made since the Milosevic era of the 1990s, ethnic and nationalist
tensions continue and the area remains an important geopolitical and
security concern to the United States.
Since the September 11, 2001 attacks on the United States, the
geopolitical and security importance of the post-Soviet states of
Central Asia and the Caucasus has increased dramatically. Countering
authoritarianism and economic stagnation, which provide the fuel for
domestic unrest, religious extremism, and international terrorism, is a
key to protecting U.S. interests in the region. Central Asia's
tremendous oil and gas resources add to its importance to the United
States. The proven oil reserves of just two states on the Caspian Sea
basin, Kazakhstan and Azerbaijan, are just slightly less than those of
the United States. Also, Kazakhstan's Kashgan field is one of the most
important petroleum finds in 30 years.\1\
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\1\ National Energy Policy, pp. 8-12, Report of the National Energy
Policy Development Group, GPO: May 2001.
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In the Southern Caucasus, the area's significant oil reserves, its
unresolved ethnic and nationalist conflicts, as well as the threat of
international terrorism underscore those states' geopolitical and
security importance to the United States. An uneasy stalemate over
Nagorno-Karabakh exists between Armenia and Azerbaijan. In Georgia,
separatist movements in Ajaria, Abkhazia, and South Ossetia threaten
the integrity of the state internally, while the conflict in the
neighboring Russian Republic of Chechnya threatens Georgia externally.
Both Azerbaijan and Georgia provide the route for the planned Baku-
Thilisi-Ceyhan pipeline that will bring the region's vast oil and gas
resources to world markets.
Trade with and investment in the E&E region are certain to benefit
the United States increasingly, as recognized by the Committee on
Foreign Relations when it wrote the FREEDOM Support Act soon after the
collapse of the Soviet Union.\2\ From the natural resources sector to
the industrial equipment sector to the service sector and beyond, the
United States is broadening its trade relationships with the region.
U.S. exports to the region totaled almost $7 billion in 2002 with
direct investment adding to no less than $2 billion in that same year.
USAID's work to combat corruption, introduce and promote enforcement of
contract and other commercial laws, help E&E countries join the World
Trade Organization, and lay the foundation of a private sector have
helped pave the way for American trade and investment.
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\2\ Section 101(7) of the FREEDOM Support Act (P.L. 102-511).
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Ethnic, religious, and political extremism are major sources of
instability in several areas within the E&E region. The role of Islam,
in particular, must be monitored, but at the same time it is vital that
the leaders of the region democratize and respect human rights in order
to avoid adding fuel to the fire for any kind of extremism.
Finally, America's most important geopolitical and security
interest in the region is its relationship with Russia. The world's
largest nation in area controls thousands of nuclear warheads and,
despite its problems, fields one of the largest conventional militaries
in the world. Russia is also an energy powerhouse. In 2000, it was the
world's second largest exporter of oil. It also holds one-third of the
world's proven natural gas reserves.\3\
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\3\ National Energy Policy, pp. 8-12, Report of the National Energy
Policy Development Group, GPO: May 2001.
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STRATEGIC GUIDANCE
Our work in the E&E region is integrated with U.S. foreign policy
as set forth in several key documents: the President's National
Security Strategy,\4\ the Joint State Department/USAID Strategic Plan
\5\, and USAID's discussion paper entitled ``U.S. Foreign Aid: Meeting
the Challenges of the Twenty-first Century.'' \6\
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\4\ The National Security Strategy of the United States of America,
The White House, September 2002.
\5\ Security, Democracy, Prosperity. Department of State/USAID
Strategic Plan for Fiscal Years 2004 to 2009: Aligning Diplomacy and
Development Assistance, August 2003.
\6\ U.S. Foreign Aid: Meeting the Challenges of the Twenty-first
Century, USAID, January 2004.
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The National Security Strategy integrates defense, diplomacy, and
development into one overall foreign policy strategy. The E&E Bureau is
working towards five of the eight objectives identified by the
President's plan. We are championing aspirations for human dignity by
promoting human rights and democracy throughout the E&E region. Our
efforts in private sector development are helping to ignite a new era
of global economic growth through free markets and free trade. Our
health care and social sector programs expand the circle of development
by opening societies and building the infrastructure of democracy. We
work with others to defuse regional conflicts in the Balkans, the
Caucasus, Cyprus, and Northern Ireland. Finally, USAID is adopting
exciting new public-private sector business models such as the Global
Development Alliance to leverage new resources to meet U.S. foreign
policy objectives and transform America's national security
institutions to meet the challenges and opportunities of the twenty-
first century.
We in USAID's Bureau for Europe and Eurasia (E&E) are heartened by
the adoption of the Joint State Department/USAID Strategic Plan, which
was created to harmonize State Department and USAID policies and
actions, consistent with the National Security Strategy. Our Bureau has
long had an excellent and very close working relationship with the
State Department's Office of the Coordinator for Assistance to Europe
and Eurasia. We are glad that the Agency and the Department have now
moved towards a level of cooperation that has been the hallmark of the
E&E Bureau's relationship with the Coordinator's Office ever since the
Bureau and Coordinator's Office came into existence.
The Joint Strategic Plan outlines 12 strategic goals for the
Department and the Agency. E&E Bureau programs promote 9 of those
goals. Throughout the region, one of the E&E Bureau's key strategic
assistance areas is the establishment of democracy and human rights.
Another key strategic assistance area is the creation of economic
prosperity and security. Our Bureau also has a major emphasis on social
and environmental issues to safeguard and bolster gains in other
sectors. We promote regional stability through our conflict reduction
work--most of which is at the grassroots level--in the Balkans, the
Caucasus, Central Asia, Cyprus, and Northern Ireland. The E&E Bureau
works on counterterrorism by diminishing the underlying conditions
linked to terrorism--such as weak institutions and neglected social
systems--and by emphasizing accountable, legitimate, and democratic
government. We minimize the impact of international crime and illegal
drugs through our work to promote the rule of law, transparent
financial systems that inhibit money laundering, and anticorruption
regimes. In the unfortunate cases when it has been necessary, we have
provided humanitarian responses due to crises in the Balkans, the
Caucasus, and elsewhere. Through public outreach in Mission-level
strategy development as well as training and exchange programs, our
Agency has been involved in public diplomacy and public affairs. Our
Bureau is strongly committed to management and organizational
excellence. For example, it has provided the Agency with models of
information technology innovation in the financial management field and
continues to have one of the Agency's most efficient staff-to-program
dollar ratios.
In light of the evolving nature of U.S. assistance in a rapidly
changing global context, the USAID discussion paper suggests that we
must increase aid effectiveness and policy coherence through greater
clarity of purpose, alignment of resources with objectives, and
strategic management. Our work is consistent with these ends. A
fundamental element of our mission is to promote transformational
development, consisting of sustained democratic, economic, and social
change in the E&E region. With our work in the Balkans and the
Caucasus, we also strengthen failed (or recovering) states. In response
to dire conflicts, we have provided humanitarian relief. To achieve
specific U.S. foreign policy goals, we support strategic states such as
Cyprus, Ireland, and Turkey. The E&E Bureau also addresses global and
transnational issues such as the spread of HIV/AIDS, multiple-drug-
resistant tuberculosis, trafficking in persons, and environmental
degradation.
Over the past several months, the E&E Bureau closely reviewed the
larger strategic parameters set in the National Security Strategy, the
Joint State/USAID Strategy, and the USAID discussion paper. We then
took stock of the E&E region by measuring progress to date and
assessing the remaining challenges. As a result of these reviews and
analyses, the E&E Bureau drafted a new strategy that will guide our
programs over the next four years, based on our mission to assist the
transition of Eastern Europe and Eurasia to sustainable democracies and
open market economies. For some countries, phase out of USAID
assistance is on the horizon owing to their continued success. Yet
other country programs are facing entrenched challenges that will be
overcome only with hard work, close vigilance, and continued U.S.
development assistance.
THE COUNTRY PERFORMANCE CONTEXT
Several years ago, the E&E Bureau developed a system for monitoring
country progress that compiles, tracks, and analyzes independently-
produced indicators from a variety of international sources. The chart
that immediately follows shows a strong tendency for economic reform to
accompany democratic freedom in individual countries. It also
highlights the large disparities among E&E countries in progress toward
economic and democratic reform as well as their standing vis-a-vis the
European Union.
The E&E Bureau classifies the E&E region into six groups of
countries to identify the major gaps between performance and exit
targets.
The Northern Tier Europe countries (the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) are the
most advanced. They have achieved democratic freedoms roughly on par
with some Western democracies and are working toward meeting EU
economic reform standards. The Northern Tier European countries have
considerably more to accomplish in second stage economic reforms,
especially in competition policy. (First stage reforms entail the
reduction of government intervention and ownership, while second stage
reforms focus on the complex task of building market-based
institutional capacity and better public governance.) All have
graduated from substantial USAID bilateral assistance, but their
continued progress is monitored for the lessons it provides for other
countries.
The Advanced Southern Tier Europe countries (Bulgaria, Croatia, and
Romania) have attained a level of democratic and economic reform
equivalent to that attained by the Northern Tier countries when USAID
was preparing to phase out its Missions in those countries.
Nonetheless, unemployment rates are still very high. These high rates
have been accompanied by a significant drop in real wages, still well
below the levels of 1989. Macroeconomic stability is fragile,
particularly in Croatia and Romania, though perhaps not much more than
in many of the economies in the Northern Tier countries. Inflation
continues to be high in Romania, but is falling impressively.
Macroeconomic imbalances (fiscal and current account deficits) are high
in Croatia, although no higher than the Northern Tier average.
In the Western Balkans (Albania, Bosnia-Herzegovina, Kosovo,
Macedonia, and Serbia-Montenegro), unemployment rates are the highest
of the transition country groups, particularly among youth, a
development only partially mitigated by the large informal economies
within these countries. These countries are poorly integrated into the
world economy, lacking even intra-regional trade. Macroeconomic
imbalances are uniformly high, amongst the highest of all the
transition country groups.
The countries classed as Resource-rich Eurasia (Russia, Kazakhstan,
and Azerbaijan) particularly lag in measures to fight corruption. All
three countries have fewer democratic freedoms today than in 1991.
Backsliding in democratization has continued in recent years,
particularly in Kazakhstan and Russia. Their private economic sectors
continue to be dominated by large firms with significant market power.
The major development task for these economies is to broaden economic
growth beyond what has occurred in the energy sector. This will be
hampered by their poor performance in human capital development, in
which the sub-region scored lowest within E&E. Life expectancies in all
three countries are among the lowest of all the transition countries.
Health and education expenditures remain very low by any standard,
while secondary school enrollment rates have declined over the 1989-
2001 period from 78 to 70 percent in Russia, 76 to 54 percent in
Kazakhstan, and 63 to 33 percent in Azerbaijan.
The countries of the Resource-poor Eurasia sub-region (Armenia,
Georgia, Kyrgyz Republic, Moldova, Tajikistan, and Ukraine) have the
largest gap between progress in first stage and second stage economic
reforms. Sustaining reform gains will be especially difficult unless
more progress is made in structural reforms and in building
institutional capacities. Export shares are the lowest of all the six
country groups (7 percent of GDP in 2001). These countries have neither
the strong incentives for reform that EU membership provides to central
and eastern European countries, nor the natural resources to sell as do
the resource-rich Eurasian countries. Per capita income in this sub-
region is the lowest in Europe and Eurasia, as are secondary school
enrollment rates, education expenditures, and health expenditures.
Among economic reforms, non-bank financial reforms and infrastructure
reforms lag the most. Public governance and administration, including
anti-corruption measures, also perform very poorly.
Countries in Non-reforming Eurasia (Belarus, Turkmenistan, and
Uzbekistan) have not yet come close to completing first stage or second
stage economic reforms. Economic structural change lags considerably as
illustrated by the small share of the economy controlled by the private
sector, only 32 percent. Inflation is much higher in Belarus than
elsewhere in E&E, serving as an indicator that structural reform is
needed. Secondary school enrollments and health and education
expenditures are especially low in Turkmenistan and Uzbekistan, and
under-five mortality rates are very high. In contrast, Belarus' human
capital indicators are more in line with east European standards.
THE ROBUST RESPONSE FROM USAID
Through FY 2004, Congress appropriated a total of $16.3 billion in
SEED and FSA assistance to the region. USAID has managed about 65
percent of this total with the remainder transferred to other USG
agencies for security, nuclear safety, fiscal advisory, and other
assistance programs.
In coordination with the State Department's Assistance Coordinator
for Europe and Eurasia (EUR/ACE), USAID has played a lead role in
planning and implementing assistance programs focused into three goal
areas:
democracy and governance (rule of law, civil society,
political processes, independent media, and local governance);
economic restructuring and growth (privatization, fiscal
systems, enterprise development, financial sector, and energy);
and
social transition (humanitarian assistance, health,
education, and related social protection issues).
Generally, activities have concentrated on the policy and
institutional requirements for reform; the development of grassroots
and local organizations such as NGOs, political parties, professional
organizations, small and medium private enterprises (SMEs), and
municipal government; and the promotion of health reform and other
targeted social interventions to mitigate the adverse impacts of
change. Humanitarian assistance was provided in the early years,
especially in the aftermath of major military conflicts in the Balkans.
President Bush's National Security Strategy, which embraces the
development of democracy and market economies as fundamental pillars of
U.S. foreign policy, is bearing fruit in Europe and Eurasia. In my
testimony last year, I highlighted successes at the macro level
including, amongst others, the emergence of positive economic growth in
the region, the great strides made in democracy as evidenced by 21 of
our recipients ranked as free or partly free by Freedom House, and the
impending integration of eight of our recipients into the European
Union. Even more impressive may be some of the people-level impacts
that USAID programming is helping produce in the countries in which we
work.
Owing to our efforts with small and medium enterprises, that
sector now employs over 4.3 million people in Ukraine.
In Russia, a nationwide network of financial institutions
that we helped strengthen has made over 114,000 loans with the
amount lent doubling over the past year to reach $129 million.
The loans have significantly enabled entrepreneurs to grow
their businesses.
We are helping E&E countries to penetrate markets overseas.
In the case of Macedonia, we helped establish a National
Entrepreneurship and Competitiveness Council, two clusters that
developed action plans to spur exports, and a Quality Control
laboratory for meat and dairy processors.
Our assistance in the areas of observing elections, voter
education, monitoring, and exit polling paved the way for the
transparent conduct of January's key presidential election in
Georgia, a first in recent memory for this strategically-placed
country. Also, our assistance with parallel vote tabulation in
last November's flawed parliamentary elections was instrumental
in proving that the official results did not reflect the will
of the people.
Seventy-six Citizen Information and Service Centers have
been established in Bulgaria, enabling local governments to
better serve the needs of their constituents.
In Kazakhstan, 5 percent of intravenous drug users
nationwide have already been reached through the deliverance of
affordable, high quality condoms and the training of 260 peer
educators and 43 teachers. These important developments are
helping arrest the spread of HIV/AIDS.
The Roll Back Malaria program in Tajikistan has established
surveillance centers in each of the country's four provinces
that provide equipment and training to diagnose the disease
that has reached epidemic proportions in a number of our
countries.
In Romania, our program permitted the number of orphans in
institutional care to be reduced by 8,550 last year, the
closure of 43 institutions providing substandard care, and the
drafting of legislation to set standards for adoption.
CURRENT BUDGET PATTERNS
The FY 2004 appropriation and FY 2005 request levels continue to
decline, reflecting the higher priority given to other countries in the
world such as Iraq and Afghanistan, the progress that a number of our
recipients have made especially on economic policy, and the deferral to
the European Union for assistance to some of our SEED recipients.
The SEED appropriation for FY 2004 is $442 million, of which USAID
manages $314 million (71 percent). For USAID, this constitutes a
decline of a little more than 12 percent from $359 million in FY 2003.
Overall SEED levels declined 34 percent from 2001 to 2004 with the
portion of these funds used by USAID decreasing 2 percent. In FY 2005,
the SEED request totals $410 million, of which $271 million (66
percent) is proposed for USAID programs. The overall USAID level is
down almost 14 percent in FY 2005 from a year earlier, reflecting both
the overall decline in SEED levels and the decline in the USAID share.
SEED levels had peaked in FY 2001 at $674 million.
SEED levels for all countries or other separately budgeted regions
are lower in FY 2005 than they were in FY 2003. The steepest declines
will take place in Croatia, Macedonia, and Montenegro. For its part,
Croatia is on a glide path toward phase-out, with an end set for SEED
assistance of 2006. On the other hand, levels fall off most modestly
for Bulgaria from FY 2003 to FY 2005. Bulgaria, the other country in
the region for which a phase-out date (2006) has been established, has
been unwavering in its support for the war against international
terrorism. In addition, while coming down, request levels remain robust
in FY 2005 for Bosnia ($41 million), Kosovo ($72 million), and Serbia
($87 million). These countries continue to contend with the aftermath
of ethnic upheaval and its pursuant heavy economic and social costs.
The FY 2004 appropriation for FSA is $584 million, of which USAID
manages $410 million (70 percent). For USAID, this amounts to a fall of
more than 12 percent from $468 million a year earlier. Overall FSA
funding levels declined 18 percent from 2001 to 2004 \7\ while the
portion of these funds used by USAID increased 14 percent. In FY 2005,
the FSA request amounts to $550 million; $389 million (71 percent of
the total) is proposed for USAID programs. The overall USAID level in
FY 2005 is down a little more than 5 percent from the year before. More
than a decade ago (1993), FSA levels were $1.2 billion, more than
double the FY 2005 request level.
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\7\ This figure excludes funding for the ECA office in the State
Department which was included in the FSA appropriation in 2001 but not
in 2004.
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The only FSA country whose request level is substantially higher
for FY 2005 than it was in FY 2004 is Georgia, an outcome of American
policy to support the new reform government and the transparent manner
in which the presidential election was conducted recently. With
assistance levels during FY 2003-FY 2005 relatively steady at about $25
million per annum, Tajikistan is one of the United States' most
cooperative development partners in the region. On the other hand,
assistance declines are precipitous for Kazakhstan, Russia, and
Ukraine. Over the three-year period FY 2003-FY 2005, levels will have
come down for Kazakhstan (by 35 percent to $28 million), Russia (by 45
percent to $79.5 million), and Ukraine (by 43 percent also to $79.5
million). We can reduce assistance to Kazakhstan, owing to its massive
oil and gas resources. In Russia, development assistance is perceived
as less necessary in the economic arena, allowing Russia to be
considered a candidate for phase-out in FY 2008. We continue to monitor
the situation in Russia closely. Ukraine's leadership is regarded as a
weak development partner whose democratic transition, characterized by
vested interests, weak political accountability, corruption, unequal
enforcement of the rule of law, and tightly controlled media, casts a
pall on the country's development prospects. The two countries with the
most repressive governments in the region (Belarus and Turkmenistan)
are also experiencing reductions in support over FY 2003-2005.
CRITICAL GAPS FOR FUTURE ASSISTANCE
We, however, need more resources than less. Indicators of progress
in several areas of assistance that are essential to sustainable
transition of countries in the E&E region do not show adequate
improvement, and a number of key issues remain to be addressed.
While there have been improvements in democracy indicators
in our Eastern and Central European recipients, most of our
Eurasian countries have no more democratic freedoms today than
in 1991, notwithstanding the continued development of civil
society. In fact, a number of countries have less freedoms,
most notably Russia.
Combating HIV/AIDS must be given particular priority because
current programs from all sources have slowed, but not halted,
an impending catastrophic epidemic. If infection rates are not
further slowed in places like Russia, the impact on the
population, health system, budgets, employment pool, and
political stability could be grave, and our investments in
reforms in these countries may be swept away.
Widespread unemployment continues to be a problem throughout
the entire E&E region. It leaves large populations,
particularly among youth, frustrated by their inability to
share in the benefits of economic growth and freedom.
Corruption is recognized as a critical factor, limiting
performance towards many E&E goals. Institutional reforms,
unless they counter incentives for corruption, will not be
unsustainable. Corruption affects negatively all E&E goal area
work and the lives of citizens in all our countries.
Trafficking in persons has expanded with the freedom of
movement that has accompanied the collapse of strong central
governments and has been exacerbated by the economic
deterioration and reductions in living standards which have
frequently accompanied the transition era. In addition to the
extreme suffering and degradation associated with this problem,
trafficking undermines the future of regions where it occurs by
striking vulnerable youth.
PHASE-OUT OF USAID ASSISTANCE
The U.S. Government always has assumed that assistance to the E&E
region would be temporary, lasting only long enough to ensure
successful transition to a sustainable democracy and an open market
economy. Today, programmatic success and declining resources result in
the need to plan for phase-out of our assistance in some countries.
Indeed, the E&E Bureau has already exited from eight countries, and
phase-out is being planned or is under consideration in a number of
others such as Bulgaria, Croatia, and Romania on the SEED side, and
Russia and possibly Ukraine on the FSA side. We will monitor closely
all transition indicators. If these indicators do not show progress, we
are prepared to re-visit exit decisions. A case in point is our serious
concern about the democratic transition in Russia. In any event, exit
from an individual country need not take place at the same time across
all sectors nor all regions. For instance, we may want to stay engaged
in the Russian Far East longer than in European Russia.
USAID and the State Coordinator's Office are now undertaking phase-
out assessments for all our country recipients in order to begin
identifying exit dates and adjusting our strategies to address
remaining gaps. In phasing out assistance, an overriding theme is to
find ways to decrease the region's vulnerability to conflict and ensure
that political and economic instability do not provide a seedbed for
terrorist activity and financial networks. Failure to achieve a
sustainable transition would leave both the region and its neighbors
vulnerable to instability.
Systematic planning for the eventual end of assistance enables
USAID to ensure the sustainability of assistance gains in a number of
ways. This includes: focusing resources on the most critical
vulnerabilities and gaps in a country's transition, determining areas
that may need attention after USAID departs, and preparing for an
orderly close-out of activities. Building on our experience with the
European Northern Tier graduates, USAID is exploring appropriate post-
presence initiatives as a way to consolidate assistance gains and carry
support for democracy and markets into the future, even after a local
USAID mission is closed. Post-presence initiatives consist of American
or East-East regional partnerships established with USAID assistance,
commercial relationships with the U.S. private sector, diplomatic
relationships with other USG agencies, and, where well defined gaps are
identified, post-presence programs funded by USAID.
THE USAID PROGRAM
The strategy adopted by USAID for the E&E region closely follows
the approach to foreign assistance described in the Joint State/USAID
strategy by focusing on three of its Strategic Goals: economic
prosperity and security, democracy and human rights, and social and
environmental issues. Progress in each broad area is monitored
systematically for each country that we assist, and individual country
programs are tailored to the local needs that correspond with USAID
capabilities.
Economic Prosperity and Security: For the majority of E&E
countries, the central focus of USAID assistance in this goal area is
to assist in the economic reform process and to establish an
environment that promotes growth. Most first stage economic reforms
(liberalization of domestic prices and trade and foreign exchange
regimes and small-scale privatization) have been accomplished, except
in the three non-reforming Eurasian countries (Belarus, Turkmenistan,
and Uzbekistan). Therefore, most remaining policy assistance will
emphasize second stage reforms that focus on building market-based
institutional capacity and better public governance. The six resource-
poor Eurasian countries (Armenia, Georgia, Kyrgyz Republic, Moldova,
Tajikistan, and Ukraine) have the farthest to go to reach acceptable
standards in these areas, and they are most vulnerable to recidivist
policy changes.
We will target SME development particularly in Eurasia since SME
sectors in the central and eastern European countries are already much
larger than those in Eurasia. About 45 percent of employment in central
and eastern European countries comes from SMEs, compared to only 24
percent in the resource-poor Eurasian countries and 10 percent in the
resource-rich Eurasian countries (Azerbaijan Kazakhstan, and Russia).
While energy programs are needed throughout the E&E region, we will
emphasize such work in those Eurasian countries where issues such as
winter heating could prove destabilizing, e.g., Armenia.
Democracy and Human Rights: E&E supports the development of
democratic institutions, processes, and values within the context of
promoting a more equitable distribution of both horizontal and vertical
power. Horizontally, power shared among different branches of the
national government (executive, legislative, and judicial) ensures
transparent and accountable government through a system of checks and
balances. Vertically, the devolution of power to local governments and
the empowerment of citizens through civil society and political
processes keep governments responsive to the needs of people. Enhancing
the rule of law, particularly in terms of protecting human rights,
controlling corruption, and guaranteeing civil liberties, is an
important component of this work and includes ensuring the rights of
minority groups and other disadvantaged segments of the population.
Progress in fostering a more equitable distribution of power is
expected to be incremental and requires a long-term commitment,
particularly in the more difficult cases of Eurasia.
Because democratic reforms are stalled or regressing in most
Eurasian countries, most areas of assistance in democracy and human
rights will be emphasized in that region, including municipal
governance, elections, rule of law, independent media, and development
of political parties and civil society. Especially important in the
near term will be elections assistance in countries of key foreign
policy interest to the United States, such as Azerbaijan, Georgia,
Russia, Ukraine, and several of the Central Asian countries. The
eastern European countries are relatively advanced in civil society and
electoral processes, so other forms of democratic and governance
assistance, including public administration, rule of law, independent
media, and anti-corruption, will receive emphasis.
Trafficking in Persons (TIP) is a global problem that requires a
multi-faceted response (its discussion is included here owing to its
implications for human rights). The underlying factors that give rise
to TIP in the E&E region include economic dislocation, a breakdown in
traditional social structures, corruption, the absence or decline in
personal values, the rise of international organized crime,
disenfranchisement of women and ethnic minorities, regional conflicts,
and the demand for legally unprotected, cheap labor in the sex trade
and other illegal venues. Programs in all three of the E&E Bureau's
strategic assistance areas address TIP. We address the TIP problem
using the framework of prevention, protection, and prosecution.
Programs to prevent trafficking include economic empowerment of
individuals through SME activities, public education and awareness
campaigns, capacity-building of governments, NGOs, and the media to
address the problem, and legal reform and implementation. Our programs
also help protect victims through support of government and NGO
referral services and the establishment of safe houses and counseling
services. While the E&E Bureau does not directly work on criminal law
prosecution, it does support reform of the overall legal system,
including prosecutors and public defenders.
Social and Environmental Issues: Progress in this goal area
requires investing in systems as well as addressing the most urgent
problems and diseases. The areas of greatest concern include health,
social protection, and human capital. Coordination with programs
designed principally to meet other goal areas will be necessary to
direct more resources toward reversing the decline in health and other
welfare levels.
We will emphasize child survival and maternal health interventions
as well as family planning and reproductive health in Eurasia. The
Caucasus countries and the Central Asian Republics have the highest
under-five mortality rates in the transition region.
Also, most Eurasian countries have experienced decreases in life
expectancy since 1989-1990. Life expectancies now range between 65 and
69 years in Eurasian countries, and the male-female life expectancy gap
in a handful of Eurasian countries is the highest worldwide. In
contrast, life expectancies stand at between 72 and 74 years in the
central and eastern European region. We will need to continue to
address the causes of these adverse trends in Eurasia, with
interventions to mitigate diseases stemming from unhealthy lifestyles.
Infectious diseases such as HIV/AIDS and tuberculosis will be
targeted in those countries where they are the most virulent. For its
part, the HIV/AIDS pandemic has the potential to erase much of our
hard-won development gains, most notably in Russia and Ukraine.
Depending on the availability of resources, education assistance in
the Eurasian resource-poor countries will be pursued. It has
particularly high long-term potential, especially through further
collaboration with the World Bank and other donors.
Finally, largely through programs for economic growth, we will need
to focus our assistance and expertise on creative means to decrease
unemployment, particularly in the southeast European countries.
Unemployment rates average 20 percent in the southern tier. A very high
percentage of the unemployed consists of the long-term unemployed and
youth. In some countries such as Bulgaria and Macedonia, high
unemployment also is accompanied with still very low real wages
relative to pre-transition levels.
Cross-Cutting Issues: The E&E Bureau works on several issues that
broadly fall in all three strategic assistance areas of the economic,
democratic, and social transitions. A key initiative of the E&E Bureau
is to work to incorporate the positive values that are necessary to
sustain the development of a free society with a market economic
system. We are also working to combat corruption that undermines
reforms necessary for economic growth and democracy.
In Western Europe and the United States, the stock of social
capital, that has made democracy and capitalism effective and that
helped develop the institutions that support democracy, the rule of
law, and a market economy, evolved over many centuries. The terms
``values'' and ``social capital'' refer to the prevalent mindset that
results in voluntary compliance with established laws, trust,
cooperative behavior, and basic codes of conduct. One of the
fundamental differences between long-standing market-oriented
democracies and centralized authoritarian ones is how individuals
relate to the state. Communist systems fostered attitudes of dependency
and fatalism. The system was sufficiently corrupt and inefficient to
require nearly everyone to use bribes or other illegal means to get
ahead. While the rule of Communist parties has ended in most E&E
countries, the culture that it created continues to hamper efforts to
build a free and socially cohesive civil society based on the rule of
law with a functioning market economy. The international donor
community initially underestimated the social capital that would be
necessary to introduce and secure essential reforms. We have learned
that both patience and programmatic attention are needed to achieve the
desired reform results. The E&E Bureau will focus more consciously and
effectively throughout its portfolio to nurture the culture, values,
and social capital necessary to accelerate and secure reform.
Unfortunately, corruption is endemic in many countries of the E&E
region in both the public and private sectors. We further believe that
corruption is a development problem, not just a law enforcement
problem. Corruption flourishes when transparency, accountability,
prevention, enforcement, and education are weak. The E&E Bureau is
working to bolster all five areas. We are promoting transparency
through our work to create open, participatory governments. To promote
horizontal accountability, our programs support checks and balances
among government branches at the same level, inspector general
functions, and clear hierarchical (not ad hoc or personal) structures
within agencies. To promote vertical accountability, USAID programs
support the decentralization of power to other layers of government as
well as checks and balances from outside sources, such as independent
media, trade associations, and political parties. Our programs also
support prevention of corruption through the systemic reform of
institutions and laws to decrease opportunities and incentives for
corruption. USAID is working to promote enforcement through the
consistent application of effective standards and prohibitions.
Finally, USAID programs support education efforts that point out the
adverse consequences of corruption, the tangible benefits of reform,
and the concrete potential for positive change.
INNOVATIVE ASSISTANCE TOOLS
The E&E Bureau is making every effort to increase the impact of the
resources appropriated by Congress. Some of the methods include
building partnerships and public-private alliances within the context
of on-going USAID programs and putting in place post-presence
mechanisms to sustain goals and promote reform after bilateral
assistance ends.
To achieve its objectives, the E&E Bureau has always depended on a
wide range of partners, including host country governments, NGOs, other
international donors, and the American private sector. Working with
organizations that rely heavily on volunteers and sister-institution
relationships has the potential for attracting major in-kind and
financial resources to advance our strategic objectives. The E&E Bureau
encourages U.S.-based partnerships to build constituencies for our
objectives that will last beyond the endpoint of USAID funding. Such
partnerships will become a larger part of the program in the years
prior to mission close-out.
Consistent with the initiative expressed by Secretary of State
Colin Powell and USAID Administrator Andrew Natsios, the Global
Development Alliance (GDA) encourages joint funding by USAID and the
private sector for activities that serve mutually recognized
objectives. We are committed to attracting private business donors and
foundations to accomplish common objectives. In FY 2002, the E&E Bureau
utilized $33 million to leverage an additional $59 million from our
partners in the private sector in support of programs in Armenia and
Bosnia-Herzegovina. USAID as a whole leveraged nearly $1.5 billion in
2002. To encourage further the adoption of public-private alliances,
the E&E Bureau has established a GDA-incentive fund on which our
missions are bidding competitively. A series of training courses for
USAID staff contributed to the success of the competition through
facilitating contact with potential private sector partners.
USAID's legacy is the long-term impact that its programs have on a
country after the bilateral mission is closed. Most of USAID's legacy
results from programs implemented during the existence of USAID's
bilateral mission, but occasionally a further sustainability of gains
made during USAID presence. Such legacy mechanisms include partnerships
with U.S. private sector institutions, scholarship funds, and other
programs that do not require large amounts of recurrent funding or
USAID administration.
The Millennium Challenge Corporation (MCC), which had its first
meeting on February 2, 2004, will administer the Millennium Challenge
Account (MCA) that provides for increases in assistance to developing
countries of 50 percent over three years totaling $20 billion through
FY 2008. The funds are earmarked for countries that have adopted
appropriate policies; i.e., that demonstrate a strong commitment to:
ruling justly (e.g., upholding the rule of law, rooting out
corruption, and protecting human rights and political
freedoms);
investing in their people (e.g., investment in education and
health care); and
encouraging economic freedom (e.g., open markets, sound
fiscal and monetary policies, appropriate regulatory
environments, and strong support for private enterprise).
These three criteria correspond to the three goal areas in the E&E
strategy. USAID assistance will be targeted on those areas where
improvements are needed to qualify for MCA funding.
cyprus, northern ireland and the republic of ireland, and turkey
The E&E Bureau also provides oversight for Economic Support Funds
(ESF) allocations to Cyprus, Northern Ireland and the Republic of
Ireland, and Turkey. ESF monies have been furnished to Cyprus and
Northern Ireland and the Republic of Ireland to promote reconciliation
and conflict resolution through local, bi-communal initiatives. The FY
2004 appropriation for Cyprus is $13.4 million and $21.9 million for
Northern Ireland and the Republic of Ireland. The FY 2005 request
proposes $13.5 million for Cyprus and $12 million for Northern Ireland
and the Republic of Ireland. The FY 2004 and 2005 budget requests
include $99.4 million and $50 million, respectively, in ESF funds to
Turkey for debt servicing in support of the country's stabilization and
economic recovery efforts. In the 2003 War Supplemental, Turkey
received $1 billion in ESF funds administered through the U.S.
Department of the Treasury.
ASSISTANCE FROM THE SENATE FOREIGN RELATIONS COMMITTEE (SFRC)
In the invitation to this hearing, the SFRC asked if there was any
way that it could help us. In general, we are pleased with the
authorities that you have accorded us. They provide us considerable
flexibility and latitude in our programming. In particular, we have
greatly appreciated the use of ``notwithstanding authority'' and
Development Credit Authority, both of which have contributed to the
impressive development results that we have achieved in such a short
time. We also appreciate Congress's support in providing the Agency
with its full operating expense request, as well as new program
authorities that will enable us to increase our staff and strengthen
our capacity to meet critical development challenges--both in the E&E
region and worldwide.
CONCLUSION
We are proud of our successes in the region. Our programs, which
are integrated into the frameworks set by the National Security
Strategy, the Joint State/USAID strategy, and USAID's discussion paper,
have permitted us since the fall of the Iron Curtain to make tremendous
strides in furthering democracy, installing market-based economic
systems, and tending to the social and humanitarian needs of the former
Communist states of Europe and Eurasia. We are very aware that there is
much left to be done. In particular, the post-Soviet states of Eurasia
appear to have a long transition path ahead of them. As new priorities
emerge in other parts of the world, we urge the distinguished members
of the Senate Foreign Relations Committee to provide continued support
to our programs in Europe and Eurasia. The geopolitical, security, and
trade and economic importance of the region remains of vital interest
to the United States, and our very close working relationships with the
Coordinator's Office in the Department of State allow us to program
resources in a way that will be most responsive to these interests.
Thank you, Mr. Chairman. Without the support that this Committee
and Congress have given us over the years, the progress that we have
made in the region would not have been possible. In closing, I want to
assure you of our continued commitment to achieving the noble goals you
set out in the SEED and FREEDOM Support Acts.
Senator Allen. Your full testimony will be made part of the
record as well as your statements. Let me ask you a few
questions here and there may be others that will be submitted
in writing from myself and other members. I'm sure you'll be
willing to answer those.
In my opening remarks I mentioned the difference in the
administration's proposal about $8 million for Azerbaijan, $2
million for--I'm using rough numbers--for Armenia. Why is there
this difference? What's the rationale for it?
Ms. Jones. Well, let me outline a couple of points to begin
with. First of all, we're extremely careful to make sure that
whatever assistance we provide to Azerbaijan or Armenia does
not in any way enhance the ability of either country, but
especially Azerbaijan, to conduct any military operations in
connection with the Nagorno-Karabakh conflict. That's an
extremely important point for us, not least because we're so
heavily engaged in trying to broker a solution, immediate
solution to the Minsk group between Armenia and Azerbaijan.
The primary focus of the funding that we give to Armenia is
to enhance its communications capabilities to make it more able
to participate in peacekeeping in the region. They're working
on establishing a peacekeeping battalion. And to enhance the
interoperability of Armenian forces with NATO and international
forces. One of the things that Armenia is working on, for
instance, is to deploy a truck unit to Iraq under OAF.
The FMF we're providing to Azerbaijan does a lot of those
things, but in addition, the biggest issue we have with
Azerbaijan is to enhance its ability to control the Caspian.
This is particularly important not only for oil transport
routes, which is on the benign side, but it's an area that can
be used for narcotics trafficking, trafficking in persons, WMD
trafficking, and transiting terrorists.
So a lot of our assistance is going to enhance their border
patrol capabilities and sea patrol capabilities. In addition,
we're upgrading, we're helping them upgrade air space
management at Nasosne Air Base. That is particularly important
for us because it enhances our--the safety of U.S. air
overflights and flights that land there on the way to and from
Afghanistan and to some degree Iraq. There's KC-135 refueling
that goes on there and it's extremely important to us that the
capability of this base be enhanced so that our aircraft are
safe.
We're also using quite a bit of this money, this funding,
to purchase equipment to maintain Azerbaijan's three
peacekeeping deployments, one in Kosovo, one in Afghanistan,
and one in Iraq. All three are very important to us and it's
all meant to be in support of Azerbaijan's, whatever is
necessary to support the global war on terrorism, offer to us.
The other aspect to all of this is that over the years
we've been able to provide Armenia with a tremendous amount of
economic support assistance so that it even now has the highest
per capita assistance of any of the countries of Central Asia
and the Caucasus.
The other thing that we're hoping for, and this will be
decided by others, is that Armenia will qualify for the
Millennium Challenge Account, and that will really upgrade the
assistance levels that we'll be able to provide to Armenia.
Senator Allen. All right. There's about 7 minutes until the
vote, so what I'm going to try to do is not hold you over and
I'm going to hold back on some questions. I do have some
questions on military assistance concerning Armenia and
Azerbaijan. I'll submit them for the record.
Ms. Jones. All right.
Senator Allen. And I hope you'll answer these----
Ms. Jones. We will be sure to answer.
Senator Allen [continuing]. Questions, some which are
specific, some larger. I want to try to get some thoughts from
you all on two issues real quickly if possible. I am concerned,
Mr. Hill, you've mentioned the flood of heroin out of
Afghanistan into Central Asian countries, the Caucasus,
Southeast Europe, Russia, Ukraine, and so forth. What are we
doing in conjunction with anyone else trying to stop the flow
of drugs particularly out of places like Afghanistan, which
seems to be its only cash crop, very lucrative obviously but
unfortunate, in that country. What are we trying to do in that
regard and who else is helping us?
Mr. Hill. I'll just be very brief and then Ambassador Jones
may want to say something. We're very much aware that those
borders are so porous with Afghanistan and we also know that
the flood of narcotics out is massive at this point. It ends up
in Europe, it's beginning to stop off on the way, and that
means it's having a terrible impact on Central Asia and Russia,
et cetera.
Everything we do in our portfolio that deals with rule of
law, judicial reforms, anything like that that will prevent the
corruption from stopping the prosecution is a step in the right
direction. USAID is not as involved in the war against
smuggling as other agencies that work on border security, et
cetera. But to the extent our rule of law processes and
programs succeed, that can make blockage more likely.
But Ambassador Pascual and I were just in Central Asia and
we were told that only a very small percentage of the border is
controlled at this point, so there are massive amounts of
assistance that would be required to really address that
particular problem.
Senator Allen. You're saying as a practical matter this
is----
Mr. Hill. With the amount of moneys that we have to spend--
--
Senator Allen. Rather than being oblivious and saying,
gosh, we care about it and so forth, we have a hard time on our
own borders. And so you're saying it's very porous.
Mr. Hill. It is. It's expensive, yes.
Ms. Jones. I might just add a couple of things. In
Afghanistan itself, the U.K. is responsible, it's the lead
nation for trying to manage the counter-narcotics effort.
They've just announced today that they're doubling their
budget.
In the meantime, we also have some very aggressive programs
on border control, border security, especially with Tajikistan
and Uzbekistan as the first line of resistance, if you will.
Tajikistan has an impressive record of capturing heroin and
other narcotics as they cross the border. It's still not
enough, but it's the kind of effort that we have underway. DEA
is increasing its presence in these countries. We work very
closely with them to try to increase that even more, and as I
mentioned in my opening remarks, we have asked for quite a bit
more money this year in order to go after the narcotics
problem.
In Turkmenistan, we have a joint operation again with the
British where we do some of the counter-narcotics work, the
British do other parts of it, especially on the border with
Iran, to get at one of the porous borders.
Senator Allen. Thank you. Let me ask you one final
question. Last year when the Senate was considering the foreign
assistance measure, I was successful in adding, it turned out
to $5 million to combat piracy of intellectual property. There
was concern--it's not just in your portfolio, it's a problem in
Asia, it's a problem all over the world where our intellectual
property, our entertainment, our software is being stolen,
misappropriated, and that means jobs. There's a lot of
innovators, a lot of research in this country and obviously in
production.
I've heard, listening to folks even in your area, it's not
unique to people complaining about China and different Far East
Asia or Eastern Asia areas but also in the southeastern area
and Central Europe. Do you find piracy, theft of intellectual
property, to be a problem and what, if anything, is being done
there? What policies, what resources are in place to protect
the United States' intellectual property?
Ms. Jones. It is a problem. It's one not nearly on the
scale of other regions, but we have a very aggressive
diplomatic effort underway with each of these countries,
particularly with Ukraine, for instance, to ensure adherence to
IPR requirements to--and Russia, to get them to pass much
better IPR legislation, to implement----
Senator Allen. And enforce----
Ms. Jones [continuing]. Enforce IPR legislation,
absolutely. And there are a variety of sanctions that are
available to use as well if the work isn't done as well as it
should be.
Senator Allen. Thank you. Do you have anything to add, Mr.
Hill?
Mr. Hill. Well, just that our portfolio of USAID programs
often tries to help these countries gain membership in the
international organizations that require that they pass
legislation dealing with these problems, and in quite a number
of countries we have had some success in getting them to pass
it. The second part of it, of course, is to get them to enforce
it, but there is progress, and it's a big part of what we try
to push.
Senator Allen. I think you both understand how much I care
about this issue and I think you all do as well--to me it's a
priority protecting intellectual property rights and what's
happening, again, not just in your area. That is a big concern,
and for countries in Western Europe, countries such as Germany.
This is not unique to some of the countries and I think it's
vitally important that our leaders, the United States leaders,
make sure they know how important we consider this to be, and
this is not just something that we don't care about you
stealing this or pirating that or breaching various copyright
patents.
Ms. Jones. Mr. Chairman, one of the big engines we have is
the desire of many of these countries to join the World Trade
Organization, which requires very stringent IPR legislation, so
that's one of the other big hooks that we have as with Ukraine
or with Russia or with Kazakhstan, any of these countries, that
their legislation must be in place and the implementation must
be vigorous.
Senator Allen. Thank you both. I wish we could discuss it
longer but I need to let you all go right on time. Thank you
both for your testimony and you're anticipated to answer some
other questions. The subcommittee hearing is adjourned.
[Whereupon, at 4 p.m., the committee adjourned, to
reconvene subject to the call of the Chair.]
----------
Responses to Additional Questions Submitted for the Record
Responses of Hon. Elizabeth Jones to Additional Questions for the
Record Submitted by Senator George Allen
Question 1. Recently, the administration released its fiscal year
2005 budget requesting $8.75 million in military assistance for
Azerbaijan and only $2.75 million for Armenia. As you are aware,
Congress heeded the administration's request in the aftermath of
September 11 and granted the President limited and conditional
authority to waive Section 907 of the Freedom Support Act.
Prior to the enactment of the waiver, the administration, as a
matter of unilateral policy but not law, did not allocate military
assistance to either nation citing the Section 907 restrictions placed
on Azerbaijan and the need to maintain balance. As part of the 907
waiver, there was an agreement made between the administration and
Congress to continue ensuring military parity between Armenia and
Azerbaijan. How does this budget request not undermine that
understanding and not contradict the administration's previously held
position?
Answer. The administration has requested almost $5 billion in FY05
in the Foreign Military Financing (FMF) account. FMF granted to
friendly countries is used to purchase U.S. military equipment and
services, such as training. Changes in country requests reflect normal
priority adjustments. FMF improves the capability of allies and other
friendly nations to contribute to international crisis response
operations and also promotes interoperability of their militaries with
U.S. armed forces. Azerbaijan currently provides peacekeeping troops in
Iraq, Afghanistan, and Kosovo.
Specific increases for Azerbaijan are linked to U.S. priorities in
fighting terror, peacekeeping, and maritime security, particularly
regarding proliferation and drug trafficking on the Caspian Sea. A
large portion of our military assistance program is aimed at improving
Azerbaijan's maritime capabilities to detect and interdict the illicit
movement of WMD, drugs, or terrorists through this poorly controlled
transit corridor.
We do not have a policy that FMF funding levels for Armenia and
Azerbaijan should be identical, but we are determined to ensure that
our military assistance to these two countries does not alter the
military balance between them. We are confident that increased FMF
funding for Azerbaijan will not alter the military capability or
offensive posture of Azerbaijan, nor will it perturb the military
balance between it and Armenia in the Nagorno-Karabakh conflict. Our
proposed FMF funding does not signal any change in our position on
Nagorno-Karabakh. Finally, I should note that the balance of overall
U.S. assistance in the FY05 budget request remains strongly in
Armenia's favor. The overall FY05 request includes $67 million for
Armenia and $51.2 million for Azerbaijan.
Question 2. Recently, the administration released its fiscal year
2005 budget requesting $8.75 million in military assistance for
Azerbaijan and only $2.75 million for Armenia. As you are aware,
Congress heeded the administration's request in the aftermath of
September 11 and granted the President limited and conditional
authority to waive Section 907 of the Freedom Support Act.
Furthermore, how does providing asymetrical military assistance to
Azerbaijan not damage the credibility of the U.S. as an impartial and
leading mediator in the ongoing sensitive peace negotiations for the
Karabakh conflict?
Answer. FY05 military assistance requests for Armenia and
Azerbaijan reflect the two countries' very different needs. Notably,
Azerbaijan, as a Caspian littoral state, has a large unmet need for
maritime security capabilities, which Armenia simply does not have.
The specific funding levels of our military assistance programs or
of overall U.S. assistance programs in either country will not affect
our ability to serve as an impartial mediator. In this context, it is
worth noting that the overall FY05 assistance funding request for
Armenia remains significantly higher ($67 million) than the request for
Azerbaijan ($51.2 million).
Question 3. Recently, the administration released its fiscal Year
2005 budget requesting $8.75 million in military assistance for
Azerbaijan and only $2.75 million for Armenia. As you are aware,
Congress heeded the administration's request in the aftermath of
September 11 and granted the President limited and conditional
authority to waive Section 907 of the Freedom Support Act.
Finally, would not the administration's action only serve to
legitimize Azerbaijan's ongoing blockades against Armenia and Karabakh
and its periodic threats to renew military aggression, thereby
subverting the short- and long-term U.S. policy goals of regional
cooperation and security for the South Caucasus region?
Answer. Any military assistance that we provide to Azerbaijan is
carefully considered to ensure that it will not create offensive
capabilities that might upset the military balance between Azerbaijan
and Armenia. The assistance that we provide to the two countries in no
way legitimizes any aspect of their unresolved conflict. Regional
stability is a primary concern of U.S. policy in the South Caucasus,
and the administration will do nothing that would put that objective at
risk. We continue to work to help resolve the Nagorno-Karabakh crisis,
both through bilateral diplomacy with the two countries and through our
co-chairmanship of the Minsk Group.