[Senate Hearing 109-141]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-141

                      FOREIGN ASSISTANCE OVERSIGHT

=======================================================================

                                HEARING



                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                      ONE HUNDRED NINETH CONGRESS



                             FIRST SESSION



                               __________

                             MARCH 2, 2005

                               __________



       Printed for the use of the Committee on Foreign Relations


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html



                    U.S. GOVERNMENT PRINTING OFFICE
23-757                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


                     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
NORM COLEMAN, Minnesota              JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio            RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee           BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
LISA MURKOWSKI, Alaska               BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Camp, Donald, Deputy Assistant Secretary, Bureau of South Asian 
  Affairs, Department of State, Washington, DC...................     1
    Prepared statement...........................................     3
    Response to question submitted by Senator Biden..............   159
Chafee, Hon. Lincoln, U.S. Senator from Rhode Island, opening 
  statement......................................................     1
Feingold, Hon. Russell D., U.S. Senator from Wisconsin...........    73
Kunder, Hon. James R., Assistant Administrator for Asia and the 
  Near East, U.S. Agency for International Development, 
  Washington, DC.................................................     8
    Prepared statement...........................................    10
Martinez, Hon. Mel, U.S. Senator from Florida, opening statement.    53
Pierson, Hon. Lloyd O., Assistant Administrator for Africa, U.S. 
  Agency for International Development, Washington, DC...........    63
    Prepared statement...........................................    65
    Response to question submitted by Senator Feingold...........   165
    Responses to questions submitted by Senator Obama............   166
Ranneberger, Michael E., Principal Deputy Assistant Secretary, 
  Bureau of African Affairs, Department of State, Washington, DC.    55
    Prepared statement...........................................    59
    Response to question submitted by Senator Chafee.............   160
    Responses to questions submitted by Senator Feingold.........   161
    Responses to questions submitted by Senator Obama............   167
Satterfield, Hon. David M., Acting Assistant Secretary, Bureau of 
  Near Eastern Affairs, Department of State, Washington, DC......    33
    Prepared statement...........................................    33

                           Afternoon Session

Allen, Hon. George, U.S. Senator from Virginia...................   126
Bradtke, Robert A., Principal Deputy Assistant Secretary, Bureau 
  of Europe and Eurasia Affairs, Department of State, Washington, 
  DC.............................................................   128
    Prepared statement...........................................   131
Coleman, Hon. Norm, U.S. Senator from Minnesota, opening 
  statement......................................................    79
Franco, Hon. Adolfo, Assistant Administrator for Latin America 
  and the Caribbean, U.S. Agency for International Development, 
  Washington, DC.................................................    89
    Prepared statement...........................................    92
    Response to question submitted by Senator Coleman............   173
Hill, Hon. Kent R., Assistant Administrator, Bureau for Europe 
  and Eurasia, U.S. Agency for International Development, 
  Washington, DC.................................................   135
    Prepared statement...........................................   138
Kunder, Hon. James R., Assistant Administrator for Asia and the 
  Near East, U.S. Agency for International Development, 
  Washington, DC.................................................   116
Martinez, Hon. Mel, U.S. Senator from Florida....................    98
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................   109
Revere, Evans, Acting Assistant Secretary, Bureau of East Asia 
  and Pacific Affairs, Department of State, Washington, DC.......   110
    Prepared statement...........................................   112
Noriega, Roger F., Assistant Secretary, Bureau of Western 
  Hemisphere Affairs, Department of State, Washington, DC........    83
    Prepared statement...........................................    85
    Responses to questions submitted by Senator Lugar............   168
    Responses to questions submitted by Senator Coleman..........   170
    Response to question submitted by Senator Nelson.............   175

                                 (iii)

 
                      FOREIGN ASSISTANCE OVERSIGHT

                              ----------                              


                        WEDNESDAY, MARCH 2, 2005

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:08 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Lincoln 
Chafee, presiding.
    Present: Senators Chafee, Boxer, Martinez, Nelson, Obama, 
and Feingold.

  OPENING STATEMENT OF HON. LINCOLN CHAFEE, U.S. SENATOR FROM 
                          RHODE ISLAND

    Senator Chafee. The hearing will commence of the Foreign 
Relations Committee and the South Asian Subcommittee. Welcome, 
gentlemen.
    I would like to start with Mr. Camp. Is that appropriate?

STATEMENT OF DONALD CAMP, DEPUTY ASSISTANT SECRETARY, BUREAU OF 
    SOUTH ASIAN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Camp. Thank you. Thank you, Mr. Chairman and Senator 
Boxer.
    First of all, I'd like to express the regrets of Assistant 
Secretary Rocca, that she could not be here today. She is ill; 
sent me in her stead. She sends her regrets and her best 
wishes.
    In many parts of South Asia, there has been increased 
momentum for positive change. Our productive relationships with 
India and Pakistan continue to improve, and significant 
progress is being made in rebuilding Afghanistan and lowering 
tensions between India and Pakistan.
    Not all the news is good, unfortunately. In particular, we 
are deeply troubled by the political crisis in Nepal, where the 
Maoist threat continues to grow. In Sri Lanka, the cease-fire 
continues to hold, but negotiations remain stalled. Problems 
with corruption, lawlessness, governance, and political 
violence plague Bangladesh. Our fiscal year 2006 foreign 
operations assistance requested for South Asia will be used to 
support our policy in the region and to maintain momentum in 
our programs for progress and meet these challenges.
    I'd like to begin with Afghanistan. Last year, Afghans 
adopted a moderate democratic constitution and successfully 
conducted their first multiparty Presidential election. 
Afghanistan's economy has grown by 50 percent in 3 years. 
United States assistance is helping the Afghan people win the 
peace, preventing Afghanistan from ever again becoming a haven 
for terrorists.
    Much remains to be done, and we are committed to finishing 
the task. Nine hundred and fifty-six million dollars requested 
in fiscal year 2006 foreign-ops assistance for Afghanistan will 
sustain critical ongoing and accelerated stabilization 
programs, including $1.98 billion in urgent foreign-ops 
programs included in our 2005 supplemental funding request.
    Holding parliamentary elections in 2005 is one of the 
primary political tasks for President Karzai's administration. 
We will support this process and, at the same time, help the 
government build and strengthen democratic institutions. 
Economic support funds requested for budget assistance will 
support government operations as revenue generation and 
collection capacity are strengthened. As DOD continues training 
of an Afghan National Army, our ESF assistance will sustain 
accelerated programs for disarmament, demobilization, and 
reintegration, and support a multifaceted counternarcotics 
strategy.
    In India, our strong bilateral partnership includes 
security and economic ties and working together to address 
regional problems, such as the tsunami disaster and the crisis 
in Nepal. Our next steps in strategic partnership expands 
cooperation on civilian nuclear, civilian space, and high-tech 
trade development, provides for expanded dialog on missile 
defense and for enhanced nonproliferation export regimes in 
India. Military-to-military cooperation is greatly increased. 
United States assistance programs are helping India to complete 
financial, trade, energy, water, and agricultural reforms, to 
improve economic stability and reduce poverty. Our programs 
also promote better access to education, justice, healthcare, 
and services by women and vulnerable groups.
    Pakistan. Though our long-term commitment--through our 
long-term commitment to Pakistan, we support its efforts to 
combat extremism and become a moderate, prosperous, democratic 
state. We seek a Pakistan that is secure and at peace with all 
its neighbors, a voice for tolerance and moderation in the 
Islamic world, living up to its great economic potential, and 
serving as an inspiring model for the broader Middle East and 
South Asia region. Our relations with Pakistan have grown 
steadily closer and more productive. It is a key ally against 
terrorism. Our $698 million fiscal year 2006 request for 
Pakistan contains $300 million in FMF and $300 million in ESF 
for the second of the 5-year $3 billion Presidential 
commitment.
    A return to full democracy in Pakistan is central to long-
term stability and a primary objective of our policy. United 
States democracy programs support this goal, including by 
helping Pakistanis prepare themselves to participate in 
successful 2007 national elections that are free and fair.
    Bangladesh. Bangladesh has built a functioning, albeit 
challenged, democracy that has achieved important economic 
growth. Nevertheless, significant problems with corruption, 
increase in violent political attacks, poor governance, and the 
opposition's general strikes threaten democratic stability and 
impede economic growth. United States development and democracy 
programs in Bangladesh seek to address the challenges that 
foster extremism.
    Nepal. The United States has a strong interest in helping 
the Nepalese overcome the serious political problems they face. 
Unity among Nepal's legitimate political forces is key to 
assuring that a brutal Maoist insurgency does not seize power. 
We see King Gyanendra's February 1 dismissal of the government 
and declaration of a state of emergency and detention of 
politicians and dissidents as a serious setback for Nepalese 
democracy that risks eroding even further the government's 
ability to resist the insurgency. We told the king that he 
needs to move quickly to reinstate and protect civil and human 
rights, release those detained under the state of emergency, 
and begin a dialog with the political parties. We have made it 
clear to the government that, in the current political 
situation, our security assistance is at risk. The overwhelming 
preponderance of the assistance that the United States is 
providing to Nepal is devoted to the political and economic 
development the country so desperately needs.
    Sri Lanka. The United States has been in the forefront of 
the effort to support Sri Lankan tsunami relief efforts, and 
will remain engaged in reconstruction. We are committed to help 
resolve the conflict between the government and the Liberation 
Tigers of Tamil Eelam. We support Norway's facilitation of a 
peace settlement, and remain prepared, along with other donors, 
to help Sri Lanka address urgent post-conflict reconstruction 
needs. Our nationwide development and health programs support 
the government's economic growth and antipoverty efforts.
    In concluding, let me say just a word about our public 
diplomacy and regional programs. Our public diplomacy programs 
remain a key part of the war on terrorism in South Asia. 
Through people-to-people programs, we will continue to promote 
shared values on education and democratic reforms, regional 
conflict resolution, and strong civil societies. We are also 
addressing, in a regional context, many of the issues of 
concern to us in South Asia, such as trafficking in persons, 
fighting deadly diseases like HIV/AIDS, ending corruption, and 
improving the status of women and girls.
    Finally, achieving United States goals in South Asia 
remains crucial to our own national security and to a stable 
future for the region. While there has been much progress over 
the past few years, continued success depends on adequate 
resources to manage our policy and support our foreign 
assistance programs.
    Thank you very much for your support. And, after Mr. Kunder 
speaks, I'd be very happy to take questions.
    [The prepared statement of Mr. Camp follows:]

Prepared Statement of Deputy Assistant Secretary Donald Camp, Bureau of 
        South Asian Affairs, Department of State, Washington, DC


                  MOMENTUM FOR PROGRESS IN SOUTH ASIA

    Mr. Chairman and members of the committee, thank you for inviting 
me to meet with you today to discuss United States policy interests in 
and our program request for South Asia. In many parts of the region, I 
am happy to report, there has been increased momentum for positive 
change. Our relations with India and Pakistan continue to improve, and 
significant progress is being made in rebuilding Afghanistan and 
lowering tensions between India and Pakistan. Although Sri Lanka was 
devastated by the Indian Ocean tsunami, there is hope that cooperation 
on relief between the government and the Liberation Tigers of Tamil 
Eelam may increase trust between the two sides. Not all the news is 
good, unfortunately. In particular, we are deeply troubled by 
developments in Nepal, where the King dismissed the government and 
imposed a state of emergency while the Maoist threat continues to grow. 
Although the cease-fire continues to hold in Sri Lanka, negotiations 
remain stalled. Problems with corruption, lawlessness, governance and 
political violence plague Bangladesh.
    We will have, during the next few years, a crucial opportunity to 
assist South Asia toward a future that is stable and free from 
terrorism, conflict and proliferation; prosperous and economically 
integrated; governed through accountable democratic institutions; and a 
responsible voice for moderation in the Muslim world. Our fiscal year 
2006 foreign assistance requested for South Asia will be used to 
support our policy in the region and to maintain momentum in our 
programs for progress and to meet these challenges.

Afghanistan
    In January of last year, Afghans adopted a moderate, democratic 
constitution, and in October successfully conducted their first 
multiparty Presidential election. With the rebuilding of major roads, 
schools, health facilities, and other infrastructure, the country is 
being physically knit back together, which in turn will assist economic 
and political integration. The IMF estimates that Afghanistan's economy 
has grown by 50 percent in 3 years. NATO agreed to lead the 
International Security Assistance Force, as a new United States-trained 
Afghan Army and police are gathering strength, and civil-military 
Provincial Reconstruction Teams are extending security and development 
in the provinces.
    United States assistance is helping the Afghan people win the peace 
in their country. By doing so, we prevent Afghanistan from ever again 
becoming a haven for terrorists. Much remains to be done and we are 
committed to helping the Afghans finish the task. We are requesting 
$956.4 million in FY 2006 Foreign Operations assistance for Afghanistan 
to sustain accelerated programs to stabilize the country (the request 
for Afghanistan is $1.1 billion including DOD and DEA counternarcotics 
programs, and State and USAID operations), to follow $1.986 billion in 
foreign operations funding in the FY 2005 supplemental request. Between 
fiscal years 2001 and 2005 Congress has appropriated over $6.2 billion 
for Afghanistan as an investment in a more democratic and prosperous 
future and a more secure future for Americans.
    Holding legitimate parliamentary elections in 2005 is one of the 
primary political tasks for President Karzai's administration. We will 
support this process and at the same time help the government build and 
strengthen democratic political institutions able to peacefully channel 
the intense competition for power and resources among Afghanistan's 
rival groups. U.S. and other donors' assistance to the 2005 election 
process will include civic education and training for newly elected 
officials. A portion of the FY 2006 Economic Support Funds (ESF) will 
assist local elections, develop effective public education, and 
strengthen the women's ministry and centers throughout the country, as 
well as the judicial infrastructure, the Human Rights Commission, civil 
society groups, and the independent media.
    ESF-funded budget assistance will support government operations as 
revenue generation is strengthened. ESF-funded civil-military 
Provincial Reconstruction Teams established by the United States and 
our allies in Afghanistan have increased stability and development in 
Afghanistan's provinces, helping link central and local governments 
with communities. The number of PRTs has expanded to 19 today, with two 
more to be established in coming months. Expanding security and the 
government's control of the territory is an ongoing challenge to 
Afghanistan's progress. As DOD continues training of the Afghan 
National Army, our FY 2006 ESF assistance will also sustain accelerated 
programs for disarmament, demobilization, and economic reintegration of 
militia and support a multifaceted counternarcotics strategy. FY 2006 
International Narcotics Control and Law Enforcement (INCLE) funds will 
continue to fund training for border police, national police, and a 
highway patrol, as well as institutional reform at the Ministry of the 
Interior.
    Agriculture and the rural economy provide a way of life for about 
70 percent of the Afghan population. In FY 2006, Transition Initiatives 
(TI) funding will be used to help farmers re-establish production, 
become more profitable and efficient, improve food security, provide 
employment for more Afghans, and rehabilitate water systems. Credit 
programs for operating and investment capital will support production 
and processing activities. TI funds, along with ESF, will also be aimed 
at increasing access to primary education through community-based 
school construction, textbook production, classroom-based teacher 
training, and primary school equivalency/accelerated learning.
    Afghanistan's counternarcotics program will also be supported by FY 
2006 INCLE funds, which will continue to fund crop eradication, public 
diplomacy, and demand reduction programs. ESF funds will also continue 
to play an important role in supporting government efforts to end poppy 
cultivation and narcotics trafficking through alternative development 
programs.
    Economic reconstruction and development and rebuilding of 
infrastructure continue to be key factors in ensuring stability and a 
``democracy dividend'' for the Afghan people. Requested FY 2006 ESF 
continue assistance for restructuring the banking system, strengthening 
fiscal management capacity and revenue generation, and spurring private 
enterprise and trade initiatives. We must sustain programs for 
employment, agriculture (the livelihood of most Afghans), health, and 
education. Completion of the Kabul-Kandahar-Herat ring road will extend 
central government authority, increase trade, and continue to knit the 
country back together. We have vaccinated millions of children, and 
constructed or rehabilitated scores of schools, clinics, and hospitals.
    A significant reconstruction dividend is the steady decline in 
humanitarian needs. The 3 million refugees who have returned and the 
millions saved from famine and cold are now contributing to the Afghan 
economic boom. But humanitarian problems have not disappeared, and we 
cannot turn our backs on the remaining Afghans who are destitute. We 
will continue to support remaining Afghan refugees in Pakistan and 
Iran, internally displaced persons, and returnees. U.S. and donor 
demining assistance will enable continued safe returns and facilitate 
economic reconstruction.

India
    United States relations with India, the preeminent power in the 
region, continue to improve and expand. As India increasingly fills a 
global leadership role, we must build strong bilateral partnership. Our 
partnership is growing across multiple fronts, including our security 
and economic ties and we are working together to solve regional 
problems. India, along with the United States, was a charter member of 
the group of countries formed to coordinate tsunami relief, and we are 
consulting closely with the Indians on how to help the Nepalese resolve 
their political crisis.
    Through our Next Steps in Strategic Partnership, we are working to 
expand cooperation on civilian nuclear, civilian space and high 
technology trade development as well as an expanded dialog on missile 
defense and enhanced nonproliferation export regimes in India. DOD's 
bilateral Defense Planning Group, joint exercises, and military 
exchanges have greatly increased military-to-military cooperation. A 
High Technology Cooperation Group is advancing trade and investment in 
this vital area where our two countries have complementary strengths.
    United States assistance programs are helping India to complete 
financial, trade energy, water, and agriculture reforms to improve 
economic stability and reduce poverty. Our programs also promote better 
access to education, justice, and services by women and vulnerable 
groups. Our health programs support the prevention of HIV/AIDS, 
tuberculosis and other diseases, and increased child survival--issues 
also addressed though a bilateral Global Issues Forum whose concerns 
range from trafficking in persons and human rights abuses to 
environment, science, and health.

Pakistan
    In the Intelligence Reform and Terrorism Prevention Act, Congress 
adopted the 9/11 Commission's recommendation that the United States 
make a long-term commitment to the future of Pakistan. We see this 
commitment--which requires that we support Pakistan's own efforts to 
combat extremism and transform itself into a moderate, prosperous, 
democratic state--as a pillar of our strategy to win the war on 
terrorism. We seek a Pakistan that is secure and at peace with all its 
neighbors, a voice for tolerance and moderation in the Islamic world, a 
country that lives up to its great economic potential and can serve as 
an inspiring model for the broader Middle East and South Asia region.
    United States relations with Pakistan have grown steadily closer 
and more productive. As a key ally against terrorism, throughout 2004 
Pakistan mounted successful operations against terrorists and their 
supporters near the border with Afghanistan and as well as in the 
country's urban areas. Hundreds of terrorist operatives have been 
captured in Pakistan since September 11, 2001. In recent months, 
terrorists linked to Daniel Pearl's murder, the 1998 Embassy Dar Es 
Salaam bombing, the 2002 Consulate Karachi attack, the 2004 Afghanistan 
election worker kidnappings, and assassination attempts against 
President Musharraf and Pakistani Prime Minister Aziz have been 
arrested by Pakistani law enforcement or killed in police shoot-outs. 
Last year the A.Q. Khan proliferation network was unmasked and we 
continue to work closely with Pakistan to ensure that this global 
security threat can never be reconstituted.
    Our $698.3 million FY 2006 request for Pakistan contains $300 
million in Foreign Military Financing funds and $300 million in 
Economic Support Funds for the second of the 5-year, $3 billion 
Presidential commitment. This reflects the critical importance of both 
aspects of the war on terror. As we facilitate the capture of al-Qaida 
and Taliban remnants and strengthen our military ties through the FMF 
program, we will help tackle the conditions that terrorists seek to 
exploit providing up to $200 million in ESF for macroeconomic 
stabilization and growth, plus at least $100 million in ESF to support 
social sector programs.
    A return to full democracy in Pakistan is central to long-term 
stability and a primary objective of our Pakistan policy. U.S. 
democracy programs and exchanges are assisting the development of 
accountable, responsive democratic institutions and practices, 
including effective legislatures and local councils that respond to 
citizens and that play a positive role in governance. Our programs will 
also support much-needed political party reform, the development of an 
independent media that provides balanced information, and effective 
civil society that advocates for the rights of those most vulnerable, 
such as women and religious minorities. All of these programs will be 
crucial to helping Pakistanis prepare themselves to participate in 
successful 2007 national elections that are free and fair.
    Pakistan's economy has moved from crisis to stabilization and now 
to significant growth. The government's ongoing pursuit of structural 
reform, prudent economic policy initiatives, and effective 
macroeconomic management has impressed the IMF and donor community. We 
are assisting this positive momentum with ESF, but also continue to 
support the grassroots economic development and health programs that 
are just as important, and much more visible to ordinary Pakistanis, 
through USAID's programs.
    Pakistan recognizes the critical need for, and is pursuing, 
education reform, including for madrassahs. Pakistan's need for 
improvements in education is profound. Beyond the very real problem 
created by the intolerance and extremism inculcated in some madrassahs, 
the education system in general has been failing the youth of Pakistan. 
For political, economic, and social reforms to succeed, young 
Pakistanis must have the preparation needed to gain employment and 
compete in the global marketplace. Funds requested for education will 
be used to support and help the government shape these reforms, 
including through incentives for schools to join the government's 
reform programs, teacher training, and increased access for girls.
    FY 2006 INL funds will be used to further strengthen Pakistan's 
border security, and law enforcement and intelligence capabilities and 
coordination, including on counternarcotics. Funds will also help 
extend law enforcement access and enhance monitoring in the Federally 
Administered Tribal Areas along the Afghan border through construction 
of roads and infrastructure. Road construction will also, in tandem 
with USAID projects, facilitate access to education and economic 
development to help integrate these areas with the rest of the country.

India-Pakistan Relations
    Reducing the threat of conflict between India and Pakistan is of 
critical importance to both countries as well as to the United States 
and the international community. We have long encouraged Indo-Pak 
engagement while working to reduce the tensions between these two 
countries. The rapprochement and Composite Dialogue that began nearly 2 
years ago between India and Pakistan has seen a number of successes. 
Most recently, during Indian Foreign Minister Natwar Singh's February 
15-17 visit to Islamabad, both sides made real compromises in agreeing 
to begin bus service across the Line of Control in Kashmir. This is one 
of the most significant developments since the composite dialog began 
in January 2004. It shows that the parties are committed to increasing 
their engagement, and we will encourage further progress.

Bangladesh
    Bangladesh, despite its stormy birth and initial dismal prospects, 
has built a functioning, albeit challenged, democracy that has achieved 
important economic growth. Credit for Bangladesh's accomplishments, 
past and present, does not rest with a single leader, party, or 
organization. And, neither does responsibility for the current problems 
rest with a single Bangladeshi administration, institution, or leader.
    Nevertheless, Bangladesh's significant problems with corruption, 
increase in violent political attacks, poor governance, and the 
opposition's ``hartals'' (general strikes), threaten democratic 
stability and impede economic growth. United States development and 
democracy programs in Bangladesh seek to address the challenges that 
foster extremism. Poverty, lack of education, and endemic corruption 
combined with porous borders and lack of public faith in elected 
government have increased the appeal of radicalism.
    United States democracy programs seek to increase the 
accountability and transparency of democratic institutions, which can 
help defuse bitter rivalries, and support civil society advocacy groups 
such as Transparency International Bangladesh. To promote sustainable 
development, our programs will continue to improve basic education, 
foster scientific cooperation, assist economic growth and trade, combat 
trafficking in persons, and increase health services for women and 
children.

Nepal and Bhutan
    The United States has a strong interest in helping the Nepalese 
overcome the serious political problems they face, and the 
developmental problems from which much of their current political 
crisis derives. We want Nepal to be a peaceful, prosperous, and 
democratic country, but it confronts the possibility that a brutal 
Maoist insurgency might seize power; not through military force but 
through a collapse of will to resist it. For this reason we were 
particularly concerned about King Gyanendra's February 1 dismissal of 
the government, declaration of a state of emergency, and detention of 
politicians and dissidents. This serious setback for Nepalese democracy 
risks eroding the government's ability to resist the insurgency even 
further. The King has said that his recent actions are intended to 
strengthen Nepal's multiparty democracy and to bring the Maoist 
insurgency to an end. He needs to move quickly to reinstate and protect 
civil and human rights, release those detained under the state of 
emergency, and begin a dialog with the political parties intended to 
restore multiparty democratic institutions under a constitutional 
monarchy.
    Following on the King's actions, India and the United Kingdom 
announced they are suspending assistance to Nepal's Armed Forces. We 
have the same step under consideration, but have not yet made a 
decision. However, we have made it clear to the government that in the 
current political situation our security assistance is at risk. In our 
security assistance so far, we have supported Nepal's military through 
professional training, modern rifles, and nonlethal equipment. A 
central part of our program has been ensuring that the security forces 
improve their record with respect to human rights.
    The overwhelming preponderance of the assistance the United States 
is providing to Nepal is devoted to the political and economic 
development the country so desperately needs. Nepal has some of the 
world's lowest social indicators, and more than half of our development 
assistance has been earmarked for health and family planning. We will 
also continue to focus on the restoration of democratic institutions 
and seek to increase citizen participation and representational 
diversity, provide assistance for elections, if and when they are held, 
and strengthen key rule of law and anticorruption institutions.
    We continue to work with the governments of Bhutan and Nepal to 
resolve the situation of the 100,000 refugees of Bhutanese origin in 
Nepal and are working closely with UNHCR and NGOs to assure the welfare 
of the many resident and transiting Tibetans in Nepal.

Sri Lanka and Maldives
    The focus of almost everyone in Sri Lanka, over the past several 
weeks, has been on recovery from the effects of the tsunami. The United 
States has been in the forefront of the effort to assist Sri Lankan 
recovery efforts and will remain engaged as we transition into meeting 
the country's enormous reconstruction needs. Other important long-term 
concerns remain, however. First among them is resolving the conflict 
between the government and the Liberation Tigers of Tamil Eelam. 
Despite the largely successful ceasefire begun in 2003, peace 
negotiations between the two sides have not been restarted. The 
necessity for cooperation between the two sides on tsunami relief may 
help establish a higher level of trust helpful to the peace process.
    The United States continues to support Norway's facilitation of a 
peace settlement and remains prepared, along with other donors, to help 
Sri Lanka address urgent post-conflict reconstruction needs. The goal 
of peaceful reconciliation will also need to help guide our post-
tsunami reconstruction assistance. As we and other donors encourage a 
resumption of talks, we continue to provide a package of assistance 
programs aimed at providing a boost to reconstruction and 
reconciliation in war-torn areas.
    Our nationwide development and health programs support the 
government's economic growth and antipoverty efforts, while our 
democracy programs promote human rights and political reintegration and 
reconciliation. Increased FY 2006 FMF funding will be used to help Sri 
Lanka's navy meet threats posed by national and regional terrorist 
groups, and will help to reform and upgrade its military.
    Another country devastated by the tsunami was Maldives. As with Sri 
Lanka and other countries, the United States made a major contribution 
to relief in Maldives and is committed to help with reconstruction. The 
recent visit of former Presidents Bush and Clinton to Maldives and Sri 
Lanka underlines the seriousness of our commitment.

                 PUBLIC DIPLOMACY AND REGIONAL PROGRAMS

    Public Diplomacy programs remain a key part of the war on terrorism 
in South Asia. Throughout the region the Bureaus of South Asian Affairs 
and Economic and Cultural Affairs and the Office of International 
Information Programs are implementing both traditional and innovative 
outreach programs, targeting younger, nonelite audiences. Through these 
people-to-people programs we will continue to promote shared values on 
education and democratic reforms, regional conflict resolution, and 
strong civil societies. Our American Centers remain key to these 
efforts. Our English teaching programs will advance academic potential 
and engagement with the United States and its values.
    These programs are complemented by our regional Economic Support 
Fund initiative for Education, Democracy and Development in South Asia 
(EDSA). We are requesting $2.5 million in FY 2006 ESF for this 
initiative, which seeks more effective ways to address extremism 
through small, innovative pilot and multicountry projects in education, 
democracy, and income generation. These projects are coordinated with 
and will inform our larger bilateral development programs.
    Many of the issues of concern to us in South Asia, particularly 
those that affect ordinary South Asians on a personal level, need to be 
addressed in a regional context. Our diplomatic efforts and programs 
aimed at combating trafficking in persons have been refocused and 
intensified to raise the performance of South Asian governments in 
accord with criteria in the Trafficking Victims Protection Act. We are 
combating HIV/AIDS throughout the region, with the principal focus on 
India, where the problem is by far the worst. Corruption lies at the 
nexus of the governance and economic failures in South Asia. Our 
development, democracy programs, and law enforcement programs combat 
corruption by promoting transparency, accountability, and efficiency, 
including through strengthened private sector, civil society, and 
independent media involvement. Finally, we remain ever mindful of the 
plight of women throughout the region, and our programs across the 
board have integrated components to improve literacy, education, 
health, and economic and legal rights for women and girls.

                               CONCLUSION

    Achieving United States goals in South Asia remains crucial to our 
own national security and to a stable future for the region. While 
there has been much progress over the past few years, continued success 
depends on adequate resources to manage our policy and support our 
foreign assistance programs.
    Thank you for your support. I'd be happy to take questions.

    Senator Chafee. Thank you very much, Mr. Camp.
    Mr. Kunder, welcome.

STATEMENT OF HON. JAMES R. KUNDER, ASSISTANT ADMINISTRATOR FOR 
     ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL 
                  DEVELOPMENT, WASHINGTON, DC

    Mr. Kunder. Thank you, Senator, Senator Boxer.
    I am the Assistant Administrator for Asia and the Near 
East. Our Bureau is responsible for those countries between 
Morocco and the Philippines, and extending north to Mongolia. 
In that area, we have the world's largest concentration of poor 
people; and so, many of our development programs focus on the 
needs of those poor.
    I also want to point out one other demographic statistic. 
Across that region, there are 324 million people, a number 
exceeding the population of the United States, in the age 
category between 15 and 24. So we've got an enormous 
opportunity, but also an enormous recruiting ground for 
instability. And so, the need to focus on jobs programs and 
education programs is driven home by that 324 million number.
    Our primary focus in South Asia is, naturally, on stability 
and reconstruction. Our reconstruction program in Afghanistan 
is preeminent among those programs, but we also have unstable 
situations, as Don has said, in Nepal, in Pakistan along the 
border region, in Sri Lanka. So, the area of focusing on 
counterterrorism, instability, and reconstruction is primary 
for us.
    We've also tried to look at, in our program request for 
2006, a number of strategic issues that extend across the 
region. Number one is education and the need to transform the 
educational systems in the region. Number two is democracy and 
governance, with greater participation, focus on specific 
issues, like gender issues, participation of women, 
participation of civil-society organizations, antitrafficking, 
and other issues generally in the cone of democracy and 
governance. A third area is economic growth. For that 
burgeoning population, we have got to focus on job programs.
    We have tried to focus on creative modalities for working 
in these areas. In addition to our ESF and development-
assistance programs, we have emphasized public/private 
partnerships. USAID's Global Development Alliance tries to take 
advantage of the increasing investment across Asia; and, thus 
far, we have been able to leverage private contributions to the 
development process, on an order of 5-to-1 ratio for every 
taxpayer dollar we've invested in these Global Development 
Alliance programs.
    We have also tried to look over the horizon, if you will, 
at problems that are not yet prominent in our discussions, but 
we think are going to be increasingly prominent issues in the 
coming years. Preeminent among those is water, both the water 
shortages that we face across the region and the potential for 
water disputes to be the source of conflict and friction in the 
future. We have suggested--this is something we will want to 
discuss with the committee, and with the Congress--the need to 
have a ``Blue Revolution,'' like the Green Revolution that we 
led several decades ago, to increase food production around the 
world.
    We have also looked at the need to create regional hubs. 
Right now, we are looking at regional hubs in Cairo and in 
Bangkok to supplement our bilateral programs and start looking 
at regional issues and engagement with regional institutions 
across Asia as a way of leveraging the taxpayers' dollars in 
the foreign-assistance field.
    Finally, in terms of modalities, we have increasingly tried 
to perfect our technique of working with the United States 
military in places like Afghanistan. We have got to figure out 
ways to make that relationship more productive. In the recent 
tsunami response, USAID, State, and the military worked very 
closely together to deliver humanitarian assistance. We're 
trying to build on that kind of relationship through the use of 
Provincial Reconstruction Teams--that is, joint State, DOD, and 
USAID teams--working in the countryside to help win the war on 
terrorism and assist in the reconstruction effort.
    In closing, I would just like to focus a little bit further 
on Afghanistan. I had the honor of being sent out in January 
2002, right after the Taliban abandoned Kabul, to reopen the 
USAID mission there. If someone had predicted, in January 2002, 
that we would be as far along in the reconstruction process as 
we are in March 2005, I would have thought they were crazy. The 
situation, obviously, is not without its problems, not without 
its occasional terrorist attacks, and not without significant 
reconstruction hurdles yet to cross, but we have made enormous 
progress, and I think the request for substantial assistance in 
Afghanistan needs to be supported, and I think we have a track 
record of proving that we can do the job there.
    And, finally, I want to make a request for full support for 
our operating-expense request. I know that this is a de rigeur 
thing that I have to do, but I really want to make a personal 
appeal, because it's not just an abstract operating-expense 
issue. When we have to take on these reconstruction and 
instability issues, as we do in South Asia--just as we say for 
the military, we have to have ``boots on the ground,'' well, we 
have to have ``Reeboks on the ground,'' if you will. We need 
people out there.
    We've got, now, 20 reconstruction teams scattered across 
Afghanistan. We can do a good amount of work through our 
contractors, through our NGO partners, but the U.S. Agency for 
International Development, from a height of around 10,000 
officers during the Vietnam war period, is down to about 2,200 
officers around the world, in more than 80 countries. As one of 
my military colleagues said, in shock, ``This is nothing but a 
reinforced battalion, worldwide.''
    We are doing the job. We have proven we can do the job in 
tough places, like Iraq and Afghanistan. And we simply need the 
resources. That's an important part of the U.S. Government's 
toolkit in the war on terrorism, and we simply need the bodies 
to continue to do the job.
    So, my report on South Asia is that we've made enormous 
progress. We've got very significant challenges, as Mr. Camp 
has said. And I'd be prepared to answer any questions you have.
    Thank you.
    [The prepared statement of Mr. Kunder follows:]

 Prepared Statement of Hon. James Kunder, Assistant Administrator for 
  Asia and the Near East, U.S. Agency for International Development, 
                             Washington, DC

    I welcome the opportunity to appear before you today to discuss the 
work of the U.S. Agency for International Development in Asia and the 
Near East.
    USAID works in 28 countries in Asia and the Near East--from Morocco 
to the Philippines and as far north as Mongolia. The region is home to 
64 percent of the world's population and two-thirds of the world's 
poor.
    Foreign assistance is an essential component of U.S. foreign policy 
in the region. To meet the needs of the people of Asia and the Near 
East, we have missions in 19 countries. Five of those missions--
Afghanistan, Pakistan, Thailand, Yemen, and Iraq--opened recently. We 
established them to handle priorities arising from U.S. foreign policy 
goals and ongoing development challenges in the region. Three countries 
in ANE are eligible for the Millennium Challenge Account, and three 
have been selected as MCA threshold countries. Our fiscal year 2006 
request is consistent with U.S. foreign policy priorities and rewards 
countries that demonstrate commitment to democracy, good governance, 
and economic freedom.
    There are struggling democracies throughout Asia and the Near East 
that need help building stronger legal and governing institutions; 
promoting citizen participation, particularly that of women; and 
strengthening the basic services they provide to the public.
    Corruption is a pervasive problem, making it difficult for 
economies and legal systems to function properly--particularly in South 
and East Asia. This also makes foreign investors less likely to put 
more money into the region.
    Fundamentalism is spreading, especially in the Middle East. The 
insurgency in Iraq and the ongoing Israeli-Palestinian issue make the 
Middle East one of our greatest challenges and foreign policy 
priorities. Radicals are taking advantage of the sense of hopelessness 
caused by oppressive regimes and extreme poverty. Severe restrictions 
on human rights impose a sense of fear among many.
Threat of Instability and Terrorism
    USAID's overriding focus is countering the threat posed by 
instability and terrorism in Asia, the Middle East, and North Africa. 
Conflicts permeate the region--from ongoing insurgencies in Iraq, 
Afghanistan, and Nepal to the separatist movements in Mindanao, 
Philippines, and Sri Lanka. Many countries harbor extremist groups that 
prey on disenfranchised populations left vulnerable by their 
government's inability or lack of commitment to meet their daily needs. 
As these extremist groups grow, they threaten to destabilize their own 
countries and often support terrorism directed at the United States. 
USAID is an integral player in the U.S. Government's response to these 
threats.
    All of USAID's programs, ranging from democracy and economic 
governance to education and health care, address the poverty, 
extremism, and corruption that threaten the region's stability. USAID 
plays an indispensable role in stabilizing and rebuilding Afghanistan 
and Iraq; and mitigating conflict and improving conditions for peace in 
the Middle East and elsewhere.
    In fiscal year 2006, USAID proposes shifting $275 million in 
Development Assistance funds to the more flexible Transition Initiative 
(TI) account for Afghanistan, Ethiopia, Haiti, and Sudan. TI funds 
provide the necessary resource flexibility to target the sources of 
fragility in countries where political and economic conditions remain 
volatile. Afghanistan is a prime example. In its changing security and 
economic environment, the ability to adjust priorities and programs 
quickly is critical to supporting its successful transition to a 
democracy and rebuilding its social and economic fabric. TI funds 
comprise 24 percent of the total fiscal year 2006 request for 
Afghanistan.
    Operating large programs in high threat environments, such as Iraq 
and Afghanistan, where we can have only a limited footprint is 
demanding and has challenged the skills and creativity of our staff. 
Our American staff on the ground and our host country national staff 
remain the backbone of overseas missions, but particularly in these 
countries, which are some of the most dangerous places in the world. 
Granting USAID's Operating Expense request is vital to the Agency's 
ability to adequately manage its expanding portfolio and develop a 
workforce with the depth and skills to respond to the challenges of 
development in the 21st century.
    Although increasing stability and minimizing terrorism are USAID's 
highest priority, we have other important objectives in the Asia and 
Near East region such as improving education and workforce training, 
strengthening democratic and economic institutions, and improving 
health. A few of these are described below.
Burgeoning Youth Population Requires an Education for Work and Life
    Giving young people appropriate skills and hope for a better future 
is essential for economic, political, and social development. The Asia 
and Near East region has experienced a drastic demographic shift and 
now houses the largest generation of youth ever--368 million young 
people in the 19 countries where USAID has a presence. The youth 
population has grown disproportionately compared to the rest of the 
population, putting enormous pressure on governments with limited 
capacity and resources to provide education and employment 
opportunities. Developing a workforce with the right skills to be 
productive is a key issue across the region. USAID implements school-
to-work and vocational programs to equip the youth population with 
skills needed in the job market.
A Blue Revolution
    USAID hopes to spearhead a ``blue revolution'' to address the life-
threatening and growing constraint of scarce water resources. Some of 
the most important international security interests in Asia and the 
Middle East either derive from, or are significantly exacerbated by, 
transboundary water disputes over water sources. Water needs in Jordan 
exceeded supply by 78 percent in 2000, and West Bank/Gaza has water to 
meet only one-third of its minimum drinking needs. Projections show 
that much of South Asia will be facing similar shortages of potable 
water by 2025. A serious challenge to maintaining the quantity and 
quality of water is land degradation due to deforestation and 
settlement by growing populations.
Public-Private Partnerships
    USAID recognizes that the private sector is a huge factor in the 
places we work, either through their presence in East Asia or lack, 
thereof, in the oil and utility industries in the Middle East. 
Partnerships with the private sector enable USAID to leverage funds, 
technologies, and new ideas to address the growing challenges in our 
region. Identifying synergies between our goals and our comparative 
advantages have led to a number of successful partnerships, including 
an education initiative in the Broader Middle East and North Africa and 
campaigns against illegal logging in Asia.
Regional Hubs
    One of our strategies for increasing surge capacity and enhancing 
management efficiency is the opening of regional offices in Bangkok and 
more recently in Cairo. These offices provide contracting, legal, and 
financial services to field missions and manage programs in countries 
with no USAID presence and programs targeting key regional issues with 
a regional dimension such as HIV/AIDS and trafficking in persons.
Tsunami Response and Reconstruction
    In December 2004, a major earthquake followed by a tsunami hit Asia 
and Africa, devastating many coastal areas. Over 220,000 people in 
eight countries perished in a few hours and many more had their homes 
and livelihoods swept away. The coastal areas of Indonesia and Sri 
Lanka, the Maldives and two Indian island chains bore the brunt of the 
calamity and will require significant investments in rehabilitation and 
reconstruction. President Bush has pledged long-term U.S. commitment to 
help the tsunami victims rebuild their lives.
    USAID's presence in these countries, our expertise with disaster 
assistance, and solid working relationships with the region's 
governments and our partner nongovernmental organizations meant we were 
able to respond immediately, providing life-saving food, water, medical 
care, and shelter. Lessons learned from working with the Department of 
Defense in Afghanistan and Iraq also bore fruit in the weeks following 
the disaster. Close coordination between USAID and the military was a 
key part of the success of the U.S. response.
    Now, we have moved on to rebuilding the communities devastated by 
the tsunami. Cash-for-work programs to give families incomes, loans, 
and training to develop livelihoods and design of longer term 
reconstruction projects of water systems and critical infrastructure 
are underway.
USAID's Work Pays Off
    Despite the growing security challenges, our work has brought 
substantial and measurable results.
    In less than 2 years on the ground in Iraq, we are managing $4.2 
billion in contracts and grants. We laid the foundation for democracy 
and good governance. The first free elections in more than 40 years 
were held on January 30, 2005. We have trained 10,000 local council 
members, and we have rehabilitated over 2,300 schools and trained 
32,000 teachers.
    Despite ongoing security challenges, the progress we are seeing in 
Afghanistan is noteworthy. Eight million people, 40 percent of them 
women, voted in the country's first Presidential election. USAID played 
a prominent role in that success, through voter education programs and 
distributing and counting ballots. We have built a good relationship 
with the new government, substantially completed the Kabul-Kandahar 
highway and contributed to the best wheat harvest in over two decades 
through seeds, fertilizer, and irrigation projects. We have printed 
10.3 million textbooks and provided basic health services to 4.7 
million people.
    In Indonesia, where corruption has been a major stumbling block, we 
have helped pass antimoney laundering laws. And in the Philippines, 
where a separatist movement threatens peace in the South, we have 
helped reintegrate over 21,000 combatants into society and helped equip 
them with jobs and other social services.
    Ninety-five percent of children ages 2-8, in Egypt, tune in to the 
Egyptian version of Sesame Street, learning to be tolerant, practice 
good hygiene, and get a head start in school.
    USAID supported the recent free trade agreement with Morocco, the 
second Arab country after Jordan (2001). We have also worked with 
Lebanon, Yemen, Vietnam, Cambodia Nepal, Laos, and Algeria on accession 
to the WTO. A bilateral trade agreement with Vietnam was completed in 
2000. These efforts are critical because regional and international 
trade is an important source of growth for the region.

                        PRIORITIES IN EAST ASIA

    In East Asia, as in much of the Asia/Near East region, conflicts 
threaten stability. Oppressive and corrupt governments and 
disenfranchised populations contribute to discontent and obstruct 
economic growth.
    USAID will continue to focus attention and resources on two 
conflict-affected countries, Indonesia and the Philippines, which are 
also two important allies in the war on terror. In both of those 
countries, education is a major part of our programs. Like the rest of 
the region, access to basic and secondary education remains unequal. 
Both Indonesia and the Philippines have Presidential initiatives for 
education of $157 million and $33 million respectively. Throughout the 
region, we are rapidly expanding our education programs.
    We will work to open up corrupt and closed political and economic 
systems, major barriers to investment, good governance and human 
rights. In addition to targeted efforts in countries like Indonesia, 
USAID is developing a new regional governance initiative for East Asia. 
Where possible, we will support trade capacity building to complement 
the United States-Thailand Free Trade Agreement negotiations.
    Our intensive efforts to fight the spread of HIV/AIDS in Cambodia 
have been a resounding success to date. However, the threat persists. 
We will continue our vigilance against this potential epidemic through 
regional and bilateral programs.
    We will also continue to combat trafficking. Over the last 10 
years, the number of people trafficked has grown, and the average age 
has dropped. Profits from trafficking rank third only to drugs and 
guns, encouraging criminal syndicates to work closely with local 
trafficking networks. USAID will continue to work with vulnerable 
people in high-risk environments, but we will give added attention to 
children and youth, who are most at risk.

Regional Development Mission in Asia
    The East Asia and Pacific region is one of the world's most 
important trading routes, which facilitates the spread of HIV/AIDS and 
other infectious diseases, as well as trafficking of persons and 
illicit narcotics. Many challenges remain for the region, not the least 
of which is recovering from the recent tsunami. Many countries in 
mainland Southeast Asia still have relatively centralized systems of 
government. Another threat is the health and economic impact of poor 
air quality, unclean water, and lack of safe sanitation. Countries in 
the region continue to suffer from the scourge of HIV/AIDS, malaria, 
and tuberculosis.
    A secure, robust, and integrated Southeast Asia Pacific region 
would bode well for the economic well-being of all nations in the 
world. Highly unbalanced growth and political or social instability 
could jeopardize vital U.S. strategic interests in the region.
    USAID's Regional Development Mission/Asia manages regional 
programs, strengthening United States relations with ASEAN members, and 
country-specific programs in mainland Southeast Asia (Burma, China, 
Laos, and Vietnam) as well as HIV/AIDS and environmental programs that 
extend east into the Pacific and west into South Asia.

Burma
    The State Peace and Development Council continues to maintain 
political and military control of the country. The Council's economic 
mismanagement of the country's resources has led to a deterioration of 
social and economic conditions.
    The intensifying economic hardship in Burma over the past decade 
has resulted in many Burmese relocating to the Thai-Burma border 
region. There are over 144,000 Burmese living in refugee camps and 
hundreds of thousands registered and unregistered Burmese migrants.
    USAID provides humanitarian assistance, including health care and 
efforts to control infectious diseases. Democracy programs train 
Burmese journalists and public information workers to improve the 
quality and dissemination of news and information on the situation 
inside Burma. Scholarships are available for Burmese refugees to study 
at universities around the world.

Cambodia
    After a year of political stalemate, the country has inaugurated a 
new administration and a new monarch, signaling new prospects for 
stability. However, corruption permeates all aspects of daily life.
    More than half of Cambodia's 13 million people are under the age of 
18. Ensuring that they receive an adequate education that will prepare 
them to be productive citizens remains a major challenge. The forests 
of Cambodia are one of its most valuable resources. The Government has 
attempted to regulate forest exploitation, with limited success.
    United States interests in Cambodia include strengthening 
democracy; expanding regional cooperation and integration; promoting 
greater economic openness and lower trade barriers; and addressing 
terrorism. USAID programs address HIV/AIDS prevention and care; expand 
access to maternal, child, and reproductive health services; increase 
the participation of political parties, NGOs, and the private sector in 
promoting human rights and documenting evidence of Khmer Rouge 
atrocities; and improve the quality of basic education.

China
    USAID's activities in China are limited to assisting Tibetan 
communities, a regional HIV/AIDS program and support for American 
Schools and Hospitals Abroad.
    The Tibetan Plateau presents a challenging implementation 
environment for development assistance. Those most in need of 
assistance live in small nomadic communities scattered across vast 
rural tracts, unserved by roads or other public infrastructure, and the 
harsh climate limits assistance to the warmer 9 months of the year.
    The principal goal of the program is to strengthen Tibetan 
communities' capacity for meeting their socioeconomic needs, while 
conserving the environment and preserving their cultural heritage. This 
program is implemented through U.S. nongovernmental organizations.

East Timor
    In 2002, after 24 years of Indonesian occupation, East Timor became 
the first newly independent nation of the millennium. It is one of the 
10 poorest countries in the world with an estimated population of 
924,642. Its small domestic market, island status, extreme mountainous 
terrain, and poor infrastructure present formidable challenges.
    Despite these challenges, East Timor has made solid progress since 
1999 in establishing a democratic state and revitalizing its economy 
and export market for coffee. However, its bid for the Millennium 
Challenge Account failed in the economic growth area. Given the 
Government's willingness to respond, dedication of the international 
community, and concentration of MCA threshold resources in this area, 
rapid progress is possible.
    The overall goal of the USAID program will continue to address the 
long-term development needs in accordance with key United States 
foreign policy interests in East Timor. USAID programs address Timor's 
most pressing concerns; accelerating economic growth and job creation; 
good governance; and improving basic health services.

Indonesia
    Besides the new challenges created by the tsunami, significant 
social, political, and economic barriers continue to impede Indonesia's 
progress toward becoming a moderate, stable, and productive nation. 
More than half of Indonesia's population subsists on less than $2 per 
day. Governing institutions remain weak and corruption is endemic. 
Approximately half of Indonesian nchildren who start primary school do 
not complete junior secondary school, and dropout rates are increasing.
    In 2004 Indonesians voted in a new President, Vice President, and 
legislators in free and fair elections. By holding the largest and most 
complex single-day elections in history, the most populous Muslim 
nation demonstrated to the world the compatibility of democracy and 
Islam.
    The GOI commitment to tackling terrorism and regional conflicts is 
strong, but the September 2004 terrorist bombing of the Australian 
Embassy and continued violence in Aceh in 2004 demonstrated that 
sustainable solutions to these issues remain elusive. The current 
ceasefire in post-tsunami Aceh offers hope for future conflict 
resolution.
    The outcome of Indonesia's democratic transition has profound 
implications for United States strategic interests in fighting 
terrorism; preserving regional stability in Asia; strengthening 
democratic principles, the rule of law, and respect for human rights; 
and expanding access for U.S. exports and investment.
    USAID immediately responded to the tsunami disaster with relief 
assistance. Additional relief and reconstruction activities will 
respond to the needs in Aceh. USAID focuses on economic growth and job 
creation; clean and good governance; and improving the education and 
health sectors. The Millennium Challenge Corporation has identified 
Indonesia as an eligible country for the Millennium Challenge Account. 
USAID will play an active role in helping Indonesia qualify for these 
new funds.

Mongolia
    Mongolia's harsh climate, small domestic market, land-locked 
status, and lack of infrastructure present formidable challenges. Yet 
the country provides an important example to others in East Asia, 
Central Asia, and elsewhere on how to manage an economic transition 
within a democratic political framework. Mongolia has also been a 
visible supporter of the United States in the continued war on 
terrorism.
    USAID's programs directly address two of Mongolia's most pressing 
concerns: Sustainable private sector-led economic growth and more 
effective and accountable governance. This includes work on growth at 
the policy, sector, individual firm, and ``grassroots'' levels. 
Judicial reform is the largest program within USAID's governance work, 
leading to fully automated courtrooms that increase public access 
dramatically.

Philippines
    The Philippines has long been a close strategic ally of the United 
States. However, the Philippines continues to be held back by internal 
conflict and violence. The sizeable Muslim population in Mindanao is 
marginalized economically and lacks adequate access to basic social 
services.
    Weak leadership, powerful vested interests, and ongoing conflict 
feed the cycle of poor economic performance by discouraging private 
investors and tourism and draining public coffers.
    Nevertheless, the Philippines can accelerate its economic and 
social development as well as the ongoing peace process with the 
Mindanao-based Moro Islamic Liberation Front. With USAID assistance, 
more than 24,000 former combatants from the Front have been 
successfully reintegrated into the productive economy, demonstrating 
the tangible benefits of peace.
    USAID concentrates on reducing conflict in Mindanao and other areas 
vulnerable to violence; fighting corruption and supporting improved 
performance of selected government institutions. Other programs promote 
the health and well-being of Filipinos through improved and 
decentralized service delivery, increased private sector involvement, 
social acceptance of family planning, and policy reform. In addition, 
USAID protects the Philippine's rich natural resources by strengthening 
their management and governance and encouraging better urban 
environment management and reliable and cleaner energy. In Mindanao, 
USAID increases access to quality education and livelihood skills in 
the conflict-affected areas, and in the rest of the country, USAID 
supports broader education sector policy reform.

Vietnam
    Since the late 1980s, Vietnam pursued a policy of economic openness 
and has transformed its centrally planned economy into a market-driven 
system. As a result of more market-based policies, the Vietnamese 
economy has achieved a relatively high GDP growth rate (7 to 8 percent 
per year) for the last several years. However, Vietnam still ranks as 
one of the world's 25 poorest countries.
    Presently, Vietnam's strict regulatory environment, lack of rule of 
law, inadequate infrastructure, and lack of market competitiveness 
handicap the private sector. The HIV/AIDS epidemic is now widespread, 
not just in high-risk groups, but also among the general population.
    An expanded United States-Vietnam relationship is important for 
fostering regional security, prosperity, human rights, and peace in the 
Southeast Asia region. USAID's progam focuses on two areas: 
Accelerating Vietnam's transition to a more open, market-based economy 
and improving access to services for selected vulnerable groups.

                       PRIORITIES FOR SOUTH ASIA

    With a young, impoverished, and rapidly growing population, 
governments in South Asia strain to provide basic human services and 
economic opportunities.
    USAID will continue to rebuild Afghanistan. Working hand-in-hand 
with the Afghans, we have made significant progress, and the country is 
well on its way to self-rule through democratic processes. However, 
there is much more to be accomplished. We will also promote economic 
and political transitions in conflict-ridden countries, such as 
Pakistan, Nepal, and Sri Lanka. These efforts will remain central to 
our efforts to bring prosperity to the region.
    To combat the region's dire poverty, USAID will spur the rapid 
creation of jobs and the delivery of essential human services, 
especially education and health. Boosting incomes among the large 
numbers living in rural populations will require attention to 
agribusiness and other nonfarm endeavors.

Trafficking
    USAID has been instrumental in increasing awareness and 
understanding of human trafficking in South Asia. In addition to 
educating governments and populations largely unaware of the issues, 
USAID has directly assisted about 27,000 people and many more 
indirectly. The program has spawned policy reforms in India, Nepal, and 
Sri Lanka. In Bangladesh, the government has made significant progress 
with USAID's help, thereby removing the threat of Tier III sanctions.

Afghanistan
    Afghanistan remains at the center of United States strategic 
interests. We began our work there in 2002 to address a humanitarian 
crisis. Three years later, we see a future bright with hope. The most 
important development in the post-Taliban era occurred this past 
October with the completion of highly successful Presidential elections 
in which over 8 million people voted, with over 40 percent of voters 
being women. We are in a unique position to support this deserving 
population living on the front lines in the war on terror. Working 
closely with other U.S. Government agencies, USAID plays a key role in 
the development of the country.
    Despite remarkable progress, much crucial work remains. Afghanistan 
has some of the worst social and economic indicators in the world. 
Curbing the alarming growth of the illicit narcotics trade, in part by 
providing viable alternatives for rural farmers, is essential for 
stability. Agriculture, which makes up over 60 percent of GDP, is 
hampered by lack of access to markets. Ruined infrastructure is a 
factor in this, as it impedes economic growth in all areas. Among all 
other factors, the most important constraint to USAID's work is the 
security situation.
    Our programs support the country's transition from a failed state 
to a stable, productive country. To boost the economy, USAID works with 
the Government to strengthen economic policy and increase rural 
incomes, especially from licit agriculture. Other programs improve 
basic health care for women and children. In addition, USAID has 
expanded access to basic education and strengthened democratic 
practices through funding for elections, media, and civil society.

Bangladesh
    Bangladesh is a populous and important ally of the United States in 
the Islamic world. U.S. interests include a stable democracy, economic 
prosperity to stem the potential growth of extremism, and improved 
understanding between the two countries.
    Bangladesh has responded with remarkable promptness to the threat 
of Tier III sanctions under the Trafficking Victims Protection Act. At 
the same time, endemic corruption and deteriorating quality of 
governance are serious problems. Nearly half of Bangladeshis live below 
the national poverty level of $1 per day, and natural disasters, 
compounded by substandard and unavailable public services, condemn 
millions of people to misery.
    USAID's overall goal is to reduce poverty through a vibrant 
economy. Additional programs help reduce fertility, improve family 
health, strengthen small businesses, improve environmental management, 
strengthen the energy industry, provide food for the most vulnerable, 
improve disaster response, promote democracy, and improve the quality 
of the basic education system. Measures to more directly address 
governance and corruption are also being built into the program. 
Underscoring this work are efforts to engage current and future opinion 
leaders on key development issues while demonstrating U.S. commitment. 
Some examples include engaging Islamic leaders with respect to our 
antitrafficking program and acquainting journalists with USAID programs 
and beneficiaries.

India
    India is home to 1.1 billion people and has the world's 12th 
largest economy. India also has the world's third largest Muslim 
population. As the two largest democracies in the world, the United 
States and India share many values and strategic interests. India is 
both a key partner in the war on terrorism and an anchor for security 
and economic growth in strategically important South Asia.
    India's strong democratic traditions and financial stability are 
forces of equilibrium in a volatile region. However, economic 
development in India is uneven and varies by region and social factors. 
India is also one of the most disaster-prone countries in the world. 
The December 2004 tsunami underlines the importance of ongoing 
investments in disaster management.
    USAID seeks to promote economic prosperity through financial market 
development and expanded trade and investment, reduce incidence of 
infectious diseases, and enhance family welfare. In addition, USAID 
supports development and democracy to alleviate poverty, reduce 
malnutrition, and improve the status of women; and humanitarian 
responses to save lives and reduce suffering associated with disasters.

Nepal
    In the last 54 years, Nepal has made a remarkable transition from 
an isolated kingdom with limited basic services and infrastructure to a 
constitutional monarchy. Today, the most pressing problems are the 
Maoist insurgency and its impact on security and economic development, 
the stabilization of a democratic multiparty system and return to the 
rule of law. Nepal remains one of the poorest countries in the world, 
with an annual per capita income of $276 and 38 percent of the 
population living below the national poverty line. Moreover, Nepal is 
grappling with an incipient HIV epidemic.
    On the political front, there are reasons for serious concern, 
particularly given the King's actions on February 1 when he dismissed 
the government, announced a state of emergency, suspended fundamental 
rights and press freedoms, and arrested leading politicians, human 
rights activists and journalists. This is a serious setback for 
democracy and rule of law in Nepal and risks increasing support for the 
Maoists.
    The United States has an interest in an economically and 
politically stable multiparty democracy in Nepal, serving as a 
geographic buffer between the world's two most populous nations in a 
volatile region. By addressing the underlying causes of poverty, 
inequality, and poor governance in Nepal, USAID makes an important 
contribution to fighting terrorism, promoting regional stability and 
freedom, and diminishing the likelihood of a humanitarian crisis.

Pakistan
    Pakistan is of unquestioned strategic importance to the United 
States. With 159 million people, it is home to the world's second 
largest Muslim population and has been key to United States-led 
counterterrorism efforts in South Asia. Over the past year, Pakistan 
has improved relations with India in the conflict over Kashmir and with 
Afghanistan.
    However, Pakistan faces daunting challenges: Poverty, low literacy, 
little foreign investment, sectarian strife, and terrorism. A stable, 
democratic, economically thriving Pakistan is vital to United States 
interests in South Asia. However, continued high fertility rates and 
the large number of youth mean that demand for schools, health care, 
water and sanitation services, and jobs will strain Pakistan's 
fundamentally weak service delivery systems in the coming years.
    In Pakistan, USAID concentrates on improving the quality of 
education, increasing reproductive health and health care services for 
women and children, building democratic institutions, and increasing 
rural incomes and employment. These objectives not only address 
Pakistan's fundamental social and economic challenges, but also 
exemplify the long-term commitments needed to establish the United 
States as a reliable partner and ally to this strategically important 
nation.

Sri Lanka
    Sri Lanka, struggling to recover from two decades of armed 
conflict, will now have to deal with recovery from the recent tsunami, 
which flooded coastal areas and wiped away communities along the south 
and east coasts of the island nation.
    Prior to the tsunami, USAID emphasized the opportunities presented 
by the 2002 ceasefire agreement between the government and the 
separatist Liberation Tigers of Tamil Eelam. Now, along with ongoing 
activities to support the peace process, foster economic growth and 
civil society participation, and provide physical and psychological 
rehabilitation for those affected by the war, USAID is undertaking a 
range of recovery and reconstruction activities.
    The United States continues to support measures to enhance the 
peace process, improving democratic institutions and processes, 
promoting respect for human rights, and enhancing economic growth 
through market-oriented policy reform and financial stability. By 
helping resolve Sri Lanka's civil war, the United States contributes to 
regional stability and the global war on terrorism. Sri Lanka is also 
eligible for the Millennium Challenge Account and is working with the 
MCA to develop a concept paper that addresses its post-tsunami needs as 
well as the wider development context.

                     PRIORITIES IN THE MIDDLE EAST

    In the Middle East and North Africa, a region persistently lacking 
in political and economic opportunities, a disproportionately large 
youth population frays today's social fabric and threatens future 
stability. Like the rest of the region, economic growth is just not 
rapid enough to absorb all the new entrants into the workforce. As a 
result, high unemployment and underemployment rates are typical 
throughout the region.
    Priorities here include rebuilding Iraq, establishing self-rule 
through democratic processes and the expanding education programs to 
give youth the skills to earn a living and be productive members of 
society. In a region where the youth population is exploding and 
unemployment remains disturbingly high, a relevant education is 
critical. In addition, USAID supports free trade agreements, 
infrastructure and business development programs to create jobs and 
help jumpstart a stagnant economy.

Reform in the Middle East and North Africa
    In his State of the Union speech, President Bush said that to 
``promote peace and stability in the broader Middle East, the United 
States will work with our friends in the region to fight the common 
threat of terror, while we encourage a higher standard of freedom. 
Hopeful reform is already taking hold in an arc from Morocco to Jordan 
to Bahrain.''
    To support this growing momentum for reform and respond to the 
region's aspirations for democratic, economic, and social progress, 
President Bush led the G-8 last year at the Sea Island Summit in 
establishing a partnership with countries of the Broader Middle East 
and North Africa (BMENA). The foundation of this partnership is the 
Forum for the Future, which brings together ministers from G-8 and 
BMENA countries to discuss reforms and new ideas for cooperation. The 
first Forum meeting was held in Rabat, Morocco, in December 2005, and 
brought together foreign, finance, and economic ministers from 28 
countries. Other efforts developed under this partnership include 
initiatives on literacy, democracy assistance, microfinance, 
development of small- and medium-sized businesses, and entrepreneurship 
training. USAID is supporting these reform efforts.
    Many Arab countries have been attempting to reform their political 
systems for more than a decade. Although change has been slow, space 
has been created in several countries for increased political debate 
and action. In some of these countries, political reforms have been 
fairly continuous. In others, progress has been followed by regression. 
In a third category, countries have only recently embarked on reform 
efforts.
    USAID supports reform in many sectors and through a variety of 
approaches. In Egypt, for example, assistance in tariff adjustments 
have simplified customs procedures, boosted investment and promoted 
trade. In Lebanon, USAID works with local governments to strengthen 
administration and with citizens to encourage their participation in 
public decisions. A manual to educate women on human rights has been 
distributed throughout Morocco, and programs to train judges in the 
West Bank and Gaza have strengthened the judicial system and promoted 
rule of law.

Middle East Partnership Initiative
    Under the Middle East Partnership Initiative (MEPI), managed by the 
State Department, USAID administers a variety of activities across the 
MEPI pillar areas of economic reform, political reform, education 
reform, and women's empowerment. Some USAID-administered activities in 
the political reform arena include the development of campaign training 
schools for women candidates in the region, and a regional rule-of-law 
program focused on judicial independence, procedure, and training for 
legal professionals. In the education arena, USAID helped to establish 
United States-Middle East university partnerships to strengthen 
programs in such areas as education, business/economics, journalism, 
and information and communications technology. In the economic reform 
area, USAID provided technical assistance and training to improve 
commercial banks' capacity to provide credit and other critical 
financial services, as well as strengthen central bank supervision and 
regulation.

Egypt
    Egypt, a strong moderating force in the Middle East, has long been 
an important United States ally. Egypt and the United States share 
strategic interests that include combating terrorism, resolving 
regional conflicts, advancing regional peace, ensuring domestic and 
regional security, and promoting economic development.
    The greatest threat to domestic stability results from popular 
frustration with recent economic performance and a persistent lack of 
economic opportunity. On the other hand, favorable trends in 2004 
included advances in intellectual property rights protection, new 
legislation promoting business competition, and accession to several 
important trade ageements. In all of these areas, USAID worked closely 
with the government to reach these goals.
    USAID focuses first on accelerating economic growth--essential to 
strengthening Egypt as a stable and prosperous United States ally. 
Second, we emphasize the creation of private sector jobs: Strengthening 
the trade and investment environment and increasing access to 
sustainable utility services. Third, we have targeted the enhancement 
of the human resource base: Providing health services; strengthening 
governance and participation in the political process; and improving 
basic education.

Iraq
    Misguided economic policies and three wars wrought terrible damage 
to Iraq's society and economy. Per capita income fell to very low 
levels, unemployment increased, poverty expanded, and basic services 
deteriorated along with social indicators in areas such as health and 
education. The reconstruction efforts have been undertaken in the midst 
of a growing violent insurgency of former regime elements, foreign 
fighters, and other enemies of democracy. Over past decades, Iraq has 
deteriorated from a nation with enormous natural resources and a 
relatively healthy, educated population to a failed nation.
    It is in the United States national interest to create a stable, 
democratic Iraq with a free-market economy. If this can be achieved, it 
will have far reaching impacts on an unstable region with little 
experience in democracy.
    In 2004, USAID carried out programs in agriculture, economic 
growth, infrastructure, transportation, telecommunications, seaport and 
airport rehabilitation/operation, local governance, health, education, 
electricity, water, and sanitation. Just last month with USAID support, 
for the first time in decades, Iraqis had the opportunity to vote, 
express their views publicly, debate important issues and policy 
alternatives, and have a part in the decisionmaking process.

Israel
    The close bilateral relationship that the United States has with 
Israel serves the national security interests of both countries. The 
Government of Israel's political and economic stability continues to be 
a key objective of United States foreign policy in the Middle East.
    The fundamental USAID objective in Israel is to support the Israeli 
economy, a task of special importance as the Government of Israel 
implements a series of ambitious reforms required for financial 
stability and sustainable growth. Though the United States cash 
transfer is not conditioned on economic policy reform, the United 
States continues to encourage Israeli efforts to reduce government 
spending and deficits, improve tax and public wage structures, increase 
privatization, reform labor markets, and liberalize its trade regime.

Jordan
    Jordan continues to play a vital role in the Middle East as both a 
key United States ally in the war on terror and a model of reform for 
the rest of the Arab world. This role is enhanced by the strong will 
and dynamism of King Abdullah II, who has actively promoted major 
reform initiatives in all sectors to create a better future for 
Jordanians. However, the Jordanian economic, political, and social 
sectors are still very vulnerable to regional developments, 
particularly in Israel and the Palestinian Territories and Iraq.
    Serious social challenges clearly exist in Jordan. First, Jordan's 
growing population has now reached 5.29 million. Second, most schools 
do not provide students with the skills they need for work. Third, the 
vast majority of early childhood education services are provided by the 
private sector and only affordable by the upper classes. A growing 
population will also place a tremendous strain on Jordan's limited 
water resources.
    USAID focuses on increasing water supplies and using existing water 
resources better; improving economic opportunities for all Jordanians 
through private sector development; fostering the democratic process; 
improving Jordan's educational system; and improving primary and 
maternal health care.

Lebanon
    Significant events took place in Lebanon last year, including the 
formation of around 180 new municipalities reflecting a stronger trend 
toward decentralization. The controversial extension of the President's 
term for an additional 3 years, and the formation of an unpopular 
government and the current events of this week, culminating with the 
resignation of Prime Minister Karami and his government, have brought 
Lebanon's internal politics to the forefront of the international 
arena. Lebanon's accumulating public debt has reached $35 billion, 
which is equivalent to approximately 180 percent of GDP, one of the 
highest ratios in the world.
    USAID contributes to U.S. policy priorities of promoting democratic 
principles and free economies through investing in the people. It is 
helping the people of Lebanon by improving their standard of living, 
protecting their environment and health, building their local 
institutions, addressing their legal rights as citizens, and addressing 
their humanitarian needs.

Morocco
    Morocco has a per capita income of $1,200, placing it in the lower 
class of middle-income countries in the region. Its social indicators 
are among the lowest in the region. Urban poverty is a direct 
consequence of unemployment, which is particularly high among youth, 
contributing to insecurity and instability in urban areas.
    Morocco is important for United States interests in the region as 
its oldest ally and as a stable, democratizing, and liberalizing Arab 
Muslim nation. The key challenges for the country are creating jobs for 
a fast growing labor force and addressing the gaps in meeting the basic 
needs of the population.
    In Morocco, USAID helps increase productivity in agriculture and 
agribusiness, create new business opportunities in other areas, and 
improve the business environment. In addition, USAID improves education 
and training for employment. Last, USAID works with the Government to 
improve its response to citizen needs.

West Bank and Gaza
    USAID continues to play an integral role in promoting the U.S. 
Government's strategic foreign policy priority of advancing the Middle 
East peace process and creating an independent, viable, and democratic 
Palestinian State living side by side with Israel in peace and 
security. This includes improving the quality of life for Palestinians. 
The conflict with Israel has severely constrained development, 
especially since the Intifada began in September 2000.
    A forceful and well-coordinated donor response during the past 4 
years, and the successful USAID-led effort for the resumption of 
Israeli revenue clearances in the past 2 years, has meant that an 
outright humanitarian disaster, especially in Gaza, has been averted.
    USAID's strategy has been guided recently by a more flexible plan 
to promote stability in the West Bank and Gaza by responding to 
emergency needs; promoting reform; revitalizing the private sector; and 
maintaining infrastructure and human capital development.

Yemen
    Yemen has made impressive progress with the establishment of a 
constitutional government, a parliamentary system with multiparty 
elections, and laws to strengthen nongovernmental organizations. 
Recently, though, economic reform has slowed, and Yemen's internal 
stability is threatened by a combination of forces challenging the 
government's movement to increased democracy. These forces include 
extreme poverty, Islamic extremism, internal and international 
terrorism, and the alienation from the central government by relatively 
independent tribal leaders in remote areas.
    Despite progress made over the last decade, Yemen remains one of 
the least developed countries. Poverty reduction remains Yemen's most 
compelling challenge.
    USAID's overall goal in Yemen is to support the United States 
Government's (USG) foreign policy objectives in the war on terrorism by 
helping to develop a healthy and educated population with access to 
diverse economic opportunities. To gain support from tribal leaders for 
government decentralization, development, democracy, and 
counterterrorism objectives, USAID helps create jobs, increase income, 
improve health, education, and community empowerment, and strengthen 
democratic institutions.

    Senator Chafee. Well, thank you very much.
    Mr. Camp, could we run down the numbers for South Asia, as 
you go through the various categories, and just some of the 
decisionmaking that went into coming up with those numbers, the 
development, child survival, the transition initiative, 
economic support, the narcotics. Do you have that same chart?
    Mr. Camp. I do have a chart outlining the--yes--the 
individual accounts for each country, and we can discuss that.
    Senator Chafee. Rather than each country, the one I have 
has it for the region. Is it more appropriate to go country by 
country or can we look at just regionally?
    Mr. Camp. I think it would--I don't know. Jim? I think it 
would be more rational to go country by country, because we're 
doing different things in different countries, rather than 
putting the accounts together. That would be my preference.
    Senator Chafee. OK. Sounds good.
    Mr. Camp. OK. Maybe I could address, in particular, the ESF 
and FMF for each of the countries. And, Jim, do you want to 
handle the DA and CSH accounts?
    Let me start with a couple of the big ones. And that would 
be Afghanistan ESF, in particular, where we have a request, in 
2006, for $430 million. A lot of this is focused on 
infrastructure in Afghanistan. The infrastructure needs in 
Afghanistan are simply enormous. This funding is intended for 
items such as completion of the major road between Kandahar and 
Herat, which is part of the larger ring road around 
Afghanistan. It is intended for farm-to-market roads, smaller 
secondary roads, and even graveled roads throughout the 
country. It is--it will help rebuild the irrigation ditches 
that were destroyed over many years, some of which were built 
by USAID in the 1950s, but have deteriorated over the years. 
Power generation is a huge issue in Afghanistan. A lot of that 
money is going for thermal power-generation plants and the 
like. That's one of our really big-ticket items.
    The INCLE, International Narcotics and Law Enforcement, 
$260 million for Afghanistan. This is focused on the--several 
things. One is the emerging huge counternarcotics issues we 
face in Afghanistan. We are working--we have an estimate, this 
year, of something like 206,000 hectares of land under poppy. 
We've got to get this down. And we're focusing on several 
different methods: Eradication, interdiction, police 
enforcement, public information. All of that is in that INCLE 
account. And then, as well, police training, the Afghan 
national police, building up the security forces of 
Afghanistan, that is a very important portion of that account.
    Let's see, Jim, do you want to talk about the CSH and DA 
accounts in Afghanistan?
    Mr. Kunder. In the 2006 budget request, we are not 
requesting any development assistance money for Afghanistan. 
We're relying extensively on the ESF account.
    We are requesting $42.8 million in child survival and 
health. Despite the progress, obviously Afghanistan has some of 
the worst socioeconomic indicators in the world, very high 
infant mortality rate, very high maternal mortality rate. We 
are working with a very receptive Ministry of Health to reform 
the delivery of healthcare in Afghanistan, build more rural 
clinics across the country and try to get those clinics made 
part of an overall coordinated healthcare system that reaches 
out to isolated populations across the country. And most of 
that child survival and health funding will go to build more 
rural clinics, staff those rural clinics, and help reform the 
Ministry of Health.
    Mr. Camp. Moving on to Pakistan. Here, the big-ticket 
items, if I may, are $300 million for ESF and $300 million for 
FMF. This is part of the President's multiyear commitment to 
Pakistan, to President Musharraf, of $3 billion over 5 years. 
This is the second year of that program.
    The FMF is focused on helping Pakistan help us in the 
global war on terrorism. It will mean providing the means to 
help Pakistan combat remnants of al-Qaida in the frontier 
areas. It relates also to Pakistan's own defense needs.
    The ESF is divided, $200 million and $100 million--$200 
million for budget support, $100 million for education and a 
variety of social-sector needs that Pakistan faces.
    Jim, do you want to add to that?
    Mr. Kunder. I'm not sure what would be most helpful. We 
have, obviously, a detailed breakdown of exactly what 
individual projects the money is going for. Do you want me to 
go through those in detail, sir? I'll be glad to do it at 
whatever level of detail you want. I'm not sure you want to 
spend the time, I'll be glad to do it. What'll----
    Senator Chafee. Well----
    Mr. Kunder [continuing]. Be most helpful?
    Senator Chafee. What would be helpful for me is: Where are 
you taking from as you receive the increases? How do you make 
priorities as you look at the region? You mentioned just--
Afghanistan, up on the narcotics; in Pakistan, up on the 
military, foreign military financing. Where is it coming from?
    Mr. Camp. This is part of the larger request. We're not--
we, unfortunately, are increasing most of our accounts in South 
Asia, so we are not--we don't find a lot of areas to cut in 
South Asia. Because we have such growing, large, expanding 
programs in Afghanistan and Pakistan, our programs in the rest 
of the region have traditionally been rather small by 
comparison, including in India and Bangladesh. So we're not 
really drawing from South Asia programs. We're requesting new 
money, in many cases.
    Senator Chafee. Now, my chart has, when you put all the 
programs together--development, child survival, transition 
initiative, economic support, narcotics, law, Peace Corps, 
refugees, foreign military financing--fiscal year 2004 was $2.4 
billion, and this year, total for the region is $1.8?
    Mr. Camp. I don't have that chart in front of me. One big 
difference--and this may account for the variation. Last year, 
we requested substantial amounts for FMF in Afghanistan--let me 
look at my chart just a moment--$400 million in FMF for 
Afghanistan. We're down to zero this year in our request 
because that $400 million in 2005 was primarily for training of 
the Afghan National Army. That was implemented by the 
Department of Defense. This year, in a change in our 
accounting, the Defense Department is asking for the money for 
Afghan National Army training, rather than State Department. So 
that's an accounting change that accounts for at least $400 
million of that.
    Mr. Kunder. I believe, sir, the other major factor in all 
of this is the heavy use of supplemental funding for 
Afghanistan. I don't have the chart that you have in front of 
you. But if you're looking at year by year, what we would call, 
operating-year budget, actual expenditures in the year, as 
opposed to budget request, then you would also have to look at 
the substantial supplemental request for Afghanistan and add 
those numbers in, as well. I know it's a separate issue about 
whether we should be asking for the money in supplemental 
funding, as opposed to the 2006 budget, but I believe, when you 
compare historical expenditures to budget requests, then we'd 
have to weave in the supplemental requests, as well.
    Senator Chafee. Thank you, you've answered my question.
    Senator Boxer.
    Senator Boxer. Thank you so much, Mr. Chairman.
    Thank you very much for your testimony. And could you send 
Secretary Rocca our best wishes and hope that she has a speedy 
recovery?
    Mr. Camp. Thank you; I'll do so.
    Senator Boxer. I want to talk a minute about Afghanistan. I 
have a very soft spot for Afghanistan. I think our country 
does. This is a nation that was crushed by the Taliban, and it 
was the tragedy of 9/11 that led to their liberation, because, 
otherwise, we were not doing that much. And as the author of 
the first resolution that called on President Clinton not to 
recognize the Taliban, I was aware--not of my own work, but 
because of the work of many feminists in America--I was very 
aware of what the Taliban was doing to the women there, 
essentially making them invisible, or worse.
    So when we had what I call this ``accidental liberation,'' 
it was this amazing opportunity to free these good people. And 
I think that Hamid Karzai is really an extraordinary human 
being.
    And I also think that, were it not for Iraq and the fact 
that it's costing a billion dollars a week there, we could have 
had the resources necessary. And I feel it is, you know, 
exceedingly sad, because, in Afghanistan, I think we have a 
situation where we could work with them to create a true model 
of democracy and freedom, but, because we are so hampered by 
our lack of resources, it's very difficult.
    And I want to talk to you about the status of women there, 
because, when you gave your report, it was very glowing, but 
what--you didn't talk about the latest report by the Human 
Rights Watch, and I want to ask you about that.
    First of all, we continue to see delay in parliamentary 
elections. I want to ask you about that delay, how you view 
that. In a recent article, Nisha Varia, of Human Rights Watch, 
wrote--and I'd ask unanimous consent that Human Rights Watch 
article, published in The World Today, be placed in the record.
    Senator Chafee. Without objection.
    [The article referred to follows:]

                [From Human Rights Watch, Mar. 1, 2005]

                          Struggle for Rights

                            (By Nisha Varia)

    Images of long lines of Afghan women patiently waiting to cast 
their votes in last October's presidential election, and the candidacy 
of a female doctor for president, seem vividly to symbolise the 
progress of women since the fall of the Taliban just over 3 years ago. 
The images of hope are not wholly misleading. Large numbers of women 
participated as voters, poll workers, and civic educators in many parts 
of the country. However, the real test--for women's rights, and for 
Afghanistan itself--lies ahead, with local and parliamentary elections. 
This time women will run for office in greater numbers, and the rule of 
local warlords will be at stake as never before.
    The parliamentary and local elections, to be held later this year 
carry a greater risk of violence, vote-buying, and intimidation, with 
intense jockeying for control over districts and provinces. Given the 
slow pace of disarmament and demobilisation and the continued security 
vacuum, the omens are mixed, at best. From attacks on girls' schools to 
death threats, violence against women remains routine.
    The areas with the most Taliban and insurgent activity continue to 
be particularly hostile to women's rights. The insecurity and attacks 
have prevented many aid projects in the south and southeast. Thus, in 
Zabul province, only 1 percent of 7- to 12-year-old girls attends 
primary school. In Uruzgan province, only 2 percent of those who cast 
their ballots in the presidential election were women.

                             FACING DANGER

    In theory, women's political rights are clearly outlined in the new 
constitution. It guarantees men and women equal rights and duties 
before the law, and reserves a quarter of the seats in the lower house 
of parliament, the Wolesi Jirga, for women. One-sixth of the upper 
house, the Meshrano Jirga, is also reserved for women, by presidential 
appointment.
    In practice, things look very different. Independent candidates 
face violent retaliation if they run campaigns advocating justice and 
women's rights. The worry is that the only women who will feel safe 
enough to stand will be compliant daughters, sisters and wives of local 
commanders, or other proxies, who promise to toe the party line.
    Women still struggle to participate in the country's evolving 
political institutions. This is not just a question of social 
expectations, or about the conservatism of Afghan society, it is to do 
with power. Those who put their heads above the parapet powerfully 
describe the dangers that they face. From Kabul to Kandahar to Herat, 
women talk of how the failure of disarmament and the continued 
dominance of regional warlords threatens their ability to work and 
speak freely.
    Women aid workers, government officials, and journalists face 
harassment, violent attacks, and death threats. Those who challenge the 
powerful, conservative elements of the country's political structures 
are targeted because they can be made into chilling examples for other 
women considering political activity.
    Last June, gunmen fired into the home of a women's rights activist 
who had spoken publicly about sexual harassment, trafficking, and 
violence against girls. The bullets missed her by inches. ``To fear 
losing your life,'' she told me, ``is part of living in this country.''
    One organisation was forced to close a project that provided 
classes for internally displaced women in the central Panjshir region. 
Two armed men declared: ``We don't want to see you here again or else 
you risk your lives.'' The provincial government could not provide 
safety guarantees. In the words of one staff member: ``Nothing worked. 
We felt we had lost.''
    In the north a woman working for a literacy programme was 
repeatedly threatened by local strongmen. They told her: ``We will kill 
you as an example to other women.'' A magazine editor says she has been 
threatened many times, but has not even reported the threats, because 
to do so would be pointless. ``If I want to report it, what can [the 
government] do? Nothing at all.''
    The pervasive mood of fear, and the lack of accountability for 
perpetrators of violence, could seriously undermine women's 
participation in the elections. These are not isolated examples, I 
talked to more than 80 women from around the country considering 
running for office. Almost all say they expect warlords and dominant 
political factions to intimidate them through violence or threats if 
they decide to become candidates.
    Some say they will not run because they are afraid for themselves 
and their families. These fears of harassment are often reinforced by 
previous threats women faced during the emergency and the 
constitutional Loya Jirga grand councils, or in their everyday work. As 
one female community leader in northern Afghanistan said, ``Most of the 
women who are running have connections with [General Rashid] Dostum or 
[Governor Mohammed] Atta. Their men will come at night and make 
problems for my family so it's not possible [to run for parliament]. I 
have to sit quiet.''
    Others are determined to be candidates--but are clear about the 
risks. One woman told me: ``I am sure, l00 percent, [military factions] 
will make problems for me. I will try, what else can we do? For five 
years, they should take us hostage? If they kill me, no problem, but I 
will run for parliament.''

                            WARLORDS REMAIN

    Part of the underlying problem is that many of the men who replaced 
the Taliban share the same views on women that made the Taliban so 
notorious. But another key reason is that the United States and its 
allies have helped prop up regional warlords and their factions--many 
with atrocious human rights records--in the fight against the Taliban 
and Al Qaeda. These warlords have had a chokehold on regional and local 
governments.
    There has been no coherent strategy for helping President Hamid 
Karzai remove the warlords from power and replace them with civilians 
loyal to the central government. The replacement of General Mohamed 
Qasim Fahim as defence minister in Karzai's new cabinet, is welcome. 
However, the president failed to appoint women to powerful cabinet 
posts, relegating them to traditional roles overseeing ministries for 
women and young people. And at the local level, many influential 
provincial governors--in effect, more militia leaders than civilian 
governors--remain in place.

                                LAWLESS

    NATO leads the international peacekeeping force but has repeatedly 
failed to muster the necessary resources to expand its presence 
throughout the country. NATO member states, while in theory 
acknowledging the security needs, and recently expanding their 
activities in the East, have not translated this into decisive action. 
In the meantime, much of the country remains lawless.
    Again and again, Afghan women activists identify improvement of the 
security environment as the most significant step that the government 
and international actors can take to ensure their freedom to assert 
political rights without fear of violence. Almost all who talked to 
Human Rights Watch expressed their dismay at the failure of the 
disarmament process, the continued dominance of warlords, and the lack 
of accountability for abuses.
    An expansion of NATO-led peacekeeping troops throughout the country 
and renewed efforts at disarmament could help transform it from the 
rule of the gun to the rule of law. Instead, Afghanistan remains one of 
the most poorly funded conflict zones in the world.
    The Taliban stripped women and girls of their most basic rights. 
Banished completely from public life, the slightest infraction could 
result in arrest or execution. With the fall of that regime at the end 
of 2001, it seemed such nightmares were a thing of the past. But the 
pressures on women today are sometimes almost as severe as they were in 
that brutal era.
    Three years ago, the United States, Britain, and their allies 
pledged to support women in their struggle to reclaim their rights, and 
to provide a supportive environment for them to do so. After decades of 
conflict, those promises should be kept.

    Senator Boxer. She wrote that, quote, ``The parliamentary 
and local elections to be held later this year carry a greater 
risk of violence, vote-buying, and intimidation, with intense 
jockeying for control over districts and provinces.'' And she 
goes on, ``Given the slow pace of disarmament and 
demobilization and the continued security vacuum, the omens are 
mixed, at best. From attacks on girls' schools to death 
threats, violence against women remains routine.'' And you 
didn't mention that in your statement.
    What we know is, many women in Afghanistan still live in 
fear, especially in the southern parts of the country. NATO 
only has 8,500 troops conducting peacekeeping duties in a 
country that's the size of Texas. And I don't have a lot of 
confidence that women will be able to vote without facing 
threats, violence, and intimidation.
    Now, as I said, we're spending a billion a week in Iraq, 
and the entire ask for Afghanistan is $1.3 billion in economic 
and development assistance. So I want to know how much of that 
assistance will be directly targeted to improve the lives of 
women. And where in your budget might I find that?
    Mr. Camp. OK. Several good questions. Let me start on the 
parliamentary-election side.
    I think we share, with President Karzai, the desire to see 
those parliamentary elections take place as soon as possible. 
Obviously--you know, the Bonn Agreement talked about having 
them by June 2004, I believe. That deadline has obviously 
passed. There was a decision taken last year to separate the 
Presidential and parliamentary elections. Now we are faced--and 
I would say, more pointedly, Afghanistan is faced--with moving 
forward with those as quickly as possible.
    Senator Boxer. What does that mean?
    Mr. Camp. Well, it means as soon as the logistics can be 
arranged. And I would say security, as well, is part of that. 
We don't have a date yet. We would like--it's not really up to 
us. The Government of Afghanistan has to decide when it can 
hold those. I know that President Karzai wants to do those as 
soon as he possibly can. He's working with the United Nations 
on the logistics and on the--basically, the modalities of 
getting this done.
    Senator Boxer. Do we have anything in the budget that's--to 
help with this?
    Mr Camp. Absolutely.
    Senator Boxer. And where would we find that?
    Mr. Camp. That would be in the Afghanistan ESF. That is--
actually, it's 2005 supplemental, I believe, to assist 
Afghanistan in the holding of elections. We made a large 
contribution----
    Senator Boxer. And how much is that?
    Mr. Camp. I'm sorry?
    Senator Boxer. How much would that be?
    Mr. Camp. I do not know the answer to that right now. I 
think it's $60 million, but I'd have to check and get back to 
you on that.
    Senator Boxer. Yes.
    Mr. Camp. We contributed----
    Senator Boxer. I need to know that.
    Mr. Camp [continuing]. For the parliamentary--for the 
Presidential election. We want do the same for the 
parliamentary.
    Senator Boxer. Yes, I would like you to get back to us, if 
you can, on how----
    Mr. Camp. Sure.
    Senator Boxer [continuing]. Much that is, and if it is in 
the supplemental.
    Mr. Camp. OK. It is in the supplemental. And as far as what 
the exact amount was, I'll get that to you. In fact, my 
colleagues might have the answer, behind me.
    [The submitted written answer to the requested information 
follows:]

    Question. What is the USG contribution for the Afghanistan National 
Assembly elections?
    Answer. The United States has already contributed $12 million to 
the United Nations for Afghanistan's 2005 National Assembly elections, 
scheduled for September 18, 2005. Once funds are available from the 
administration's FY05 supplemental funding request, the administration 
intends to make an additional significant contribution consistent with 
U.S. support for the Presidential election last year.
    We are also actively reaching out to the international community on 
this issue and encouraging them to help fully fund the elections.

    Senator Boxer. OK.
    Mr. Camp. But on the question of----
    Aha. Thank you very much. In the supplemental, a request 
includes $280 million to support preparation for upcoming 
parliamentary elections and to extend the stabilizing influence 
of the new democratic government. So that combines two things. 
But the elections portion is substantial.
    Senator Boxer. All right.
    Mr. Camp. The United Nations will be putting out an appeal 
for every--a global appeal for support in the elections.
    Senator Boxer. Good.
    Mr. Camp. We will be supporting that. But also on the 
followup----
    Senator Boxer. Good.
    Mr. Camp [continuing]. Of the $280 million----
    Senator Boxer. OK.
    Mr. Camp. The question of women's participation in 
elections. I think we can take some confidence from the fact 
that, in the Presidential election, women's participation was 
actually rather high, as a percentage, higher than some might 
have expected.
    Senator Boxer. What was it?
    Mr. Camp. Forty percent is the figure that I recall. And I 
think that----
    Senator Boxer. And what was the participation of men? How 
many----
    Mr. Camp. I'm sorry. Forty percent of the voters were 
women.
    Senator Boxer. So 60 percent of the voters were men.
    Mr. Camp. Right.
    Now, moving into the question that you asked about where 
funding exists in our budget for--focused on women and girls. I 
would say it is virtually everywhere. It is a crosscutting 
issue. We are providing funding under ESF for women's and 
girls' education. We are--in our health programs, we have 
programs focused specifically on women and girls. I think we're 
helping to set up hospital wings devoted to women and girls, 
which, in the Afghan social context, is necessary. Training of 
female doctors. So it's----
    Senator Boxer. OK.
    Mr. Camp [continuing]. Across the board.
    Senator Boxer. If you could get back to us with a 
breakdown----
    Mr. Camp. OK.
    Senator Boxer [continuing]. It would be very helpful. 
Because the committee has been interested in this, and we have 
passed some amendments that passed the committee; we never got 
the foreign relations bill, authorization bill, onto the 
floor--but that deal with women and girls. So I would be very 
interested.
    So do you not agree with Human Rights Watch when they say 
that the attacks on girls--I'll read it, exactly, to you--
``Women aid workers, government officials, and journalists face 
harassment, violent attacks, and death threats. Those who 
challenge the powerful conservative elements of the country's 
political structures are targeted because they can be made into 
chilling examples for other women considering political 
activity.
    ``Last June, gunmen fired into the home of a women's rights 
activist who had spoken publicly about sexual harassment, 
trafficking, and violence against girls. The bullets missed her 
by inches. `To fear losing your life,' she said, `is part of 
living in this country.'
    ``The pervasive mood of fear, the lack of accountability 
for perpetrators of violence, could seriously undermine women's 
participation. These are not isolated examples. She spoke to 
more than 80 women from around the country considering running. 
Almost all say they expect warlords and dominant political 
factions to intimidate them through violence, threats, if they 
decide to become candidates.''
    And she goes on--this is Human Rights Watch--``Part of the 
underlying problem is that many of the men who replaced the 
Taliban share the same views on women that made the Taliban so 
notorious. But another key reason is that the United States and 
its allies have helped prop up regional warlords and their 
factions--many with atrocious human-rights records--in the 
fight against Taliban and al-Qaida. These warlords have had a 
choke hold on regional and local governments.''
    What is your response to that?
    Mr. Camp. My response would be that, in fact, our program 
is designed very much to ensure that the central government 
takes--regains authority over the whole country and that, in 
fact, warlords are minimized, marginalized, and eventually----
    Senator Boxer. They're minimized and marginalized.
    Mr. Camp [continuing]. And eventually eliminated.
    Senator Boxer. You think they are being minimized and 
marginalized.
    Mr. Camp. I think that our DDR program, in particular, is 
focused on making sure that people--the warlords are brought 
into Kabul, lose their, sort of, regional support, in terms of 
militia. It's a long-term task. And I would certainly not 
dispute the fact that there is still--there are still problems, 
particularly in the south, I would say, where the traditional 
social structure is extremely conservative. There are problems. 
And that--those are what we're trying to address.
    And I would say that our funding commitment to Afghanistan 
is quite substantial. I think the numbers that we are citing 
are large numbers and seek to solve the problems that Human 
Rights Watch has identified.
    Jim, did you have anything to add on----
    Mr. Kunder. I'm glad you raised it, Senator. When we first 
went into Kabul, in January 2002, we made a point of making our 
first grant--first USAID grant--to the Ministry of Women's 
Affairs, as both a practical and symbolic indication of how 
important this issue was to us.
    I think you made a comment earlier about the Taliban and 
it's oppression of women. But I think, in fairness, that to 
understand the depth of the problem, women in rural Afghanistan 
live in medieval conditions in many places. The problem is a 
structural problem, with deep structural roots, cultural roots, 
as Don just said. So that to solve that problem is going to 
require a long-term approach. Now, we've taken the 
congressional earmark that was in the 2005 appropriations bill 
for $50 million, specifically targeted for Afghan women, and 
we've exceeded that earmark. We're trying to drive resources to 
women. And we just met again with the Minister of Women's 
Affairs, Minister Jalal, to try to come up with a comprehensive 
and accelerated program of establishing women's centers in 
regional capitals.
    We're taking this very seriously. But while life was 
dramatically worse for urban elite women in Kabul under the 
Taliban, my honest view is that women in rural Afghanistan had 
it rough before the Taliban, during the Taliban, and still have 
it rough because of these structural problems.
    So we're taking the earmark seriously. We're taking 
cooperation with the Ministry of Women's Affairs seriously--
we're passionately committed to doing something about this. But 
I would be misleading you if I suggested that the allocation of 
$50 or $60 million is going to dramatically change things in 
the short term.
    I have one last comment--and I feel very strongly about 
this--there have been bombings of girls' schools in the 
countryside, and there have been attacks on women activists. 
But, to some extent, this is us being on the offensive. The 
reason there are attacks on girls' schools--and they're in the 
most isolated regions--is that we are pushing girls' schools up 
into the most isolated valleys and regions of the countryside, 
in places where there are men who do not want women to leave 
medieval conditions, and they are pushing back. But we are 
pushing very hard. This it not happening in downtown Kabul, or 
even downtown Kandahar. It's happening in the most isolated 
rural areas. So we're seeing those incidents, but we're seeing 
in, in part, I would argue, because democracy is on the march.
    Senator Boxer. Well, I'd just make the point that when you 
talk about deep culture, there--from my conversations with 
Afghan women, before the Taliban women were quite involved in 
society. So you're not talking about something that goes back, 
you know, hundreds and thousands of years, as you could point 
in other places.
    I would just say thank you very much for your comments, 
both of you, and especially those last comments. I think it 
shows that you do get what's going on there.
    I would just make a point to you, Mr. Chairman--I don't 
know whether you would agree with me or not--but I feel that 
the opportunity here in this country is--in Afghanistan--is 
just tremendous. And it, to me--and it's true that a billion-
three is not chump change, and no one would suggest that at 
all. But after years of the Taliban and this opportunity that 
we have, it is just so unfortunate that we don't have more 
international troops outside of the main cities.
    And I know we have more now than we did. It was a big push 
by this committee, in many ways, to just get them to get 
outside of Kabul. And to the extent that we can do more there--
we obviously are hampered by the unrelenting cost of our 
military in Iraq. I mean, it's just plain and simple. And I'll 
say again, a billion a week on the military, a billion-three 
for the entire year for aid to Afghanistan, a place where I 
think we have an atmosphere, an underlying atmosphere, of 
change, that we really could exploit, in the best sense of the 
word.
    So I just thank both of you for your comments, and I look 
forward to getting a followup from you on, if you can analyze 
the aid, both in the supplemental and in your regular budget 
request, and how you see the different line items being applied 
to condition of women in the country.
    Mr. Camp. Be glad to.
    [The submitted written answer to the requested information 
follows:]

    Question. Can you provide a breakdown in fiscal year 2005 of how 
much economic and development assistance for Afghanistan will be 
directly targeted to improve the lives of women (provide a breakdown by 
program), and where in the budget it might be found?
    Answer. While exact funding figures will be unavailable until final 
program allocations of the fiscal year 2005 supplemental have been 
determined, we plan to apportion a significant amount of funding 
directly at initiatives designed to improve the lives of women and 
girls. Project in fiscal year 2005 to include:

   Health programs and services that have a direct impact on 
        women;
   Education programs designed to increase school attendance 
        for girls, expand literacy, and commence renovation of the 
        Carte Seh Girls' School;
   Promotion of Afghan civil society opportunities for women 
        through training and grants to women-led NGOs;
   Entrepreneurship training workshops for women and networking 
        assistance to develop market linkages inside and outside 
        Afghanistan;
   Integrated Development programs to empower and strengthen 
        women-led community organizations such as development councils, 
        saving and investment clubs, and enterprise development 
        vehicles;
   Expanded focus on alternative livelihood opportunities in 
        provincial areas (i.e., employment creation programs and small 
        business and vocational training.

    These proposed activities are above and beyond the $50 million 
earmarked by Congress in the fiscal year 2005 conference report for 
support of programs that directly address the needs of Afghan women and 
girls. In response to that earmark, over $56 million within existing 
projects have been identified and tailored to include activities that 
have a direct impact on women and girls.
    In fiscal year 2006, we fully expect to continue our focus on 
projects aimed at improving the lives of Afghan women and girls. While 
funding levels for the next fiscal year are not yet determined, it is 
anticipated that our fiscal year 2006 programs benefiting Afghan women 
and girls will approximate those planned for fiscal year 2005. As 
figures become available, we will be glad to provide you with further 
information on our activities in this area.

    Senator Boxer. And I think if we can make real progress 
there, it also sends a message to a place like Saudi Arabia, 
where the women couldn't even vote in their election, and the 
women can't drive, and it's a disastrous situation.
    The last point I would make is, if you ever, sort of, get 
tired of hearing about the condition of women in Afghanistan, 
just put on a burqa, once, for 15 minutes, and keep it on, even 
though you're going to want to pull it right off. And you--the 
sense that you have is of being completely invisible and having 
no soul and no humanity whatsoever. And I think if everyone 
could do that--I wish everyone could do that, who's interested 
in foreign policy, to understand what it means to women 
throughout the world who are made to feel invisible.
    And as Bernard Lewis said--the noted historian, a 
conservative one, at that, when he was asked, and I saw this 
interview, which I am paraphrasing--``If you had to say what--
why is the economic development in the Muslim world behind the 
times?'' He said, ``If I had to give one reason, it would be 
the condition of the women and the way the women are treated.''
    So there's so much to this, liberating the women there, 
because it's going to mean so much for democracy, so much for 
economics; and, frankly, it's going to mean so much for our 
spirit, because, if we do that, we're helping, you know, half 
the world's population just by fostering equality.
    So I thank you very much, Mr. Chairman.
    Again, I thank the witnesses.
    That would conclude my questions.
    Senator Chafee. Thank you, Senator Boxer.
    I have a couple of followup questions, if I could, on the 
counternarcotics effort. What is the real truth? We have, at 
some of our hearings, testimony that it--the spread of the 
poppy-growing is destabilizing the country; it's getting worse. 
I think one of our witnesses said they're growing--they grow 
the poppies right in the town square in some of the 
communities. And then the militias that are--the warlords that 
are growing the crops have their own militias, and it affects 
the judicial system, such as it is. The corrosive aspect of 
narcotics in Afghanistan. What is happening? And are dollars 
being well spent? You testified to eradication and crop 
substitution and some of the other initiatives that we have 
there. But are we making any gains?
    Mr. Camp. I would start out by saying it is a huge, huge 
problem. There is no denying that. Two hundred thousand 
hectares under cultivation is a frightening statistic. 
Afghanistan has quickly surpassed Burma as the largest producer 
of opium. That is something that no one can ignore, and it is 
something that has focused us to look very, very severely at 
our programs and what we can do to begin to address this 
problem. And I won't say that we're going to end it next year. 
It is an ongoing problem that we have to address. I think we've 
come up with a coordinated program that is going to be making 
progress over the coming years. That's all I can commit to, I 
would say. Certainly, eradication is an important part, but it 
is not the entire part.
    And I would also say that, first of all, Afghanistan is 
fully committed--the Government of Afghanistan and President 
Karzai is fully committed to wiping out this scourge. He has 
strong moral authority that he is using in this respect. 
Growing narcotics is against Islam, and that is a message that 
we are sending, and that the Government of Afghanistan is 
sending, through every public-information medium it has.
    But we're also working on interdiction, we're also working 
on alternative livelihoods. And I think USAID is heavily 
involved there.
    Mr. Kunder. Sir, first of all, I would like to say, for the 
record, to Senator Boxer's comments, I don't get tired of 
hearing about women's issues in Afghanistan, so you don't have 
to worry about that. We're more than glad to debate that 
anytime.
    All of our experience around the world in counternarcotics 
says that we've got to have all three legs of the stool in 
place. We've got to have good law enforcement. We've got to 
have active interdiction. And we've got to have an economy that 
gives people other alternatives. Unless you have the economy, 
interdiction, and law enforcement in place, you're not going to 
have success. And because the infrastructure, the institutional 
infrastructure was so damaged in Afghanistan after 23 years of 
civil war, we don't have law enforcement active in the 
countryside.
    So in terms of short-term gains, until we get the law 
enforcement and the interdiction and the economic opportunities 
all working in sync, it's going to be a while until we get this 
thing turned around.
    Our administrator, Andrew Natsios, just came back from 
Afghanistan last week. He was in Nangahar Province, one of the 
centers of poppy-growing. And his sense, anecdotally, talking 
to farmers, was that these messages are getting through--the 
public-education message that Don is talking about, the public-
health message, and President Karzai's personal strong 
opposition to narcotics. What Andrew was out there seeing were 
jobs programs, where people were rebuilding irrigation systems 
as an alternative to growing poppy. And they were successful. 
Now, we're getting anecdotal information that this combination 
of programs is starting to have an impact in the countryside.
    I think, truth in advertising, you're not going to see an 
immediate dramatic decline in the next year, because it's going 
to take a while to rebuild the law-enforcement infrastructure 
and the economic infrastructure in the countryside. Over time, 
I think we're going to win it better than we are in Latin 
America, because we've got open countryside to work in, we've 
got poppies that happen to grow red flowers on them that are 
easily noticeable, and some factors that are on our side. But 
until we get all three legs of the stool--interdiction, law 
enforcement, and alternative livelihoods--working in sync, 
we're not going to have an immediate dramatic turnaround. 
That's my estimation.
    Senator Chafee. Well, thank you very much.
    One last question. On the ring road, what's the status? 
What do we have--what have we completed, and what do we have in 
front of us?
    Mr. Kunder. The main section, from Kabul to Kandahar, 
south, the part that was completed last year, is handling 
traffic. We've had some maintenance problems. We've had to go 
back to a couple of contractors, sort of the way we do in the 
United States, who didn't do quite as good a job paving as we 
expected them to. But, essentially, that segment of 240 miles 
from Kabul to Kandahar is in service.
    The next stretch that we're focused on is the one to the 
west, from Kandahar to Herat. The U.S. Government is 
responsible for 220 kilometers; the Saudis and Japanese, about 
100 kilometers apiece. We are under construction. We are 
shooting for a target date of completion of December of this 
year for the Kandahar-to-Herat section of the road.
    On the good-news/bad-news front, we had record snows in 
Afghanistan this winter. That's good news for irrigation and 
agriculture. It was bad news for highway construction. So we'll 
be reporting to you later this year about whether we're going 
to meet the December deadline for the Kandahar-to-Herat 
portion.
    The northern portions of the ring-road, where the Europeans 
and the World Bank are working, they have not made quite as 
much progress. But the United States sections, between Kabul to 
Kandahar, and then Kandahar to Herat, we're, generally 
speaking, on schedule.
    Senator Chafee. Do you have many bridges? Is that an issue?
    Mr. Kunder. It is a huge issue. The section from Kandahar 
to Herat is the major drainage basin for the Helmand River and 
others, that are subject to rapid flooding in the springtime 
from the Hindu Kush Mountains, some of the highest mountains in 
the world, so that the construction of bridges and culverts is 
a huge engineering task. And so, that's a major part of it, and 
that's one of the reasons we have the timeline we do.
    Senator Chafee. I've been asked to ask a question on behalf 
of the committee, and that is: What is the status of our 
assistance programs to Nepal?
    Mr. Camp. The status of our assistance programs to Nepal 
is, frankly, that they're under review, after what happened on 
February 1. We're looking at how we can express our dismay at 
what the King has done, without harming the people of Nepal, 
and without making any more likely the possibility of a Maoist 
takeover. So we have really not come to a conclusion as to how 
best to deal with the assistance issue here. We are hoping that 
the King will do what we have urged, and what the Indians and 
the British and the rest of the international community has 
urged, which is to quickly restore civil liberties and release 
political--the prisoners that have been picked up after 
February 1, and restore multiparty democracy. If we see no 
progress on that, then I think we're going to have to take a 
very careful look and see how we use our assistance programs in 
that respect.
    Senator Chafee. Thank you very much, gentlemen. And we will 
recess for the second panel. Thank you once again.
    [Recess from 9:56 to 10:02 a.m.]
    Senator Chafee. Welcome, Mr. Satterfield. And we will 
welcome your testimony.

   STATEMENT OF HON. DAVID M. SATTERFIELD, ACTING ASSISTANT 
SECRETARY, BUREAU OF NEAR EASTERN AFFAIRS, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Ambassador Satterfield. Thank you very much, Senator. Very 
pleased to be here this morning.
    I would ask permission for the written statement, which I 
have prepared, to be entered into the record.
    Senator Chafee. Without objection.
    Ambassador Satterfield. And I understand that time is short 
today, and I think there will be a number of questions asked. 
Rather than do a normal summary statement, I'd simply like to 
note, I have just returned, yesterday evening, from a rather 
extraordinary 3 days in Beirut, Lebanon. The developments that 
we have witnessed on the ground in that country, which emerged 
from its civil war 15 years ago, but which has remained under 
Syrian dictate, in terms of its political process, and with the 
presence of Syrian occupying forces and intelligence elements 
on the ground, is now moving forward in a quite exceptional 
manner. Secretary of State, our colleagues in Europe, the 
French Government, have spoken to these developments in London 
last night. We are doing all we can to support and encourage a 
continuation of an atmosphere in Lebanon which allows the 
people of Lebanon, at long last, to make their own political 
decisions in an atmosphere of freedom--freedom from violence, 
freedom from threat of intimidation. It is long past time that 
Lebanon be able to assume its sovereign independent role in the 
region. But we are very, very encouraged by what is taking 
place on the ground there.
    Thank you, Senator.
    [The prepared statement of Ambassador Satterfield follows:]

   Prepared Statement of Hon. David M. Satterfield, Acting Assistant 
    Secretary, Bureau of Near Eastern Affairs, Department of State, 
                             Washington, DC

    Mr. Chairman and members of the committee, thank you very much for 
providing me the opportunity to come here today and discuss the year 
ahead for the Middle East region.
    As we look forward to the year ahead, it's safe to say that we have 
greater reason for optimism for the region than has been the case for 
many years. We see as harbingers of a much brighter future for the 
people of the region:

   The political process under way in Iraq;
   New Palestinian leadership that has committed itself to an 
        end to violence, a return to negotiations with Israel, and 
        internal reform;
   A rising tide of demand throughout the region for the 
        political, economic, and social reform that we believe is 
        critical for regional security, stability, and prosperity; and
   Libya's abandonment of its weapons of mass destruction 
        programs.

    Just over a month ago, we witnessed a historic day for the Middle 
East. Millions of courageous Iraqi men and women, defying threats to 
their lives, lined up on the streets to cast their votes in Iraq's 
first democratic and transparent elections in generations. On that day, 
the Iraqi people demonstrated to the world their determination to shed 
the shackles of an authoritarian past and to build a democratic, 
stable, and prosperous Iraq, at peace with its neighbors. The Iraqi 
people still face a challenging road ahead. But the United States 
remains firmly committed to providing the support Iraq needs to 
progress in its transition.
    In February, the United States Government sent an assessment 
mission to Iraq headed by Ambassador Dick Jones. This mission aimed to 
take a fresh look at our overall engagement in Iraq and ensure that we 
do everything we can to support the Iraqi Transitional Government and 
maintain momentum in the political and economic development in Iraq 
throughout 2005. We are now assessing the results of that mission.
    As we look ahead, it remains clear that the success of Iraq's 
transition will depend upon continued progress in three key areas: 
Security, the political process, and the economy and reconstruction.
    The key to establishing and maintaining security in Iraq is the 
development of Iraqi Security Forces capable of taking full 
responsibility for external and internal security. The horrific suicide 
bomb in Hilla on February 28 was only the latest tragic reminder of the 
challenge that Iraq faces as it emerges from decades of dictatorship. 
The discipline and bravery exhibited by the ISF on Election Day gave us 
a glimpse into what is possible as more Iraqi forces are trained, 
equipped, and spurred by patriotism to serve and protect their country. 
It is this specter of capable Iraqi forces that drives the insurgents 
to target Iraqis who are determined to support the new government. The 
capacity of the ISF also will increase as its leadership is trained, 
including more military officers developed through the NATO training 
mission. We are very pleased by NATO's decision, taken during the 
President's visit last week, to increase participation in this critical 
mission.
    Political progress will depend largely on Iraqi efforts to promote 
national unity, both over the year ahead and in the long-term. On 
Election Day, some Iraqis chose to stay home--some out of fear, and 
others out of alienation and disenchantment. However, we are encouraged 
by the post-election statements of Iraqi leaders, calling for broad 
participation in the political process moving forward. In 2005, 
according to the Transitional Administrative Law: Iraq will form a 
Transitional Government; the Transitional National Assembly will draft 
a new permanent constitution--to be completed by August 15 and put 
before Iraqi voters in a referendum by October 15; and elections for an 
Iraqi Government under the new constitution will be held in December. 
Although the fundamental freedoms and protections set forth in the TAL 
will serve as a guide, it will be up to the Iraqi people to decide the 
shape and content of the new constitution. Broad participation will be 
essential to the creation of a pluralistic, democratic system of 
government that respects the rights and freedoms of all Iraqis.
    It also will be essential to accelerate Iraq's economic recovery 
and reconstruction. We have seen significant progress on the economic 
side in Iraq, including debt reduction and movement toward WTO 
accession. Most importantly, international assistance and Iraq's own 
national funding must continue to be applied in ways that ordinary 
Iraqis can see and feel, particularly through the improved delivery of 
essential services. Development of a strong private sector is also a 
key to Iraq's success. The goal is productive, immediate infrastructure 
improvements, which in turn will stimulate sustainable job creation.
    Finally, we are very encouraged by signs of increasing 
international engagement in supporting the Iraqi people. The tremendous 
success of Iraq's January elections has been recognized by many 
countries and international organizations, which publicly reaffirmed 
their commitments to the reconstruction and political development of 
Iraq. Moreover, some countries that were reluctant to participate in 
the past now are stepping forward to assist Iraq. In coordination with 
the Iraqi Government, we also are continuing to reach out to friends 
and allies; on February 22, the EU announced its readiness to cohost 
with the United States a conference to demonstrate international 
support--political, economic, and security--to Iraq following its 
elections, if the Iraqis request such a conference.
    Dramatic changes within the Palestinian Authority and between 
Israelis and Palestinians have also greatly improved the atmosphere in 
the Middle East over recent months although the horrific terrorist 
bombing in Tel Aviv February 25 painfully illustrates just how fragile 
that progress is, and how critical it is that the PA take decisive 
action--now against terrorists who kill innocent civilians and act to 
subvert progress. Following the overwhelming electoral victory by 
Mahmoud Abbas in a free and fair Presidential election at the beginning 
of the year, the Palestinian Authority has begun to take positive steps 
to implement many of the reforms that we have long stressed are 
critical to the successful implementation of the road map and the 
establishment of a stable, democratic, and economically prosperous 
Palestinian State. We were struck by the robust debate within the 
Palestinian Legislative Council in recent days over the shape of the 
new cabinet, and the insistence of a majority of council members that 
ministers be free of the taint of corruption and cronyism that has long 
plagued the Palestinian Authority. General Ward's presence on the 
ground, working closely with the new Minister of Interior, General 
Nasir Yusuf, will provide us with a greatly enhanced opportunity to aid 
crucial Palestinian security reform.
    Palestinians will go to the polls again this year to elect a new 
Legislative Council for the first time in nearly a decade. These 
elections will be another strong signal in favor of democratic reform 
throughout the region and will be a critical test for President Abbas 
and his reform agenda. We anticipate that he will face a strong 
challenge from Hamas and other extremist Palestinian groups. We are 
committed to taking steps to demonstrate to Palestinians that their 
interests are best served by cooperating with President Abbas, pursuing 
the path of peace, and abandoning the destructive tools of terror. The 
President's announcement of a United States commitment to increase our 
aid levels to the Palestinians substantially to $350 million, subject, 
of course, to congressional approval, is intended to provide the 
immediate boost that we hope will help jump start the Palestinian 
economy and restore Palestinian confidence in the future, and to ensure 
that Palestinian and Israeli interests are safeguarded as Prime 
Minister Sharon's Disengagement Plan is implemented. Similarly, we are 
working both bilaterally and in multilateral channels to encourage our 
partners in the region and internationally to increase their own 
economic assistance to the Palestinians to alleviate Palestinian 
poverty, reduce unemployment, rebuild critical infrastructure, and 
promote new private sector investment. We will work closely with the 
Palestinian Authority to ensure that the economic reforms required to 
make these assistance programs succeed are implemented.
    The resumption of Israeli-Palestinian dialog is greatly 
encouraging; it gives both Israelis and Palestinians new hope for the 
future. Successful implementation of the Israeli planned withdrawal 
from Gaza this summer will be a key milestone marking a move away from 
the violence of the past 4 years and toward a political process that 
will allow implementation of the road map, which remains the 
internationally agreed strategy for achieving the President's vision of 
two democratic states, Israel and Palestine, living side by side in 
peace and stability. As the President has made clear, we continue to 
press on both sides the need to abide completely by the obligations and 
commitments they made on the road map.
    We also look to the neighbors, especially Egypt and Jordan, to take 
steps that will contribute constructively to the efforts of the two 
parties in making progress toward peace. Egypt's willingness to work 
with Palestinian security forces to improve the security climate in 
Gaza, its hosting of the Sharm al-Sheikh summit, and the decision by 
both Egypt and Jordan to return their Ambassadors to Tel Aviv are all 
indicative of the many ways that these two states can play a crucial 
supportive role in the peace process. Beyond the immediate neighbors, 
the other states in the region also have important roles to play, not 
only in providing Palestinian economic assistance, but also in lobbying 
for internal Palestinian Authority reform, resuming contacts with 
Israel, reopening trade or other representative offices, and finally 
and forever abandoning the Arab League boycott, which remains an 
obstacle to peace and economic advancement. With promising openings 
between Israelis and Palestinians, we will be working aggressively over 
the coming months to encourage our friends and partners in the region 
to help create a positive environment for peace.
    As President Bush noted in his inaugural address, in our world 
today, the survival of liberty at home increasingly depends on the 
success of liberty in other lands. In cooperation with our regional and 
G-8 partners, last summer we formally launched last summer the Broader 
Middle East and North Africa Initiative (BMENA), which will serve 
increasingly as a forum for mobilizing our energies to promote 
democracy and reform with our partners in the Arab world and beyond. We 
believe that our efforts to promote reform measures across the 
political, economic, and education spectrum have already put these 
issues on the regional agenda to an extent not previously known. The 
Forum for the Future held in Rabat last December laid out an ambitious 
agenda of programs in support of reform for this year. The Palestinian 
and Iraqi elections have inspired prodemocracy forces throughout the 
region to demand that their own societies similarly enjoy the benefits 
of true popular participation in government. Further, through the 
Middle East Partnership Initiative, this administration has 
strengthened a commitment to work cooperatively, using all of the 
resources available to the Department of State and USAID for this 
region, with the governments and civil society in the region to support 
and promote democratic, economic, and educational reform and to reduce 
barriers to women's full participation in society. The Middle East 
Partnership Initiative has requested additional funding for FY06 that 
will ensure that the United States is in a position to continue playing 
a central role in developing programs that will advance this important 
reform and democratization agenda. Strengthening bilateral economic 
ties through, for example, the conclusion of Free Trade Agreements, 
will also promote economic reform in the region.
    In his State of the Union address, the President stated that ``the 
Government of Saudi Arabia can demonstrate its leadership in the region 
by expanding the role of its people in determining their future. And 
the great and proud nation of Egypt, which showed the way toward peace 
in the Middle East, can now show the way toward democracy in the Middle 
East.'' Both Egypt, with President Mubarak's announcement that the 
Egyptian constitution would be amended to allow multiple candidates for 
the Presidential election, and Saudi Arabia, which is currently holding 
unprecedented municipal elections, have taken modest but important 
steps in the right direction. But much more remains to be done to 
promote political reform and foster democracy. In particular, it is 
essential if true political reform is to take hold that we see an end 
to politically motivated arrests, like that of Ayman Nour, and a real 
commitment to accepting the principles of freedom of speech and 
expression as a foundation block for democratic institutions. 
Intensifying our dialog on democracy and reform with these two critical 
regional partners, as with all of our friends in the region, will 
remain a high priority for the administration as we look to the future.
    We continue to confront difficult, even daunting challenges in 
achieving our regional goals and objectives. Over the coming months, we 
will press ahead with our critical work in support of the global war on 
terror. We will continue robust, cooperative efforts with regional 
governments to prevent terrorist attacks, disrupt terrorist finance, 
and bring terrorists to justice. Through our assistance and training 
programs, we are helping our friends in the region build their legal, 
regulatory, enforcement, and operational counterterrorism capabilities, 
including strengthening regional military and law enforcement forces 
and financial oversight and regulatory capabilities. Our highest 
priority is and will remain using all of our resources to protect 
American citizens and facilities, to prevent terrorist operations, to 
deny terrorists and their financiers refuge or support anywhere in the 
region and to eliminate the disenfranchisement and despair that 
contribute to terrorist recruitment.
    The pursuit of weapons of mass destruction by regional powers and 
nonstate actors remains a principal source of threat and instability in 
the Middle East. As the President made clear in his visit to Europe 
last week, the United States and its key European allies are in full 
accord that Iran must not be allowed to acquire a nuclear weapon 
capability. A nuclear-armed Iran pursuing aggressive regional policies 
and supporting terrorism, especially aimed at derailing Arab-Israeli 
efforts to achieve peace, would pose a unique danger to regional and 
global security and stability. Over the coming year, we will continue 
to work closely with our friends and allies, particularly the United 
Kingdom, France, and Germany, in finding a means to convince Iran to 
abandon its efforts to develop this capability or to respond 
appropriately if it does not. The United States has demonstrated in 
Libya that it is prepared to respond positively to concrete steps taken 
to address United States WMD concerns. In response to Libya's 
implementation of its December 2003 commitment to eliminate WMD and 
MTCR-class missile programs, the United States has returned United 
States diplomatic personnel to Tripoli, lifted the travel ban, removed 
the National Emergency and effectively ended the economic embargo. Over 
the coming year, we will continue to develop our new relationship with 
the Libyan regime.
    The tragic assassination of former Lebanese Prime Minister Rafiq 
Hariri also underscores the urgency of implementing UNSCR 1559, ending 
Syria's occupation of Lebanon and its interference in Lebanese internal 
affairs. We cannot say more clearly or explicitly that Syria must leave 
Lebanon now. We have seen Syria's words to the effect that it intends 
to withdraw its forces to the Beqa'a valley, but the time for words is 
past. We need to see Syrian action, and we will be watching very 
carefully to ensure that the parliamentary elections scheduled for this 
spring are allowed to proceed freely, fairly, and without any outside 
interference. The people of Lebanon deserve to live in freedom, no less 
than any other people in the Middle East or elsewhere. And, as we saw 
earlier this week, the people of Lebanon are now demanding a voice in 
their own political future.
    Finally, as we address these critical priorities, we are aware that 
we must also confront unprecedented popular hostility to the United 
States in the Arab world. We have developed a coordinated strategy that 
aims to explain our policies and culture through a broad range of 
regional media as well as USG-funded outlets, cultural exchanges, 
English-language training, ``American Corners'' information centers, 
and enhanced Arabic and Farsi websites to reach out to younger and 
nonelite audiences in the region. Over the course of the year, we will 
be redoubling our efforts to strengthen our public diplomacy outreach 
in the region.
    Mr. Chairman and members, thank you very much for providing me with 
this opportunity to describe our views on the state of the Middle East 
region.

    Senator Chafee. Thank you.
    And as the hearing here is on the budget, can you talk 
somewhat about how--your priorities in addressing the region?
    Ambassador Satterfield. Certainly.
    Senator, our priorities with respect to the region are 
focused on encouraging the key elements of the President's 
program for the Middle East; that is, to support continued 
developments in Iraq toward a democratic, pluralistic, stable, 
and prosperous state; to support peacemaking between Israel and 
the Palestinian Authority, which both guarantee that Israel 
remains secure--secure in a regional context, secure as it 
moves forward with its extraordinary step in withdrawing from 
the Gaza Strip and cities in the West Bank; support for the new 
Palestinian Authority and the democratically elected President 
of that Authority, Mahmoud Abbas; support for our friends and 
allies throughout the region, not just in traditional terms, 
Senator--for their security, for their development--but also in 
terms of providing focused support for the process of regional 
reform and transformation.
    The Broader Middle East/North Africa Initiative, which 
incorporates the economic pillar of the Middle East Partnership 
Initiative run by the Department of State, is very much keyed 
to encouraging, supporting, and sustaining democratic 
developments on the ground throughout the Middle East.
    The President and his Secretary have spoken out, quite 
directly, on the fact that we have strategic partnerships, 
partnerships that are vital to our broadest interests, in the 
Middle East and beyond, with countries throughout the Middle 
East, including Egypt and Saudi Arabia. But the fact of that 
partnership, and the fact of our strong support for, and 
acknowledgment of, the steps being taken by states--such as 
Saudi Arabia, and Egypt, in areas that include the Israel/
Palestinian peace process, Iraq, the global war on terrorism--
does not mean that we're not able, also, to address, as 
partners and friends, those areas of internal reform or 
development where we do see progress, as needed.
    We will continue to make our focus on that, and you will 
see, in the budget request, support for civil-society 
development, for broad democratization, and for reform.
    Senator Chafee. Thank you.
    Having just returned from Lebanon, what is the status of 
our aid to that country? And do you think there will be need 
for further than you have put in the budget?
    Ambassador Satterfield. Certainly.
    We are not recommending, at present time, an increased 
amount of assistance for Lebanon. The amount--the moneys that 
we had been providing to Lebanon have been targeted, through 
PVOs and NGOs, at support for civil society, as well as support 
for development in those areas of the countries most deprived, 
primarily in the rural areas. We will be looking, aggressively, 
given developments on the ground, at how we can best focus, 
perhaps more specifically, on preparing for democratic free and 
fair elections in Lebanon, including training of Lebanese 
elections observers, how best to encourage the development of 
civil society there. And we will obviously come back and 
consult with the Congress, as developments there may shift our 
own decisions with respect to assistance.
    And I would defer to my colleague from AID for any further 
comment on that.
    Mr. Kunder. I think he said it all.
    Senator Chafee. And moving away from the numbers to some of 
the policy, is there concern about Hezbollah and their sphere 
of influence in Lebanon?
    Ambassador Satterfield. We're obviously concerned, Senator, 
about Hezbollah. We have made very clear, we regard Hezbollah 
as a terrorist organization. We do not differentiate between 
the leadership which is involved in unacceptable support for, 
conduct of, acts of violence and terror directed against Israel 
and the leadership which works on social, economic, political, 
or religious programs in Lebanon. We can't make that decision. 
And we have strongly encouraged our European allies, similarly, 
to take steps addressing Hezbollah as a terrorist organization, 
particularly with respect to the possibility of financing 
flowing to Hezbollah.
    We are concerned about Hezbollah's and Iran's destructive 
role in Arab/Israel peacemaking. It is a significant issue--
significant for the Palestinians, significant for us.
    Senator Chafee. Is there fear that, with the withdrawal of 
the Syrians, the Hezbollah would then become more dominant in 
Lebanon?
    Ambassador Satterfield. Senator, Hezbollah is a political 
force in Lebanon. In view of potential developments on the 
ground which open the scope for true free and fair elections, 
the possibility does exist that Hezbollah will be able to 
obtain more parliamentary seats than it otherwise would have 
been able to.
    There are other specific developments which Syrian 
withdrawal from Lebanon could produce, in terms of the internal 
scene. But we believe, if civil society is supported, if 
efforts against corruption are supported and advanced--and we 
do have specific assistance programs that have been focused on 
anticorruption efforts--that Hezbollah's appeal can be reduced.
    Senator Chafee. It would seem to make sense that we try and 
establish a better relationship with Assad. What's the 
impediment to doing that?
    Ambassador Satterfield. Well, the impediment, Senator, is 
the Syrian Government, itself, and it's refusal to move--
unwillingness or inability to move--on those demands that we 
have posed to them now for 2 years, demands that have been made 
very specifically in the three areas of concern over Iraq, 
concern about Syrian support for, tolerance of, groups involved 
in or through Syrian territory in support for terror and 
violence, and Syria's position/presence in Lebanon and refusal 
to admit or to acknowledge implementation of U.N. Security 
Council Resolution 1559's provisions.
    We have spoken with the Syrian Government, the most senior 
levels, on this, most recently in January, by then-Deputy 
Secretary of State Armitage and then-Assistant Secretary of 
State Burns. We have not seen satisfactory progress from the 
Syrian Government on these issues. And so, the answer, Senator, 
to your question, is, Syria, itself, bears responsibility for 
the failure to move our relationship forward, failure, indeed, 
to move forward on a broad range of critical issues for the 
United States.
    We will continue to make clear, there are two directions in 
which this bilateral relationship can move. There is a further 
downward direction in which the administration will have to 
consider whether further steps directed to the Syrian 
Government are appropriate. There is another direction, 
however, which is much more positive, but that direction very 
much depends, if it is to be taken, on the steps which the 
Syrian Government now adopts.
    Senator Chafee. What do you make of the Russian's sale of 
weapons, or proposed sale of weapons, to Syria?
    Ambassador Satterfield. I cannot clarify the motives, 
plural, behind the Russian decision to choose this moment to 
warm their political/military/economic relationship with the 
government in Damascus.
    I can say this, though. We have registered, at the most 
senior levels, including the President in his discussion with 
President Putin, our very serious concern over these steps, 
particularly any step which would result in the provision of 
advanced weaponry to Syria. This will continue to be a concern. 
We will continue to raise it.
    Senator Chafee. You must have some idea of why they're 
doing this. Could you share those with us?
    Ambassador Satterfield. I can offer an analysis which would 
reflect upon a Russian desire to differentiate itself, in its 
relationship with the Arab world, from the United States. The 
Russian position in the Security Council on a number of Middle 
East-related issues, not focused on the Middle East peace 
process, but, rather, on Syria and Lebanon, has not been 
constructive. This is of concern to us.
    I think it may be a form of identification of Russia as an 
independent political force, an independent political actor. 
There may, as well, be an economic element in this. Russia has 
recently agreed to a significant debt forgiveness for Syria, 
which would permit, in theory, a return to military sales. It 
may be a complex of all of these issues.
    Senator Chafee. Thank you.
    Senator Boxer.
    Senator Boxer. Thank you, Mr. Chairman.
    Mr. Satterfield, should I call you ``Ambassador''? Because 
you were an ambassador once.
    Senator Chafee. That's right. Ambassador.
    Ambassador Satterfield. You're welcome to, Senator.
    Senator Boxer. So I'll say Mr. Ambassador. OK.
    I was the coauthor of the Syria Accountability Act, which--
you probably know about the Syria Accountability Act--called 
for Syria's withdrawal from Lebanon. And I wrote that a couple 
of years ago. We had a very hard time getting the 
administration to go along with it. And eventually--they never 
actually supported it publicly, but they--I was very pleased 
that President Bush did sign it. I'm beginning to see some of 
the sanctions put in place. The other thing the act talked 
about was Syria's response to the terrorist groups in its 
midst; Islamic Jihad being a classic case in point.
    So I want to ask you about a couple of things. You said you 
were encouraged by what you saw. I think that no one could help 
but be encouraged by the people, themselves. This is what I 
keep saying I hope we see in Iraq more. We did see a good 
turnout in the election, but the people have to just stand up 
and say, you know, ``We want to control our own destiny.'' And 
so, of course, we can't forget that all that happened because 
of a tragedy, which was the assassination of former Prime 
Minister Hariri. And now we also hear that there's a belief 
that Islamic Jihad is behind the latest suicide bombing that 
killed a few people in Israel, in the nightclub--the cowardly 
nightclub bombing.
    So, I guess, what I want to know from you is this. With 
Syria apparently not taking action to close down these 
terrorist groups in its midst--and yet we did hear they 
cooperated with turning over Saddam's brother, so it seems like 
there's a give with one hand, a take with another--but with--
first of all, do you believe that we know enough to say that 
Islamic Jihad operating out of Syria was responsible for the 
nightclub bombing? Second, when you were there--I understand 
the U.N. team is there trying to figure out who was responsible 
for Mr. Hariri's assassination. Can you give us an update on 
both of those issues? Because I think they weigh heavily in 
terms of whether we increase sanctions on Syria or not.
    Ambassador Satterfield. Absolutely, Senator.
    I cannot, in this particular forum, go further into the 
information available on the specifics of the Islamic Jihad 
responsibility for this attack, but that's information which, 
certainly, we can provide and brief on separately, or my 
colleagues will be able to.
    What I can say is this. We have made clear, very 
specifically, to the Syrian Government, over this 2-year 
period, that the continued presence on their soil of 
operational elements of Palestinian groups--including Islamic 
Jihad and Hamas, but not restricted to those two groups, which 
we know, and are confident the Syrian Government knows, are 
involved, not just in political or public-relations work, as 
the Syrians maintain, but in operational direction, 
facilitation of acts of violence and terror against Israelis in 
Gaza, in West Bank, and in Israel proper--is unacceptable; that 
if Syria wishes, as President Bashar has repeatedly said, to 
seek a comprehensive Middle East peace, if he wishes to see a 
United States partnership for that peace process, then this 
support for terror and violence from and through Syrian soil 
must cease. It is simply not realistic to believe that the 
United States will be able or willing, or that the United 
States will be able or willing, or that indeed, the Israeli 
people will be able or willing, to see a Syrian negotiation 
commence, while, with one hand, Syria talks rhetorically about 
support for a peaceful resolution, and, with the other, 
continues to tolerate the presence on its soil of groups 
involved in exploding that very situation. We are also 
concerned with the presence, and facilitation of, Hezbollah and 
Iranian activities, from and through Syrian soil, also directed 
at detonating the chance of peace between Israelis and 
Palestinians. This, too, has been part of our agenda with 
Syria.
    Senator, I would agree with you that if Syria wishes to 
move upward in their relationship with us, including on the 
issue of additional sanctions, steps in this area are going to 
have to be taken. And we are watching very closely, very 
carefully to see what is or is not done.
    Senator Boxer. And that message, you believe, has been 
conveyed to Syrian leader Assad.
    Ambassador Satterfield. President Bashar al Assad 
understands all that I have said here, and more, on the 
specifics of our agenda, including on the issues revolving 
around Iraq and Lebanon, in face-to-face conversation. And we 
continue to speak to these issues through our charge in 
Damascus and through the Syrian Ambassador.
    Senator Boxer. Were you able to meet with him on this 3-day 
trip that you took?
    Ambassador Satterfield. No. My meetings were only in 
Lebanon.
    Senator Boxer. OK.
    Ambassador Satterfield. I did not travel to Syria on this 
trip.
    Senator Boxer. OK.
    Ambassador Satterfield. You had asked, Senator, about the 
status of the U.N. inquiry into former Prime----
    Senator Boxer. Yes.
    Ambassador Satterfield [continuing]. Hariri's 
assassination. That team arrived last Friday, on the ground in 
Beirut. They are holding discussions with a wide range of 
Lebanese and other officials. We stand ready to provide any 
technical facilitation or assistance to the Government of 
Lebanon or to the United Nations in that regard. Such requests 
have not yet been posed. There is no report of findings, even 
preliminary, yet available from the inquiry.
    Senator Boxer. The Syrian leader said that Syrian forces 
will be completely out of Lebanon, quote, ``in the next few 
months.'' Having just come back from there, do you think the 
Lebanese people believe that is real?
    Ambassador Satterfield. Senator, I think the question is: 
Does the U.S. Government attach credibility to that statement? 
And my answer would have to be, we have seen a number of very 
conflicting statements coming from senior Syrian officials in 
the news media over the last 4 days. We do not know from that 
rhetoric what, in fact, the position of the Syrian Government 
is on withdrawal of their forces, as required by Resolution 
1559.
    What is needed now is not rhetoric, whether private or 
public. What's needed is actions on the ground. The Syrian 
Government needs to make a commitment to take those steps 
related to its presence and activities in Lebanon called for in 
Resolution 1559, nothing less. And I think neither this 
government nor the people of Lebanon will believe anything 
other than what we see with our eyes.
    Senator Boxer. So the answer to the question is? I asked 
you if the people in Lebanon believe it, because they're living 
with this and----
    Ambassador Satterfield. I think they're deeply skeptical.
    Senator Boxer. OK, they're skeptical. And we're skeptical, 
until they actually start withdrawing.
    I was a little confused by your ducking the issue on 
Islamic Jihad. And I understand you're being very careful. But, 
yesterday, White House Press Secretary Scott McClellan said, 
quote, ``We do have firm evidence that the bombing in Tel Aviv 
was not only authorized by Palestinian Islamic Jihad leaders in 
Damascus, but that Islamic Jihad leaders in Damascus 
participated in the planning.'' So----
    Ambassador Satterfield. I'm not contradicting that 
statement----
    Senator Boxer. Thank you.
    Ambassador Satterfield [continuing]. Of course. But 
specific information----
    Senator Boxer. Well, I was just----
    Ambassador Satterfield [continuing]. Detailing our views, 
we can provide in another forum.
    Senator Boxer. Well, that's pretty specific. Because in the 
Syria Accountability Act we lay out these escalating sanctions 
based on Syria's support or--let's put it this way--lack of 
action against terrorists within their country.
    I have just one question on the Palestinian support. The 
President's supplemental includes--well, I have two questions--
$200 million in support for the Palestinian people; and I 
support that aid, but I want to make sure that it's 
transparent, it's not wasted. And I wondered, you know, what 
assurances you can give us on tracking that funding.
    Ambassador Satterfield. Senator, the assistance we have 
provided to the Palestinian people since October 1, 1993, have 
all been done in a completely transparent and fully accountable 
manner. We have, on two occasions, provided extraordinary 
assistance directly to the Palestinian Authority through the 
Ministry of Finance. And, in those two instances, again, 
absolute transparency and accountability has been maintained.
    We are very concerned, as we know the Congress is, 
regarding these issues. We will continue to pursue our 
assistance efforts with the Palestinian people, and, indeed, 
with the Palestinian Authority, on that basis of absolute 
transparency, absolute accountability.
    Senator Boxer. And you know of no incidents where we've had 
problems with that aid in the past.
    Ambassador Satterfield. No instance----
    Senator Boxer. OK.
    Ambassador Satterfield [continuing]. Whatsoever.
    Senator Boxer. All right. My last question is about the 
burden-sharing question in Iraq.
    Ambassador Satterfield. Yes.
    Senator Boxer. And many of us believe that--not all of us, 
but many of us believe that the burden-sharing in the first 
gulf war was worthy of emulation. We wound up spending 20 
percent, and our allies, 80 percent. And, here, in this war, I 
would go so far as to say it's close to 98 percent or 96 
percent American dollars. And in making the case for war, the 
administration repeatedly assured Congress that we'd have a 
large coalition that would share the burden, but we were not 
told that the U.S. taxpayers would be paying for this 
assistance. You know, we were told, when we questioned it, that 
we were being ungrateful to our allies who did join with us.
    Now, here we have a circumstance where countries are 
withdrawing their troops, and yet the administration is 
requesting between $200 and $400 million in economic and 
military aid to our coalition partners in Iraq and Afghanistan 
as part of the supplemental. The DOD portion of the request 
includes an additional $600 million in transportation and other 
assistance.
    Now, I don't expect that you'd have this at your--at a 
moment's notice, that you can give us this information. But 
before we get this supplemental, would you please make 
available to the committee a list of the countries that have 
been our coalition partners, and what they have provided to us 
in military or reconstruction assistance, and what are we 
asking for those coalition partners?
    Because if we knew we were hiring people, it would have 
been--we would have been one response. We were told these were 
people who shared our values and were contributing. And now 
we're being asked--taxpayers are being asked, in addition to 
the billion dollars a week we're spending just on the military 
in Iraq, to now give money, hundreds of millions, for these 
coalition partners.
    So I need to know, in every case--and I'm going to make an 
issue of it on the Senate floor, if we don't have it, but even 
if we have it. I need to know what they've spent and what--
instead of just giving a blank check of $200 to $600 million to 
the administration to hand out to folks--which we were not told 
that was going to be the case--you know, I need specific 
information.
    So I will be looking to you, in the next couple of weeks, 
whatever it takes you--be very aware that it's going to be 
difficult--please tell us what these countries have spent, what 
we've already reimbursed them, because I know we've already--in 
some cases, we've paid for the troops. I believe it was in 
Poland. And we paid for the uniforms, and we paid for a lot of 
other things. So what have we already paid these countries for 
their contribution? And out of that pot of money the 
administration wants, what are we planning to reimburse or pay 
each of these countries in the future? So I would really 
appreciate that.
    Would that be forthcoming, Mr. Ambassador?
    Ambassador Satterfield. I'll check that.
    Senator Boxer. Thank you.
    Ambassador Satterfield. Certainly.
    Senator Boxer. Thank you very much, Mr. Chairman.
    Ambassador Satterfield. Thank you, Senator.
    [The submitted written answer to the requested information 
follows:]

    Question. What have Coalition members spent in Iraq (to include 
both military and economic/reconstruction spending)?
    Answer. Economic contributions by the international community have 
been significant. Of the $32 billion in pledges for 2004-2007 at the 
Madrid Donors' Conference, $13.584 billion was from non-U.S. sources. 
This consisted of $5.55 billion in lending pledged by the World Bank 
and IMF and $8.034 billion in grants and loans from 37 bilateral 
donors, of which $5.9 billion was from Coalition members.
    About half (just over $1 billion) of the $2.1 billion disbursed by 
donors by the end of the first year (pledges were made over 4 years) 
has been in deposits to the International Reconstruction Fund Facility 
for Iraq (IRFFI), which is comprised of U.N. and World Bank trust 
funds. These trust funds are now implementing their initial IRFFI 
projects.
    In addition to reconstruction assistance, Paris Club creditors, in 
November 2004, agreed to forgive 80 percent of Iraqi sovereign debt 
(approximately $31 billion in debt relief) in three stages.
    In terms of security assistance, the NATO Training Mission--Iraq 
(NTM-I) is benefiting from financial contributions. Over $4 million has 
been pledged by all 26 NATO members to a recently established trust 
fund for training of Iraqi security forces, providing for troops, 
equipment, and financial assistance to NTM-I. NATO trainers were in 
Baghdad within 6 weeks of NATO's decision to launch a training mission 
in Iraq. Mission advisors have coordinated in-country training courses 
and mentored over 200 Iraqi staff-level officers. NTM-I is currently 
staffed by personnel from 14 different countries, including the United 
States, and is now supported with either personnel or financial 
assistance by every ATO member.
    The international community has also provided extensive assistance 
in the areas of military/security manpower. MNF-I currently has 27 non-
United States contributors with roughly 24,700 soldiers in Iraq. These 
forces were trained, equipped, and deployed at significant expense to 
the contributing nations, funds that had been allotted to other 
national priorities.
    UNSCR 1546 notes the MNF's intention to create a distinct entity 
under its command to provide security for the U.N. presence in Iraq. 
Japan and many EU member states have pledged over $20 million for U.N. 
security. Georgia and Romania, already with troops inside MNF-I ranks, 
are the first contributors; over 500 new Georgian troops have deployed 
to the region and Romania is expected to deploy 100 new troops this 
month. In addition, over 150 Fijian security personnel are providing 
close-up security as an integral part of the U.N. mission.
    Contributions from non-Coalition countries are making an impact as 
well. Jordan hosts an 8-week police training course at an academy 
outside Amman, where international police trainers implement basic 
police training and border enforcement officer training through a 
program sponsored by the State Department. The graduation of 1,500 
students every month is due to the support of 16 nations (including 
Iraq and Jordan) that collectively provide 325 International Police 
Trainers (IPTs). A company of 134 soldiers recently conducted training 
in Egypt, and the United States is helping Bosnia prepare an explosive 
ordnance disposal unit for their first deployment to Iraq this summer. 
Germany established a military and police training program in the UAE 
and has trained over 100 Iraqis in truck driving and maintenance. In 
May, Australia will deploy 450 troops to provide security for Japanese 
and to train Iraqi Security Forces. Macedonia, the United Kingdom, 
Canada, Poland, the Czech Republic, Austria, Slovenia, Slovakia, 
Hungary, and Finland have all offered police training.

    Question. What have Coalition members been reimbursed for their 
contributions?
    Answer. The United States only provides assistance to countries for 
which such assistance is an absolute financial necessity. The United 
States often provides strategic lift (i.e., transportation to and from 
the region), sustainment (i.e., consumables such as food, water, fuel, 
and ammunition), and certain items of individual soldier equipment 
(e.g., desert pattern uniforms, flack jackets, helmets, boots, etc.) 
and other required equipment. In addition, the United Nations has 
established a Trust Fund to consolidate and disburse donations to 
forces providing U.N. protection. Funds have been deposited in the 
account, but it is not yet operational.
    U.S. assistance still leaves every Coalition partner responsible 
for a significant set of financial obligations, including soldier 
salaries and per diem, benefits and insurance, and the depreciation and 
recapitalization of all nationally owned equipment such as weapons, 
vehicles, and communications gear. The Polish Government, for example, 
estimates it has spent over $550 million in support of its operations 
in Iraq thus far, in addition to other bilateral contributions and 
assistance they have provided to the Iraqi Govemment and people. 
Despite United States assistance, our Coalition partners sustain 
significant expenses in Iraq and elsewhere.

    Question. What are we planning to reimburse them in the future 
(with reference to the supplemental and how Coalition partners will be 
assisted)?
    Answer. The current supplemental requests include $400 million for 
Coalition Partner Support [$200 million in a new account for economic 
assistance and $200 million for Peacekeeping Operations (PKO)]. The 
purpose of the request is to provide assistance to Coalition or Global 
War on Terrorism (GWOT) partners that have taken on significant 
political risks and financial burdens in order to support United 
States-led operations in Iraq, Afghanistan, and elsewhere.
    When a new troop contributor comes forward, or a current Coalition 
partner decides to deploy additional troops, military-to-military 
discussions take place to work out such details as timing and location 
for the deployment, equipment requirements, logistical support, and 
financial costs. The United States does not offer assistance to 
Coalition partners that do not require it, nor does U.S. assistance 
come close to covering all deployment costs. However, in some instances 
it often allows certain countries to contribute forces, or more forces 
than they could otherwise afford to deploy. While we believe the amount 
of assistance given is, in all cases, the required amount that will 
help the U.S. efforts in the GWOT, we have simultaneously sought to 
minimize financial burdens on the U.S. taxpayer. For example, we worked 
with our European allies in getting the United Nations to establish a 
(U.N.) Trust Fund to provide funding for middle ring security for the 
U.N. presence in Iraq. Our NATO allies help to provide all finances 
required to resource the NATO Training Mission. We are committed to 
working with the international community to appropriately share future 
costs.

    Senator Chafee. Thank you, Senator Boxer.
    Senator Martinez.
    Senator Martinez. Thank you, Mr. Chairman.
    And, Mr. Ambassador, I wanted to ask you a couple of quick 
questions. One is--during a recent trip to the Middle East, I 
was taken by the need for there to be a lasting peace process, 
for there to be security, obviously, for Israel. And one of the 
real problems, obviously, was Southern Lebanon. Their 
withdrawal--or the potential withdrawal of troops is an 
encouraging sign. In addition to the 15,000 or so troops, there 
appear to be thousands of intelligence agents that are also in 
Syria. Is there any talk of the withdrawal of, also, these 
intelligence agents?
    Ambassador Satterfield. Absolutely, Senator. The 
requirement of Resolution 1559 is for the withdrawal of all 
Syrian forces from Lebanon immediately. That includes their 
military intelligence personnel. And we have reiterated that 
demand. The President of the United States has made that 
specific requirement clear. During my visit, I reiterated that 
requirement, as well. So, yes; it does include their military 
intelligence personnel.
    Senator Martinez. If, in fact, there were to be a 
withdrawal, what occurs in Southern Lebanon, where there 
appears to be little governmental control by the Lebanese 
Government, and where there are, in fact, substantial forces 
that are not the forces of peace and not the forces of--that 
would assist the peace process?
    Ambassador Satterfield. Senator, we have called--U.N. 
Security Council Resolution 425 calls for the extension of 
Lebanese Government authority throughout its territory, 
specifically in the south, to the border. And Resolution 1559 
picks up that call and makes clear that all armed elements, 
other than those belonging to the Lebanese Government, need to 
be disarmed or to give up their arms. There should be only one 
gun, one authority, in this country, and that includes on the 
border area.
    Those are requirements, requirements of a variety of U.N. 
Security Resolutions; they are requirements of the U.S. 
Government, as well. And we very much hope that, in a political 
environment in Lebanon established--if this current, very 
encouraging and very dramatic trend continues--with free and 
fair parliamentary elections, that there will be the 
possibility of real steps on these areas: Full establishment of 
Lebanese Government authority, an end to unauthorized armed 
presences, as well. These are difficult issues that have an 
internal complex content to them within Lebanese politics. But 
they need to be worked on. And, in this environment that we 
have lived with for the past 15 years, it's been impossible to 
see progress achieved. We very much hope that that changes.
    Senator Martinez. How are we doing on our support for 
political and economic and educational reforms under the Middle 
East Partnership Initiative? And how effective is the aid that 
we're providing through that effort?
    Ambassador Satterfield. Well, I'll defer to my colleague 
from AID, but I can tell you, generally speaking, we have made 
quite a focus on both education, in the civil-society sense and 
otherwise, in the MEPI programs, and will continue to do so. It 
is part and parcel of the efforts to generate support for both 
reform and for civil society, for creating a viable economic 
new generation in that region, that are both employed, but 
employed in a manner that makes them competitive in a 21st 
century environment. And we have been pleased by the progress 
made, in the limited life span of this program so far.
    And, Jim----
    Senator Martinez. Mr. Kunder.
    Mr. Kunder. I mentioned earlier, Senator, that across the 
entire Asia and Middle East region there's a population of 
young people between 15 and 24 that exceeds the entire 
population of the United States of America. So we've got an 
enormous opportunity, but also an enormous problem. So we're 
focusing extensively on education and job creation, and the 
linkages between the two; not just abstract education, but 
education that is going to lead to jobs in the 21st century 
economy.
    I can deliver more information to you, but we've got 
substantial successes across the region in getting schools 
constructed, in getting teachers trained in more participatory 
teaching techniques that teach children to think a little more 
creatively, not the rote learning that they've been used to, 
which we think makes a contribution both to education and 
democracy and antiterrorism. We've also made significant 
contributions in getting parents and communities involved in 
education, because the culture there was to keep the parents 
and the community leaders excluded from participating in the 
education process, which was very centralized.
    So we've got a lot of work to do, but I think there's been 
substantial progress, and it's a high priority for us.
    Senator Martinez. One last question is--the Israelis I know 
expressed some concern to me, when I visited there, about arms 
smuggling that oftentimes takes place through Egypt. And I know 
that Egypt is an ally of ours, and one that is the recipient of 
substantial assistance, military, and otherwise. Is it 
possible--first of all, do you concur that a substantial amount 
of arms smuggling takes place through Egypt that finds its way 
to this troubled region, where no more arms are needed? And is 
there more that we can do with Egypt, in terms of encouraging 
their cooperation in stopping this smuggling?
    Ambassador Satterfield. Senator, the issue of arms 
transfers coming across the Egyptian/Gaza border is a 
significant one. It is an issue which not only has been the 
object of discussion between the United States and Egypt, but, 
more importantly, has been the object of direct discussion at 
very senior levels between the Egyptian and Israeli 
Governments. Those two governments are in the process, as we 
speak here, of reaching agreement, upon a change in disposition 
of Egyptian forces on that border, which can provide for a more 
effective control over this kind of very destructive, very 
detrimental smuggling.
    We very much hope that these understandings come to 
conclusion soon, that Egyptian forces are able to deploy to 
that area. It does require the mutual agreement of Egypt and 
the Israeli Governments, because of the peace-treaty 
limitations there. We hope it does conclude, because, yes, it 
is a problem. It's a threat to Egypt, it's a threat to Israel, 
it's a threat to the Palestinians, as well.
    Senator Martinez. Thank you.
    Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Senator Martinez.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    Back on the question of Iran. After the President's 
seemingly successful meetings in Europe, what steps is the 
administration going to take now to address the Iranian 
situation? Give me specifics of what the administration plans 
to do.
    Ambassador Satterfield. Senator, we've made clear it would 
be unacceptable to us--indeed, we believe it should be 
unacceptable to the world--to see Iran acquire a nuclear-
weapons proficiency.
    Senator Nelson. We all embrace that. I need to know, 
specifically, what is the administration planning?
    Ambassador Satterfield. We have been discussing, with our 
EU allies, their own discussions, negotiations with Iranian 
authorities on achieving an absolutely verifiable and 
sustainable suspension of the enrichment cycle which could lead 
to a weapons-development program.
    Senator Nelson. And what do you see in the cooperation of 
Russia and other European leaders that will lead us to be able 
to verify elimination of the Iranian nuclear program?
    Ambassador Satterfield. We are supportive of the EU 
negotiations with Iran and their demand for a suspension, a 
full suspension, in a verifiable manner, of the enrichment 
cycle. We have our own doubts regarding the credibility of 
Iranian commitments made, which is why we underscore 
``verifiable'' and----
    Senator Nelson. Do we have our doubts about the----
    Ambassador Satterfield. The Iranians----
    Senator Nelson [continuing]. Commitment of the Europeans?
    Ambassador Satterfield. We have our doubts--no, we have our 
doubts about the committee of the Iranians in this regard. The 
Iranian track record is not a positive one.
    Senator Nelson. I understand that. How much confidence do 
we have that the Europeans are not looking out for their own 
financial arrangements?
    Ambassador Satterfield. Senator, in the course of these 
discussions that the European Union is conducting with Iran, we 
have made very clear, the President's made clear, we support 
the content of those discussions as we understand what the 
European Union is insisting upon. We hope very much they 
achieve a satisfactory result.
    Senator Nelson. Well, I hope so, too.
    What about Russian President Vladimir Putin?
    Ambassador Satterfield. We have made clear to the Russian 
Government, as well, our concerns about Russia's own unique 
engagement in the Russian nuclear program. We would not want to 
see--we have made clear--any steps from the Government of 
Russia that would undermine, undercut the efforts being 
undertaken by the European Union in this regard. We see this 
all as a package. Every state dealing, either with the missile 
program in Iran or with its nuclear program, broadly writ, need 
to be on the same script with respect to controls and limiting 
the ability of Iran to develop a nuclear weapons program.
    Senator Nelson. OK. Now, everything you've said, we would 
embrace unanimously here, as the congressional committee 
charged with the oversight of the administration. Now, will you 
give me specifics of what has changed, other than what you said 
about the EU, that would lead us to the conclusion that we have 
a chance of getting Iran to dismantle their nuclear program?
    Ambassador Satterfield. Well, our focus all along had been 
on Iranian lack of good faith, based on their historical 
record, not on a challenge to EU good faith in the conduct of 
the discussions. We have had a very intense discussion with the 
EU, including at the level of the President, on where they are 
going with this dialog. And we believe they are moving in the 
right direction on this. They, the EU. The issue is whether 
Iran will respond to the demands, the quite appropriate 
demands, being made by the European Union in this regard.
    Senator Nelson. Do you see that that EU effort is being 
embraced by specific people, such as Chirac, such as the 
leadership of Germany?
    Ambassador Satterfield. We certainly believe that the EU 
effort is one that is informed at the political level by the 
key players in the European Union, yes, there's no question 
about that.
    Senator Nelson. Well, let me just say that I'm a Doubting 
Thomas.
    Ambassador Satterfield. We all are.
    Senator Nelson. And the problem is that if we continue to 
see this thing drift, as it has in the past 4 years, suddenly 
Iran is going to be like North Korea and they're going to have 
a nuclear weapon, and then it's all the more difficult to get 
them to dismantle.
    Ambassador Satterfield. Senator, we have seen steps taken 
on the ground. And a briefing in other channels can be provided 
on our assessment of what Iran has or has not done to date. But 
whatever current steps may be, whatever current measures Iran 
may have put in place, we want to see it continued and we want 
to see it monitorable and verifiable. That's----
    Senator Nelson. Well, Mr.----
    Ambassador Satterfield [continuing]. The bottom line.
    Senator Nelson [continuing]. Mr. Chairman, in our oversight 
capacity, what the Secretary has just said is, in another 
setting, that we would be able to understand the specifics of 
what has been done. And I wish that you would consider doing 
that. He's referring to a classified setting, and I think----
    Ambassador Satterfield. Certainly, Senator.
    Senator Nelson. I mean, the alternative is unthinkable, 
that they start peddling nukes to terrorists, just like our 
concern is that North Korea starts peddling nukes to 
terrorists. Or, that they put a nuke on top of their rocket 
that has a range to go to Israel.
    Ambassador Satterfield. We absolutely agree, Senator. We 
share those concerns.
    Senator Nelson. Why have we dillydallied for 4 years?
    Ambassador Satterfield. Well, Senator, we have not. We have 
been as engaged as possible with the Iranian regime in 
addressing these areas. We have been as supportive as possible 
of other efforts to constructively deal with this. And by 
``constructive,'' I mean to establish a verifiable and a 
sustainable suspension of the Iranian nuclear program. I do not 
believe we have been lacking in efforts to deal with this very, 
very difficult issue, either our own or through our allies.
    Senator Nelson. Well, I'm glad you feel that way. There are 
others that think that we haven't been nearly as aggressive as 
we should. But, we can talk about that another day.
    Let me ask you--the administration has come forth, which I 
embrace, with a $350 million package with regard to the 
Palestinians. What are we doing to get other Arab countries to 
step up to their responsibility?
    Ambassador Satterfield. In the course of the discussions 
over the last month, that preceded the London meeting that just 
concluded yesterday evening, we have been engaged, the 
Palestinian Authority has been engaged directly, with states in 
the Persian Gulf, Saudi Arabia, other potential donors, to 
mobilize as much as possible of an additional broad 
international and regional economic support effort for the 
Palestinians. We have seen significant progress in that 
direction through the meetings held in December of last year of 
the Ad Hoc Liaison Committee, which groups the principal donors 
for Palestinian assistance.
    We are, all of us, looking toward a donor pledging session 
later this spring. I think the political environment on the 
ground, if it continues as it is now, will be supportive for 
such a session.
    We have made specifically clear to states in the gulf that 
the windfall of profits they have received from the increase in 
oil prices, and the dramatic changes in the Palestinian 
Authority with the death of Yasser Arafat, the free and fair 
election of Mahmoud Abbas, means they have a role, as well as 
do we, as does the international community, in providing 
support for the new Palestinian leadership. It is our 
expectation, it is the Palestinian expectation, that those Arab 
States will see it in their direct interest to provide 
significant assistance, and we will continue to make that point 
clear.
    Senator Nelson. You know, it's the opinion of this Senator 
that it is absolutely inexcusable for Saudi Arabia, as much 
money as they have, to have given such a paltry sum for the 
economic development of the Palestinian people. And, in fact, 
that's been the case. Are we coming down hard now? Is this 
administration coming down hard on Saudi Arabia to get them to 
help economically develop the Palestinians?
    Ambassador Satterfield. Senator, Saudi Arabia is one of the 
very few Arab States which has actually met in full its 
commitment under the 2002 Arab League Summit to provide 
assistance to the Palestinian Authority. But the answer to your 
question is: Yes; we have been extremely direct with the 
Government of Saudi Arabia, as well as with other governments 
throughout the gulf, not on those past obligations, but on what 
the changed circumstances mean in terms of future and current 
obligations to help the Palestinians. Absolutely.
    Senator Nelson. One more question, Mr. Chairman.
    You may have covered this in some of the discussion with 
Senator Boxer. It seems that this tragic assassination of Rafik 
Hariri has brought to the surface the desire of the Lebanese 
people to be free. What can this United States Government, 
right now, do to help the Lebanese people throw off the 
shackles that have been put around them, not only by the Syrian 
Government, but by these terrorists groups?
    Ambassador Satterfield. Senator, we can continue to do 
several things that we have underway right now. The first is to 
speak very bluntly, and at the most senior levels, as the 
Secretary of State and her colleagues at the London meeting 
have done, as the President has done, as we all are doing, to 
say that it is long past time for the people of Lebanon to be 
able to live in sovereignty, independence, and freedom, which 
are the three slogans of this unique development taking place 
on the ground in Beirut. We can provide continued emphasis on 
the part of the international community, not just the United 
States, on the absolute need for full implementation of 
Security Council Resolution 1559, which calls for the 
withdrawal of Syrian forces, including intelligence forces, 
from Lebanon. We can continue to emphasize that the goal here 
is an atmosphere on the ground in Lebanon, in these months 
before spring elections are expected, that allows Lebanese to 
campaign, to face choices regarding their representatives in an 
atmosphere free of threats and free of intimidation.
    The tragic murder, the terrorist killing, of former Prime 
Minister Hariri has, indeed, been a catalytic event, but it has 
underscored, I think, for Lebanese, as it has for the 
international community, the simple fact of, ``Enough. The time 
has come for Syria to go. The time has come for the Lebanese 
people to be able to step forward.''
    On the specific economic side, we are, indeed, working on 
programs which gear to preparation for elections, gear to 
civil-society development in Lebanon, can help the people of 
Lebanon move forward.
    Finally, we will continue to maintain all possible 
pressures on the government in Damascus to meet their 
obligations and responsibilities in all of those areas we have 
identified in our bilateral dialog, but, in particular, on 
their international obligations, under Council Resolution 1559, 
to withdraw their forces from Lebanon.
    Senator Nelson. Do you think President Assad wants to 
withdraw the Syrian troops, but is prevented so by his daddy's 
men surrounding him?
    Ambassador Satterfield. Senator, we do not, in the conduct 
of our own relationship with Syria, make a differentiation 
between any particular officials of that government. We believe 
it must be treated as a single government in which the 
statements by all of its officials are taken with equal 
seriousness.
    Do we know what the Syrian Government wishes to do? We 
have--I said it already to Senator Chafee--we will judge what 
the Syrian Government is doing based on what we see on the 
ground, not on its rhetoric.
    Senator Nelson. Why did the Government of the United States 
not follow up on President Assad's offer to cooperate with the 
United States military in sealing the Syrian/Iraqi border, 
which was conveyed through your Ambassador over a year ago?
    Ambassador Satterfield. We followed up in full. It is 
disingenuous on the part of the Syrian Government, in this area 
or any other areas of requested cooperation, to claim that 
there was some United States reluctance or failure to follow 
up. It's simply not true. We followed up in full on all of 
these steps. It----
    Senator Nelson. Are those----
    Ambassador Satterfield [continuing]. It was Syrian 
unwillingness to move that created the problems that Syria now 
faces today.
    Senator Nelson. Has that unwillingness changed now?
    Ambassador Satterfield. We have seen some steps taken by 
the Syrian Government with respect to the Iraqi border, but 
those steps fall below the level of comprehensiveness. We have 
seen very few steps taken, to this date, on the very important 
issue of former regime elements moving through, or resident in, 
Syria and providing support to this brutal insurgency.
    Senator Nelson. Does this recent turnover of this al-Qaida 
figure portend a change in Syria?
    Ambassador Satterfield. We would hope that that step 
indicates that all of the other measures which we have told 
Syria it must take with respect to former regime elements will 
now be conducted. But, again, we will have to judge this on 
what we see on the ground. The disposition of Mr. Sab'awi was 
part of, but not a completion of, a list of very specific 
measures we have asked the Syrian Government to take.
    Senator Nelson. Are there government-to-government contacts 
going on right now with regard to the sealing of the Syrian/
Iraqi border?
    Ambassador Satterfield. Yes, there are, Senator.
    Senator Nelson. Are there military-to-military contacts?
    Ambassador Satterfield. There have been military contacts 
on this issue.
    Senator Nelson. Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Senator Nelson.
    You were Ambassador to Lebanon for several years in the 
late nineties, so you know the Lebanese people well. And you 
spoke recently about the strength of the political party, 
Hezbollah. Is it a fair question--some would say that the 
antipathy that the Lebanese have toward the Syrians is only 
equaled by their antipathy toward Israel and the United States. 
Is that accurate?
    Ambassador Satterfield. No, Senator; I don't think that's 
an accurate statement. There is clearly a concern throughout 
the region regarding U.S. policies. Some of that is based on 
misinformation as to what our policies and values truly are, 
some of it is outright opposition to specific policy decisions 
we've made. But I do not believe it is fair to say that the 
majority of the Lebanese people are unfavorably disposed to the 
United States.
    Senator Chafee. How strong is the political party, 
Hezbollah?
    Ambassador Satterfield. It has significant strength, 
particularly in the south and in the Beqa'a Valley, and that 
strength depends largely on the fact that it was regarded by 
Lebanese as less corrupt and more effective in providing basic 
services than the all-too-absent Lebanese Government or other 
political parties functioning on the ground there.
    The way to get at that particular phenomenon, whether it's 
Lebanon we're speaking of or any other country around the 
world, is to be able to build the capacity for a corruption-
free national government to take its responsibilities in 
providing that assistance. It's true in Lebanon, as it is true 
in any other country in the Middle East or elsewhere.
    Senator Chafee. So you're saying their strength is minimal. 
Am I hearing you accurately?
    Ambassador Satterfield. Their strength is a phenomenon of 
the absence of a Lebanese Government role on the ground which 
is capable of providing basic services and support to its own 
people. Hezbollah has stepped into that void, and it's a void 
which needs to be filled by the government itself.
    Senator Chafee. OK. And my last question is: You are the 
Ambassador to Jordan, is that correct?
    Ambassador Satterfield. I was confirmed by the Senate as 
Ambassador to Jordan. I will be going to Baghdad in May.
    Senator Chafee. Who, then, will be our diplomat in Jordan?
    Ambassador Satterfield. The President has not yet made a 
recommendation for the next Ambassador to Jordan.
    Senator Chafee. Who's carrying those tasks at present?
    Ambassador Satterfield. Our very able charge, David Hale, 
is currently carrying out those duties.
    Senator Chafee. And is that--the lack of--that being 
resolved, is that a problem?
    Ambassador Satterfield. We have an excellent operational 
relationship with the Government of Jordan.
    Senator Chafee. Thank you.
    Senator Martinez.
    Senator Martinez. A couple of quick questions. May I 
congratulate you, then? Will you be taking Ambassador 
Negroponte's place? Is that----
    Ambassador Satterfield. I will not be taking Ambassador 
Negroponte's place. The administration will be submitting a 
recommendation for John Negroponte's replacement. I will be 
taking the number two position in Baghdad.
    Senator Martinez. OK; very good.
    In coordinating aid, I know that it's always something we 
want to see happen to ensure the best use of taxpayer dollars. 
Is there a need for a full-time coordinator to support aid 
efforts? Is there a need for coordination between the State 
Department arm and the USAID arm and how that function takes 
place?
    Ambassador Satterfield. We are looking right now at 
structural issues as the situation on the ground moves forward, 
as the international assistance effort moves forward, and we 
will be in close touch with the Congress on how we would 
recommend moving forward in this regard. And I wouldn't 
prejudge the outcome of those discussions with respect to a 
coordinator position.
    Senator Martinez. I would just say thank you both for your 
service, and particularly best wishes to you in your new 
assignment, and thank you for your testimony today.
    Ambassador Satterfield. Thank you very much, Senator.
    Senator Chafee. Thank you, Senator Martinez.
    I echo those words also. Thank you for your service----
    Ambassador Satterfield. Thank you.
    Senator Chafee [continuing]. To the country and for your 
testimony today.
    Ambassador Satterfield. Appreciate it.
    Mr. Kunder. Senator Chafee, you asked earlier, in the South 
Asia hearing, about the 2006 budget request specifically and 
whether there were dramatic changes. I just want--truth in 
advertising--to point out that there is, in an addition to the 
supplemental request, a request for an increase in West Bank/
Gaza funding, because the anticipation is, with the transfer of 
Gaza, we will have a need for a more robust program ongoing 
there.
    And also, in Iraq, we have been working off of the generous 
$18 billion that the Congress provided under the Iraq 
Reconstruction Fund. There is, for the first time, a request 
for an ongoing program at a much lower level. And this is not 
to do the major reconstruction work, but to do the kind of 
transformational change in the Iraqi economy, in the Iraqi 
educational system, that we think will continue the work that's 
been done during this immediate reconstruction phase.
    So you asked that question earlier. I just wanted to point 
out, in this region, as opposed to South Asia, we have asked 
for several dramatic changes in the appropriations level 
between 2005 and 2006.
    Thank you, sir.
    Senator Chafee. Thank you, sir.
    The hearing is concluded.
    [Recess from 10:51 to 10:57 a.m.]

   OPENING STATEMENT OF HON. MEL MARTINEZ, U.S. SENATOR FROM 
                            FLORIDA

    Senator Martinez [presiding]. Good morning. We'll call the 
hearing to order.
    And I wanted to just begin by welcoming Mr. Michael 
Ranneberger, Principal Deputy Assistant Secretary of Bureau of 
African Affairs, and the Honorable Lloyd Pierson, Assistant 
Administrator for Africa of the United States Agency for 
International Development. I want to thank both of you for 
joining us today.
    And this, of course, is the six-regional panel today, and 
the focus of this hour will be on sub-Saharan Africa. And today 
also represents my first official business as the chairman of 
the Africa Subcommittee, and I'm quite pleased and honored to 
be in this position. And I look forward to working with our 
distinguished ranking member, Senator Feingold, in this matter.
    And I should point out that Senator Feingold has, 
currently, an amendment being debated on the floor of the 
Senate. And that has not allowed him to be with us, 
momentarily. There will be a vote on that amendment shortly. 
And so, I may have to recess the hearing so that I, myself, 
might go vote. And then I presume, after that vote, both the 
Senator and I will be able to return.
    Today's discussion about our foreign-assistance efforts is 
a very appropriate stating point, and I will hopefully 
encourage a comprehensive and thoughtful exchange of our 
priorities and programs in sub-Saharan Africa.
    And before we go to our panelists, I'd like to just briefly 
highlight some of my key priorities and interests related to 
the subcommittee and to the region.
    First and foremost, I think United States foreign policy 
needs a stronger and more focused effort on Africa. I'm very 
pleased by the increased assistance that is being provided 
through the HIV/AIDS funding and, obviously, the Millennium 
Challenge Account and our counterterrorism efforts that are so 
important to our national security. I'm very concerned that we 
also increase our focus on traditional development assistance.
    I believe we need to advance a comprehensive strategy for 
Africa, a strategy that focuses on democracy and governance, 
institution-building, human rights, and sustainable economic 
growth, a strategy that focuses on building domestic capacity, 
which will bring about lasting, positive change for the people 
of Africa.
    I'm particularly troubled that, despite the considerable 
level of international aid, the record of development in sub-
Saharan Africa is still very poor, and there are statistics to 
back that up. For example, per-capita GDP in sub-Saharan Africa 
has fallen from $660 in 1980 to $585 in 2003. This poor growth 
occurred despite U.S. development assistance that totaled over 
$32 billion from 1980 to 2003. Total development assistance 
from all sources, bilateral and multilateral, totaled over $361 
billion. Clearly, a lack of foreign assistance has not been the 
predominant reason for the lack of development in the region.
    At the same time, sub-Saharan Africa is the world's least 
free nation, with 31 of 38 countries greater than--the 2005 
Index of Economic Freedom as being greater--that's mostly 
unfree or repressed. As such, it is not surprising that it is 
the world's poorest region, as well.
    Countries that embrace economic freedom, including freedom 
of trade, labor, and capital, experience stronger economic 
growth than those that seek to thwart the market through 
regulatory hurdles and political policy restrictions.
    A final concern, I want to briefly highlight, is security. 
Sub-Saharan Africa is home to many unstable governments. Over 
the past decade, there have been wars and serious insurrections 
in 28 of the 48 countries in sub-Saharan Africa. In fact, most 
new peacekeeping operations in the past decades have involved--
in the past decade have involved conflict in the region.
    In addition to contributing to serious humanitarian crises, 
instability in the region aggravates poverty and poses an 
important security concern for the United States. As we have 
learned all too well, unstable regions are ripe for terrorist 
exploitation as bases of operations and recruitment. There has 
also been increased evidence of terrorist activity in sub-
Saharan Africa over the past decade, ranging from attacks on 
United States assets in Kenya to Islamic terrorists in Nigeria, 
Niger, and Chad. And this is obviously alarming as we go 
forward.
    The bottom line is, we need to advance bold policies which 
will target the root causes of challenge, of conflict in the 
developing countries around the world. We need to aggressively 
fight the causes of poverty--poor institutions and poor 
economic policies--which plague the people of Africa.
    And I look forward to discussing these issues in greater 
detail after hearing from our distinguished witnesses today. 
Unfortunately, our ranking member will not be here to give an 
opening statement at this time, so we will immediately go ahead 
and turn to our distinguished panel, and then allow the ranking 
member to give his opening statement.
    So, Mr. Ranneberger, we'll turn to you first.

STATEMENT OF MICHAEL E. RANNEBERGER, PRINCIPAL DEPUTY ASSISTANT 
  SECRETARY, BUREAU OF AFRICAN AFFAIRS, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Mr. Ranneberger. Thank you, Senator.
    Mr. Chairman, thank you for asking me to testify today on 
the most pressing issues in, and the budget priorities for, 
sub-Sahara Africa in fiscal year 2006.
    Our increasing engagement in Africa advances United States 
national interests: To promote peace and stability, to advance 
democracy, to combat terrorism, to foster economic development, 
and to alleviate human suffering. As we move ahead, we are 
forging a partnership with Africa that advances shared 
interests and values. As Secretary Rice said in recent 
congressional testimony, ``We don't consider Africa to be a 
target of our policy, but, rather, very good partners in what 
we are doing.''
    Substantial progress is being made. During the past 4 
years, there have been over 50 democratic elections, and the 
majority of African economies are growing. It is particularly 
significant that African regional institutions are becoming 
stronger and playing more effective roles to mitigate conflict, 
foster democracy, promote regional integration, and act against 
terrorism. We see timely, specific examples in the decisive 
role that the economic community of West African States is 
playing to restore democracy in Togo, and in the effective 
mediation of the Comprehensive Peace Accord in Sudan by the 
Intergovernmental Authority on Development.
    It is also important to highlight the growing role of the 
African Union, as evidenced, for example, by the crucial 
mission it has undertaken in Darfur in western Sudan. 
Strengthening these African regional organizations, and our 
relationship with them, is a major goal of United States 
policy.
    Yet the challenges are daunting. African development is not 
advancing at a sufficient pace to alleviate widespread poverty. 
And Africa will not likely reach the international development 
goals of the Millennium Declaration. We are working closely 
with African partners to alleviate the poverty that enables 
terrorists to continue to find refuge, resources, recruits, and 
training grounds in the region.
    The administration's $2.8 billion fiscal year 2006 budget 
request addresses the most serious problems facing our 
interests in Africa and is designed to help African governments 
and organizations implement African solutions to African 
problems, both urgent and long term.
    While Africans want to, and are, taking the lead in 
addressing many of their problems, our assistance remains 
indispensable. Our request includes $152 million in economic 
support funds, $24 million in foreign military finance, $11 
million in international military education and training, $41 
million in peacekeeping operations, and at least $1.2 billion 
in global HIV/AIDS initiatives, as well as child survival and 
development assistance funds, and transition initiatives 
moneys. In addition, the United States will continue to be the 
largest donor of humanitarian assistance to Africa, and Peace 
Corps programs will continue to make major contributions 
throughout the continent.
    Our six priority goals in using this assistance are:
    First, expand democratic values and respect for human 
rights by promoting democratic government and good governance, 
particularly through efforts to combat corruption and to 
strengthen civil society.
    Second, increase economic prosperity and security by 
expanding trade and investment, strengthening Africa's private 
sector, and improving the productivity of African economies.
    Third, strengthen Africa's capacity to fight terrorism.
    Fourth, foster regional stability by preventing, 
mitigating, and resolving crises and conflict through 
coordination with international allies and, most importantly, 
with the African Union and other subregional African 
organizations.
    Fifth, counter the spread of HIV/AIDS and other infectious 
diseases.
    And, sixth, assist with the conservation of Africa's 
natural-resource base.
    These six priorities reflect the fact that the continent's 
challenges are, in our increasingly global environment, linked 
to our broader interests and to those of the international 
community. And in that context, I want to emphasize that the 
United States is collaborating at an unprecedented level with 
the European Union and its member states; with other countries, 
such as Japan, Australia, and Canada; and with international 
institutions, particularly the United Nations, the 
international financial institutions, and, of course, very 
importantly, with the African Union and the subregional African 
organizations. This approach maximizes the impact of our 
assistance and our influence.
    The African Continent is increasingly hearing a concerted 
message from the international community on the core issues of 
democracy, economic development, HIV/AIDS, counterterrorism, 
and conflict mitigation.
    Africa remains a major focus of the G-8 process, 
particularly with respect to efforts to combat corruption, to 
train Africans for peacekeeping, and to promote development.
    Our engagement with Africa is, then, inextricably tied to 
the broader goal of strengthening United States security. We 
count, in that regard, many sub-Saharan African countries as 
allies in the global war against terrorism.
    American leadership will remain crucial to Africa's 
stability and progress. Three examples stand out:
    Nowhere is this more evident than in the Sudan. The United 
States played a leading role to support the mediation by the 
Intergovernmental Authority on Development (IGAD) of the 
Comprehensive Peace Accord in Sudan. We will remain at the 
forefront of international efforts to support implementation of 
this accord. And this Comprehensive Peace Accord then provides 
a solid basis for resolving the crisis in Darfur.
    We have intensified, at the same time, efforts to end the 
violence and atrocities in Darfur, and to achieve a political 
settlement there. And we have made clear to all parties that we 
will not normalize relations with Sudan until the Darfur crisis 
is resolved.
    In Liberia, our sustained involvement has been crucial to 
ending armed conflict and assisting preparations for elections.
    The United States is also remaining strongly engaged to 
support completion of the peace process in the Great Lakes 
Region.
    We will remain focused on areas where conflict and tension 
threaten regional stability. We continue to follow closely the 
developments in Somalia, and have supported the IGAD-sponsored 
reconciliation process there.
    We're also engaging with the problem of the border dispute 
between Ethiopia and Eritrea.
    For fiscal year 2006, Senator, we have requested $152 
million in Economic Support Funds, $138 million of which is 
targeted on 12 key focus countries. These include five key 
partner countries: Nigeria, South Africa, Ethiopia, Kenya, and 
Djibouti. Their size, the size of their economies, the strength 
of their militaries, their cooperation on counterterrorism, and 
their roles in promoting regional stability all warrant our 
investment in their development as prosperous democracies.
    Six of our focus countries--Angola, Burundi, the Democratic 
Republic of the Congo, Sierra Leone, Liberia, and Sudan--are 
emerging from, have recently emerged from, or are still 
enduring, long periods of conflict and instability.
    In Zimbabwe, our last focus country, we will channel funds 
to organizations working to restore democracy and good 
governance.
    Nine million seven hundred thousand dollars in our fiscal 
year 2006 ESF request has been sought for the Africa Regional 
Fund, which will be used, among other purposes, to support good 
governance, encourage trade and investment, assist judicial 
reform, bolster civil society, strengthen borders, and help 
preserve Africa's ecosystems and natural resources. This fund 
is essential to provide the flexibility to target problems as 
they arise. For example, some of this year's regional fund will 
be used to help support the elections process in Togo, which 
was, of course, an unforeseen need. If the regional fund were 
not available, we would not be in a position to respond 
quickly, as U.S. interests are impacted in late-breaking 
developments. We, of course, will notify the Congress each time 
when these moneys are used.
    The Bureau has requested $1 million in ESF to strengthen 
regional and subregional organizations, such as the AU and 
ECOWAS, by bolstering their institutional capacities and their 
ability to reach and implement regional solutions.
    Assisting African States to fight terrorism is one of our 
most important priorities.
    Economic progress and prosperity are essential to Africa's 
future; and, thus, a paramount United States goal. Our efforts 
are directed toward a trade and development-based approach that 
encourages the growth of Africa's private sector. We will 
continue to reinforce the policies of African governments that 
promote economic liberalization and successful private-sector 
development.
    Over the past 4 years, in that regard, Senator, the Africa 
Growth and Opportunity Act has created over 190,000 new jobs. 
Two-way trade is up to just over $44 billion, as of last year. 
In addition to the progress generated by AGOA, we can point to 
other signs of positive economic activity in Africa. For 
example, foreign direct investment in Africa increased by 28 
percent. United States investment in sub-Sahara Africa alone 
has increased by about 37 percent. Average GDP in sub-Sahara 
Africa, while still not at acceptable levels, is at a record 
level of about 4.5 percent, on average.
    The Millennium Challenge Account (MCA) holds enormous 
promise, of course, for growing Africa's economies. The 
worldwide fiscal year 2006 MCA request of $3 billion will, to a 
large extent, go to Africa, in that half of the MCA-eligible 
countries are located in sub-Sahara Africa.
    One very positive development that we will reinforce in 
fiscal year 2006 is the willingness of African militaries to be 
trained for, and to participate in, peacekeeping operations. 
Training of these forces continues under the African 
Contingency Operations Training and Assistance program, and 
will now be incorporated into the Global Peacekeeping 
Operations Initiative, the so-called GPOI, starting this year. 
The global request for 2006 for GPOI is $114 million, of which 
a substantial percentage will be used in sub-Sahara Africa.
    Progress on so many fronts--economic, governance, 
professionalization of the military, health, and education--is 
threatened by the continuing plagues of HIV/AIDS, malaria, and 
tuberculosis. Twelve of the fifteen countries, however, in the 
President's emergency plan for AIDS relief, are located in sub-
Sahara Africa. At least $1.2 billion from the global AIDS 
initiative is designated for programs in Africa.
    In closing, Mr. Chairman, I want to emphasize the 
importance we attach to strong public diplomacy efforts to 
strengthen ties between the people of Africa and the American 
people. Our request for public-diplomacy programs in Africa in 
2006 is $33 million.
    We estimate that approximately 75 percent of our current 
public-diplomacy resources are directly engaged in reaching out 
to Africa's Muslim community, which makes up about 43 percent 
of the continent's population.
    By and large, people throughout Africa have positive 
attitudes about the United States, and we need to build on 
these. Our histories and cultures are intertwined. We share 
fundamental values that link us together. That is why the 
American public supports increased aid to Africa as long as 
it's done with accountability and transparency in expenditure.
    Mr. Chairman, I appreciate your, and this committee's, 
continuing interest in Africa. I look forward to discussing our 
budget request and other issues of concern with you and members 
of the committee.
    Thank you.
    [The prepared statement of Mr. Ranneberger follows:]

    Prepared Statement of Michael E. Ranneberger, Principal Deputy 
 Assistant Secretary, Bureau of African Affairs, Department of State, 
                             Washington, DC

    Mr. Chairman and members of the committee, thank you for asking me 
to testify on the most pressing issues in, and our budget priorities 
for, sub-Saharan Africa in FY2006. Our increasing engagement in Africa 
advances United States national interests to promote peace and 
stability, to advance democracy, to combat terrorism, to foster 
economic development, and to alleviate human suffering. As we move 
ahead, we are forging a partnership with Africa that advances shared 
interests and values. As the Secretary stated in recent congressional 
testimony: ``We don't consider Africa to be a target of our policy, but 
rather, like the rest of the world, very good partners in what we're 
doing.''
    Substantial progress is being made. During the past 4 years there 
have been over 50 democratic elections, and the majority of African 
economies are growing significantly. It is particularly significant 
that African regional institutions are becoming stronger, and playing 
more effective roles to mitigate conflict, foster democracy, promote 
regional integration, and act against terrorism. We see timely, 
specific examples in the decisive role that the Economic Community of 
West African States (ECOWAS) is playing to restore democracy in Togo, 
and in the effective mediation of the comprehensive peace accord in 
Sudan by the Inter-Governmental Authority on Development (IGAD). It is 
also important to highlight the growing role of the African Union as 
evidenced, for example, by the crucial mission it has undertaken in 
Darfur in western Sudan. Strengthening these African regional 
organizations and our relationship with them is a major goal of United 
States policy.
    Yet the challenges are daunting. African development is not 
advancing at a sufficient pace to alleviate widespread poverty, and 
Africa will likely not reach the International Development Goals of the 
Millennium Declaration. We are working closely with African partners to 
alleviate the poverty that enables terrorists to continue to find 
refuge, resources, recruits, and training grounds in the region. 
Although most of African countries are willing partners in the war on 
terrorism, many lack the resources to counter effectively this threat 
in their midst. Failed or failing states present tempting opportunities 
to terrorist networks. Long-running conflicts, some nearing resolution 
and others not, threaten regional and subregional security.
    Persistently high HIV/AIDS rates, hunger, drought, and poverty 
undercut progress that is being made in establishing democratic 
frameworks and liberalizing economies. The same is true of corruption, 
armed conflict, and human rights abuses. Addressing these problems is 
essential so that Africa can harness the vast potential of its people 
and natural resources. Increasing our engagement now is a wise 
investment that will pay dividends in the United States-Africa 
partnership for many years to come.
    The administration's $2.8 billion fiscal year 2006 budget request 
addresses the most serious problems facing our interests in Africa, and 
is designed to help African governments and organizations implement 
African solutions to African problems, both urgent and long term. While 
Africans want to, and are taking, the lead in addressing many of their 
problems, our assistance remains indispensable. Our request includes 
$152 million in Economic Support Funds (ESF), $24 million in Foreign 
Military Finance (FMF), $11 million in International Military Education 
and Training (IMET), $41 million in Peacekeeping Operations (PKO), at 
least $1.2 billion in Global HIV/AIDS Initiative, and $849 million in 
Child Survival and Health (CSH), Development Assistance (DA), and 
Transition Initiatives (TI) moneys. In addition, the United States will 
continue to be the largest donor of humanitarian assistance to Africa, 
and Peace Corps programs will continue to make major contributions 
throughout the continent. My colleague from USAID, Lloyd Pierson, the 
Assistant Administrator for Africa, will speak to the details of 
development assistance.
    Our six priority goals are:

   Expand democratic values and respect for human rights by 
        promoting democratic government and good governance, 
        particularly through efforts to combat corruption and to 
        strengthen civil society;
   Increase economic prosperity and security by expanding trade 
        and investment, strengthening Africa's private sector, and 
        improving the productivity of African economies;
   Strengthen Africa's capacity to fight terrorism;
   Foster regional stability by preventing, mitigating, and 
        resolving crises and conflict through coordination with 
        international allies, and most importantly, with the African 
        Union and other African subregional organizations;
   Counter the spread of HIV/AIDS and other infectious 
        diseases; and,
   Assist with the conservation of Africa's natural resources 
        base.

    These six priorities reflect the fact that the continent's problems 
are, in the increasingly global environment, linked to our broader 
interests and to those of the international community. There are 
numerous examples. The progress of democracy in Africa reinforces 
United States efforts to promote freedom throughout the world. Twenty 
African counties are now members of the Community of Democracies. 
Africa supplies over 30 percent of U.N. peacekeeping forces worldwide. 
Resolution of conflicts in Africa sends a positive message to other 
conflict-prone areas of the world. Most notably, the achievement of 
peace in Sudan will send a very positive message to the people of the 
Middle East that even the most intractable conflicts can be resolved. 
Finally, Africa is an increasingly important producer of petroleum, 
with exports growing to the United States, Europe, and other areas.
    The United States is collaborating at an unprecedented level with 
the European Union and its member states, other countries such as 
Japan, Australia, and Canada, the United Nations, and international 
institutions to work with African countries and regional organizations. 
This multilateral approach maximizes the impact of our assistance and 
influence. The African Continent is increasingly hearing a concerted 
message from the international community on the core issues of 
democracy, economic development, HIV/AIDS, counterterrorism, and 
conflict mitigation. Africa remains a major focus of the G-8 process, 
particularly with respect to efforts to combat corruption, to train 
African countries for peacekeeping, and to promote economic 
development.
    Unfortunately, there remain African governments that are unable to 
govern effectively parts of their countries outside the capital area. 
As has been demonstrated in other parts of the world, failed, failing, 
and fragile states breed the conditions where terrorists recruit and 
take haven. They also afford bases for terrorist networks to attack the 
interests of the United States and its allies. Porous borders and weak 
governments in Africa are conducive to drug trafficking, arms 
smuggling, corruption, human rights abuses, and conflicts. Deadly 
diseases and environmental problems in African States have effects far 
beyond their borders.
    Our engagement in Africa is, therefore, inextricably tied to 
strengthening United States security. We count many sub-Saharan African 
countries as our allies in the Global War on Terrorism. They are eager 
for U.S. counterterrorism programs and training. These partner 
governments are willing to apprehend terrorist suspects and host 
forward operating sites for U.S. and coalition forces. Our FY06 request 
addresses threats to the United States via counterterrorism programs, 
as well as addressing our partners' economic, social, and security 
needs.
    American leadership will remain crucial to Africa's stability and 
progress. Three examples stand out. Nowhere is this more evident than 
in Sudan. The United States played a leading role to support the 
mediation by the Inter-governmental Authority on Development (IGAD) of 
the comprehensive peace accord in Sudan. We will remain at the 
forefront of international efforts to support implementation of the 
North/South peace accord. This comprehensive peace accord provides a 
solid basis for resolving the crisis in Darfur. The African Union has 
made substantial progress in constraining violence through the 
deployment of observers and protection forces. A United States-drafted 
U.N. Security Council resolution will be considered soon that calls on 
the U.N. Secretary General to develop a plan for the eventual rehatting 
of the African Union mission into a U.N. peacekeeping operation. The 
total appropriated for Sudan-Darfur through FY05 is $753 million; the 
United States has already provided $545 million in humanitarian relief 
in Darfur and Chad from the FY04 and FY05 regular budgets, and will 
continue to provide urgent humanitarian assistance as long as is 
necessary. We have intensified efforts to bring about an end to 
violence and atrocities, and a political settlement, and have made 
clear to all parties that we will not normalize relations with Sudan 
until the Darfur crisis is resolved. In addition to the fiscal year 
2006 request, we have requested $242 million in the fiscal year 2005 
supplemental for Darfur, and $100 million in the fiscal year 2005 
supplemental to support implementation of the North/South accord, and 
development and reconstruction in southern Sudan.
    In Liberia our sustained involvement has been critical to ending 
armed conflict and assisting preparations for elections. Congress' 
appropriations in FY04 and FY05, the activities of the U.N. 
Peacekeeping Mission in Liberia (UNMIL), strongly supported by the 
United States, the hands-on involvement of our Embassy in Monrovia, and 
daily attention here in Washington have all played a role in Liberia's 
reconstruction. We are coordinating closely with other donor nations 
and the World Bank, especially in the crucial area of security sector 
reform, which will be funded in part by PKO funds. However, our work 
here is not done. One of the key lessons we have learned over the years 
in West Africa is that we must not pull back from these challenges too 
soon. The problems in Sierra Leone, Liberia, and Cote d'Ivoire are all 
linked. We will do this in close consultation with ECOWAS, which played 
a vital role in helping stabilize Liberia. We must, therefore, continue 
to ensure Liberia's peace and successful development, so that 
democratic national elections can finally be held for the people of 
Liberia.
    The United States will also remain strongly engaged to support the 
completion of the peace process in the Great Lakes region. The United 
States has taken the lead to foster a tripartite mechanism among the 
Democratic Republic of the Congo, Rwanda, and Uganda to ease tensions 
and to build confidence among the three to move forward. We are working 
closely with the European Union, the United Nations, and the Africa 
Union in these efforts, particularly to end the violence in eastern 
Congo. At the same time we are heartened by developments in Burundi, 
where on February 28 voters went to the polls in a referendum on the 
country's new constitution. This is a key step in the country's 
transition to democracy after a decade of civil war.
    We will remain focused on other areas where conflict and tension 
threaten regional stability. We continue to follow closely the 
developments in Somalia, and have supported the IGAD-sponsored 
reconciliation process. While serious challenges lie ahead, we will 
work with the international community to foster the development of a 
stable Somalia at peace with its neighbors.
    We remain engaged with the problem of the border dispute between 
Ethiopia and Eritrea, which constantly threatens to disrupt regional 
stability and holds back the economic progress of both countries. High-
level interagency delegations have visited both countries in recent 
months, encouraging both sides to meet their obligations under the 
Algiers Agreement. The United States also supports the U.N.'s efforts 
to resolve this dispute and avert further hostilities.
    For FY06 we have requested $152 million in Economic Support Funds, 
$138 million of which will be targeted on 12 key focus countries. These 
include five key partner countries--Nigeria, South Africa, Ethiopia, 
Kenya, and Djibouti. Their size, the size of their economies, the 
strength of their militaries, their cooperation on counterterrorism 
and/or their key roles in regional stability warrant our investment in 
their development as prosperous democracies.
    Six of the focus countries (Angola, Burundi, the Democratic 
Republic of the Congo, Sierra Leone, Liberia, and Sudan) are emerging 
from, have recently emerged from, or still are enduring long periods of 
conflict and instability. Our assistance will support efforts to 
resolve these conflicts and help people reintegrate into society. Of 
the $138 million for the focus counties, $75 million is for Liberia, 
and $20 million is for Sudan.
    In Zimbabwe, we will channel funds to organizations working to 
restore democracy and good governance. We remain gravely concerned by 
the situation in Zimbabwe. Its once-thriving economy has shrunk by 40 
percent over the past 5 years; inflation and unemployment have soared; 
the once strong Zimbabwe dollar is now trading informally at over 
10,000 to one United States dollar; and new investment has disappeared. 
Parliamentary elections at the end of this month provide an opportunity 
to the Zimbabwe Government to demonstrate that it wants to return to 
the path of free market democracy. The Southern Africa Development 
Community (SADC) is insisting that Zimbabwe adhere to SADC electoral 
principles to provide for fair elections. We are urging Zimbabwe to 
take specific steps to end violence, allow freedom of assembly, allow a 
free press, and invite international election observers, among others.
    Nine million seven hundred thousand dollars in fiscal year 2006 ESF 
has been requested for the Africa Regional Fund, which will be used, 
among other purposes, to support good governance, encourage trade and 
investment, assist judicial reform, bolster civil society, strengthen 
borders, fight money laundering, and help preserve Africa's ecosystems 
and natural resources. This fund is essential to provide the 
flexibility to target problems as they arise. For example, some of this 
year's Regional Fund will help support elections in Togo. If the 
Regional fund were not available, we would not be in a position to 
quickly advance U.S. interests in such late-breaking situations. We, of 
course, notify Congress in a timely manner regarding the use of these 
funds.
    The Bureau has requested $1 million in ESF to strengthen regional 
and subregional organizations such as the AU and ECOWAS by bolstering 
their institutional capacities, and their ability to reach and 
implement regional solutions. Also, through the Global Peace Operations 
Initiative (GPOI), the Department will provide significant support to 
African Union and ECOWAS peace and security structures. In addition to 
Darfur, the AU's Peace and Security Council has recently pressured Togo 
to restore its constitutional order, and supported South African 
President Thabo Mbeki's mediation in Cote d'Ivoire. The AU's reach 
across the continent, including northern Africa, makes it an especially 
important partner. Three million dollars is requested for the Safe 
Skies for Africa program, both to combat terrorism and promote economic 
development by improving aviation safety and security.
    Assisting African States to fight terrorism is one of our most 
important priorities. Both Development Assistance (DA) and ESF funds 
will be utilized to improve the long-term economic prospects of 
Africa's people, while furthering United States gaols and interests. 
Along with Public Diplomacy (PD) funds, these programs promote goodwill 
toward the United States. The history of terrorist attacks in East 
Africa, the problems in Somalia and Africa's growing Muslim population 
all make Africa an important venue in the Global War on Terrorism. 
Significant proportions of FMF funding will assist counterterrorism 
efforts by strengthening border and coastal security in key partner 
states. For example, a large part of our requested FMF will be 
allocated for follow-on support to the $100 million East Africa 
Counter-Terrorism Initiative (EACTI). In addition, we will sustain 
efforts to help stabilize the pan-Sahel region of West Africa through 
Africa Coastal/Border Security Program FMF funds.
    Economic progress and prosperity are essential to Africa's future, 
and thus a paramount United States goal. We continue to encourage 
economic reforms and the development of functioning capital markets. 
American trade and commerce with Africa continues to grow. Our efforts 
are directed toward a trade and development-based approach that 
encourages the growth of Africa's private sector. We will continue to 
reinforce policies of African governments that promote economic 
liberalization and successful private sector development.
    Over the past 4 years, the African Growth and Opportunity Act 
(AGOA) has created over 190,000 jobs. Two-way total trade (exports plus 
imports) between the United States and sub-Saharan Africa increased 37 
percent to just over $44 billion in 2004. AGOA encourages high 
standards for market-based economies, progress on governance and human 
rights issues, broader economic reforms and building goodwill toward 
the United States. Thirty-seven countries in sub-Saharan Africa are now 
eligible for AGOA. We expect more to meet the criteria during 2005 and 
2006.
    In addition to the progress generated by AGOA, we can also point to 
other signs of positive economic activity in Africa. For example, 
foreign direct investment in Africa (including north Africa) increased 
by 28 percent in 2003. United States investment in sub-Saharan Africa 
alone increased by 37.2 percent in 2003. Average real GDP grown in sub-
Saharan Africa reached a record level of 4.5 percent in 2004. Despite 
these encouraging statistics, however, sub-Saharan Africa still has not 
made sufficient progress toward reaching its full economic potential.
    The Millennium Challenge Account (MCA) holds enormous promise for 
growing Africa's economies. The MCA funds only countries that have 
demonstrated a commitment to democracy and good governance, investing 
in people and economic freedom. The worldwide FY06 MCA request is $3 
billion. Half of MCA eligible countries for both fiscal year 2004 and 
fiscal year 2005 are in African countries.
    We will continue to support the AU's New Partnership for Africa's 
Development (NEPAD), as an important initiative to provide a road map 
to development through good political and corporate governance, sound 
economic practices, and peer review.
    One very positive development that we will reinforce in FY06 is the 
willingness of African militaries to be trained for, and participate 
in, peacekeeping operations. Training of these forces continues under 
the African Contingency Operations Training and Assistance (ACOTA) 
Program, which will be incorporated into the Global Peacekeeping 
Operations Initiative (GPOI), starting in fiscal year 2005. The fiscal 
year 2006 worldwide request for GPOI is $114 million. We have also 
requested $11 million in IMET funding for sub-Saharan Africa, which is 
largely aimed at fostering respect for human rights, democratic 
governance, and civilian control of the military. This is in addition 
to $41.4 million in PKO funds for regional peacekeeping.
    Many of the troops now involved in peacekeeping operations in 
Africa were trained under ACOTA and/or include personnel who received 
IMET training. ECOWAS troops were essential in bringing order to Sierra 
Leone, Liberia, and Cote d'Ivoire. The key partner states of Nigeria 
and Ethiopia have taken an important lead in peacekeeping matters, and 
are currently the second and fifth largest troop contributors 
respectively to U.N. peacekeeping operations around the world.
    In Central Africa, the AU mission to Burundi made excellent 
progress before its transition to a U.N. force, and peace has returned 
to this once war-torn country. Other recent successes in Africa include 
the long periods of post-conflict stability, including elections, in 
countries such as Mozambique and Namibia. We've been able to reopen our 
Embassy in the Central African Republic and are encouraging a return to 
democracy in that country.
    Progress on so many fronts--economic, governance, 
professionalization of the military, health, education--is threatened 
by the continuing plagues of HIV/AIDS, malaria, and tuberculosis. Over 
half the people infected with HIV in the world live in Africa. Africa's 
most important resource is its people, yet trained professionals and 
key workers die of this disease every day. Twelve of the fifteen focus 
countries for the President's Emergency Plan for AIDS Relief (the 
Emergency Plan) are in Africa. The principal source of funding for the 
Emergency Plan is the Global HIV/AIDS Initiative (GHAI). At least $1.2 
billion from this account is designated for programs in Africa.
    On a related issue, the important Child Survival and Health (CSH) 
request for sub-Saharan Africa for FY06 is $326 million; that for 
Development Assistance is $428.5 million and for Transition Initiatives 
is $95 million. The President's budget contains DA/CSH requests aimed 
at improving health systems, building human capacity in the health 
field, working to prevent the spread of disease, enhancing food 
security, increasing access to education and promoting conservation of 
natural resources. The DA/CSH program provides support for the 
Initiative to End Hunger in Africa (IEHA), Trade for African 
Development and Enterprise (TRADE), the Congo Basin Forest Partnership 
(CBFP), and the President's Africa Education Initiative.
    In closing, Mr. Chairman, I want to emphasize the importance we 
attach to strong public diplomacy efforts to strengthen ties between 
the people of Africa and the American people. Our request for public 
diplomacy programs in Africa (not including exchange programs) in FY06 
is $40 million. In addition to this, the President's request for the 
Bureau of Educational and Cultural Affairs includes an estimate of just 
over $49 million for exchanges and cultural programs in sub-Saharan 
Africa for FY06. Through outreach, cultural centers, American corners, 
exchanges, dissemination of information using the latest technology, 
and other steps we are promoting understanding of and support for our 
foreign policy objectives.
    Our Embassies are engaging community leaders, using ESF for girls' 
education in marginalized areas, for example, and we are working with 
moderate local Muslim nongovernmental organizations through grants and 
other means. We are providing scholarships for the study of English, 
distributing information in local languages and conducting media 
training. We estimate that 75 percent of our current public diplomacy 
resources are directly engaged in reaching out to Africa's Muslim 
community, which makes up about 43 percent of the continent's 
population.
    By and large, people throughout Africa have positive attitudes 
about the United States, and we need to build on these. Our histories 
and cultures are intertwined. We share fundamental values that link us 
together. That is why the American public supports increased aid to 
Africa as long as it's done with accountability for funds and 
transparency in expenditure.
    Mr. Chairman, I appreciate your and this committee's continuing 
interest in Africa. I look forward to discussing our budget request and 
other issues of concern relating to Africa with you and members of the 
committee.

    Senator Martinez. Thank you, sir, very much.
    And now, Mr. Pierson, we'd be pleased to hear from you.

STATEMENT OF HON. LLOYD O. PIERSON, ASSISTANT ADMINISTRATOR FOR 
AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT, WASHINGTON, 
                               DC

    Mr. Pierson. Thank you very much, Mr. Chairman. I am 
honored today to be before this committee and also to be here 
with my colleague from the Department of State, Ambassador 
Ranneberger.
    I have a brief opening statement that I would like to make, 
but do request that a longer written statement that has been 
submitted be included in the record.
    Senator Martinez. Without objection, it will be made part 
of the record.
    Mr. Pierson. Mr. Chairman and members of this committee, I 
am pleased to appear before you today as the U.S. Agency for 
International Development's Assistant Administrator for Africa 
to discuss the opportunities and challenges for sustainable 
development in sub-Sahara Africa and how the President's 
proposed budget for assistance to the region in fiscal year 
2006 will enable us to address these opportunities and 
challenges.
    I would particularly like to highlight, at the outset, a 
few key priorities that USAID has considered in developing in 
its FY06 program for Africa.
    In fiscal year 2006, USAID is proposing to shift $275 
million of development assistance funding for four fragile 
states to the more flexible transition initiatives account to 
permit focus on the source of fragility and faster, shorter 
term, high-impact visible response. Four countries--
Afghanistan, Sudan, Haiti, and Ethiopia--were chosen because 
they are the largest fragile states, in budgetary terms, which 
would most diminish flexible resources available if left in the 
development assistance account.
    The Agency has made efforts to prioritize our use of 
resources that better assures results by emphasizing support 
for countries that demonstrate a commitment to sound 
development principles and democracy.
    The future for sub-Sahara Africa continues to look 
brighter. The resolution and recovery from several violent 
conflicts which inhibited economic and social development is 
particularly encouraging. The peace in Liberia is holding. A 
comprehensive peace agreement ending the conflict in Southern 
Sudan was signed in January of this year. And Sierra Leone and 
Angola continue their transitions to peace and stability after 
years of protracted conflict.
    Unfortunately, the crisis remains unsettled in Darfur. 
Instability persists in Cote d'Ivoire, and conflict still 
plagues the Great Lakes Region.
    Encouragingly, African institutions are beginning to 
demonstrate increased capacity to deal with conflict and 
instability and to adopt more realistic policies to address 
poverty and economic growth. Interventions of the economic 
community of West African States in Liberia, and its most 
recent efforts to avert a crisis in Togo, and the deployment of 
African Union forces in Darfur are cases in point.
    Measurable progress is now being made in increasing the 
availability of the specific treatment, care, and prevention 
services required to address one of the continent's most 
overwhelming crises; the spread of HIV/AIDS.
    Despite these positive trends, sub-Sahara Africa continues 
to face enormous development challenges. It remains the world's 
poorest region, with half of its 700 million people living on 
less than $1 per day. Income and gender inequality are also 
widespread. While many countries have taken positive steps to 
improve democratic governance and governmental accountability, 
ongoing instability in countries such as Zimbabwe, Sudan, and 
the Democratic Republic of the Congo, act as a deterrent to 
increased domestic and international involvement.
    Rapid urbanization poses new and different challenges as 
cities, which will harbor more than half of Africa's population 
in just over a decade, struggle to provide sufficient jobs and 
services, particularly for the young, who can become quickly 
disillusioned and easy targets for extremist propaganda, 
criminal gangs, or armed militias. Meeting these challenges 
will require an extraordinary and sustained effort on the part 
of African governments, the private sector, civil society, and 
the international community.
    In fiscal year 2006, USAID's Africa Bureau proposes to 
invest $849.4 million in development assistance and child 
survival and health, and transition initiative funding in sub-
Sahara Africa as well as $151.9 million in ESF. It should be 
noted that this excludes all funding for HIV/AIDS in the 12 
focus countries in sub-Sahara Africa covered by the President's 
emergency plan for AIDS relief; $459.3 million.
    Support to the Sudan peace process is the single-highest 
priority in sub-Sahara Africa. And USAID's Africa Bureau is 
requesting a total of $89 million in transition initiatives and 
child-survival-and-health account funding for Sudan in fiscal 
year 2006.
    The support of Ethiopia's efforts to address issues of 
chronic food insecurity and poverty is also one of USAID's 
highest priorities in Africa.
    The centerpieces of USAID's 2006 program will continue to 
be the four Presidential initiatives launched in fiscal year 
2002, the Initiative to End Hunger in Africa, the Trade for 
African Development and Enterprise Initiative, the Congo Basin 
Forest Partnership, and the African Education Initiative.
    Other key elements in the program include the continuation 
of the African Anti-Corruption Initiative, the Conflict and 
Peace Building Initiative, and the Leland Initiative to 
Increase Access to Information Technology.
    Mr. Chairman, I appreciate this committee's continuing 
interest in Africa. I would be pleased to discuss our budget 
request and our proposed program and other issues of concern in 
Africa with you and members of this committee at this time.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pierson follows:]

 Prepared Statement of Hon. Lloyd Pierson, Assistant Administrator for 
   Africa, U.S. Agency for International Development, Washington, DC

    Mr. Chairman and members of the committee, I am pleased to appear 
before you today as the U.S. Agency for International Development's 
(USAID) Assistant Administrator for Africa to discuss the opportunities 
and challenges for sustainable development in sub-Saharan Africa and 
how the President's proposed budget for assistance to the region in 
FY06 will enable us to address these opportunities and challenges. I 
would particularly like to highlight, at the outset, a few key 
priorities that USAID has considered in developing its FY06 program for 
Africa.
    In FY06, USAID is proposing to shift $275 million of Development 
Assistance (DA) funding for four fragile states to the more flexible 
Transition Initiatives (TI) account to permit focus on the source of 
fragility, and faster, shorter term, high-impact, visible response. 
Four countries, Afghanistan, Sudan, Haiti, and Ethiopia, were chosen 
because they are the largest fragile states in budgetary terms, which 
would most diminish flexible resources available for others if left in 
the Development Assistance (DA) account.
    In addition, the Agency has made efforts to prioritize our use of 
resources that better assures results by emphasizing support for 
countries that demonstrate a commitment to sound development principles 
and democracy.

                       THE DEVELOPMENT CHALLENGE

    The future for sub-Saharan Africa continues to look brighter as 
many countries in the region begin to reap the benefits of sound 
changes to economic policy, improved governance and investments in key 
social sectors undertaken during the past decade. With the rebounding 
of the global economy, the continued growth of responsible and 
representative governments, and the recovery from several lengthy 
conflicts, much of the continent is poised to see more robust economic 
growth and an improvement in living standards in the years ahead. The 
IMF estimates that GDP in the region grew by 4.5 percent in 2004, up 
significantly from 3.5 percent in 2003 and projects that growth will 
accelerate further in 2005. While growth will be highest in oil 
producing countries, it is also expected to be strong in several 
important nonoil producing countries.
    The resolution and recovery from several violent conflicts which 
inhibited economic and social development is particularly encouraging. 
The peace in Liberia is holding, a comprehensive Peace Agreement ending 
the conflict in southern Sudan was signed in January of this year, and 
Sierra Leone and Angola continue their transitions to peace and 
stability after years of protracted conflict. Unfortunately, the crisis 
remains unsettled in Darfur, instability persists in the Cote d'Ivoire, 
and conflict still plagues the Great Lakes region.
    Encouragingly, African institutions are beginning to demonstrate 
increased capacity to deal with conflict and instability and to adopt 
more realistic policies to address poverty and economic growth. 
Interventions of the Economic Community of West African States (ECOWAS) 
in Liberia, its most recent efforts to avert a crisis in Togo, and the 
deployment of African Union forces in Darfur are cases in point. The 
policy framework and the program of action adopted by the New 
Partnership for Africa's Development (NEPAD) is sending a very positive 
signal to the world that African leadership is increasingly ready to 
take primary responsibility for economic and social development and 
improved governance in the region. NEPAD continues to deepen its 
support among African Government leaders and its road map for action is 
gaining wider credibility. NEPAD is demonstrating through its 
initiation of peer reviews of political, economic, and corporate 
governance in four countries that Africans are indeed serious about 
tackling some of their most difficult development issues. Twenty-four 
countries have now agreed to undergo the process. The United States 
continues to affirm its endorsement of NEPAD.
    Measurable progress is now being made in increasing the 
availability of the specific treatment, care, and prevention services 
required to address one of the continent's most overwhelming crises, 
the spread of HIV/AIDS. Fiscal year 2004 was the first year of 
implementation of the President's Emergency Plan for AIDS Relief, which 
proposes $15 billion over a 5-year period for the treatment, care, and 
prevention of HIV worldwide. Of this, a total of $10 billion is 
designated to scale up HIV/AIDS programs and services in 15 focus 
countries, 12 of which are in Africa. The extraordinary response by the 
international community combined with the wider availability of 
treatment, prevention, and care offers new hope that the advance of the 
pandemic can be contained with sustained support.
    Despite these positive trends, sub-Saharan Africa continues to face 
enormous development challenges. It remains the world's poorest region, 
with half of its 700 million people living on less than $1 per day. 
Income and gender inequality are also widespread. As mid-decade 
approaches, it is becoming increasingly evident that the region will 
fall seriously short of meeting many of the Development Goals of the 
Millennium Declaration (DGMD). In order to meet the goal of halving 
poverty by 2015, overall GDP growth must increase substantially from 
today's levels to between 6 and 7 percent per annum. While many 
countries have taken positive steps to improve democratic governance 
and governmental accountability, on-going instability in countries such 
as Zimbabwe, Sudan, and the Democratic Republic of the Congo act as a 
deterrent to increased domestic and international investment. Food 
security remains elusive in many parts of the continent, particularly 
in the Horn of Africa, with children being particularly vulnerable. It 
is projected that by 2015, two-thirds of the world's hungry will be in 
Africa, and it is the only continent where the trends are actually 
getting worse. Africa still lags far behind other developing regions in 
educational attainment, particularly in rural areas and for girls, and 
despite the rapid growth of information and telecommunications 
technology, the digital divide between Africa and the rest of the world 
continues to widen.
    Rapid urbanization poses new and different challenges as cities 
struggle to provide sufficient jobs and services, particularly for the 
young, who can become quickly disillusioned and easy targets for 
extremist propaganda, criminal gangs, or armed militias. While some 
health indicators have improved, the HIV/AIDS pandemic has overwhelmed 
health systems and further impoverished families in many countries, 
particularly in eastern and southern Africa. Dramatically reduced life 
expectancies and a shrinking labor pool due to HIV/AIDS will slow 
economic growth in the region by as much as 1.5 percent a year. 
Lingering conflicts, both large and localized, continue to exact a huge 
toll on efforts to bring stability and improve livelihoods. The 
presence of 4-5 million refugees and 12-13 million internally displaced 
persons in the region complicates the challenge.
    Meeting these challenges will require an extraordinary and 
sustained effort on the part of African governments, the private 
sector, civil society, and the international community. Through the 
fiscal year 2006 foreign affairs budget, the President has pledged to 
continue and augment, where possible, U.S. programs to address some of 
the most critical problems facing the continent. USAID will focus its 
efforts on supporting economic growth and agriculture, improving 
governance, mitigating conflict, improving education (particularly 
basic education for girls), preserving the diversity of the continent's 
resources, and fighting disease.
    USAID's programs will be bolstered by the significant additional 
resources to be provided through the Millennium Challenge Account, 
which will be channeled to countries that govern justly, invest in 
their people, and practice economic freedom. Eight sub-Saharan African 
countries, out of 16 total worldwide, have been deemed eligible for MCA 
assistance and an additional seven sub-Saharan African countries are 
close to the threshold of eligibility. We view these combined efforts 
as an extremely worthwhile investment in Africa's future. They equally 
serve our own interests as stability in the region is important to U.S. 
security concerns. Sub-Saharan Africa is also a source of natural 
resources of growing importance to the United States and represents an 
expanding market for American goods and services.

                           THE USAID RESPONSE

    The proposed fiscal year 2006 USAID program for sub-Saharan Africa 
will support a broad range of activities which address the most 
pressing development challenges of the region. USAID programs in Africa 
will also contribute directly to the priorities outlined in the joint 
State/USAID Strategic Plan for 2004-2009, particularly those which 
advance sustainable development and global interests, including 
regional stability and counterterrorism. Critical to the success of 
these efforts is full support for USAID's Operating Expense request. 
The Agency's ability to manage its portfolio and develop a workforce 
with the depth and skills to respond to the challenges of development 
in the 21st century is dependent on these resources.
    Beginning in fiscal year 2006, USAID will move deliberately to 
reorient its programming in sub-Saharan Africa to reflect the 
principles of maximizing aid effectiveness. This shift will be formally 
codified through the adoption of a new USAID Strategic Framework for 
Africa to be completed in mid-2005. In order to maximize the impact of 
its resources, USAID will increasingly direct its development 
assistance funding toward those African countries that are performing 
relatively well, demonstrate need, and exhibit commitment to the 
principles of sound governance, investing in their people and economic 
freedom. Experience has shown that it is in these countries that 
foreign assistance has been most effective.
    At the same time, USAID recognizes the significant number of 
fragile states in sub-Saharan Africa and the destabilizing influence 
that these countries have on economic and social development of their 
subregions. USAID will target its resources in these countries 
specifically to address the root causes of fragility and potential 
conflict. In fiscal year 2006, USAID also proposes to expand the use of 
the ``Transition Initiatives'' (TI) funding account to program its 
resources for four key countries: Afghanistan, Haiti, Ethiopia, and 
Sudan. The Transition Initiatives account will provide support to 
countries that are confronting crisis or are in transition from crisis 
toward more steady ``transformational'' economic and social 
development. The use of the Transition Initiatives account for the high 
profile programs in Ethiopia and Sudan will provide a mechanism that 
retains the responsiveness and flexibility of humanitarian aid, but 
with a focus on addressing the causes of crisis, advancing democratic 
governance, and managing conflict within highly charged and fluid 
environments. This required flexibility is not readily available within 
the traditional development assistance account which is used to fund 
long-term initiatives appropriate for transformational development. 
Using Transition Initiatives account funds in Sudan and Ethiopia will 
better enable the USAID Missions in these countries to direct their 
programs at the sources of instability and weakness and to redirect 
funds if necessary to maximize impact.
    In fiscal year 2006, USAID's Africa Bureau proposes to invest 
$849.4 million in Development Assistance (DA), Child Survival and 
Health (CSH) and Transition Initiative (TI) funding in sub-Saharan 
Africa. Of this, 50.4 percent will be directed toward transformational 
development, strengthening fragile states and addressing global issues 
and special concerns, such as climate change, through the development 
assistance (DA) account; 11.2 percent for assistance in stability, 
reform, and recovery to Ethiopia and Sudan through the Transition 
Initiatives (TI) account; and 38.4 percent for child survival and 
health, infectious disease reduction and family planning programs 
through the Child Survival and Health (CSH) account. It should be noted 
that this excludes all funding for HIV/AIDS in the 12 ``focus'' 
countries in sub-Saharan Africa covered by the President's Emergency 
Plan for AIDS Relief (PEPFAR), which is budgeted directly through the 
Office of the U.S. Global AIDS Coordinator in the Department of State.
    Support to the Sudan peace process is the single highest priority 
in sub-Saharan Africa and USAID's Africa Bureau is requesting a total 
of $89 million in Transition Initiatives and Child Survival and Health 
(CSH) account funding for Sudan in fiscal year 2006. USAID's goal in 
Sudan is to establish a foundation for a just and durable peace with 
broad-based participation of the Sudanese people. Transition 
Initiatives funding will help to lay the groundwork for long-term 
recovery and to help the country move from crisis toward economic and 
political stability. Key programs will strengthen institutions of 
democratic governance and political parties, improve the justice 
sector, strengthen civil society, improve the access to quality 
education in the south, and create and strengthen market support 
infrastructure and institutions.
    The support of Ethiopia's efforts to address issues of chronic food 
insecurity and poverty is also one of USAID's highest priorities in 
Africa. USAID is implementing a strategy to manage a transition from an 
emergency-dominated program to one which proactively builds capacity to 
prevent famine and also promotes economic growth, especially in the 
agricultural sector. The goal of the strategy is to promote increased 
capacity of the government, the private sector, nongovernmental 
organizations, communities, and households to generate economic growth 
and to build a foundation for permanently reducing famine 
vulnerability, hunger, and poverty.
    The centerpieces of USAID's fiscal year 2006 program will continue 
to be the four Presidential Initiatives, launched in fiscal year 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 Africa Education Initiative (AEI). Other 
key elements of the program include the continuation of the African 
Anti-Corruption Initiative, the Conflict and Peacebuilding Initiative 
and the Leland Initiative to increase access to information technology.

Agriculture and the Environment
    Agriculture remains the mainstay of most sub-Saharan African 
economies. It serves as the primary source of livelihood for 65 percent 
of its people, represents 30 to 40 percent of GDP and accounts for 
almost 60 percent of export income. Improved performance of the 
agricultural sector is, therefore, critical to efforts to achieve food 
security and reduce poverty. The major constraints to increasing 
agricultural productivity include low usage of improved technologies, 
limited access to credit, low levels of public investment, inefficient 
land use and environmental degradation, market distortions that 
discourage production, poor rural infrastructure and the debilitating 
effects of the HIV/AIDS pandemic. Now in its second full year of 
implementation, USAID's flagship program in the agriculture sector, the 
Presidential Initiative to End Hunger in Africa (IEHA), is helping 
agriculture generate more income and employment, unleashing the power 
of new technologies, promoting policy and program changes to liberalize 
trade and improve the efficiency of markets and developing human 
capital, infrastructure and institutions. IEHA is also assisting NEPAD 
efforts to launch the G-8 supported Comprehensive African Agricultural 
Development Plan (CAADP). In fiscal year 2006, USAID proposes to invest 
$47.1 million through the Initiative to End Hunger in Africa.
    Africa is a continent of great natural riches, unmatched 
biodiversity, and vast unspoiled landscapes. Prudent management and 
protection of these assets can contribute to sustainable economic 
growth as well as to worldwide efforts to improve the global 
environment and maintain biodiversity. Yet the region's environment is 
under serious threat. Sub-Saharan Africa contains 45 percent of global 
biodiversity yet has the highest rate of deforestation in the world. 
Serious efforts must be taken immediately to preserve, protect and 
improve Africa's environmental patrimony. USAID's environmental 
programs, which focus on linking better management of natural resources 
with improved livelihoods and strengthened environmental governance, 
are now demonstrating very positive results in over a dozen countries. 
The Central Africa Regional Program for the Environment (CARPE), a 20-
year effort begun in 1995, is USAID's premier environmental program in 
Africa and serves as the Agency's primary vehicle for the U.S. 
contribution to the Congo Basin Forest Partnership (CBFP) Presidential 
Initiative, launched in 2002. The Congo Basin Forest Partnership, an 
association of 29 governmental, nongovernmental, and private sector 
organizations, addresses two of the world's most significant global 
issues, global climate change and the loss of biodiversity in the 
world's second largest tropical forest. In fiscal year 2006, USAID 
proposes to invest $15 million through CARPE in support of the CBFP 
activities.

Trade
    The globalization of the world economy offers Africa genuine 
opportunities to increase trade and attract foreign investment. Yet 
Africa remains at the margins of the world economy, accounting for just 
1.4 percent of world exports in 2002, down from 3.5 percent in 1970. 
The region has enormous potential to become a much more significant 
player in international trade. However, to realize this potential 
Africa must continue to liberalize economic policies and implement 
institutional reforms required of the changing economic environment. 
The United States has continued to demonstrate worldwide leadership in 
expanding trade with Africa through the African Growth and Opportunity 
(AGOA) Acceleration Act of 2004. AGOA is yielding ever more encouraging 
results with total two-way United States trade with sub-Saharan Africa 
rising 37 percent in calendar year 2004, to $44.4 billion. AGOA imports 
totaled $26.6 billion in 2004, an 88-percent increase over 2003. While 
petroleum continues to constitute the bulk of AGOA imports, it is worth 
noting that nonpetroleum AGOA imports--including apparel and 
agricultural products--are also on the rise, totaling $3.5 billion in 
2004, up 22 percent over 2003. To support the AGOA process as well as 
to promote business linkages between the United States and Africa and 
to enhance the competitiveness of African products and services, USAID 
will continue to work with the United States Trade Representative and 
other United States Government agencies to design and implement trade 
capacity building activities, in recognition of the importance of such 
assistance in promoting economic growth, reducing poverty, and 
adjusting to liberalized trade. USAID plays a critical role in 
providing trade capacity building assistance in Africa, which has 
mainly been implemented through the Presidential Trade for African 
Development and Enterprise (TRADE) Initiative. Through this initiative 
three regional ``Hubs for Global Competitiveness'' in southern, 
eastern, and West Africa, are improving public services that support 
trade (such as customs procedures), building African capacity for trade 
policy formulation, and strengthening the enabling environment for 
African businesses. USAID will continue its trade capacity building 
activities in support of the United States-Southern African Customs 
Union (SACU) free trade agreement negotiations. In addition, the Agency 
is working to support the WTO negotiations by focusing on the 
development obstacles facing the cotton industry in West Africa. In 
fiscal year 2006, USAID proposes to provide $15 million of its 
development resources in the TRADE Initiative. Overall, USAID proposes 
to invest $311 million, or 36.7 percent of its development resources, 
for programs in economic growth, agriculture, and the environment in 
fiscal year 2006.

Education
    Advances in education are critical to Africa's economic, social, 
and political development. Although literacy rates have risen from 50 
percent in 1990 to 62.4 percent in 2003, Africa continues to lag behind 
much of the world in educational attainment. While access to formal 
education has improved, 39 percent of boys and 43 percent of girls are 
still not enrolled in primary school. Drop out rates remain high, with 
just 20 percent of all children completing primary school. Educational 
quality is also poor with large class sizes, significant numbers of 
poorly qualified teachers, and severe shortages of textbooks and 
teaching aids. HIV/AIDS continues to decimate the ranks of qualified 
teachers. Systemic education reform is critical if Africa's children 
are to compete successfully in today's world. USAID programs focus on 
educational policy and systems development, decentralized 
decisionmaking, and greater parental and community involvement. An 
emphasis on basic education, particularly for girls, has proven to 
yield high returns. USAID's flagship program in education is the $200 
million President's Africa Education Initiative (AEI), launched in 
2002. USAID proposes to invest $121 million, or about 14.3 percent of 
its program resources, in education programs in Africa in fiscal year 
2006, of which $55 million will support the Education Initiative. The 
Education Initiative is on track to provide 250,000 scholarships for 
girls, 4.5 million much-needed textbooks, and training for 420,000 
teachers over a 5-year period.

Health, Population, and HIV/AIDS
    Improved health is both an important development goal in and of 
itself, as well as a major factor in reducing poverty and accelerating 
economic growth. Health conditions in sub-Saharan Africa remain the 
poorest in the world, with gains in access to care and wider 
availability of treatment often undermined by persistent poverty, 
conflict, poor governance, and the continued spread of HIV/AIDS and 
other infectious diseases such as tuberculosis (TB), malaria, polio, 
meningitis, and cholera. Life expectancy has continued to decline, to 
less than 50 in those countries most severely impacted by HIV/AIDS. 
Malaria claims over 2.3 million African lives a year, mostly of young 
children. In 2003, polio, which had almost been eliminated worldwide, 
spread from two endemic countries, Nigeria and Niger, to 10 other 
countries. Sub-Saharan Africa also has the highest maternal and 
neonatal mortality rates in the world.
    USAID Missions throughout the region are implementing broad-based 
programs to increase the availability, effectiveness, and access to 
quality health care. Successful efforts to create alternative 
community-based health care financing schemes in Senegal, Rwanda, and 
Zambia offer promise to hundreds of thousands of households and provide 
successful models for replication. Immunization campaigns have reduced 
disease rates, and expanded use of bed nets has begun to significantly 
reduce the incidence of malaria in target areas. Several countries, 
including Eritrea, Malawi, and Guinea, have realized important 
reductions of 19 percent to 32 percent in child mortality rates. USAID 
proposes to invest $142.7 million, or 16.8 percent of its program 
resources, for child, maternal, or reproductive health, and the 
reduction of disease.
    With a growth rate of 2.4 percent a year, the highest in the world, 
Africa's population of 700 million will swell to over 1 billion by 
2025, despite the impact of HIV/AIDS. This will place natural 
resources, public services, and the social fabric under enormous strain 
and impact economic growth. Though the majority of women indicate the 
desire for fewer children, contraceptive prevalence rates remain under 
20 percent in all but five countries and above 50 percent only in 
Zimbabwe and South Africa. 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. In fiscal 
year 2006, USAID proposes to program $101 million to continue its 
efforts to support a range of family planning programs, including 
public education, advocacy, and outreach through traditional and 
community structures, community-based distribution of contraceptives, 
and encouragement of child spacing programs.
    Fighting HIV/AIDS is the number one health priority in sub-Saharan 
Africa. The pandemic continues to ravage the continent, although there 
are hopeful signs that prevention and treatment measures are beginning 
to slow its spread. Prevalence rates remain high in all of southern 
Africa, reaching 25 percent in Zimbabwe and almost 40 percent 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 
percent are in their productive years and two-thirds are female. The 
number of AIDS orphans is expected to rise from 11 million to 20 
million by 2010. However, the experience of Uganda, where infection 
rates have decreased by 50 percent from 1997-2001, and promising 
results in Zambia and elsewhere, demonstrate that strong leadership and 
an integrated approach to prevention, care, and treatment can be 
effective in stabilizing and/or reducing prevalence rates. The 
President's Emergency Plan is offering a new future to people who are 
infected with the virus through rapid expansion of prevention, care, 
and treatment programs of all participating U.S. Government agencies. 
In coordination with the U.S. Global AIDS Coordinator, USAID proposes 
to invest $82.2 million of its FY 2006 Child Survival and Health 
funding in the fight against AIDS in the ``nonfocus'' countries in 
Africa and will coordinate closely with the other U.S. Government 
Agencies administering other components of the Emergency Plan.

Democracy, Governance and Conflict Mitigation
    Transparency in government, observance of the rule of law, respect 
for human rights, and inclusive political processes are essential 
ingredients for the continued economic and social development of sub-
Saharan Africa. Good governance, coupled with improved economic and 
social well-being, also diminishes the appeal of extremist ideologies 
and terrorist agendas. USAID democracy and governance programs 
throughout the continent promote representative political processes and 
institutions, the growth of a vibrant civil society, building the 
capacity of local governments to deliver essential services, and 
respect for the rule of law and human rights. USAID is also addressing 
the insidious issue of corruption in the region through its Africa 
Bureau Anti-Corruption Initiative, launched in 2003. In fiscal year 
2006, USAID proposes to invest $7.5 million in this initiative, which 
promotes public access to information, citizen awareness and advocacy, 
transparency and accountability of government functions and procedures, 
support for public oversight institutions, and public-private dialog.
    The United States has played a seminal role in successful 
international efforts to bring an end to several of the violent 
conflicts that have plagued sub-Saharan Africa. In January 2005 the 
Government of Sudan and the Sudan People's Liberation Movement signed a 
comprehensive peace agreement after more than 2 years of negotiations. 
The agreement ends the world's longest running civil war, and provides 
for fundamental changes in governance through power sharing, wealth 
sharing, security arrangements, and a formal ceasefire. Across the 
border, there have been signs of progress in addressing the 18-year-old 
conflict in northern Uganda. In addition, the Intergovernmental 
Authority on Development (IGAD) has achieved several major 
breakthroughs in efforts to restore peace to Somalia. Liberia remains 
on the road to recovery after two decades of instability and civil war. 
In mid-2004, the Congolese Assembly for Democracy was persuaded to 
remain engaged with the Transition Government. In Burundi, the 
Parliament agreed to extend the transition until April 2005 when 
elections are scheduled. Through the Conflict and Peace Building Fund, 
the USAID Africa Bureau is implementing conflict response programs that 
aim to avert imminent violence, mitigate ongoing violence, or address 
its immediate aftermath. The Fund also supports conflict management 
programs that address the causes and consequences of conflict such as 
youth unemployment, ethnically based economic competition, and 
inequitable control over natural resources. USAID proposes to augment 
its investment in the Africa Conflict and Peace Building Fund by $20 
million in fiscal year 2006. Overall, in fiscal year 2006, USAID 
proposes to invest $91.2 million, or 10.7 percent of its resources, in 
efforts to strengthen democracy and governance and mitigate conflict in 
Africa.

Aid Effectiveness and Partnership
    While the United States is the largest bilateral donor in sub-
Saharan Africa, we must actively collaborate with our development 
partners in the donor community and with our African counterparts in 
order to achieve our common goal of a better life for all Africans. The 
United States supports ongoing efforts to harmonize our assistance 
flows with those of other bilateral and multilateral donors around 
sound African country-led development strategies. Experience has 
demonstrated time and again that without buy-in to donor programs from 
country and African regional partners, assistance funds will have 
little lasting impact.
    In conclusion, USAID is proposing a well-balanced program to 
address the major development challenges of the sub-Saharan Africa. The 
additional flexibility to be provided through the expanded Transition 
Initiatives account will assist us in implementing our important 
programs in Sudan and Ethiopia.
    Mr. Chairman, I appreciate this committee's continuing interest in 
Africa. I would be pleased to discuss our budget request and our 
proposed program and other issues of concern in Africa with you and 
members of the committee at this time.

    Senator Martinez. Thank you very much.
    We've been called for a vote. What I want to do is deal 
with some of the questions that are before us and allow my 
distinguished colleague, that has joined us, from Illinois--and 
then--to also ask.
    So I'll ask a couple of questions, defer to Senator Obama, 
and then come back to questions, further, until we have to 
depart for our vote.
    The Millennium Challenge Account--you know, one of the 
things that I pointed out in my opening remarks is the poor 
development record, in spite of significant aid, over years--
the Millennium Challenge Account is a new approach to 
development assistance. And I wanted to ask--eight of the 
countries eligible for this aid are in the sub-Sahara, and my 
question to you is: What types of projects are we funding under 
the Millennium Challenge Account? How is this aid reaching out 
to make the situation better there? How is it going to work 
better than prior aid efforts? Give me your take on the 
Millennium Challenge Account, and how it's working, and some 
specifics.
    Mr. Ranneberger. Just let me say a quick word, and then let 
Assistant Administrator Pierson talk.
    These projects, of course, Senator, are still in 
development. But the kinds of projects that are on the boards 
now and that are being drafted, for example, include an 
anticorruption initiative, which would pull together government 
and nongovernmental organizations, in a country which is 
plagued tremendously by corruption at this time. There's 
another that's, I think, an environmentally related project, 
conserving natural resources in conjunction with private-sector 
and nongovernmental groups.
    So they are the kinds of projects. Of course, none have 
actually been signed yet. We do hope that, within the coming 
near future--I'd say the next couple of months--that we will 
start signing the first compacts with African countries.
    With that, let me----
    Mr. Pierson. Mr. Chairman, we believe that the Millennium 
Challenge Corporation is one of the best strategic-planning 
exercises that we've seen, in terms of Africa. The 
Administrator of USAID is on the board of directors. We work 
very closely with the Millennium Challenge Corporation.
    The type of programs in which they are involved, as I 
understand it, is widely varied, but they certainly look, in 
terms of the economic activity, the type of government programs 
that a given country has. Anticorruption is a major part of 
their programs.
    The first compact country under the MCA provisions, I 
understand, has not been voted on, as yet, by the board, but 
that is progressing. There are also threshold countries in 
Africa in which USAID missions, USAID staff, work very closely 
to try to help elevate that country from the threshold status, 
so they can be considered under the other provisions of the 
MCA.
    But we work very closely, as I know the Department of State 
does, with MCA.
    Senator Martinez. The other transitional--transitional 
initiatives account--and I was going to ask, on that, the 
rationale between shifting--behind shifting from development 
assistance account to transitional initiatives account for 
Ethiopia and Sudan, while, at the same time, not doing it for 
Liberia and Congo. And, again, what types of assistance 
projects fall under that category, and what are we doing there?
    Mr. Pierson. Mr. Chairman, that's a very good question. The 
transition initiative account is increased in fiscal year 2006 
for USAID. It is an attempt on the part of the agency in terms 
of Ethiopia and Sudan, to prioritize, to give focus, to give 
added attention to those countries in which we feel the 
country--the particular instances in the country may vary, as 
they would from Ethiopia and Sudan, but it is a focus, it is a 
priority, to give more immediate attention to those countries 
that have the higher budget impact in which immediate results 
are more visible.
    And that is not to mean that there are other countries that 
could not be considered. I just returned from visiting seven 
countries in Africa; Liberia was one of them, also in the 
Democratic Republic of Congo. And there certainly are other 
countries that could make a case. Their situations are very 
pressing. We want peace, democracy, and good governance in all 
of the countries.
    But the selection in the transition account, we had worked 
very closely with both the Senate and the House, in terms of 
consultation. That account does not have earmarkings. It is an 
opportunity. It is a priority, a focus, to address specific 
needs in these larger-budgeted countries for us, as Africa 
Bureau.
    Senator Martinez. Senator Obama.
    Senator Obama. Thank you, Mr. Chairman. You know, my 
suggestion would be, given the short time that we have 
remaining--and I don't want to give 2 minutes to responses on 
an entire continent--that I submit some written questions. And 
if the gentlemen here would be willing to respond to them in 
that fashion, then I think that----
    Senator Martinez. That would be fine.
    Senator Obama [continuing]. May be the best way to proceed.
    Senator Martinez. Very good.
    We probably should then--what is our schedule, vote-wise? I 
think we probably have to recess at this time, go take care of 
our vote, and then resume after the vote. I understand it may 
be two votes, now, I'm told, so it may be a bit, in which case 
we may see you after lunch.
    Thank you very much.
    Mr. Pierson. Thank you, Mr. Chairman.
    Mr. Ranneberger. Thank you.
    [Recess from 11:26 to 12:01 p.m.]

   STATEMENT OF HON. RUSSELL D. FEINGOLD, U.S. SENATOR FROM 
                           WISCONSIN

    Senator Feingold [presiding]. Call the hearing back to 
order, and thank everybody for their patience.
    The chairman, Chairman Martinez, was kind enough to ask me, 
on the floor, to continue the hearing and make my opening 
comments and ask a few questions. So I appreciate that very 
much, a good start to our relationship together, working on 
this subcommittee.
    I want to thank Ambassador Ranneberger and Mr. Pierson for 
being here today, and, again, thank Chairman Martinez for 
taking on the challenging, but very rewarding, task of leading 
this Subcommittee on African Affairs.
    I've been either the chair or the ranking member of this 
subcommittee for a decade now, and I have enjoyed some 
wonderful relationships with partners on the other side of the 
aisle on this subcommittee, from Senator Nancy Kassebaum to 
Senator John Ashcroft to Senator Bill Frist to Senator Lamar 
Alexander.
    Today, for the first time, I join my new partner, Senator 
Martinez, on this subcommittee. And I want to state publicly 
and for the record, that I genuinely look forward to working 
with him in the cooperative spirit that has always 
characterized this Subcommittee on African Affairs.
    There is much to discuss today. As we sit here, a crisis 
that both the Congress and the administration have acknowledged 
is a genocide raging in Darfur. Instability continues to plague 
parts of Africa, from the Eastern Congo to Cote d'Ivoire. The 
insidious influence of corruption is threatening to steal the 
victory that Kenyan voters won just a few years ago, when they 
chose democratic change for their country. The Government of 
Zimbabwe continues to wage a deliberate and coordinated 
campaign of repression targeting its own citizens. The people 
of Somalia still live in near anarchy. Parts of Nigeria are 
controlled by organized criminal syndicates that do not simply 
intimidate the state; in these areas the syndicates sometimes 
are the state. The children of Northern Uganda continue to have 
to flee their homes at night in fear.
    But even as we focus on these urgent issues, we must also 
recognize that the news is certainly not all bad, and that our 
assistance must help contribute to the momentum behind African 
successes, as well as addressing African crises. From Senegal 
to Botswana, governments and civil societies are making 
fighting HIV/AIDS a real priority. ECOWAS and the AU stood 
firmly on the side of democracy when Togo's longstanding 
President passed away, setting off a power struggle. 
Ironically, in Sudan, where violence in Darfur continues, the 
prospect of a lasting north/south peace is closer to reality 
than ever before.
    As my colleagues in the administration know, I believe that 
we serve our own interest and our own best impulses when we pay 
close attention to the varied policy challenges we confront in 
Africa. It's unfortunate, however, that we are holding this 
hearing 1 day before marking up the foreign assistance 
authorizing bill. This timeframe provides little to no 
opportunity to take the information from this hearing and then 
use it to inform the committee's work.
    Nevertheless, I welcome the opportunity to hear from our 
witnesses, and to work with them and with Chairman Martinez in 
the years ahead.
    I have a number of questions, but I will put some of them 
in writing, certainly with regard to Somalia, where we haven't 
really had a policy. And I'm still waiting for my report on 
that. I've got questions relating to Uganda.
    But let me turn to Darfur and the issue of famine. Jan 
Egeland, U.N. Under Secretary for Humanitarian Affairs, 
recently sounded the alarm about impending famine in Darfur, 
stating that some--some are predicting 3 million, some are 
predicting 4 million, some are predicting more than that, of 
people in desperate need of life-saving assistance, whose lives 
will be at stake as we approach the hunger gap in midyear.
    As I understand it, the U.N. World Food Program reached 1.2 
million needy recipients in January 2005, which was actually a 
decline of 3,000--300,000--from December 2004. It appears that 
our capacity to provide help is declining, while the magnitude 
of the problem is growing.
    I'd ask the witnesses: Do you believe that there will be a 
gap between available assistance and humanitarian needs in 
Darfur in 2005? How big a gap? And how much of the problem is 
access? And how much is related to available resources?
    Mr. Pierson. Senator, at USAID we are doing everything that 
we possibly can to ensure that there is no gap in humanitarian 
assistance in the Darfur area. The FY05--the total amount, 
dollar amount, that we have budgeted for Sudan is $664 million, 
$370 million particularly for Darfur. And we are doing 
everything that we possibly can to ensure that emergency food 
aid, relief supplies, water sanitation, agriculture--anything 
related to the humanitarian assistance to that terrible area--
that we are doing everything we can to try to make sure that 
humanitarian assistance is there, and on time.
    There are issues. There are some constraints, certainly, 
that we have faced. There's also a rainy season. There's 
logistics issues. But, in terms of the agency, we've expanded 
the number of people on our disaster-assistance relief team 
that is there. And we would certainly not want to have, in 
terms of those human needs that are there, any type of gap in 
that assistance.
    Senator Feingold. Thank you, sir.
    Mr. Ranneberger. And what I would add to that, Senator, is 
that we have made the access point a major issue in our 
discussions, of course, with the Sudanese Government. And I do 
think we've made some headway there. There's been good 
coordination with USAID, so that, as they get the food in 
place, the government does not pose the obstacles.
    Now they are still posing some obstacles. They're slow on 
visa issuance. Sometimes their local people on the ground in 
Darfur don't get the word from Khartoum to cooperate the way 
they should. And, of course, the other big constraint is the 
violence itself, which does continue. Unfortunately, it's a 
little bit more sporadic now; and so, it's not always as 
predictable. So sometimes routes are shut down one day, and not 
shut down another. But it makes it hard to plan convoys and 
other logistical support.
    And on that, I would add that the African Union is 
gradually expanding their role, in terms of things like 
patrolling humanitarian corridors.
    Senator Feingold. So, can we expect to see the number of 
people reached increase, let's say, March, April, in that 
timeframe?
    Mr. Pierson. Senator, I don't know that I can quantify a 
number on that, other than to say that the humanitarian 
assistance, that is desperately needed there, is the priority 
focus for the African Bureau. But in terms of the total number 
of individuals who will be reached within another month, 2 
months, I don't know that, at this stage, I could quantify on 
that.
    Senator Feingold. Sir, anything to add?
    Mr. Ranneberger. No. The only thing I'd add--I mean, is 
that, in addition to Jan Egeland, of course, this is a subject 
of--the Secretary regularly discusses these issues with 
Secretary General Kofi Annan, in terms of the United Nations 
also needing to push on this access issue. So the one point--
and I think it's an important one--is, it's not just us 
pushing. There really is a good coordination between us, the 
United Nations, and the Europeans to push. But I agree with the 
Assistant Administrator, it really is impossible to predict 
where we're going to----
    Senator Feingold. Well, let's hope those numbers do get up 
there.
    I strongly support the administration's request for an 
increase in the budget for educational and cultural exchange 
programs. And I am encouraged by Secretary Rice's strong 
statements about the importance of getting public diplomacy 
right and making it a priority. Often, we hear about new 
public-diplomacy initiatives in the Muslim world, but rarely do 
we hear how these initiatives will be pursued in Africa's many 
Muslim societies. In fact, I've been to eight different Islamic 
countries since January, and I have a pretty good sense of 
that. I was recently in Mali, actually, where I was shocked at 
how small the public-affairs budget was for the year.
    Is it possible to break out for me how much you plan to 
spend on public diplomacy in sub-Saharan Africa this year and 
next year? And what is your strategic plan for reaching out to 
African Muslims?
    Mr. Ranneberger. Perhaps I could start, and then if--first 
of all, we've projected $33 million in public-diplomacy funds, 
which come of, really, the state operating budget. But, in 
addition, we do use ESF funds. Some of our ESF funds are used 
to support public diplomacy, as well.
    But it really is a multipronged approach. And I think the 
good news, and the important news, in a sense, on outreach, 
Senator, is that it's now integrated into just about everything 
we do. And I think a case in point is the HIV/AIDS efforts. You 
wouldn't normally think HIV/AIDS in terms of outreach. But what 
we've done there, for example, is, we've channeled an 
increasing amount of funding, where possible, through moderate 
Muslim nongovernmental groups as a way of building those 
relationships. When you look at the vaccination issue in 
Northern Nigeria, that was ultimately resolved by working with 
the local Muslim authorities and nongovernmental groups. So 
this kind of integration into real-world, if you will, 
practical programs and outreach is important.
    But, in addition to doing that, of course, our Ambassadors 
reach out to the Muslims in speeches, contacts, and more 
frequent visits to Muslim areas of countries. So that is a 
major priority.
    But we've also got the full panoply of public-affairs 
actions. We've increased the amount of American Corners 
exhibits in Africa. We have developed, for example, a special 
program of international visitors to target more senior imams. 
Normally, they would be cut off by the age limit for 
International Visitor programs, but we're now bringing them in 
under a special program. In fact, I believe there was one for 
Mali.
    So it's a very multifaceted approach, and it's a major 
priority for us in Africa. I mean, you have about 43 percent of 
the population, or, some people would say, maybe half the 
African population, being Muslim at this point. And, of course, 
education efforts, as I'm sure can be explained, factor into 
this, as well, in terms of what we're doing on curriculum 
development in all of these societies.
    Senator Feingold. Did you give me a figure for the public 
diplomacy in sub-Saharan Africa?
    Mr. Ranneberger. Yes, sir; I said $33 million.
    Senator Feingold. Sub-Saharan.
    Mr. Ranneberger. Yes, sir. As part of the State operations 
budget. And then in terms of the exact amount of ESF, it would 
be hard-pressed to tell you that, because that tends to be--you 
know, we tend to allocate that as the year develops, and I 
don't have a specific amount of ESF set aside at this point for 
the outreach. But some of it will go toward outreach.
    Senator Feingold. Do you want to comment on that?
    Mr. Pierson. Senator, I'd like to comment on three aspects 
of your question. One is the public diplomacy, other is 
education in general, and then specific Muslim education.
    I've just returned from visiting seven countries in Africa. 
And one of the most memorable things on this trip that I've not 
seen before, and it's as a result, I believe, of the 
administrator's very strong efforts in terms of public 
diplomacy and branding, trying to ensure that those who receive 
assistance from the American people recognize that it does come 
from the people of this country. And for the first time--I've 
lived in Africa for a number of years, and I've never before 
seen this on--as I have on this trip--where the American people 
were being recognized for their assistance, either in terms of 
humanitarian assistance or our implementing partners. I saw the 
``US AID from American people'' in Liberia. Virtually every 
place that I went there, there would be a sign, ``USAID. From 
the American people.'' I saw that in Kenya. I was in Southern 
Sudan, it was there.
    The administrator has provided guidance, as we've relayed 
to all of our mission in Africa, that we need a communications 
person to work with the public-affairs individual at the U.S. 
Embassy. And that is being done.
    For those of our staff who are involved in the southern 
region of Africa, we've recently had a conference with them, 
talking about communication matters, public diplomacy, in 
Johannesburg. And starting this weekend will be a similar 
conference for West Africa; it'll be held in Dakar, Senegal.
    I think it is a matter of great pride. It's a matter of 
great pride for USAID and, I believe, for the American people 
who contribute the moneys that--for these programs--that, I 
believe for the first time we are really seeing that public 
diplomacy, that branding, take effect where people are really 
realizing that it comes from the American people. I don't have 
a specific dollar amount on that, but the effort is certainly 
there.
    One of the fundamental approaches the President has, is the 
Initiative on Education in Africa. The budget includes $55 
million in FY06 specifically for the President's Initiative on 
Africa. There are other education-related programs that we 
have. But that's a very results-oriented program. And I'm happy 
to provide more information. But, in terms of girls' 
scholarships, there's something. My recollection, it is 
something over 25,000 girls' scholarships that have been 
provided. Teacher training runs up into the hundred-thousand or 
so. Education is a very basic part of what we are doing.
    In terms of Muslim education, specifically, we have a 
number of programs in East Africa, as well as West Africa, and 
I'm sure in Mali that you had some experience with, what our 
bilateral mission is doing, as well as the West Africa regional 
program. For instance, in West Africa and Nigeria, there are 70 
Islamic schools in which they participate in learning-
institution-specific education for those Islamic institutes.
    So all of those areas are areas that we see as a 
fundamental part of our policies and actions in Africa.
    Senator Feingold. Thank you for your answers.
    Finally, last year's budget request included a separate 
line for an anticorruption initiative in Africa, a portion of 
the development assistance account. For the current fiscal 
year, the administration requested over $39 million for this 
initiative, but this line item does not exist in the current 
budget request. Can you explain that?
    Mr. Ranneberger. Senator, there are two major initiatives 
in Africa on counterterrorism, and then other areas that we're 
involved in. We have been pursuing this Pan Sahel Initiative. 
And I think that's one of them that you're referring to, sir. 
And the Pan Sahel Initiative was not envisioned as a permanent 
program. It was an initiative to help to increase the 
capacities of the Sahelian countries to address the 
counterterrorism. And those funds have been expended.
    Now, we are looking at a Trans-Sahara initiative--it's 
being discussed--which would integrate both the North African 
countries and the Sahelian countries. But that is still in 
development. That was not developed to that point at which that 
we felt we could request funding in the 2006 allocation.
    However, the other point I would make is that the PKO, the 
Peacekeeping--the PKO money that we have, some of that, in 
terms of training for African militaries, of course, relates to 
the counterterrorism efforts that we're making. In addition, of 
course, we've got training programs which will take place 
within the ESF account, as well.
    So this is--there's not--while there's not a specific line 
item, the priority very much remains on the counterterrorism 
efforts.
    Senator Feingold. I appreciate that, but I--and I want to 
actually submit a question to you about the East Africa Counter 
Terrorism Initiative. My question was about the Anti-Corruption 
Initiative.
    Mr. Ranneberger. Oh, I'm sorry.
    Senator Feingold. Obviously----
    Mr. Ranneberger. I missed your----
    Senator Feingold. OK. Because, obviously, the issues are 
related, but----
    Mr. Ranneberger. Excuse me.
    Senator Feingold [continuing]. I'm interested in the Anti-
Corruption Initiative. There was----
    Mr. Ranneberger. I'm sorry.
    Senator Feingold [continuing]. $39 million in there for 
this year--but there's no line item for it this year.
    Mr. Ranneberger. No, excuse me. I misheard you.
    Senator Feingold. That's OK. Go ahead.
    Mr. Ranneberger. I apologize.
    Anticorruption, of course, is a major priority for us, and 
it is factored into all of our bilateral programs in the 12 
focus countries that we have in Africa, in particular. And then 
the $9.7 million regional fund that we have requested for ESF 
for 2006; some of that funding will also be used to address 
anticorruption initiatives.
    And I think USAID can speak to some of the funding that 
they're planning to include, that they've included in their 
2006 request, as well.
    Mr. Pierson. Senator, there's no diminishment at all in our 
interest and activism on anticorruption issues. We're very--
verbally and the different types of actions that are occurring 
within our missions is very strong. To some extent, publicly, 
is stronger, I think, that it's ever been. The money may appear 
to be different on the line, because the money's being 
allocated specifically and directly to our missions. And so, 
there may not be a separate line item. And I'll get back with 
you on that, if I may. But it's my understanding that the 
moneys on anticorruption are going directly to our bilateral 
missions, and there may not be a separate line item, as there 
has been----
    Senator Feingold. What I'm looking for is assurance that 
that money has continued--continuing to be used for 
anticorruption----
    Mr. Pierson. Absolutely.
    Senator Feingold [continuing]. Not only because it's 
critical for these countries' development, for their 
credibility, for their trade, but also it does directly relate 
to our ability to fight terrorism in countries like Kenya and 
Mali and many other countries in----
    Mr. Pierson. Absolutely. I was in Kenya when the secretary 
of the anticorruption unit there with the Kenyan Government 
resigned. And, in Liberia, of the three major issues that were 
there, one was the elections, but anticorruption and taking 
money constantly--the United States Ambassador made points that 
public funds must be managed in an open, transparent manner. 
There's anticorruption money that is there. There's absolutely 
no diminishment. In fact, it is even stronger that we are 
doing.
    Mr. Ranneberger. Could I just make one point here? On the 
policy and the indication of what a priority it is for us, I 
want to just emphasize that under the G-8 initiative on Africa, 
anticorruption is going to be one of the three major issues 
that will continue to be addressed. In that connection, Nigeria 
is a focus country of that G-8 effort, and we're pressing 
Nigerians to develop an action plan with the G-8.
    Senator Feingold. Well, I appreciate that, because for all 
the talk here and throughout the administration about 
antiterrorism and how we are doing everything we can to stop 
terrorism, if this aspect of fighting corruption in some of 
these countries is not part of it, we are not serving the 
American people, we are not truly stopping the things that can 
lead to terrorism and facilitate terrorism.
    I'm sure you know that, and appreciate your answers. I want 
to thank you for your help with this hearing.
    And, with that, I adjourn the hearing.
    [Whereupon, at 12:21 p.m., the hearing was adjourned.]
                              ----------                              


                           AFTERNOON SESSION

    The committee met, pursuant to notice in room SD-419, 
Dirksen Senate Office Building, Hon. Norm Coleman, presiding.
    Present: Senators Coleman, Allen, Murkowski, and Martinez.

   OPENING STATEMENT OF HON. NORM COLEMAN, U.S. SENATOR FROM 
                           MINNESOTA

    Senator Coleman. This hearing of the Senate Foreign 
Relations Committee will come to order.
    It gives me great pleasure to return to the chairmanship of 
the Subcommittee on Western Hemisphere, Peace Corps and 
Narcotics Affairs for 109th Congress. I'm equally pleased to 
continue to work with my good friend and colleague, Senator 
Dodd, whose breadth of knowledge and years of experience in 
Latin America are virtually unmatched in these halls.
    It goes without saying that the United States has a number 
of interests in the Western Hemisphere. We have an interest in 
ensuring that democratic gains made in the hemisphere in the 
past two decades continue. We support democracy by working for 
political inclusion, the rule of law and economic opportunity, 
and by standing with our partners in the region in the fight 
against drug trafficking. The impact of drugs is acutely felt 
by too many American families and communities, but we, in the 
United States, are not the only ones who struggle with the 
effects of narcotics trafficking. Drug traffickers breed 
violence, corruption, and fear, all factors which threaten 
democracy in Latin America and in the Caribbean. The United 
States and other nations in this hemisphere have similar 
interests in cooperating in the fight against other 
transnational threats like gangs, and international terrorism.
    The United States also has important economic ties to the 
region. Latin America can represent a major market for United 
States exports. We have an interest in making sure that there 
are economic opportunities south of the Rio Grande, so that 
fewer people feel compelled to cross it. Cooperation in the 
energy sector could yield economic benefits to the United 
States, as well as our hemispheric neighbors. In the age of 
globalization, I believe there is much we, as a hemisphere, can 
do together to make our region more competitive with the rest 
of the world.
    Finally, the United States enjoys cultural and value-driven 
ties with our neighbors to the south. One cannot watch the 
Oscars, for example, without observing the influence of Latin 
American culture here in the United States. Issues such as 
immigration, international education and adoptions, and 
humanitarian work have created strong links between the United 
States and the other nations in the hemisphere.
    As America looks around the world for friends and allies, 
we are wise to look in the neighborhood of the Western 
Hemisphere, and do more to strengthen these ties. This is a 
region of great opportunity during an important time 
historically, but it is also a region with challenges. Some of 
our neighbors appear to be taking steps back from their 
commitments to democracy and the rule of law. Cuba is still not 
a free society. Certain laws of concern are being considered in 
Venezuela, and Nicaragua's progress against corruption and 
destroying weapons left over from the civil war is in jeopardy. 
Haiti continues to face huge challenges, from natural 
disasters, to security concerns, to economic strife.
    Economically the region's performance has improved along 
with the U.S. economy, but the challenges remain. Latin America 
has the largest income disparities of any world region, an 
issue which has given rise to ever more populist leaders. 
Protection of intellectual property rights remains a concern, 
and over half of Latin Americans, in a recent survey, said they 
would choose an authoritarian leader over a democratic one if 
it would solve their economic problems.
    Despite the best of intentions, our relations with the 
countries of this region are not as good as they could be. The 
war on terror has necessitated our attention elsewhere in the 
world, and anti-United States rhetoric and sentiments are, 
unfortunately, evident in many parts of Latin America as well 
as elsewhere in the world.
    This budget advances American foreign policy goals in the 
Western Hemisphere in a number of ways. The budget maintains 
funding for the Andean Counterdrug Initiative which supports 
Plan Colombia as well as counternarcotics efforts in the 
countries that border Colombia, so as to prevent gains in 
Colombia from being offset by losses in Peru, Bolivia, 
Ecuador--the balloon effect that we have heard about and talked 
about and focused on.
    In many ways the results in Colombia speak for themselves. 
Kidnapings are down, murders are down, the people in Colombia 
are confident once again to travel within their own country. 
Insurgent groups are feeling the pressure and are abandoning 
their weapons and their dangerous ways of life.
    The ACI represents a substantial part of the budget, and it 
is not a blank check. It comes with a commitment to support 
human rights and human development. Plan Colombia expires at 
the end of this fiscal year, but our funding continues. I think 
it is important to have a road map going forward, and I look 
forward to working with the administration to put that in 
place.
    After Colombia, Haiti is the largest Western Hemisphere 
recipient of foreign aid in this budget. Haiti, our close 
neighbor to the south, is beginning a pivotal year as it 
progresses toward democratic elections in November. This budget 
would shift much of our assistance to Haiti to the Office of 
Transition Initiatives at USAID. This funding is designed to 
create job opportunities, implement justice sector reforms, 
ensure free and fair elections, and support reconciliation 
throughout the country. I look forward to the comments of our 
witnesses with regard to the issue of assistance for Haiti.
    The President's budget doubles funding for the Millennium 
Challenge Account. This innovative approach to foreign 
assistance stresses good governance, economic reform, and 
investing in people. For 2004, three Latin American countries 
are eligible for MCA assistance, with two additional countries 
being eligible in 2005. We look forward to the signing of MCA 
country compacts and disbursals of aid for this valuable 
program.
    This budget supports democracy throughout the hemisphere, 
including in Cuba. Throughout the region, this budget proposes 
$144 million in Economic Support Funds (ESF), much of which 
will support the consolidation of democracy through judicial 
reform, anticorruption initiatives, education and economic 
opportunities. The budget recognizes the democratic strides 
made in Guatemala by proposing the resumption of a tiny amount 
of military assistance after a 15-year hiatus.
    Even as we pursue these lofty goals, the budget will 
provide assistance to vulnerable populations in the Americas. 
The budget designates some $125 million in child survival 
funding and $224 million in development assistance for Latin 
America. Of the President's $3.2 billion request for global 
AIDS, Haiti and Guyana would receive some $68 million. American 
farmers will continue to provide food assistance to millions of 
at-risk individuals in the Americas, and the United States will 
continue to lend a helping hand in times of emergency as we 
have done recently in Grenada and Venezuela.
    Another way America demonstrates its commitment to global 
engagement is through the Peace Corps. The Peace Corps is a 
unique institution that harnesses the American spirit for the 
twin goals of supporting international development and showing 
the true face of America overseas. Writing in the December 2004 
edition of the Foreign Service Journal, former U.S. Ambassador 
Tibor Nagy observes, ``During my long overseas service, I 
consistently met two categories of people who were highly 
favorable toward our country: Those who had close contact with 
the Peace Corps volunteers, and those who had studied in the 
United States.''
    This week as we celebrate the 44th anniversary of the Peace 
Corps, I'm pleased that the President's budget calls for a $27 
million increase for the Peace Corps. This funding will enable 
the Corps to expand into two additional countries. At the same 
time, we must acknowledge that during each of the last several 
years, Congress has failed to fully fund the President's 
request for the Peace Corps. While the small increases we have 
passed are, no doubt, welcome, they have not been enough to 
bring to reality the President's vision of doubling the size of 
the Peace Corps, particularly as the costs per volunteer are 
climbing in the areas of safety, security, and health care. I 
hope this year we, in Congress, will fully fund the President's 
request for the Peace Corps.
    As Americans, we are blessed to live in the greatest nation 
on earth. There are times and places where America must 
exercise its military might, recently in Iraq and Afghanistan. 
Sometimes great sacrifice is required. Last week, we, in 
Minnesota, received the news that three Minnesota National 
Guardsmen were killed in Iraq. The news shook my State and 
caused all of us to reflect on what their sacrifice has been 
for. I attended the funeral of one of those servicemen 
yesterday in Marshall, MN. But as we consider the free 
elections and new leaders in Iraq, Afghanistan, and the 
Palestinian territories, and as the ripple effect spreads to 
Egypt, Saudi Arabia, and Lebanon, it is clear to me that these 
sacrifices were not made in vain.
    At the same time, America has other tools for exerting our 
influence in the world and winning the war on terrorism. I've 
spoken at length about the role international exchanges can 
play in breaking down barriers that too often lead to hate. I 
would submit that the budget for foreign affairs is another way 
to win over hearts and minds around the world. The President's 
request for a 13-percent increase in foreign aid this year 
speaks volumes about America's commitment to using our ``soft 
power.'' This commitment is all the more striking in a tight 
budgetary year, and should be recognized.
    The Foreign Assistance budget contributes to the shared 
goals of supporting democratic governance, encouraging economic 
opportunity, and demonstrating compassion in the Western 
Hemisphere. It is good for America, and it is good for the 
Americas.
    We are pleased to have before the committee the two most 
foremost officials who look after American policy and American 
assistance in the Western Hemisphere, Assistant Secretary of 
State for Western Hemisphere Affairs, Roger Noriega, and 
Assistant Administrator of USAID for Latin America and the 
Caribbean, Adolfo Franco. At a certain point in time when 
Senator Dodd will be here, I will turn to him for a statement, 
but I do want to thank our witnesses for coming before us. I 
appreciate all that you do, I appreciate you being before this 
committee in the past.
    I have a great sense of optimism about the possibilities to 
strengthen the relationship between America and our neighbors 
in the Western Hemisphere. We are, quite obviously, very 
occupied with things going on in the Middle East, but for those 
who have complained that somehow we've ignored the hemisphere, 
I would argue that that's not the case. That certainly this 
chairman and ranking member of this committee, and the 
gentlemen sitting in front of us, understand the importance of 
this relationship and are working very hard to see that it's 
strengthened. I look forward to that continuing and growing 
during the course of this 109th Congress.
    With that, since my colleague Senator Dodd is not here, I 
think what we will do is hear first from Assistant Secretary of 
State for Western Hemisphere Affairs, Roger Noriega, and then 
we will hear after that from Adolfo Franco.
    Secretary Noriega.

STATEMENT OF HON. ROGER F. NORIEGA, ASSISTANT SECRETARY, BUREAU 
OF WESTERN HEMISPHERE AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, 
                               DC

    Mr. Noriega. Thank you very much, Mr. Chairman. Let me just 
say at the outset that we certainly look forward to continuing 
to work with you. I'm sure that with your leadership and 
insight and commitment to the issues, we will make the most of 
an opportunity to build even closer relations with this region 
of the world, with which we have so many important ties.
    Our policy in this region, Mr. Chairman, which is supported 
by the President's budget request, is to help countries 
consolidate and extend the democratic gains of the past two 
decades. We aim to build an inter-American community where all 
governments are not only democratic, but the people are 
genuinely free. Trade with the region is growing faster than 
with the rest of the world. At the same time, the region's 
economies grew at the fastest rate in 25 years. The challenge 
remains, however, to sustain this faster rate of growth to help 
reduce chronic poverty.
    Also, income distribution in the Western Hemisphere 
continues to be among the most skewed in the world, and 
competitiveness lacks behind other regions of the developing 
world. In this environment, we have fine-tuned our programs and 
assistance to help governments and the region deliver the 
benefits of democracy to populations that are increasingly 
impatient. We want to help our neighbors to strengthen their 
democratic institutions, and retool their economies to 
consciously extend political power and economic opportunity to 
everyone, especially the poor.
    Our policy rests on four interdependent pillars: 
Strengthening democratic institutions, promoting a prosperous 
hemisphere, investing in people, and bolstering security. Our 
policy is both a lens for analyzing the needs of the 
hemisphere, and a road map to guide our actions.
    On strengthening the democratic institutions, we have seen 
too many political crises in the region, resulting from weak, 
democratic institutions. In response, we are advancing an 
ambitious reform agenda to help extend political power, promote 
the rule of law, ensure accountability and transparency, 
guarantee basic rights, and help resolve disputes. Of course, 
in this regard we have, at the moment, some important concerns, 
for example, in Haiti, Bolivia, Nicaragua, Venezuela, and Cuba. 
Each of them represents different challenges, but what is 
constant is the need for an active U.S. policy and the means 
for carrying it out.
    On promoting prosperity in the hemisphere, the key to 
sustained economic growth is a reform agenda that further opens 
markets, encourages investment and expands free trade. In 
conjunction with this effort, we will pursue an ambitious trade 
agenda in the next 4 years. We remain committed to 
comprehensive free trade in the Americas, with our Brazilian 
partners cochairing that process.
    We will be working with Congress very soon, we hope, to 
approve a Central American-Dominican Republic Free Trade 
Agreement, and we are concluding similar pacts soon, we hope, 
with Panama and the Andean countries.
    CAFTA-DR, Mr. Chairman, presents another significant step 
in the remarkable transformation that Central America has 
undertaken toward democratic governance and free market 
economics. We can make no greater contribution to this process, 
at this time, than to secure the approval by Congress of this 
historic accord. CAFTA-DR not only will allow all parties in 
the agreement, including the United States, to increase 
prosperity through opening up of markets and increased 
investments, but it will also strengthen democracy in the 
region, encourage critical second generation economic reforms, 
and contribute to anticorruption and poverty alleviation 
efforts.
    Another pillar of our policy is investing in people. Trade 
and development go hand in hand, but governments must also 
adopt policies that spread prosperity to people from all walks 
of life. In addition, citizens are better able to claim their 
fair share of economic opportunity when their government 
invests in them, specifically in basic health and education 
services. This is a crucial component of President Bush's 
Millennium Challenge Account initiative. The MCC is currently 
negotiating agreements with three Western Hemisphere countries, 
Bolivia, Honduras, and Nicaragua. In addition, Guyana and 
Paraguay are eligible to receive threshold funding to help them 
quality for full MCA programs. We are also providing the 
Caribbean with more than $68 million from the President's HIV/
AIDS initiative, destined to assist Haiti and Guyana to 
dramatically expand prevention and treatment and to reduce, 
significantly, the prevalence of HIV in Haiti.
    On security, the focus of our assistance is to help 
countries reestablish control of their national territory, 
improve the interdiction capabilities of countries on the 
southern approaches to the United States, and to help modernize 
partner countries so their defense forces can participate in 
peacekeeping and other operations, including counterterrorism 
operations, around the world.
    The Department's requested Western Hemisphere Regional 
Security Fund will be used to help resolve territorial 
disputes, and promote conflict resolution, train security 
forces to respond to 21st century threats, and expand security 
cooperation, as well as reduce arms trafficking.
    You made specific mention of Colombia, and our assistance 
to Colombia will continue. It has made a crucial difference in 
President Uribe's fight against terrorism and narcotrafficking, 
and he is transforming Colombia in a dramatic fashion.
    Eradication of illicit crops is at record levels, as are 
interdictions and extraditions. Our goal is producing a solid 
success story that will be irreversible in Colombia and with 
its Andean neighbors. We've reduced cocoa cultivation and 
increased seizures dramatically. We're committed to sustaining 
support in Congress for our program to help President Uribe win 
the peace by defeating narcoterrorists and immobilizing illegal 
groups.
    Finally, we're attacking crime by fighting corruption. Our 
regional anticorruption funds will train law enforcement 
personnel, support legal reform, and mobilize the private 
sector through ethics pacts. As we work to implement our 
strategy in the hemisphere, we will retain our commitment to 
multilateralism.
    In 2005, two key multilateral events will help the 
hemisphere advance a common agenda. In June, the United States 
will host the OAS General Assembly in Fort Lauderdale, FL. In 
November 2005, Argentina will host the fourth Summit of the 
Americas, where the focus will be on creating sustainable jobs.
    To sustain the momentum of the past two decades, this 
administration will be a creative partner with our neighbors 
seeking to reinforce freedom and to expand opportunity. We want 
what they want, a safer and more prosperous neighborhood, where 
dictators, traffickers, and terrorists cannot thrive. We are 
optimistic because we know these goals are within our reach, as 
we work together in a spirit of mutual respect and partnership. 
Thank you very much, Mr. Chairman.
    Senator Coleman. Thank you, Secretary Noriega, I would note 
that your full statement will be entered into the record in its 
entirety.
    Mr. Noriega. Thank you, sir.
    [The prepared statement of Mr. Noriega follows:]

   Prepared Statement of Hon. Roger F. Noriega, Assistant Secretary, 
Bureau of Western Hemisphere Affairs, Department of State, Washington, 
                                   DC

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to discuss the administration's foreign assistance 
priorities for the Western Hemisphere.
    In his second inaugural address, President Bush proclaimed, ``The 
best hope for peace in our world is the expansion of freedom in all the 
world . . . Our goal . . . is to help others find their own voice, 
attain their own freedom, and make their own way.''
    Putting the President's words into action in the Western 
Hemisphere, our policy is to help countries consolidate and extend the 
democratic gains of the past two decades. We aim to build an Inter-
American community where all governments are not only democratic, but 
their people are truly free.
    U.S. trade with the region is growing faster than with the rest of 
the world. At the same time, while the region grew at its fastest rate 
in 25 years, the challenge remains to sustain this faster rate of 
growth in order to reduce chronic poverty. Income distribution in the 
hemisphere continues to be among the most skewed in the world; and 
competitiveness lags behind other developing regions. Some citizens are 
losing faith in the benefits of democracy.
    In this environment, we have fine-tuned our programs and assistance 
to help governments in the region deliver those benefits. We want to 
help our partners to strengthen their democratic institutions and 
retool their economies to extend political power and economic 
opportunity to everyone, especially the very poor.
    Our policy rests on four interdependent pillars: Strengthening 
democratic institutions, promoting a prosperous hemisphere, investing 
in people and bolstering security. Our policy is both a lens for 
analyzing the needs of the hemisphere and a roadmap to guide our 
actions.
 Strengthening Democratic Institutions
    Democracy is our priority. All citizens in the hemisphere deserve a 
voice in how their lives are governed. Moreover, many political crises 
in the region are a direct result of weak democratic institutions. In 
response, we are advancing ambitious reform agendas to help extend 
political power, promote the rule of law, ensure accountability and 
transparency, guarantee basic rights, and resolve disputes.
    In Haiti, for example, we have an exceptional opportunity to help 
the Haitian people develop the good government they have always 
deserved, but rarely had. We are encouraged that the interim government 
has set an elections timetable and that the United Nations and OAS are 
working to make that timetable a reality.
    Much of the United States foreign assistance in Haiti will improve 
the prospects for the new government that will be elected in late 2005, 
continuing the reform and training of the Haitian National Police and 
judiciary, boosting anticorruption programs, laying the groundwork for 
economic growth, and promoting human rights.
    In Bolivia, we are focused on ensuring political stability and 
maintaining constitutional democracy. A significant portion of United 
States aid to Bolivia will shore up democratic institutions there, 
through training for political parties, technical assistance to local 
governments, programs on human rights, judicial reform and 
anticorruption, and efforts to help the majority indigenous population 
play its rightful role within the democratic process.
    And in Nicaragua, United States funding will support national 
elections in 2006 by assisting with preparations and oversight. 
President Bolanos and the two major opposition parties that control the 
National Assembly are seeking agreement on a broad range of 
governability issues through a national dialog process sponsored by the 
United Nations. We are also engaged in high-level talks with the 
Government of Nicaragua on a joint plan to secure and destroy man-
portable air defense missiles (MANPADS) left over from the internal 
conflict that pose a threat to civil aviation in the region and beyond. 
Should the Bolanos government successfully compete for support through 
the MCC, these funds will spread the benefits of his development plan 
and help sustain his government.
    Venezuela has the resources it needs for its own development, but 
we are concerned that President Hugo Chavez's very personal agenda may 
undermine democratic institutions at home and among his neighbors. 
Despite our efforts to establish a normal working relationship with his 
government, Hugo Chavez continues to define himself in opposition to 
the United States. His efforts to concentrate power at home, his 
suspect relationship with destabilizing forces in the region, and his 
plans for arms purchases are causes of major concern to the Bush 
administration. We will support democratic elements in Venezuela so 
that they can continue to maintain the political space to which they 
are entitled, and we will increase awareness among Venezuela's 
neighbors of President Chavez's destabilizing acts with the expectation 
that they will join us in defending regional stability, security, and 
prosperity.
    In Cuba, the President's message to democratic reformers facing 
repression, prison, or exile is clear: ``When you stand for your 
liberty, we will stand with you.'' We are implementing the 
recommendations of the President's Commission for Assistance to a Free 
Cuba designed to hasten a democratic transition, and the regime is 
being pressured as never before. We will continue to prepare to support 
a rapid, peaceful transition to democracy. And, we will assist Cuba's 
democratic opposition and civil society as it seeks to organize itself 
for the coming transition.
 Second Pillar: Promoting a Prosperous Hemisphere
    Because U.S. purchases, investment, and remittances to the 
hemisphere dwarf U.S. aid, the key to sustained economic growth in the 
Western Hemisphere is a reform agenda that further opens economies, 
encourages investment, and expands free trade. We are urging our 
partners, therefore, to remove impediments to business creation, 
improve access to capital, strengthen property rights, and revise their 
labor laws. In this way, we can create opportunity and reduce poverty 
by expanding the ability of individuals to profit from their labor and 
creativity.
    In conjunction with this effort, we will pursue an ambitious trade 
agenda in the next 4 years. In many respects, this free trade agenda 
takes its inspiration from the success of the North American Free Trade 
Agreement; in the case of Mexico, our trade has increased 135 percent 
since NAFTA inception in 1994. We also have in place a new free trade 
agreement with Chile. In the next several months, we will be working 
with Congress to approve a Central America-Dominican Republic Free 
Trade Agreement; and we are concluding similar pacts with Panama and 
our Andean partners. We remain committed to a comprehensive Free Trade 
Agreement of the Americas, with our Brazilian cochair as a key player
    In Brazil, the personal relationship between President Bush and 
President Lula has yielded the most positive and open relations with 
Brazil in recent memory. We have a strategy for building even closer 
ties. We will reach out to engage industry and the media in support of 
the FTAA and free trade. In addition, we will orient our development 
assistance programs in Brazil to help develop small- and medium-sized 
enterprises to boost trade-led growth. And we will continue to welcome 
Brazil's cooperation on our shared regional responsibilities.
    The trade agreements we are signing don't simply create economic 
opportunity, they transform societies by encouraging the good 
governance needed to attract investment. Trade accords also require 
that countries enforce their own workers rights and environmental 
legislation.
    With your permission, I will return to the subject of the approval 
of the Central America-Dominican Republic Free Trade Agreement, or 
CAFTA-DR, which is one of the administration's highest priorities. This 
free trade agreement represents another significant step in the 
remarkable transformation that Central America has undertaken toward 
democratic governance and free market economies. We can make no greater 
contribution to this process at this time than to secure the approval 
of this historic accord. CAFTA-DR not only will allow all parties in 
the agreement, including the United States, to increase prosperity 
through the opening of markets and increased investment flows, but it 
will also strengthen democracy in the region, encourage critical second 
generation economic reforms, and contribute to anticorruption and 
poverty alleviation efforts.
    Along these lines, trade capacity building (TCB) for CAFTA-DR 
countries is integral to our implementation of the accord. In a first 
for any free trade agreement, the CAFTA-DR includes a Committee on 
Trade Capacity Building, in recognition of the importance of such 
assistance in promoting economic growth, reducing poverty, and 
adjusting to liberalized trade. We support such important work. We are 
working through environmental and labor cooperative mechanisms in 
CAFTA-DR, and in the other free trade agreements under negotiation, to 
channel assistance to improve environmental and labor conditions in our 
trading partners. In FY05, Congress appropriated nearly $20 million in 
funds for labor and environmental cooperation for CAFTA-DR countries. 
We are now working to identify the best way to utilize these resources. 
We'll also gain synergy with ongoing TCB efforts and our bilateral 
assistance in the region, which supports democratic institutions and 
anticorruption programs.
 Third Pillar: Investing in People
    Citizens are better able to claim their fair share of economic 
opportunity, when their government invests in people--specifically, in 
health and education.
    This is a crucial component of President Bush's Millennium 
Challenge Account. As you know, to be eligible for MCA funds--amounting 
to $2.5 billion for fiscal years 2004 and 2005--nations must govern 
justly, uphold the rule of law, fight corruption, open their markets, 
remove barriers to entrepreneurship, and invest in their people. By 
placing a premium on good governance and effective social investment, 
the MCA approach should help countries attract investment, compete for 
trade opportunities, and maximize the benefits of economic assistance 
funds. The MCC is currently negotiating full MCA agreements with three 
WHA countries--Bolivia, Honduras, and Nicaragua. In addition, two WHA 
countries, Guyana and Paraguay, are eligible to receive ``threshold'' 
funding to help them qualify for full MCA programs.
    Our other assistance programs likewise stress investment in people. 
We are providing the people of the Caribbean with more than $68 million 
from the President's HIV/AIDS initiative, destined to assist Haiti and 
Guyana, to dramatically expand prevention and treatment and have 
reduced significantly the prevalence of HIV in Haiti.
    We are also making quite substantial investments of Development 
Assistance and Child Survival and Health funds in several nations--more 
than $25 million per country in Bolivia, El Salvador, Honduras, 
Nicaragua, and Peru--in an effort to improve education, health care, 
and food security.
 Fourth Pillar: Bolstering Security
    We cannot strengthen democratic institutions, promote a prosperous 
hemisphere, and invest in people without bolstering security. The focus 
of our security assistance is to help countries reestablish control of 
their national territory; improve the interdiction capabilities of 
countries on the southern approaches to the United States; and help 
modernize partner countries so that their defense forces can 
participate in peacekeeping, coalition, and counterterrorism 
operations.
    The nations of the hemisphere recognize that we all share 
responsibility to protect ourselves from terrorism and the illegal 
trafficking of arms, people, and drugs. For the United States, this 
means working with Mexico to strengthen our respective borders through 
the Border Partnership Action Plan, and with Canada via the Smart 
Border Accord. In the Caribbean, we are strengthening regional security 
and protecting the southern approaches by implementing our Third Border 
Initiative as well as supporting the Enduring Friendship program. In 
both the Caribbean and Central America, we are boosting drug 
interdiction programs, advancing the establishment of entry/exit 
systems at ports of entry, conducting port and airport assessments, 
providing airport and port security and crisis training. These programs 
are funded through the Department of State and other USG agencies, and 
the OAS Counter Terrorism Committee, of which the United States is the 
largest supporter. We need to strengthen local law enforcement 
capabilities to address transnational threats.
    In Colombia, United States assistance has made a crucial difference 
in President Uribe's fight against terrorism and narcotrafficking; he 
is transforming Colombia in dramatic fashion. While the various 
terrorist organizations are still serious adversaries, as shown in 
several recent attacks, President Uribe's democratic security policy 
has the guerrillas in retreat and the overall number of terrorist 
attacks has dropped dramatically as the armed forces have expanded 
their level of operations. Eradication of illicit crops is at record 
levels as are interdictions and extraditions. Our policy is a solid 
success story, with a 33-percent reduction in coca cultivation from 
2001 to 2003. In 2004 more than 178 metric tons of coca were seized, a 
23-percent increase over 2003. We are committed to sustaining 
bipartisan support in Congress for our program to help President Uribe 
win the peace by defeating the narcoterrorists and demobilizing illegal 
groups.
    By combining eradication, interdiction, alternative development, 
and strengthening government institutions in Bolivia, Ecuador, and 
Peru, we have also helped those governments limit the spillover of drug 
cultivation. Overall, Andean regional coca cultivation declined by 16 
percent in 2003, compared to 2002. However, much still needs to be done 
to eradicate illegal coca in Bolivia and Peru, especially in the face 
of organized cocalero opposition. With Argentina, Brazil, and Paraguay, 
we are strengthening cooperation in the Tri-Border region in the 3+1 
Counter-Terrorism Dialogue.
    The Department's requested Western Hemisphere Regional Security 
Fund will be used to help resolve territorial disputes and promote 
conflict resolution, train security forces to respond to 21st century 
threats, expand security cooperation, and reduce arms trafficking.
    Finally, we are attacking crime by fighting corruption. Our 
regional anticorruption funds will train law enforcement personnel and 
support legal reform, and mobilize the private sector through ``ethics 
pacts.'' Bilateral assistance in Mexico, Central America, and the 
Andean region will increase government transparency and accountability.
    As we work to implement our strategy in the hemisphere, we will 
retain our commitment to multilateralism. Our neighbors share our 
values and interests, so we can get results through multilateral 
organizations.
    In 2005, two key multilateral events will help the hemisphere 
advance common interests. In June, the United States will host the OAS 
General Assembly in Fort Lauderdale, FL. That gathering will advance 
our agenda of delivering the benefits of democracy to ordinary 
citizens.
    In November 2005, Argentina will host the Fourth Summit of the 
Americas, where the focus will be on creating sustainable jobs through 
policies that promote more competitive economies, attract investment, 
and foster private sector-led growth--through small and medium 
enterprises in particular. We will again push for concrete commitments, 
including simplifying and expanding access to credit, so we can empower 
individuals to benefit from their own efforts.
    We have witnessed great advances of freedom and opportunity in the 
region, but we need to accelerate our progress or risk being left 
behind in the global competition for capital and trade. The Bush 
administration will be a creative partner to our neighbors seeking to 
reinforce freedom and opportunity. We already have many good-
intentioned and hard-working partners in the region.
    For the second Bush term, our objectives are the same: A safer, 
more prosperous neighborhood where dictators, traffickers, and 
terrorists cannot thrive. The hemisphere can be optimistic because we 
know these goals are within our reach, and we work together in a spirit 
of mutual respect and partnership.
    Thank you very much and I look forward to answering any questions 
you may have.

    Senator Coleman. Thank you.
    Mr. Adolfo Franco.

 STATEMENT OF HON. ADOLFO FRANCO, ASSISTANT ADMINISTRATOR FOR 
LATIN AMERICA AND THE CARIBBEAN, U.S. AGENCY FOR INTERNATIONAL 
                  DEVELOPMENT, WASHINGTON, DC

    Mr. Franco. Thank you very much, Mr. Chairman. It's a 
pleasure to appear before the Senate Committee on Foreign 
Relations to discuss how USAID's Bureau for Latin America and 
the Caribbean is implementing the President's vision for the 
hemisphere.
    At the outset, Mr. Chairman, I want you to know that I 
fully share your optimism for our region, and your eloquent 
statement is far better than anything I could present here, I 
fully share it. And I also like the phrase ``soft power'' which 
is what we are promoting at USAID on behalf of the President.
    I've submitted my complete statement for the record, Mr. 
Chairman, with your permission I'd like to summarize my 
statement here today.
    Senator Coleman. Mr. Franco, your complete statement will 
be entered into the record, without objection.
    Mr. Franco. Thank you, Mr. Chairman.
    Mr. Chairman, the essence of President Bush's policy for 
the Latin American and Caribbean region is that long-term 
economic growth and political stability are only possible if 
governments extend political power and economic opportunity to 
all of their citizens, especially the very poor. By promoting 
prosperity throughout Latin America and the Caribbean, the 
United States can provide expanded opportunities to promote a 
peaceful and democratic hemisphere, and Secretary Noriega is 
absolutely right, we want exactly what they want.
    USAID, therefore, remains committed to the promotion of the 
consolidation of democracy and improved political stability, 
advanced market-based development, and increased human well-
being for the fulfillment of human potential in our region.
    Mr. Chairman, there is good news in our region. With the 
exception of Haiti, 2004 has seen a healthy turn in the 
region's economic activity, which averaged a 5.5-percent 
growth. Of all United States exports, 40 percent were sold to 
Latin America and the Caribbean, and the United States 
continues to be the largest buyer of all of Latin America and 
the Caribbean's exports.
    However, as you have noted, Mr. Chairman, and so has 
Secretary Noriega, there is a huge income disparity in the 
region compared to the rest of the world, and the challenge 
will be to remain competitive with other regions of the world 
as we move to a further globalized economy, and therefore these 
remain monumental challenges in our region.
    Mr. Chairman, I would like to highlight some key areas of 
concern to us and to the committee. First, corruption is 
continuing to lead in terms of the crisis and challenges of the 
region, and continues to pose a threat to democracy. As you 
noted, Mr. Chairman, recent polling data is disturbing, and 
suggests that many citizens would prefer authoritarian regimes, 
that can deliver economic benefits, to democratic governments.
    Corruption is a real threat to economic development as 
well, and the growth of democratic and strong societies will be 
impossible if it is not tackled. Therefore, good governance 
will remain a top priority for the Bush administration. I think 
the President eloquently stated that vision when he spoke at 
the Development Bank 3 years ago, announcing the Millennium 
Challenge Account.
    Despite, Mr. Chairman, bold efforts by Colombia, Bolivia, 
and Peru to combat narcotrafficking, the continuing lack of 
state presence and functioning public institutions have allowed 
illegal narcotics production and armed terrorist organizations 
to continue to flourish, particularly in the Andean region.
    We also face the growing problem of global demand for 
forest products. Illegal and destructive logging remains a key 
threat to our region. It is important to underscore that Latin 
America has the largest remaining forests in the world and they 
are under increasing stress. In addition, as you noted, Mr. 
Chairman, inequalities and access to quality health services 
also present a major obstacle to achieving overall economic and 
social development in Latin America and the Caribbean which has 
the second highest prevalence rate of HIV in the world.
    To help address these challenges, USAID will continue to 
focus on four strategic program priorities. Number one, 
democracy and governance. Number two, economic prosperity and 
security. Number three, counternarcotics, and lastly, social 
and environmental development issues.
    In addition, USAID is implementing a number of President 
Bush's initiatives from the President's Emergency Plan for HIV/
AIDS Relief, to the Centers for Excellence in Teacher Training, 
to the Amazon Basin Initiative, and lastly to the Water for the 
Poor initiative, which I know, Mr. Chairman, is of great 
interest to you.
    I would like to give you some of the details of the 
priority areas I've outlined. On democracy and governance, as 
stated previously, legal and judicial reforms remain the 
highest priority for USAID governance program in the region. 
This is because corruption remains the chief obstacle to 
economic development, and to effective democratic governance 
throughout the hemisphere. USAID-supported criminal justice 
system reforms, are improving access to courts, providing more 
open and participatory processes, leading to faster resolution 
of cases, and increasing citizen confidence, and we need to 
redouble these efforts.
    On the economic, prosperity, and security front, the United 
States continues to help Latin American and Caribbean countries 
to enact legal policy and regulatory reforms that promote trade 
liberalization, hemispheric market integration, and improved 
competitiveness. USAID provided technical assistance and public 
outreach in Central America, and the Dominican Republic during 
the negotiations for the United States-Central America Free 
Trade Agreement, which was signed by five countries in Central 
America in 2004. CAFTA implementation will continue to be a 
major priority in 2006, along with increased efforts to 
negotiate other free trade agreements in the region, 
particularly the Andean region of South America.
    On the counternarcotics front, as you know, Mr. Chairman, 
narcotics trafficking leads to violence, crime, and corruption, 
and weakens governments, especially in the Andean region. To 
address this threat to democracy, the Andean counternarcotics 
initiatives have three primary goals. First, disrupt the 
production of illicit drugs. Second to strengthen law 
enforcement in the region, and third, to develop licit income 
alternatives to illegal drug production.
    Since its inception in fiscal year 2003, USAID's assistance 
to Andean governments has expanded state presence, strengthened 
democracy, created licit income streams, improved social 
conditions, and provided assistance to displaced people. And, 
as Secretary Noriega underscored, I think our assistance was 
critical to assisting the courageous government of President 
Alvaro Uribe in Colombia.
    On the social and environmental issues, Mr. Chairman, USAID 
assistance in the health sector has helped to advance cure 
rates for tuberculosis, expand vaccination coverage, reduce 
major childhood illnesses and deaths, lower maternal mortality 
rates, and develop cost-effective methods for combating malaria 
and other contagious diseases. Under the President's emergency 
plan for AIDS relief, USAID will continue to assist the two 
high-risk focus countries in our region, which are Guyana and 
Haiti, and also establish two subregional programs on HIV/AIDS 
in the Caribbean and Central America, as well as in 10 other 
countries, and I'm also working personally very closely with 
the business community, both United States and international in 
the region to establish business councils to promote HIV 
training, education programs, and treatment.
    USAID education programs also continue to develop effective 
service delivery models that provide promise to people's lives 
in the future, for young people to have training, particularly 
on the technical and IT areas, which have been lacking in our 
region. We support monitoring student performance, better 
information systems for ministries of education, and special 
training for young adults to compete in the workforce. I wish 
to note that we have an enormously large youth population in 
this region, and this is of concern to the President, I know 
he'll discuss it at the Summit in November, we need to create 
future jobs for this growing population in our region.
    USAID also implements a wide array of environmental 
programs that respond to the President's priorities to protect 
and conserve the region's natural resource base and 
biodiversity by reducing environmental hazards, and increasing 
the management of, and access to, clean water in the region. A 
major strategy will be launched this year to further expand our 
efforts in biodiversity conservation, particularly in the 
Amazon basin countries.
    In conclusion, Mr. Chairman, the programs I have mentioned 
offer you an insight into the steep development challenge that 
the countries of our hemisphere face. I, as you, remain 
optimistic though, that with the leadership and vision of 
President Bush, Secretary Rice, and Administrator Natsios, we 
are setting a new standard, particularly on the corruption and 
good governance front that will instill a deserved sense of 
security, opportunity, and prosperity for all Latin Americans 
and Caribbeans.
    I would be pleased to answer any questions that you or the 
distinguished members of the committee might have for me. Thank 
you very much.
    [The prepared statement of Mr. Franco follows:]

 Prepared Statement of Hon. Adolfo A. Franco, Assistant Administrator, 
      Bureau for Latin America and the Caribbean, U.S. Agency for 
               International Development, Washington, DC

    Mr. Chairman, Members of the Committee, it gives me great 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) 
continues to promote the President's vision for the Western Hemisphere. 
The essence of President Bush's policy is that real, long-term economic 
growth and political stability are only possible if governments 
consciously extend political power and economic opportunity to 
everyone, especially the very poor. In her January 18 confirmation 
hearing before the Senate Foreign Relations Committee, Secretary of 
State Condoleezza Rice stated that the Western Hemisphere is 
``extremely critical'' to the United States. ``With our close neighbors 
in Latin America we are working to realize the vision of a fully 
democratic hemisphere bound by common values and free trade.''
    The strong economic, cultural, and geographic ties between the 
United States and the countries of the Western Hemisphere make their 
political and economic stability of vital interest to the United 
States. Approximately 40 percent of imports for LAC countries come from 
the United States, 50 percent of the region's exports ($217 billion) 
are purchased by the United States, and Latin America supplies more 
than one-third of United States energy imports. In 2003, $20 billion of 
U.S. private investment was made in the region, and according to the 
Inter-American Development Bank May 2004 report, an estimated $30 
billion in remittances were expected to flow to the region from the 
United States. Still, the people of the LAC region suffer from huge 
income disparity compared to the rest of the world, and competitiveness 
lags behind other developing regions of the world.
    The challenges remain formidable as it becomes obvious that many 
regional economies are not growing sufficiently fast to generate enough 
jobs to keep up with population growth, let alone address chronic 
poverty.
    Mexico is the largest source country for unauthorized immigration 
to the United States, and of the six other countries with more than 
100,000 unauthorized residents in the United States, five are in Latin 
America. As stated by President Bush in November 2004, ``In this 
century, countries benefit from healthy, prosperous, confident 
partners. Weak and troubled nations export their ills--problems like 
economic instability and illegal immigration and crime and terrorism. . 
. . Healthy and prosperous nations export and import goods and services 
that help to stabilize regions.''
    The challenge ahead for the LAC region is to produce more 
sustainable, equitable growth, and develop diversified, broad-based 
economies if U.S. assistance is expected to make a substantial 
difference in reducing poverty. To this end, the United States can 
provide expanded opportunities that promote a peaceful and democratic 
hemisphere.
    There is growing consensus that corruption is leading to a crisis 
for democracy in this region. Corruption is not only a consequence of 
weak governance, but is a barrier to economic development and growth of 
democratic and strong societies. The Center for Strategic and 
International Studies reported in 2003 that a corrupt or inefficient 
justice sector can slow economic development, undermine the strength 
and credibility of democratic institutions, and erode the social 
capital necessary for increased human well-being and the fulfillment of 
human potential.
    Further, research by the World Bank shows that countries that 
effectively address corruption and improve the rule of law can increase 
their national incomes by four-fold over the long term, and child 
mortality can fall as much as 75 percent.
    Both policymakers and the public are growing more aware that 
corruption has significantly increased. A 2003 survey by the World 
Economic Forum of business leaders in 102 countries found that 7 of the 
10 countries with consistently high measures of political corruption 
are in Latin America. Growing awareness of corruption has influenced 
the rhetoric of politicians, and many officials have won elections by 
promising to fight corruption. Similarly, civic organizations and the 
media are increasingly promoting transparency, lobbying for reforms, 
and informing citizens.
    LAC countries have adopted a wide range of legal, accounting, and 
auditing procedures to combat corruption, and some are prosecuting 
corrupt public officials. The pervasive nature of high-level corruption 
across the region makes prosecution and punishment imperative.
    In December 2003, former Nicaraguan President Arnoldo Aleman was 
sentenced to 20 years in prison for corruption. Accused of helping to 
divert nearly $100 million of state funds into his party's election 
campaign and found guilty of money laundering, fraud, embezzlement, and 
electoral crimes. Aleman has been released from prison to serve his 
sentence in his home, where he continues to negotiate political deals 
that could result in reversing his conviction.
    In January 2004, prosecutors in Guatemala initiated a formal 
investigation of embezzlement charges against former President Alfonso 
Portillo, as well as his Vice President, Finance Minister, and three 
other top officials, who are now in jail. Former Costa Rican President 
Miguel Angel Rodriguez resigned as secretary general of the 
Organization of American States in October 2004. This action followed 
allegations of corruption against Rodriguez, who is presently under 
house arrest. And, in Paraguay, six Supreme Court justices charged with 
corruption were impeached and replaced in 2004, and judges selected in 
an open and transparent process for the first time in Paraguayan 
history.
    Just and effective legal systems increase government credibility 
amid its citizens and bolster support for democratic institutions. The 
2004 United Nations Development Program Report on Democracy in Latin 
America drew attention to declining public faith in democracy due to 
persistent poverty and governments' inability to effectively deliver 
public services, including security. In addition, countries with more 
effective and equitable justice systems provide more stable and 
attractive investment environments by offering legal protections for 
investors.
    Although LAC countries have made strides to adopt procedures to 
make criminal justice more transparent, efficient, and participatory, 
much remains to be done to fully implement these reforms and provide 
access to justice for all. Crime and organized gangs, fueled by a 
combination of population density and resource conflict, rapid 
urbanization (World Bank estimates that 58 percent of Latin Americans 
live in urban areas), and persistent income inequality, present a 
growing problem that places further stress on democratic institutions. 
A study by the Inter-American Development Bank notes that Latin 
America's per capita gross domestic product would be 25 percent higher 
today if the region had a crime rate similar to the rest of the world.
    Free and fair elections have become the norm in the LAC region. 
However, Haiti's fraudulent parliamentary elections in 2000 led to a 
protracted political impasse characterized by arbitrary and 
authoritarian rule, lawlessness, and violence. The impasse ended in 
2004 with the resignation of President Aristide. To demonstrate 
commitment to advance and consolidate democracy, alleviate poverty, and 
restore stability in Haiti, the donor community pledged more than $1 
billion in short-term assistance to the interim Government of Haiti. 
That available funds are being utilized at a significantly slower than 
envisioned rate is indicative of Haiti's weak public institutions, 
unskilled workforce, and insecure working environment--hallmarks of a 
fragile state.
    Despite bold efforts by Colombia, Bolivia, and Peru to combat 
narcotrafficking, the continuing lack of state presence and weak 
institutions in some areas allow illegal narcotics production and armed 
terrorist organizations to operate. Profits from narcotics offer large 
trafficking organizations the means to corrupt and undermine legitimate 
governments, and the lack of effective rule of law threatens business 
interests and puts citizens and Americans at risk.
    Economic growth in LAC reached 5.5 percent in 2004 (according to a 
preliminary estimate by the Economic Commission for Latin America and 
the Caribbean), outperforming the most optimistic forecasts. With the 
exception of Haiti (where GDP fell 3.0 percent), every country in the 
region posted positive growth. This growth is a reflection of improved 
macroeconomic policies throughout the region, including fiscal 
consolidation and prudent monetary management. As a result, the 
countries in the region were able to reverse the trend where GDP has 
grown, on average, by a paltry 2.0 percent annually for the last 9 
years.
    The region's macroeconomic performance is closely tied to the 
international economy. World economic activity increased in 2004 and 
global GDP is expected to grow just under 4.0 percent (up from 2.6 
percent in 2003), while world trade is expected to grow more than 9.0 
percent. This international environment, especially rising prices for 
oil, metals, and agricultural commodities, also boosted the terms of 
trade in LAC. In 2003 the region marked its first balance of payments 
surplus in 50 years, and posted a surplus again in 2004. Importantly, 
this surplus is not only a reflection of high commodity prices, with 
export volumes rising an estimated 11 percent last year, but also 
improved terms of trade and migrant remittances, which rose 16.8 
percent over 2003 levels.
    Significant challenges remain, however, to lock in this higher rate 
of economic growth and reduce poverty. These include putting in place 
the macroeconomic reforms needed to boost competitiveness and 
productivity growth. Nearly 128 million people (about 25 percent of the 
region's population) earn less than $2 per day and 50 million people 
earn less than $1 per day. The urban unemployment rate has hovered 
around 10 percent for the last several years. External debt for the 
region remains a concern; since the mid-1990s, external debt as a share 
of GDP has risen from a low of 35 percent in 1996 to 43.9 percent in 
2003. Although the IMF estimates external debt fell to 38.4 percent in 
2004 on the back of strong fiscal performances, this level of debt is 
still too high. This indicator was highest for Guyana (202 percent), 
Nicaragua (162 percent), Argentina (130 percent), and Belize (90 
percent).
    Spurred by a growing global demand for timber and paper, illegal 
and destructive logging remains one of the key threats to the world's 
oldest forests. Illegal logging destroys forest ecosystems and 
displaces the poor, robs governments and communities of needed 
revenues, and acts as a disincentive to sustainable forest management. 
Only 0.5 percent of all forests are under ecologically sound 
management, as certified by independent international certification 
bodies.
    Inequalities in access to quality health services, especially for 
maternal and child health, present major obstacles to achieving overall 
health improvements as well as economic and social development in the 
LAC countries. HIV/AIDS prevalence is increasing across the LAC region, 
with significant increases noted between 2001 and 2003 in Belize, 
Honduras, Suriname, and Jamaica. The adult HIV/AIDS prevalence rate in 
the Caribbean is surpassed only by sub-Saharan Africa, and AIDS has 
become the leading cause of death in the Caribbean for both men and 
women aged 15-24. More than 2 million people now live with HIV in LAC 
countries. In the past year, over 250,000 people were newly infected 
with HIV and well over 140,000 people died from AIDS in 2004.
    The increased risk of transmission stems from social patterns of 
early sexual initiation and multiple partners, as well as stigma and 
discrimination, which keep the disease underground and discourage 
people from seeking testing and treatment. This poses a serious threat 
for the security and health of the United States, given the high 
mobility of LAC populations regionwide for employment, education, and 
tourism.
    The quality of primary and secondary education in LAC countries is 
poor. In a recent study by the Organization for Economic Cooperation 
and Development of math and science skills among 15-year-olds in 43 
countries, the 5 participating LAC countries ranked among the lowest. 
The majority of students attends weak and underfunded schools, and 
fails to acquire basic skills in mathematics, language, and science. 
Educational systems lack adequate financing, which translates into 
poorly trained and motivated teachers and a shortage of materials.
    Rural and poor populations, the majority in most LAC countries, 
face many obstacles--language barriers, long distances to schools, and 
poorly trained teachers--resulting in very high dropout rates. Fewer 
than 30 percent of students in the region complete secondary school, 
and many who do finish lack the skills to compete in the workplace, 
especially in an increasingly competitive global economy.

                        U.S. NATIONAL INTERESTS

    As outlined in the U.S. National Security Strategy of September 
2002, and the joint State-USAID 2004-2009 Strategic Plan, USAID's 
overarching goal is to advance sustainable development and global 
interests.
    In LAC, the four top strategic priorities are: (1) To advance 
democracy and human rights; (2) to increase economic prosperity and 
security; (3) to combat narcotics trafficking; and (4) to address 
social and environmental issues. These strategic priorities give 
paramount importance to the implementation of policies that address the 
key constraints to development.

               USAID OPERATIONAL GOALS FOR THE LAC REGION

    USAID's challenge in the LAC region is to continue to assist with 
building a hemispheric community where all governments are not only 
democratic, but their people are truly free. Within this environment 
USAID continues to target its scarce development assistance resources 
mainly to those countries that are making the difficult decisions to 
help themselves. We want to help our partners to retool their economies 
to take advantage of the new trade opportunities, to strengthen their 
social and political institutions through greater investments in health 
and education, and to encourage responsible policies and effective 
government.
    The LAC Bureau determines strategic priorities for transformational 
development countries (all of the 16 USAID presence countries except 
Haiti and Colombia--both grouped as strategic states) according to 
their performance against Millennium Challenge Account (MCA) indicators 
that reflect effective governance, economic growth, and investment in 
people. In low-income (MCA eligible) countries where there is political 
will and commitment to address the performance gaps, USAID's programs 
are designed to improve country performance to meet the MCA assistance 
criteria.
    Three countries from our own hemisphere were among the first 16 to 
be declared eligible for MCA assistance: Bolivia, Honduras, and 
Nicaragua. Two additional countries were recently selected as ``MCA 
threshold countries'' for fiscal year 2005: Guyana and Paraguay. These 
countries will receive USAID assistance aimed at helping them achieve 
full eligibility.
    In both the low- and middle-income countries, USAID is 
strengthening the skills of host country government institutions and 
local organizations to address MCA performance gaps and ensure 
sustainability of development progress, as well as addressing global 
and transnational issues such as HIV/AIDS, conservation of biological 
diversity and global climate change, trafficking in people, direct 
support for trade agreements, and counternarcotics.
    In Haiti, a top hemispheric priority country, USAID's core program 
focuses on humanitarian assistance and support to the interim 
government in its efforts to reestablish political stability and 
improve economic performance, implement justice and police reform, and 
hold free and fair elections. To implement these activities, USAID is 
requesting additional resources from the planned Transition Initiative 
Appropriations account to fund the creation of short-term employment, 
environmentally sound agricultural production, improving access to 
microfinance, primary education, justice, human rights protection, and 
civil society strengthening. The USAID program in Colombia, another 
Presidential priority country, is designed to attack narcotics 
trafficking. Other strategic program goals in the region include 
implementation of the Peru/Ecuador Peace Accords, bolstering security 
in the Caribbean and building international solidarity for human rights 
activists, especially strengthening the voice to Cuba's independent 
journalists.
    In the Caribbean, USAID provides significant humanitarian 
assistance to countries recovering from several hurricanes and tropical 
storms which caused significant human suffering and economic loss in 
September 2004. Grenada, Haiti, and Jamaica were particularly hard hit. 
Following the disaster relief phase, the economic recovery program has 
drawn on lessons learned from post-Hurricane Mitch reconstruction 
efforts in Central America to implement community infrastructure 
rehabilitation and economic revitalization, including targeted 
assistance to particularly damaged economically important sectors, such 
as the tourism, agriculture, and fishing industries to create 
employment and revitalize economic growth.

                        DEMOCRACY AND GOVERNANCE

    Justice sector modernization remains the largest focus of USAID 
governance programs in the LAC region. USAID is advancing criminal 
justice reforms, strengthening judicial independence, expanding access 
to justice, and improving administration of justice. Criminal justice 
system reforms developed and enacted over the last decade are making an 
impact through improved access to courts; more transparent, efficient, 
and participatory processes; faster resolution of cases; and increased 
citizen confidence in the integrity of the process.
    USAID has also made significant progress to provide alternative 
case resolution mechanisms, including the establishment of 61 mediation 
centers in eight countries. In addition, 61 community justice centers 
bring together a variety of justice-related institutions and services 
in a single location, often in areas where no access was previously 
available to justice. USAID plans to make operational 15 additional 
mediation centers and 15 additional justice centers by the end of 2006. 
These and other justice reform efforts will reduce the time to process 
cases in eight target countries by an additional 20 percent by the end 
of 2006 (for Bolivia, Dominican Republic, Ecuador, El Salvador, 
Guatemala, Honduras, Nicaragua, and Peru). New efforts in justice 
reform will target crime prevention and commercial codes.
    USAID's governance programs promote accountability and transparency 
in national and local government institutions, strengthen civic 
organizations to advocate for citizens' rights, and increase the skills 
of national and local governments to manage resources and provide 
services. We can see the results of electoral reform in Honduras, where 
for the first time in history, citizens were able to vote directly for 
representatives, rather than for a party slate. Anticorruption 
programs, such as establishment of transparent management and 
recordkeeping systems or auditing agencies, improve citizen oversight 
and build local capacity to address issues of weak governance, 
entrenched political institutions, and poor public sector management.
    USAID investments, since 1990, have encouraged adoption of 
national-level integrated financial management systems by all USAID 
presence countries in LAC, bringing transparency to national budgets 
for the first time. USAID, plays an active role in anticorruption 
efforts. At the local level, technical assistance and training for 
municipal leaders improves coverage of basic public services and 
infrastructure, transparent financial administration, and public 
participation in decisionmaking.
    USAID collaborates with U.S. Government agencies in planning and 
managing the biennial Global Forum against Corruption, and convenes the 
Donor Consultative Group for Latin America and the Caribbean. The 
Agency advises the State Department in the work of the committee of 
experts for the implementation mechanism of the Inter-American 
Convention Against Corruption by involving USAID missions and civil 
society in the review process.

                    ECONOMIC PROSPERITY AND SECURITY

    USAID is assisting LAC countries to enact legal, policy, and 
regulatory reforms that promote trade liberalization, hemispheric 
market integration, competitiveness, and investment. USAID was 
instrumental in providing technical assistance and public outreach in 
Central America and the Dominican Republic during negotiations for the 
United States-Central America Free Trade Agreement (CAFTA), which was 
signed by five countries in 2004. USAID continues to help countries 
meet new standards for rules of trade, such as customs and rules of 
origin, sanitary and phytosanitary measures (animal and plant health 
and food safety), and intellectual property rights. In addition, USAID 
assistance helps smaller economies benefit from a global trading system 
by addressing longer term challenges, such as rural economic 
diversification and small and medium enterprise development and 
competitiveness.
    Implementation of CAFTA will continue to be a major priority in 
2006, along with increased efforts to negotiate other free trade 
agreements, including a United States-Andean Free Trade Agreement. 
USAID will continue to play a vital role with the United States Trade 
Representative and partners in the Andean region in trade negotiations 
with Colombia, Ecuador, and Peru. Our work related to CAFTA and in the 
Andean region is expanding as we partner with different governments, 
producers, associations, nonprofit organizations, think tanks and 
especially corporations to promote an enlightened dialog about the role 
trade can play in stimulating economic growth.
    USAID will continue to support development of regulatory frameworks 
and innovative approaches to widen and deepen financial intermediation 
in the small and microenterprise sector to give marginalized business 
people greater access to borrowing capital. USAID plans to train an 
additional 10,000 people across the region in trade-related areas in 
2006. USAID is also supporting cutting edge efforts to increase the 
developmental impact of remittances, which were estimated at $38 
billion in 2003--more than all other development assistance combined.

                        ANDEAN COUNTERNARCOTICS

    Narcotics trafficking, guerrilla and paramilitary violence, human 
rights abuses, corruption, crime, and a lack of effective government 
presence in the coca-growing areas in the Andes pose a threat to 
democracy in the region.
    The Andean Counternarcotics Initiative has three goals: (1) Disrupt 
the production and trafficking of illicit drugs in the Andean region; 
(2) strengthen law enforcement and judicial institutions that combat 
narcotrafficking; and (3) develop viable alternatives to illegal drug 
production. Working in partnership with the leadership in the Andean 
region, USAID's assistance has helped to expand state presence, 
strengthen democracy, create licit economic opportunities, improve 
social conditions, and provide assistance to internally displaced 
people. For example, in Peru from 1995 to 2001, the alternative 
development program contributed to a 75-percent reduction in the 
hectares under illicit coca. Today, the legal agricultural economy in 
the coca growing regions is larger than the coca economy.
    In his remarks at an international donors' conference for Colombia 
held February 3-4, 2005, in Cartagena, Colombia, USAID Administrator 
Andrew Natsios noted the Government of Colombia's political will and 
commitment to coca eradication and asserted that the global community, 
by working together, can provide the appropriate types and levels of 
assistance Colombia needs to end the drug trade and strengthen 
``legitimate'' state institutions in a manner that protects the rights 
and freedoms of its citizens. He added that the United States will 
continue to provide assistance on alternative development programs to 
expand opportunities for social, economic, and democratic progress by 
farmers ``caught up in illicit drug cultivation.''

                    SOCIAL AND ENVIRONMENTAL ISSUES

    USAID programs in the health sector are improving access to and 
quality of health services offered by both private and public sector 
care providers. USAID assistance has directly contributed to important 
advances in detection and cure rates for tuberculosis, significantly 
raised vaccination coverage rates, and helped reduce or eliminate major 
childhood illnesses, such as measles in LAC countries. While progress 
is being made to lower maternal mortality and apply proven, cost-
effective methods to combat malaria and other contagious diseases, 
infection rates remain unacceptably high.
    In the LAC region, the HIV/AIDS epidemic is largely concentrated in 
high-risk populations. Under President Bush's Emergency Plan for AIDS 
Relief (PEPFAR), USAID assists in two focus countries (Guyana and 
Haiti), subregional programs in the Caribbean and Central America, and 
12 nonfocus countries. These 12 ``nonfocus'' programs are extremely 
important in combating the epidemic since they not only cover non-USAID 
presence countries (such as Costa Rica, Belize, and nine Eastern 
Caribbean countries), and Panama, but they also engender economies of 
scale in cross-border initiatives. For example, the Central America 
program saves money by negotiating regional prices for media programs 
across Central America.
    In addition, these programs ensure effective collaboration with and 
among regional bodies working to fight HIV/AIDS. In the Caribbean, for 
example, USAID helps support the Caribbean Epidemiology Centre in its 
HIV/AIDS surveillance activities, and PANCAP (Pan-Caribbean AIDS 
Program), which was the first regional program to receive a Global Fund 
grant. Regional programs are also effective at leveraging other donor 
resources. In the past 2 years the Guatemala-Central America Program 
has leveraged 7.6 million Euros from the Germans (KFW) and an $8 
million World Bank grant to complement USAID regional program efforts.
    Across the LAC region, USAID activities have resulted in a 
significant decrease in risky behavior and an increase in protective 
behavior, a substantial increase in access to treatment and diagnosis, 
and a marked improvement in the quality of care and support available 
for people living with HIV/AIDS.
    USAID education and training programs develop innovative and more 
effective service delivery models, many of which are being expanded by 
host governments and multilateral development banks. USAID programs 
support the following: Improved testing and student assessment; 
development of school-level report cards; management information 
systems to help Ministries of Education make targeted investments in 
low-performing schools; and greater parental and community involvement 
in education.
    In direct response to the poor quality of primary and secondary 
educational structures in LAC countries, USAID will train an additional 
5,500 teachers and administrators in 2005 and 2006 through the Centers 
of Excellence for Teacher Training (CETT), a Presidential Initiative to 
improve the quality of reading instruction in the 1st through 3rd 
grades. USAID also supports advancements in workforce training and 
higher education to help young adults prepare to enter the workforce.
    USAID's environment programs protect the region's natural resource 
base and biodiversity, and reduce environmental hazards. As part of the 
Global Climate Change Initiative, USAID strives to improve land use and 
management of scarce biological resources, and promote the transfer and 
wider adoption of clean energy technologies. Through the Initiative 
Against Illegal Logging, USAID attempts to reverse the sale and export 
of illegally harvested timber products and assist countries to 
establish and strengthen enforcement of laws related to forest 
management, strengthen protected areas management, and promote good 
business practices, transparent markets, and legal trade. Under the 
Clean Energy Initiative in Mexico, USAID supports clean energy 
production and promote energy efficiency concepts to selected 
municipalities.
    USAID is also continuing efforts to improve the management of water 
resources and accelerate access to clean water in support of the Water 
for the Poor Initiative. A regional strategy for biodiversity 
conservation in the countries comprising the Amazon Basin will improve 
the capacity of indigenous communities and local law enforcement 
agencies to protect the biodiversity of indigenous peoples' reserves. 
As part of the work USAID conducts in this sector, an additional 1.5 
million hectares (bringing the total to 19.5 million) will be under 
improved management for biodiversity conservation and an additional 5.3 
million hectares (for a total of 23.5 million hectares) will be under 
increased protection and sustainable management of forest ecosystems by 
the end of 2006.

                MANAGEMENT EFFICIENCY AND EFFECTIVENESS

    To improve management efficiency and ensure that operating expense 
and staff allocations respond to priorities, the LAC Bureau has 
undertaken Mission Management Assessments in all 16 missions. These 
assessments have helped the Bureau streamline management support 
operations, focus program portfolios, reduce management units, identify 
efficiencies in procurement, and broaden the functions of its regional 
platforms throughout the region. The LAC Bureau continues to work on 
finalizing the regional services platforms for Central and South 
America. The bureau is defining core staff requirements (technical and 
management support) for small-, medium-, and full-sized missions, and 
redefining the roles of U.S. direct hire staff, as well as the 
missions' program delivery models.
    The Program Assessment Rating Tool (PART), a component of the 
President's Management Agenda, focuses on assessing whether goals, 
indicators, and targets are in place and used to determine whether a 
program achieves results. The original assessment found that while 
strategic planning and performance evaluation were effective at the 
level of USAID's individual operating units (the 16 country programs), 
the LAC Bureau could not assess regional level progress due to the lack 
of regional performance measures and targets. To facilitate regional 
performance monitoring, the LAC Bureau in collaboration with the Office 
of Management and Budget undertook an extensive effort in 2004 to 
develop a set of contextual and regional indicators that would provide 
valuable performance information to managers in the field and in 
Washington. The Bureau's long-term goals are now supported by annual 
outcome and/or output-related regional performance measures which the 
Bureau will use to assess program progress.

                              OTHER DONORS

    Official development assistance across the LAC region by all donors 
totaled just over $5.2 billion in 2002 (latest available figures 
compiled by the OECD). Bilateral donors accounted for about 86 percent 
of this assistance and multilateral donors the remaining 14 percent. 
The largest multilateral donor is the European Commission, followed by 
the International Development Association and the Inter-American 
Development Bank.
    The United States has been the largest bilateral donor since 2001, 
topping Japan, which was the largest donor for 6 years prior to 2001. 
United States assistance in 2002 totaled more than $1.2 billion in 
grant funds, followed by Japan and Spain. Germany, the Netherlands, and 
the United Kingdom are also active donors in the region. According to 
OECD, nearly 60 percent of the assistance to the LAC region was geared 
toward social (health, education, water, housing, employment) 
infrastructure and services; approximately 14 percent was focused on 
economic (transportation, energy, and business development) 
infrastructure and services; and 12 percent on improved economic 
production (agriculture, industry, trade, and tourism).
    Mr. Chairman, this concludes my statement. I welcome any questions 
that you and other members of the committee may have. Thank you.

    Senator Coleman. Thank you very, very much Administrator 
Franco. I'm pleased to have with us my colleague from Florida 
who brings a personal perspective, a life experience 
perspective to U.S./Western Hemisphere relations, and I'm just 
thrilled to have him as part of this subcommittee, Senator 
Martinez.

   STATEMENT OF HON. MEL MARTINEZ, U.S. SENATOR FROM FLORIDA

    Senator Martinez. Thank you, thank you, Mr. Chairman, I 
appreciate that very much, and if I may begin by welcoming good 
friends, Secretary Noriega and Administrator Franco, what a 
pleasure it is to be with you in this setting.
    Let me just, as a matter of opening, and before any 
questions might come up, I just wanted to say a few things 
about my view of the region. First, and foremost, it is 
obviously a region of the world that has had such a close and 
long neighbor relationship with the United States, and it's one 
that we have to continue to keep a strong presence in, and a 
more vibrant presence. And I think if I hear anything 
consistently from people, in the region from those that are 
interested in Latin America, is that our foreign policy needs 
to be more focused on the region, so I would hope that in this 
President's term, and as we go to the future, that there will 
be continued and renewed revitalization and enthusiastic new 
perspectives in our very vital relation with the region.
    And, it's a region while, at the same time, having made a 
tremendous amount of progress over the last decade, many 
challenges remain, and at times we even see new challenges 
arising, so I for one, I think I will just say that I'm 
staunchly committed to the President's call for democracy, for 
freedom, for the President's call that I think ought to be 
heard far and wide, but certainly in the region that we care so 
much about.
    I believe that looking at Secretary Noriega's statement, I 
think you say it very well that this multifaceted approach, and 
I think it is correct that we should face it that way. I am 
very imbued with the great progress that President Uribe is 
making in Colombia, I think we're making headway against a very 
determined group that are more interested in the trafficking of 
narcotics than they are in lofty thoughts of freedom, 
democracy, or anything else, so I think the progress he's 
making is encouraging, it's positive, and I think what we must 
do is continue to foster that. I want to delve into that as we 
go into questions on how it's going, how we can do better to 
help President Uribe and the fledgling progress that's being 
made in Colombia, and how do we avoid allowing neighbors to 
disrupt that progress, how do we find a way that we can deal 
with the forces of the region that now seem more disruptive 
than they seem helpful?
    I'm very concerned about the continuing stridency of the 
government of Venezuela, not so much toward the United States, 
because that will come and go, but as toward some people, and 
the departure from somewhat democratic beginnings into what is 
a course that is far from democratic.
    A government cannot call itself democratic if it doesn't 
govern democratically. The first step to democracy is the 
election, what really proves out to be a democratic regime is 
the way it acts toward its own people, the way it behaves 
toward the standards, rights that we understand around the 
world to be freedom of religion, freedom of assembly, freedom 
of the press, the freedom of speech, which includes the free 
press, and then also the freedom to own property, and the 
property rights of people, so all of these things I view, are 
under challenge in Venezuela in a way that I think is 
threatening to the stability of the country.
    I am extremely concerned about the tendency of this 
government to now wish to arm itself, I'm not sure against whom 
or for what purpose, but arms purchases in this region will 
only be destabilizing, will only trigger an arms race, it will 
only trigger a missed opportunity for a better life for its own 
people, and I think that's misguided and wrong.
    I also am encouraged by the implementation of the 
President's policy toward a free Cuba. It is too long since the 
people of Cuba had the opportunity to see the exciting things 
that we've seen in the Middle East with elections, that we've 
seen in other parts of Latin America with elections, and I 
think that the time for Cuba to begin to join the family of 
nations is upon us. But I think the President's policies are 
wise, I think those things that would derail the success of 
that policy or I think are misguided and wrong, I think the 
President put together a comprehensive approach to Cuba, a 
strategic vision for how we bring the country to democracy, and 
it uses several key ingredients as strategies for that, and I 
think that one of those, obviously, is information.
    I'm always encouraged when I hear the subjugated people of 
Eastern Europe, now having an opportunity to be free, how they 
do not talk about tourist travel and they do not talk about 
agricultural sales making a difference in their lives or 
freeing them from the subjugation of communism, but they do 
consistently talk about Radio Free Europe, and how hearing a 
message of hope, knowing that they were not alone in the world, 
somehow made their prison, made their imprisonment, made their 
oppression somehow more tolerable because they knew they were 
not alone. That same power of communication can be achieved 
with an effective radio and TVMRT, and I've been looking 
forward to some specifics on that effort. I think also a 
continuation of our current policies in Cuba will allow us to 
continue what we've seen as a very effective policy since May, 
when it began.
    I think, also being from Florida, we have to be very 
concerned about Haiti, looking for stability and progress there 
so the people of Haiti can have a better life and so that the 
stability of their government can be enhanced.
    But, also on a more positive note, I think we also need to 
look forward to the great success that we've had with NAFTA, 
the potential for CAFTA, and I think that other initiatives 
that would encourage and enhance the possibilities of commerce, 
of grade, of agreements that bring hope to people, that bring 
jobs to the region, we're very encouraged in Florida, and very 
hopeful that the free trade zone of the Americas will be housed 
in Miami, which I believe to be the trade and commerce capital 
of Latin America, so anyway, we're very excited and hopeful 
about that, and look forward to that.
    So, with those comments, Mr. Chairman, thank you for 
allowing me, and I'll be happy to get into some questions.
    Senator Coleman. Thank you, Senator Martinez, it's a great 
pleasure to have you as part of this committee. Let me turn to 
your colleague, the senior Senator from Florida has arrived, 
Senator Nelson, would you like to say a few words? The 
witnesses have already given their testimony, before they are 
questioned, I'd certainly like to give you an opportunity.
    Senator Nelson. Are we the two anchors on this committee?
    Senator Coleman. And fine anchors you are, too, by the way, 
Senator.
    Senator Nelson. Well, I have visited with Mr. Noriega on 
lengthy occasions about many of these subject countries in the 
jurisdiction, and I assume that you've already discussed the 
matter of Venezuela, the matter of Haiti, and so forth, but 
I'll get into it in some of my questions.
    Senator Coleman. Thanks, Senator Nelson. Let me talk a 
little bit, we'll start with Colombia. I think it would be fair 
to speak for all of the folks here that the leadership of 
President Uribe has been very strong. We've seen many positive 
things coming out of Colombia. Colombia is in the process now 
of working out details of legislation to demobilize insurgents, 
Senator Noriega, we had a little chance in private to talk 
about this issue, but I'd like to explore it further. What's 
the role for the United States in this demobilization process?
    Mr. Noriega. Thank you very much, Mr. Chairman. We believe 
that the progress that President Uribe is making through 
agreements whereby members of the AUC, the self-defense units, 
are stacking weapons, demobilizing themselves, taking 
themselves off the battlefield is an important part of his 
strategy and policy and is a fruit of our commitment. We need 
to make the most of this, because it's taking people out of the 
conflict. It demonstrates that his policy of imposing a rule of 
law and making significant investments in the security side, is 
producing dramatic results. And so our role in supporting 
demobilization is literally helping secure the peace.
    It has to be done in a responsible, careful way. We know, 
for example, that the AUC, as well as the others, is deeply 
involved in drug trafficking. We want to make sure that as 
people are demobilized by the Colombian Government that there's 
an accountability, and an integrated and responsible policy 
that actually dismantles these groups, these blocks of 
fighters. So I think that it is important that there be a 
juridical framework for that. President Uribe and his team have 
presented to Congress in Colombia, a proposal on justice and 
reconciliation and we need to encourage them to work with their 
Congress to come up with a credible process that holds people 
accountable. In particular, one that never extends an amnesty 
to the notorious violators of human rights or undermines our 
extradition arrangements.
    President Uribe has proposed that sort of draft law. It's 
being considered through good-faith, open negotiations with 
Members of the Colombian Congress. As they produce that, and 
I'm confident that they will, I think the United States will 
have more room to provide sustained substantial support to this 
demobilization process. Members of Congress of the United 
States have laid out their concerns, but I see that as a 
positive thing, because what they've laid out are certain 
conditions under which we would make a substantial commitment 
to support this demobilization effort. President Uribe, I 
think, sees that as an opportunity to get this right. If there 
is a juridical framework, it could potentially mean support, 
not only from the United States, but elsewhere in the 
international community. So I think we're going to get there.
    In the meantime, we have provided some support to a vetting 
and tracking and monitoring system that the Organization of 
American States is running. We've consulted with Congress and 
are able, now, to provide an additional $1.8 million for that 
process. Again, this is a process that is essentially a census 
of the people that are being demobilized, and tracking them to 
ensure that they stay out of the fight. So we can pay for that 
filter process, and eventually be able to provide, perhaps, 
more substantial support to actually retrain people and reenter 
them into civilian life.
    Senator Coleman. Let me go from one of the success stories, 
which I believe Colombia to be, to one of the areas of great 
concern, Haiti. Funding for Haiti has been transferred to the 
Office of Transition Initiative, OTI, both Administrator 
Franco, respond first and second, Secretary Noriega. Can you 
explain, kind of a multipart question, how is this going to 
help us with United States assistance for Haiti, there's an 
election that's scheduled by the end of the year, I'd like to 
get a sense for whether you see it coming off, what's the role 
of the OAS, do they have resources, give me a little overview 
of what's happening with Haiti, both in terms of our funding 
and how you see it being more effective, and then if you can 
give me a view of the social and political situation in Haiti, 
in particular as we look to an election, Administrator Franco?
    Mr. Franco. I'd be delighted to do so, Mr. Chairman. Let me 
just, if I could, add a couple of things on Colombia, so I can 
give you a very good, comprehensive answer. We want to get it 
right on Colombia, we've been engaged in consultations with 
Congress, we did notify the Congress last year of our intention 
to be supportive of the demobilization process, contingent on 
consultations which were ongoing.
    I think it's important since we're concerned, now, that 
Plan Colombia is coming to an end, I know you said the ACI this 
fiscal year, about our continued role in the future that by 
getting this process right, as I think we will in very short 
order, this will also be a way to get by in and support from 
the European Union and other donors, because this will be an 
expensive proposition, something that we are consulting with 
Members of Congress as we do move toward, I hope in the future, 
of providing vocational training and the other, to have 
international cooperation and financial support forthcoming for 
this effort, in addition to being the right thing on the human 
rights front.
    On the situation in Haiti, first on the OTI account and the 
mechanics of this, there is, what the administrator has 
proposed is a Transition Initiatives Account worldwide, for 
USAID, of which, for our region, for fragile and failing 
states. In our region the country that would be eligible for 
this, if it is approved by the Congress, would be Haiti in the 
amount of $30 million. So this is a proposal that a portion of 
the resources that would be made available would come from a 
new account called Transition Initiatives. In essence, what the 
difference is between Transition Initiatives and the other 
support that we give to Haiti, is that it would provide, 
notwithstanding, authority for the use of these resources.
    Why that is important in a failing state, or a fragile 
state situation as we have in Haiti, is that we have a very 
changing circumstance happening, we have long-term development 
plans for the country, but we also have many short-term needs. 
Most of the funds that are appropriated to AID are appropriated 
to specific accounts, for specific purposes that are good, but 
tie our hands, so this is a way to be responsive to the Haitian 
Government and our own foreign policy priorities in the 
country. Obviously, there is a consultation process with the 
Congress, but it does not tie the money to a specific activity 
and it gives us that additional flexibility.
    On the questions of elections, and support for elections, 
last year we provided $9.4 million for this effort, and it was 
largely through the OAS, we are in the process of the planning 
and oversight of the election for later this year that has 
taken place since last year, registration of voters, the 
resources we're requesting this year will be not only to 
continue those efforts, but also to promote an education 
campaign for voters, political party building, there are a lot 
of people interested in the process in Haiti in terms of 
running for office, political parties in the country, on the 
media campaign, to explain to voters their responsibility, 
civic responsibilities, what the elections entail, and of 
course, monitors for these elections, which will be 
international, United States and domestic, meaning local 
monitors from Haiti.
    So these are the chief activities, there's also an 
important component with Minustah, that is the name for the 
U.N. Stabilization Mission in Haiti, and the OAS to provide 
security at the polling places, and there's security prior, 
during, and after voting. So this is a very comprehensive plan 
that we have been engaged in, we work closely with the OAS with 
our mission, with the international community.
    This is an area, Mr. Chairman, because it will be an 
expensive election, this is a society that, in terms of 
election experiences does not have the track record of other 
countries in the region, and has some major obstacles, namely a 
population that is not, does not have the literacy rates and so 
forth of some of the other Latin American countries, so we are 
looking for donor support through our donor coordination group, 
particularly from the Canadians and others, and France, that 
are engaged very closely in this effort.
    Mr. Coleman. Senator Noriega, anything you want to add to 
that?
    Mr. Noriega. Yes, Mr. Chairman, I appreciate the 
opportunity. We have a long way to go in Haiti. We've had a 
very tough couple of weeks recently, and the last year, 
although we see the elements occasionally coming together and 
we see some running room ahead of us in political 
normalization, getting the economy going, getting the security 
situation going. But, we have hit some serious tough spots.
    One was last September when there was political violence 
inspired by President Aristide's engagement with the Lavalas 
settlements in the country, but also a natural disaster, 
tropical storm Jeanne, so September was a real blow.
    In the last few weeks, some of this has to do with the 
anniversary of President Aristide's departure from the country, 
some of those people taking advantage, you've seen prison break 
and some political violence, including the possibility of some 
abuses by the police, so this has been a rough spell, too. But 
I think it's good that we're here being held accountable right 
now after this tough patch, because it reminds us that this is 
going to be a long effort.
    The positive news is, I think, that the elections will give 
people hope, if they see that it's a genuine process that's 
open. So we have to provide support to democratic elements of 
the country. Security has to be improved so we have to go after 
those criminal elements and those who use political violence 
and put them back in jail. I should say, that the prison break 
had as much to do with narcotrafficking as it did anything 
else, so they have to be detained so that it restores a sense 
of security so that political leaders from across the political 
spectrum will get out and compete in the process and 
participate in a national dialog and go forward.
    So, I think we need to recover our stride there. We have an 
international commitment. There was a donor meeting last July 
where over a billion dollars was committed by the international 
community. We need to get that money moving more urgently, more 
effectively, more efficiently, and in a transparent and obvious 
way so that people see things improving in their lives. The 
United States has done an awfully good job. We initially had 
this conversation after Aristide's departure a year ago, and 
there was some question as to whether we would step up to the 
plate, and we did. The United States put $200 million toward 
this in the last year.
    But we don't have to go it alone, other key donors are 
there. The United Nations is engaged, the U.N. Security Mission 
has done a tremendous job, I must say, under difficult 
circumstances, but they have to be encouraged to be even more 
proactive and to stay engaged and step up as bad guys in the 
country try to undermine the progress that they're making.
    So, this is an integrated approach, it's very tough. The 
Haitian people deserve a good government, they've always 
deserved it, they've seldom had it, and the foundation of our 
policy is to give them that, to restore some sense of security, 
so that the economy can start to revamp. Economic assistance 
will always have to be a part of this equation, and we'll stay 
in there, and I think the international community will stay 
committed as well. But I don't want to leave you with the 
impression that it isn't going to be awfully tough.
    Senator Coleman. Thank you. I have some more questions to 
ask of you, but we are limited in time, an hour that I will 
extend a little bit in deference to my colleagues. Why don't we 
do two 5-minute rounds, first Senator Nelson and then for 
Senator Martinez and Nelson.
    Senator Nelson. Thank you, Mr. Chairman. Mr. Noriega, you 
just talked about economic assistance. Can you explain to this 
committee why you oppose Senator Mike DeWine's legislation, 
known as the HERO Act that would allow textiles from third 
parties to come into Haiti to be turned into manufactured 
garments that would then be duty free, and explain your 
opposition, in light of the fact that you supported doing the 
same thing for Africa.
    Mr. Noriega. Thank you very much, Senator Nelson. The 
administration hasn't taken a formal position on the HERO Act, 
or the other measures that have been proposed.
    Senator Nelson. It would pass in a nanosecond, if the 
administration said yes.
    Mr. Noriega. I think the concern that we have is, frankly, 
the interests of American industry, particularly in the textile 
industry as we are working in good faith with our Congress to 
get approval of other trade measures. I'm not an expert in this 
issue, but it is my understanding that the area of concern is 
the ability under the HERO proposal to use fabric and fiber 
from outside of the----
    Senator Nelson. From third countries.
    Mr. Noriega. From outside of the hemisphere.
    Senator Nelson. That's correct. Just like it's being done 
in Africa; sub-Sahara and Africa.
    Mr. Noriega. And that in the case of Haiti, this could be 
meaningful. It is perceived by our textile industry as being a 
meaningful, significant problem, and frankly we just had to 
rely on the judgment of some of our allies up here about what 
is doable in terms of that industry. That does not mean, 
Senator, that we don't see the importance of this kind of 
commercial arrangement as part of our long-term strategy in 
Haiti. During the course of this year, where we will be doing 
some very real bargaining with the Congress on trade 
legislation. There may be some opportunity for Haiti, but it 
may not take the form of the HERO proposal. But there are some 
other ideas on the table, and I can tell you, Senator, that I 
had the opportunity to discuss this at length with Deputy 
Secretary Zoellick yesterday. We spent an hour and a half on 
Haiti and this is one of the issues that he's very mindful of, 
and very sensitive to, and I think you'll find that we'll be 
prepared to engage during the course of the year.
    In the meantime, right now, before we can talk about 
meaningful advances on the commercial side of things, we need 
to make additional strides on cleaning up the port and the 
customs procedures and eventually privatizing the port, so that 
you can make space for honest commerce. Right now that is not 
the case in Haiti, so we have a way to go on that front, and 
we're working on that earnestly right now. We're putting about 
$1.7 million to the customs and----
    Senator Nelson. Well, other than cleaning up the port, 
which is clearly a step in the right direction, now what other 
things, if you want support, the building up of a garment 
industry in Haiti, for 200 years, Haiti has been a basket case, 
and it's the poorest nation in the Western Hemisphere, and it's 
going to continue to spiral downward unless the other nations 
of the Western Hemisphere get serious about it. It happens to 
affect Senator Martinez and my State probably more than any 
other, simply because we're on the receiving end, so other than 
cleaning up the port, what other, since you don't support, and 
I think you have stated the position of the administration, and 
now we have it on the record as to why you don't support 
Senator DeWine's legislation, what other things would you think 
and propose?
    Mr. Noriega. Senator, what I've noted, what we do in terms 
of improving the security situation, and supporting the rule of 
law in Haiti, in the energy area, getting power, reliable 
sources of energy is also good for the private sector. USAID 
has given a terrific emphasis on microenterprise and come 
public works activities to generate economic activity. Haitians 
are good workers, and I'm convinced under the right conditions, 
the private sector will go in there without additional trade 
benefits. But we have to get to a certain stability and improve 
the security situation and transparency so people can get their 
product in and out of their country in a reliable way before 
you'll see room for a lot of commercial activity.
    I don't want to suggest that anyone give up on the trade 
side of this, because, as I noted, it is something that is very 
much on our mind, and it is something that we could do at the 
appropriate time. But again the intricacy of moving trade 
legislation up here does play into this.
    Senator Coleman. I noted that Administrator Franco wanted 
to respond. Please, go ahead.
    Mr. Franco. Senator, if I could, I shared the concern about 
invigorating, I don't want to say reinvigorating, but 
invigorating for the first time, commercial activities in 
Haiti, and especially export potential. Obviously, Florida is 
the State particularly of interest in the Haitian community. As 
you know, Governor Bush has established an advisory committee 
on this issue, and has appointed me to it. So this has been a 
discussion with private sector Haitian-Americans, and just as 
Secretary Noriega has said, I want to underscore that we're 
looking at every option and I think he's made it very clear, 
that we're looking to see what can be done in this field, but, 
there's an important ``but'' here. HERO, in and of itself, 
can't even if it were approved, is not going to transform the 
society until we have proper infrastructure, electrical 
delivery of service, it's important to understand right now, 
we've now taken it for granted in Port-au-prince, the lights 
are on.
    Senator Nelson. Of course, that's true for any Third World 
country, but we did it for Africa.
    Mr. Franco. Yes, sir, but there is a distinction. 
Currently, unlike Africa, and most of the countries in Africa, 
and I am familiar with AGOA, and I worked up here, I did work 
on AGOA, on the Africa issues, unlike the Africa situation, in 
the case of Haiti, Port-au-prince specifically, United States 
Government efforts and financing through USAID is providing 
electrical power. Now at some point, we need to transition from 
this, that there is private power, there is a functioning 
country that can actually have the investment climate necessary 
to fulfill the promise of something like AGOA or HERO.
    Therefore when I've met with Haitian-Americans who are 
going to be the individuals investing, or the people in Haiti, 
the first thing they talk about is what Ambassador Noriega has 
mentioned, we've got to get security, which we're working on, 
under control, we have to have customs facility that's actually 
working and functionable, we have to see how these resources 
are collected so they can be reinvested, we have to have 
electrical power and grids that are working, working with the 
seat of the development agency to achieve those things, our 
sense is let's get the cart and the horse right to fulfill the 
promise of any potential for HERO-like situations in Haiti, and 
we have a way to go in that regard, and we're working on them.
    Senator Coleman. Senator Martinez.
    Senator Martinez. I'll try to be brief in my questions just 
in the interest of time, Secretary, are we clear that the 
platform for the broadcast Taquiera is in the budget and will 
be part of this year's appropriation that you're seeking?
    Mr. Noriega. Yes, Senator, there's $10 million in the 2006 
budget for the Broadcasting Board of Governors from airborne 
platform.
    Senator Martinez. Right.
    Mr. Noriega. It's just as important, and we were having a 
senior level discussion about this yesterday, it's just as 
important that we continue the broadcasting during the course 
of the year.
    Senator Martinez. Right.
    Mr. Noriega. Until we get there to where that money kicks 
in, that means the Commando Solo continuing and also the blimp.
    Senator Martinez. Right, right.
    Mr. Noriega. That was also used for broadcasting, because 
we have degraded the capability of the regime to jam and so 
we're producing real results there.
    Senator Martinez. The results I hear are very encouraging, 
in fact, I've heard fairly directly that it is getting through 
for the first time, the TV images are being seen and it's very 
encouraging, and it's having, I think, the kind of impact that 
would expect it to have.
    I'm very concerned, as I mentioned in my statement about 
Venezuela and the situation there, how will we monitor the arms 
purchases and those types of activities that I think are so 
threatening to the stability of the region?
    Mr. Noriega. Senator, you put your finger right on the 
problem. It is not a question of new arms going in, it's the 
question of transparency and what it does to the arms balance. 
Within the inter-American system there is an awful lot of work 
on transparency in arms acquisition and a lot of confidence-
building measures to ensure that we don't have an arms race set 
off.
    MIGs are one thing, sophisticated aircraft. It's going to 
take many, many years before the Venezuelans can get them in 
the air and keep them in the air. The small arms are, on the 
other hand, another sort of problem. First, we're worried about 
apparent corruption in the acquisition of these arms, where 
additional resources of the state are being diverted to support 
certain illicit activities. We're worried about the arms that 
are displaced by this type of purchase, tens of thousands of 
rifles potentially ending up, not necessarily in the United 
States, but in jungles, and for that matter, on the mean 
streets of some countries in the Western Hemisphere; or in the 
hands of guerillas, like the FARC and the ELN; in the hands of 
radical groups with which the Venezuelan Government maintains a 
certain intimate contact, and; in the hands of other criminal 
elements in the big cities of South America. So that's why 
we've asked our neighbors to step up and ask Chavez about these 
things.
    Senator Martinez. But these neighbors are the ones making 
some of the sales. Brazil is engaging sales, how do we talk to 
President Lula who, as a responsible leader, must share our 
concerns, is that at all fruitful?
    Mr. Noriega. Absolutely, I think that they want to be 
responsible. The sales of the Super Tucanos from Brazil to 
Venezuela, again, is relatively small and that is not of as 
much concern to us, and it's going to take years before they 
get there. We do communicate with our neighbors in the region 
and elsewhere, actually, in Europe about the need to look at 
the balance, at transparency in these transactions so that it 
doesn't set off an arms race.
    Colombia had a run-in with Venezuela recently because 
something became public that we've known privately for a long 
time; the fact that the FARC and other bad guys maintain a 
presence, and are given, essentially, hospitality of the 
Venezuelan Government. Our message is that Colombia should not 
stand alone. They certainly don't in as much as we're with 
them, but their other Latin neighbors need to step up, too. I'm 
not saying isolate Chavez, but we're saying go and ask 
questions about what his intentions are in terms of supporting 
these illicit terrorists and criminal groups.
    Senator Nelson. Mr. Franco, just briefly in the remaining 
moments that I have, you mentioned the goals for the region, 
human rights, property, prosperity, and security and all of the 
other issues, do you feel that the resources you have are 
sufficient for you to tackle the agenda that we have with this 
very vast region, and such a close neighbor?
    Mr. Franco. Well, Senator Martinez, in a sense the short 
answer is resources, whether in our region or any place in the 
world, for the monumental tasks that we outlined, and that have 
been outlined here by the chairman as well, are in a sense, 
there's never enough, I think the same goes for domestic 
programs or any international program. I think the chairman 
noted, adequately, that there are other places in the world 
that are, right now, critical for the President and the 
administration, and that have become the priority foreign 
policy concerns, and we've got to look at things on a global 
standpoint.
    I highlighted some of the good things coming from our 
region. We have largely democratic governments in our region, 
fragile, we're supporting them, we can work with them, many of 
the things we can do because we have friendly governments, we 
can do without the types of resources that are sometimes 
necessary in a country like Sudan, the Darfur or other places. 
So I think the levels are adequate to address the needs of the 
region. We can always use more in any place in the world, I 
think we can use more in Africa, I know we can use more in 
Asia. I know I've heard that from my colleagues, but I think 
the President's request is the right request, and I think we 
can address the summit goals and the other goals we have for 
the region.
    Senator Martinez. Good answer, not enough, but that's fine. 
Thank you very much.
    Senator Coleman. I know we've got to keep this hearing to 
an hour; I'd like to extend it with the indulgence of the 
witnesses. I'm going to yield my time, I have a lot of other 
questions, the FARC involvement recently, the kidnaping and 
murder of a former President of Paraguay, and I want to talk 
about Guatemala, but I'll keep the record open until the end of 
this working week, until the end of Friday, but with that I'll 
yield my time and turn to Senator Nelson.
    Senator Nelson. I'll just make a couple of comments in 
passing in the interest of brevity.
    Mr. Franco, you indicated in your last response with regard 
to Haiti that you felt like that we had to get the security 
situation in order before you can get the economic situation in 
order, and if we do that we'll never get the economic situation 
in order, and I would respectfully suggest that what you have 
to do is you have to work on both at the same time. And it is 
not, in my judgment, an appropriate excuse to say that we are 
not going to consider something like the HERO Act until we can 
get the security situation under control. If there were 
something other than the HERO Act, but I'll tell you, I've been 
there with Senator DeWine, we see the industriousness of those 
people, we see the order in the midst of chaos in those slums 
such as Cite Soleil, and we have seen the success of those 
people in their manufacturing in the past. And you give them a 
little incentive and at the and of the day what we want and 
what's in our interest in this Senator's judgment, is to have 
Haiti politically stable and economically stable. And as long 
as they're at the bottom of the economic barrel, that then 
upsets the political stability. So I think you have to work 
both at the same time, and I'm sure that's what you meant but 
not what you said.
    Senator Coleman. I'm going to leave that as a statement. 
Senator Murkowski I know is waiting for the next question.
    Mr. Franco. Could I just respond, Mr. Chairman. First of 
all, we are doing both and we are doing a great deal on mango 
exports, on Haitian Blue, some products that are ongoing. I 
didn't suggest, Senator that there has to be a panacea, that it 
has to be perfect, and certainly that's not the standard to 
which we are holding, but we are, and we need to create the 
climate, both security and I mentioned infrastructure, customs, 
we need to make those, I think, initial investments ensuring 
that the climate, when there is an opportunity to attract 
investment is such that there is some predictable security 
situation on the ground, which I think is improving, but we are 
doing both.
    Senator Coleman. Thank you, this hearing is adjourned.
    [Recess from 2:10 p.m. to 2:13 p.m.]

   STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM ALASKA

    Senator Murkowski. Good afternoon, we are here to hear 
testimony from Mr. Revere and Mr. Kunder regarding the 
President's fiscal year 2006 budget requests for East Asia and 
the Pacific. I'd like to thank the panel for accepting the 
invitation to be with us this afternoon.
    We have just until 3 o'clock to examine the budget request 
and its impact before the next budget subcommittee panel is 
scheduled, so I do want to get right into this, we've got a lot 
of ground to cover, literally, from Japan and the Korean 
Peninsula in the north, to Australia and New Zealand in the 
South Pacific, so this subcommittee has a very broad area under 
its jurisdiction. It's also a region that has seen its 
importance to the United States grow tremendously in the past 
century, both from an economic and national security 
perspective. It's not uncommon to hear Alaskans comment that we 
are geographically closer to our friends in Japan and Korea 
than we are to Washington, DC, so it tends to give us a 
different perspective on the region than someone from the mid-
west or the east coast may have.
    And whether it's the constant reminder that North Korea 
might have the ability to reach out and touch us, so to speak, 
or the longstanding trade relationships that we have with our 
Pacific partners, there are common factors that bind us 
together. We share a dependence on the ocean for transportation 
and economic livelihood, and in some cases, subsistence 
purposes.
    When the December tsunamis struck parts of Indonesia and 
Thailand, along with other nations in South Asia and Africa, 
Alaskans recalled the 1964 Good Friday earthquake that caused 
tremendous damage throughout my State and created a tsunami 
that wiped out the town of Valdez. It was a result of that 
earthquake that Alaska became home to the Tsunami Alert Center 
for the west coast. Almost immediately, Alaskans asked whether 
a similar center could have reduced the massive loss of life in 
Indonesia, Thailand, and the other affected nations.
    We heard from USAID Administrator Natsios at a full 
committee hearing not too long ago that the warning system is 
more than just about ringing an alarm, but also about educating 
the people, so they know what the alarm means and what to do 
when it sounds. And I look forward to working with the 
administration in this education effort.
    Trade continues to play an important role in the region. 
Last year, Congress passed the Singapore and Australian Free 
Trade Agreements. The administration is in the process of 
negotiating a trade agreement with Thailand. The implementation 
of these trade agreements will help American companies expand 
into additional markets, and our bilateral relationships are 
stronger as a result. Additionally, these agreements also 
signal the intent of the United States to remain a strong 
player in the Asian market. In recent years, we've seen China 
expand its sphere of economic influence, as it's beginning to 
negotiate trade agreements with the ASEAN nations and has 
surpassed the United States as Japan and South Korea's largest 
trading partner.
    And while it should not be our goal to keep China out of 
the market or stunt its growth, neither should we be willing to 
concede the market. The United States must remain active in 
this part of the world in order to keep our companies at the 
forefront of the global marketplace.
    National security issues must also remain a top priority. 
The budget contains funding for a number of bilateral programs 
to help combat the spread of terrorism and develop local 
economies to reduce the appeal of terrorist organizations.
    While perhaps more suited for a discussion by the Armed 
Services Committee, North Korea's nuclear and missile programs 
are cause for concern, as is the European Union's potential 
lifting of their ban on the sale of arms to China. Whatever 
else the President's budget seeks to achieve in East Asia and 
the Pacific, the overarching concern must be to preserve 
stability in the region and promote the security of the United 
States and our allies.
    So I look forward to the testimony by Mr. Revere and Mr. 
Kunder on how the administration's budget priorities seeks this 
result. And with that, Mr. Revere, if you would like to begin, 
please.

 STATEMENT OF EVANS REVERE, ACTING ASSISTANT SECRETARY, BUREAU 
    OF EAST ASIA AND PACIFIC AFFAIRS, DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Mr. Revere. Thank you very, very much Madame Chairman. I 
want to thank you right at the outset for providing me with an 
opportunity to be here today to speak to precisely the issues 
that you have addressed so eloquently in your own statement.
    I'm here, of course, to spell out the strategic goals 
underlying our foreign affairs budget for East Asia and the 
Pacific region for fiscal year 2006. Let me just note at the 
outset that I have prepared a more formal statement, which I 
provided to your staff, possibly sufficient for the record, but 
if I may, let me just address very briefly, some of the issues 
that you have anticipated in your own opening remarks.
    Indeed the East Asian/Pacific region is in the midst of a 
period of very dynamic change, and it is a situation, mind you, 
that presents the United States with both tremendous 
challenges, but also tremendous opportunities. Although the 
circumstances vary, in my view, from country to country, I 
think looking at the East Asia/Pacific region as a whole, I 
think we can, indeed, discern a number of very favorable 
trends. Perhaps the most important and encouraging of these has 
been the regionwide strengthening of democracy that we have 
seen.
    In the past year we have had successful elections in Japan, 
South Korea, Taiwan, Mongolia, the Philippines, Malaysia, 
Australia, Indonesia, Thailand, and Hong Kong. The progress in 
Indonesia, in particular, is quite noteworthy. That country is 
now the third largest democracy, and the largest Muslim 
democracy in the world, and in Thailand the February 6 election 
marked the first time that a democratically elected leader has 
served a full 4-year term there.
    At the same time, throughout the region, as you've noted, 
prosperity is growing, fueled by China's rapid development, the 
resumption of growth in Japan and also broad recovery from the 
financial crisis of the late nineties throughout the ASEAN 
region. Regional economies are moving toward much greater 
economic openness, lower trade barriers, and regional 
cooperation, these are all good and healthy trends. Income 
levels in the region have climbed as extreme poverty levels 
have declined.
    But also East Asia is an area largely at peace. Despite 
incidents in Indonesia, the Philippines, and Thailand, there 
has been widespread rejection of militant Islam, and of the 
terrorism it has spawned elsewhere in the world. And we are 
also, in the region, witnessing expanding cooperation, 
expanding regional cooperation, especially in terms of the 
willingness to work together on global issues.
    Working bilaterally and through regional organizations, 
East Asian countries are beginning to seek ways to eliminate 
human misery through programs to combat human trafficking, 
narcotics trafficking, international crime, environmental 
degradation, and the spread of infectious diseases.
    In our view, we attribute these favorable trends in great 
part to the leadership and to the assistance the United States 
has provided over the years. The region would probably not be 
enjoying this upturn were it not for the fact that it is 
experiencing a period of regional stability, during which it 
has been able to build political, social, and economic 
institutions. And for this reason, we have placed maintenance 
of regional stability at the top of our list of strategic goals 
for fiscal year 2006. Much of what we do in the region is 
directed precisely at the subjective, though different resource 
tools are, of course, required in different parts of the 
region.
    In Southeast Asia, combating terrorism remains the 
principle means to work toward the goal of regional stability. 
In Northeast Asia we will continue, and we are continuing, to 
focus on the elimination of the threat posed by North Korea's 
nuclear programs, and on our efforts to ensure the positive 
integration of China into global and regional regimes and 
institutions. And regionwide, we plan to be increasingly active 
in promoting sustained economic growth and development. We will 
seek to maintain the region's dynamic growth rates through 
expanded trade and investment, through significant financial 
and corporate restructuring and improved economic and political 
governance, as well as including an end to endemic corruption.
    We aim to accomplish these goals through bilateral 
assistance, free trade agreements, and multilateral trade and 
investment and ruralization, as well as facilitation programs 
for multilateral trade and investment liberalization in APEC 
and ASEAN.
    Bilateral and multilateral cooperation to counter the 
proliferation of weapons of mass destruction, to foster 
democracy and human rights, and to address international crime 
and transnational issues are strategic objectives on their own, 
but clearly our success in pursuing these objectives will 
affect our overall success in maintaining regional stability.
    We will bolster our relationships with key partners in the 
region, especially with our five NATO treaty allies, and we 
will build an open and inclusive regional institutional 
architecture. We will work to ensure that the region's major 
institutions including APEC and the ASEAN regional forum 
continue to advance the mutually reinforcing goals of economic 
prosperity and regional security. And we are also strengthening 
our ties to ASEAN to build mutually beneficial cooperation.
    An additional goal addresses social and environmental 
issues, particularly health issues such as HIV/AIDS. And, of 
course, strong public diplomacy can leverage all of these 
efforts. And recently, as you pointed out, we experienced a 
dramatic refocusing of America and the world's attention on the 
region, as a result of the tsunami disaster of December 26 of 
last year.
    We cannot yet predict the impact that our humanitarian 
response will have on our relations in the region, but our 
response was massive, and the impact will certainly be great. 
As one senior Asian leader told us just last week, ``You have 
created a reservoir of goodwill throughout the region because 
of the assistance that you have provided.'' As the affected 
countries move further down the path toward this very complex 
and difficult reconstruction phase that they are in, the United 
States will work closely with them and the international 
community to coordinate long-term assistance, and of course, 
none of the official U.S. response would have been possible 
without the support of Congress.
    We look forward to working with you to ensure that further 
funds appropriated by Congress in support of the President's 
request for supplemental tsunami assistance continue to be 
spent in ways that reflect credit on our government and our 
citizens.
    And, in closing, let me just emphasize that we are, as you 
all know, an Asian Pacific nation ourselves, and we intend to 
stay vigorously engaged in the affairs of the region and we 
look at the period of favorable trends in the region that I've 
described as a tremendous opportunity to extend our political, 
economic, and social relations, and we intend to take best 
advantage of these opportunities, as always, with your support 
and in cooperation and in consultation with the Congress. Thank 
you very much.
    [The prepared statement of Mr. Revere follows:]

Prepared Statement of Evans Revere, Acting Assistant Secretary, Bureau 
 of East Asian and Pacific Affairs, Department of State, Washington, DC

    Mr. Chairman, I am pleased to outline for the committee the 
strategic goals underlying our foreign affairs budget for the East Asia 
and Pacific region for fiscal year 2006.

                        OVERVIEW: U.S. INTERESTS

    The region is experiencing a period of growth marked by several 
trends favorable to our interests. Democracy is on the rise, more and 
more people are benefiting from economic prosperity, and the region is 
generally at peace. Governments throughout the region are beginning to 
work multilaterally to address transnational problems, as well. We 
attribute these and other favorable trends in part to the leadership 
and the assistance the United States has provided over the years.
    It is doubtful that East Asia and the Pacific would be enjoying 
this upturn were it not for the fact that it is experiencing a period 
of regional stability upon which to build political, social, and 
economic ties. For this reason, the Bureau of East Asian and Pacific 
Affairs (EAP) has placed maintenance of regional stability at the top 
of its list of strategic goals for fiscal year 2006, complemented by 
our commitment to enhancing regional prosperity and liberty. Different 
resources are required to achieve these objectives in different parts 
of the region. In Southeast Asia, combating terrorism remains an 
essential requirement in maintaining regional stability. Our efforts 
returned some encouraging results in 2004 that we will want to build 
on. In Northeast Asia, we will continue to focus on the transformation 
of the Korean Peninsula and on the positive integration of China into 
global and regional regimes and institutions. Regionwide, we will 
promote sustained economic growth and development, bolster our 
relationships with key partners in the region and especially with our 
five major allies, and build an open and inclusive regional 
institutional architecture. Bilateral and multilateral cooperation to 
counter the proliferation of weapons of mass destruction, foster 
democracy and human rights, and attack international crime and 
trafficking in drugs and persons are strategic objectives on their own, 
but clearly our success in pursuing these objectives will affect our 
overall success in maintaining regional stability. An additional goal 
in fiscal year 2006 addresses social and environment issues, 
particularly health concerns such as HIV/AIDS. Strong public diplomacy 
can leverage all of these efforts.
    Regional Stability: In an unstable region, U.S. goals become more 
difficult to achieve. Success in countering terrorism, enhancing 
economic prosperity, eliminating weapons of mass destruction, promoting 
democracy, and addressing transnational issues strengthens regional 
stability. The fight against terrorism is essential for the stability 
of Southeast Asia, and we require adequate funds to wage this war. We 
also recognize the need to address corruption, good governance and 
transparency in Southeast Asia, and in fiscal year 2006 we intend to 
add more assistance focus on these issues in key Southeast Asian 
countries. In Northeast Asia, we will continue to focus on the 
transformation of the Korean Peninsula and on the integration of China. 
We will continue to do all we can to keep peace and ensure stability in 
the Taiwan Strait. While foreign assistance funds factor less in our 
Northeast Asia objectives, it is essential that we have adequate 
diplomatic presence, public diplomacy funding, and other resources to 
permit us to pursue active, successful diplomatic strategies.
    Our alliances with five key regional states--Australia, Japan, 
South Korea, Thailand, and the Philippines--leverages our ability to 
maintain regional stability, stay forward-deployed, and plan and 
execute force deployment adjustments. We will continue to strengthen 
these alliances. In the Philippines, we want to sustain and enhance the 
ongoing process of building the operational capabilities of the Armed 
Forces of the Philippines (AFP). With a 5-year plan for support and 
repair of operational platforms coming to an end, we will shift our 
attention to professionalizing and modernizing AFP through the 
Philippine Defense Reform (PDR) plan. We believe the results of the PDR 
will be enhanced now that the Philippine Government is controlling its 
own funding to the plan.
    Following the devastating Indian Ocean Tsunami, the Thai Government 
generously allowed United States military forces to use Utapao Air Base 
as a regional hub for our humanitarian relief efforts. This successful 
operation was a direct result of decades of joint exercises, training, 
and cooperation between Thailand and the United States, and underscores 
the importance of FMF and IMET assistance to our friends and allies 
throughout the region.
    Counterterrorism: Terrorism in the Asia-Pacific region remains a 
serious threat to United States national security interests, including 
the welfare and security of our citizens in the region and the security 
of our regional friends and allies. It threatens the positive regional 
trends toward stability, democratization, and prosperity. We strongly 
support funding to train and equip counterterrorism units in Indonesia 
and the Philippines, to provide CT training for Malaysia, the 
Philippines, Singapore, and Thailand, and to support regional CT 
training, including at the new Southeast Asia Regional Center for 
Counter-terrorism in Malaysia. Additionally, EAP has requested modest 
amounts for CT assistance to Cambodia and the Pacific islands. To deter 
the movement of terrorists and their goods, EAP supports new border 
control installations in Thailand and Indonesia, sustained border 
control progress in the Philippines and Cambodia, and improved export/
transshipment control systems in Indonesia, Thailand, Singapore, 
Taiwan, Malaysia, and Vietnam.
    In fiscal year 2004, the bulk of our CT effort was still directed 
at terrorism Tier 1 countries. But in fiscal year 2006, we can 
anticipate funding needs for CT operations elsewhere in the region. One 
of these is maritime security in Southeast Asia, particularly in the 
Strait of Malacca, through which 30 percent of total shipping and 50 
percent of oil and gas shipments pass. We have exercised strong 
leadership in shaping conceptual, legal, and diplomatic improvements. 
We will seek to build greater regional capabilities and new forms of 
cooperation to address the vulnerability of maritime shipping in 
Southeast Asia, where an attack on the Malacca Strait or other key sea 
lanes could have an enormous impact on the regional, and indeed, the 
global economy.
    In fiscal year 2006, EAP will expand CT-related programs on 
economic growth and development, democratization, and such 
transnational issues as money laundering, counternarcotics, passport 
fraud, and maritime crime. We will remain committed to addressing the 
financial, economic, and political conditions in the region that either 
foster terrorism or allow its practitioners to establish themselves 
within vulnerable populations. Several of our Indonesia and Philippine 
programs, especially those in Mindanao, have been highly successful and 
could serve as models for similar programs in the region.
    Economic Prosperity: We will seek to maintain the region's dynamic 
growth rates through expanded trade and investment, significant 
financial and corporate restructuring, and improved economic and 
political governance, including an end to endemic corruption. We aim to 
accomplish these goals through bilateral assistance, free trade 
agreements (FTAs), and multilateral trade and investment liberalization 
and facilitation programs in APEC and ASEAN.
    The Millennium Challenge Account (MCA) funding, which channels 
assistance to nations that govern justly, invest in their people, and 
encourage economic freedom can be used in several countries in the 
region to achieve these goals. Mongolia and Vanuatu are eligible for 
fiscal years 2004 and 2005 MCA funding. By fiscal year 2006, we are 
hopeful several additional countries in the region will be eligible for 
MCA funding.
    On trade and investment, we are working with countries in the 
region to advance the World Trade Organization (WTO) Doha Development 
Agenda. We are pressing China and Taiwan and Cambodia to fully 
implement their WTO obligations, and support Vietnam's accession to the 
WTO. We are working to increase regulatory and administrative 
transparency in the region, especially China, Indonesia, and Korea, and 
also in Japan, as it undertakes major privatization and pension reform 
programs. We will continue our work to reduce or eliminate tariff and 
nontariff barriers throughout the region, such as high agriculture 
tariffs in Korea and Japan, semiconductor taxes and discriminatory 
product standards in China, and price and tariff barriers on rice in 
Taiwan. We continue negotiations on a Free Trade Agreement with 
Thailand. We will support economic reform in areas like intellectual 
property rights, ranked by U.S. business as one of the greatest 
impediments to doing business in the region, biotechnology and 
competition policy bilaterally and through organizations such as APEC.
    To accomplish these objectives, we are working to increase 
opportunities for economic dialog with the countries of the region both 
bilaterally and multilaterally.
    Weapons of Mass Destruction: We remain deeply concerned about the 
proliferation of nuclear, chemical, and biological weapons and their 
delivery systems. We have held discussions with China to persuade it to 
adhere fully to bilateral and multilateral nonproliferation agreements 
and to cooperate fully in prelicensing and post-shipment verification 
checks related to U.S. dual-use exports. We also have sought China's 
cooperation in encouraging other countries to adhere to arms control 
and nonproliferation arrangements, and China has responded positively, 
in particular by playing a valuable role in hosting the six-party talks 
to address the North Korean nuclear issue. In those talks, we will 
continue to insist on the complete, verifiable, and irreversible 
dismantlement of North Korea's nuclear program. In fiscal year 2006 we 
will continue our effort to prevent, contain, and reverse the 
possibility that any WMD might become available to rogue nations or 
nonstate terrorist organizations, building on the success of the 
Proliferation Security Initiative (PSI).
    Democracy and Human Rights: Promoting democracy and human rights 
remain high priorities on the President's agenda, and are mutually 
reinforcing alongside our other goals of political stability and 
economic prosperity. The relative stability of the East Asia and 
Pacific region has provided for important advances in democracy in 
places as diverse as Taiwan, South Korea, the Philippines, Mongolia, 
and Thailand.
    Indonesia is continuing its transformation into a democratic state 
but will continue to need assistance from us and other donors, 
including better educational opportunities, a government with greater 
respect for human rights, and good governance. A prosperous, democratic 
Indonesia will in turn be a stronger partner for the United States, as 
we advance our regional strategic, economic, and counterterrorist 
goals.
    We will continue to work for more democratic governments and open 
societies, through individual country programs and regionally through 
the ASEAN Fund and other EAP regional funds. In Burma, the further 
consolidation of power by hardliners last October dealt a setback to 
international efforts to affect genuine national reconciliation and the 
establishment of democracy. We will support programs to promote 
democracy and provide humanitarian assistance to Burmese migrants in 
the Thai-Burma border region. In Cambodia, our efforts will focus on 
political party development and human rights monitoring. Programs that 
enhance transparency and good governance while combating corruption are 
key objectives.
    The issue of human rights is an integral part of the United States 
approach to North Korea. United States officials work to raise 
awareness of the severity of North Korea's human rights abuses and 
humanitarian issues with the international community. In addition, when 
possible, United States officials raise these concerns directly with 
the North Korean regime. We are working to implement the North Korean 
Human Rights Act of 2004, which was enacted by Congress in response to 
serious concerns over North Korea's human rights record and the ongoing 
humanitarian crisis faced by the North Korean people. We will also 
continue to press other nations such as China and Vietnam for 
improvements in human rights and rule of law.
    International Crime and Transnational Issues: Transnational issues, 
including terrorism, narcotics, human trafficking, piracy, 
transnational crime, and infectious diseases are a serious threat to 
regional stability. In fiscal year 2006, EAP will address some of these 
issues through our ASEAN Fund, Developing Asian Institutions Fund, and 
Regional Fund requests. We support funding of humanitarian demining in 
Cambodia, Vietnam, and Laos. We also support funding for trade-related 
environmental capacity building, wetlands restoration, transboundary 
water management, and access to clean water.
    Social and Environmental Issues: As noted above, the East Asia and 
Pacific region faces growing environmental and health challenges. The 
rapid growth of major cities has brought on problems in air and water 
quality, deforestation, and waste management. These are frequently 
cross-border problems, making a common regional strategy important. Our 
fiscal year 2006 foreign assistance programs will support continued 
development of a regional approach toward sustainable management of 
both cities and natural resources and address the growing danger that 
unsustainable practices will exhaust forests, fisheries, and coral 
reefs. Requested funding will also support work under the President's 
Initiative against Illegal Logging, which specifically cites problems 
in Southeast Asia. In the Pacific Island countries, fisheries, climate 
change, and oceanic research are all high priority U.S. interests.
    The impact of health issues on the stability and prosperity of East 
Asia is becoming increasingly clear. Of the 42 million people living 
with HIV/AIDS worldwide, an estimated 7.4 million are in Asia and the 
Pacific--more than in any region outside of sub-Saharan Africa. One 
example of our efforts to help stem the growing AIDS epidemic in Asia 
was the President's designation of Vietnam as the 15th focus country in 
his emergency plan for AIDS relief.
    Public Diplomacy and Public Affairs: The Global War on Terrorism 
has demonstrated the importance of foreign publics' perceptions of our 
foreign assistance programs generally, and more specifically, U.S. 
efforts to counter terrorism. Public diplomacy is a critical factor in 
influencing these perceptions, both in the long and short terms. Fully 
85-90 percent of the world's Muslims live outside the Middle East; most 
of these people are heirs to cultural traditions and values that in 
vital ways are distinct from cultures found in the Arab world. In fact, 
Indonesia is the country with the largest Muslim population in the 
world. The recent tsunami tragedy has shown the goodwill that can be 
generated when foreign publics understand the good work Americans do 
for fellow human beings, regardless of race, religion, or ethnicity. 
``American Corner'' public diplomacy outreach platforms in Korea, as 
well as a creative online presence, have helped stem chronic anti-
American sentiment there. Over 50 similar platforms throughout the 
region can provide long-term traction in helping both Muslims and non-
Muslims to view our policies with objectivity.
    ``Regionalizing'' Assistance Programs: The Asia-Pacific region is 
experiencing a dramatic increase in multilateral cooperation and 
institution-building to address economic, security, and transnational 
issues. This trend presents the United States with new opportunities to 
foster cooperation to address the major challenges that face the 
region. It also challenges the United States to stay firmly entrenched 
in the region's developing architecture despite the recent growth of 
Asia-only groups. EAP has already taken important steps to enhance its 
engagement with ASEAN through the Secretary's ASEAN Cooperation Plan 
(ACP). In addition to promoting cooperation on issues as diverse as 
HIV/AIDS and competition policy, ACP projects have generated extensive 
goodwill in Southeast Asia and helped to counter regional 
misperceptions that counterterrorism is the sole United States policy 
imperative in the region. ACP projects support American interests, as 
well as ASEAN's, in areas like improved governance, protection of 
Intellectual Property Rights, and transparent regional integration.
    We have a strategic interest in strengthening Asia Pacific regional 
institutions where the United States is an active participant. It is 
difficult, however, to support this strategic interest from a strictly 
bilateral funding portfolio. In an effort to address this problem, we 
are seeking to begin funding programs associated with EAP regional 
organizations such as APEC and ARF from a single new ESF budget line 
item, the Developing Asian Institutions Fund. The United States has 
successfully worked through APEC and ARF to advance U.S strategic goals 
for trade and investment liberalization and facilitation, regional 
security, and counterterrorism. The recent strengthening and expanding 
mandates of these organizations make them increasingly effective venues 
for achieving progress on U.S. priorities.
    Tsunami Recovery: We experienced a dramatic refocusing of American 
attention on the region as a result of the tsunami disaster of December 
26, 2005. The outpouring of goods, services, and funding, our 
government and our private citizens provided to those in need, was 
huge. We can look back on this as one of the proudest moments of our 
history. It reinforced a message to the peoples of Asia of American 
willingness to help those in need, generously and unhesitatingly. A 
transition is now taking place, as the affected countries move out of 
the emergency relief phase and enter the much longer, and more 
difficult, reconstruction phase. The United States will work closely 
with the countries concerned and the international community to 
coordinate the long-term assistance that will be needed. As our friends 
in Asia will see, we plan to see this effort through to its completion.
    We cannot yet predict the exact impact our humanitarian response 
will have on our relations with the affected countries and their 
neighbors, but our response was massive, and the impact will likely be 
great. This one event will likely alter the views of millions of people 
in the region about U.S. intentions, our capabilities, and indeed the 
very nature of our culture.
    Of course, none of the U.S. official response would have been 
possible without the visible support given to our relief efforts by 
Congress. We look forward to working with you to ensure that further 
funds appropriated by the Congress, in support of the President's 
request for supplemental assistance for our tsunami efforts, continue 
to be spent in ways that reflect credit on our government and our 
citizens.
    In Conclusion: Promoting regional stability, and all of the 
elements that contribute to it, requires a steady, consistent focus on 
achieving each of our fiscal year 2006 objectives and the funding that 
allows us to maintain that focus. In every case, whether countering the 
terrorist threat in the region, promoting prosperity, combating the 
proliferation of WMDs, supporting democracy, or addressing 
transnational crime, the effective use of resources is the key to 
success. EAP looks forward to working with Congress to ensure adequate 
funding and effective utilization of these funds to promote a more 
stable, prosperous, and democratic Asia-Pacific region.

    Senator Murkowski. Thank you, Mr. Revere, for that report. 
And now, Mr. Kunder if you would like to make your presentation 
and then I'll ask my questions.

STATEMENT OF HON. JAMES R. KUNDER, ASSISTANT ADMINISTRATOR FOR 
     ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL 
                  DEVELOPMENT, WASHINGTON, DC

    Mr. Kunder. Thank you. Because of the shortness in time, 
and we've provided the numbers to the committee, I'll just try 
to hit a few of the highlights.
    The Bureau I manage, the Asian/Near East Bureau of USAID, 
runs from the Philippines and Mongolia, all the way to Morocco, 
and reviewing the numbers for this hearing, the one data point 
that struck me the most was that across the Asia region, there 
are 324 million people between the age of 15 and 24, many of 
those in East Asia, a number exceeding the population of the 
United States of America. So I agree with what Evan said, the 
timing is the time of great opportunity but also a time of 
great concern that we make sure that those 324 million young 
people have the jobs, the economic opportunity, and the 
education to be productive members of free societies, free 
markets, and democracies.
    We have focused our efforts in the fiscal 2006 budget 
request in four broad areas across the region. We operate 10 
USAID missions in the East Asia region of our portfolio, and 
the four priorities for those 10 missions are, number one, 
education, transformational education, going from rote learning 
to a more open education system that will prepare people for 
the workforce and prepare people to be citizens of vibrant 
democracies. Number two is economic opportunities, with all 
those young people coming into the workforce, we've got to make 
sure we've got the 21st century jobs that will encourage them 
to buy into their futures and not become recruits for terrorism 
or instability. The third area is broadly, democracy and 
governance. We know we have problems across the region in lack 
of participation, including lack of participation by women in 
political processes, corruption across the region, trafficking 
in persons and lack of participation, so we're broadly focusing 
in the democracy and governance arena, and the fourth area is, 
since we are operating in a disaster-prone part of the world, 
is preparation for, and response to, natural disasters. We 
believe the U.S. government response to the tsunami was a 
credit to all the civilian, military, government and 
nongovernmental individuals who participated in that response.
    In order to deliver approximately $342 million of 
assistance that we're asking for in fiscal 2006, we've also 
tried to create some 21st century management structures and 
approaches that make sense in East Asia. We have created a 
regional hub, what we call the Regional Development Mission for 
Asia in Bangkok, so we can operate not only in those countries 
where we have a full USAID presence, but in those nonpresence 
countries where there are opportunities to promote democracy 
and free markets.
    We've also invested a lot of money in what we call Pre-
Market Enterprise Initiative at AID to try to get private 
sector firms that are investing in East Asia to be part of the 
development solution. Thus far, we've invested about $42 
million of taxpayers' funds, and through that, leveraged more 
than $240 million of private enterprise funds, and these are 
American corporations who are willing to invest in early 
childhood development or education or health care for their 
workers. It's an enormous asset that can supplement the 
taxpayers dollars in having a positive outcome in East Asia.
    And the third item we're trying to do is work better with 
our U.S. military colleagues across the region. We've had an 
enormously positive partnership in the wake of the tsunami 
which is still going on in terms of the transition from relief 
to reconstruction in Indonesia and the other affected 
countries, and we're continuing to work on building that 
partnership so that all parts of the U.S. Government are 
working together to meet our strategic objectives in East Asia. 
So far we think we can demonstrate a success across the region 
in areas like the reintegration of the former rebels in 
Mindanao, where we've already demobilized and reintegrated into 
the economy more than 24,000 former fighters. We think the 
development programs that we're doing can have enormous 
strategic benefit, as you suggested both in providing security 
and stability in the region and enhancing the security of the 
United States.
    I have to make one pitch, if I can, for operating expenses. 
I just came back from Iraq a week ago, in places like Iraq, 
like Afghanistan, like Mindanao, we're putting boots on the 
ground, as the military likes to say, in the front lines in the 
war on terrorism. In the Vietnam era, USAID had about 10,000 
people working for it. We're down to about 2,200 officers 
worldwide; one of my military colleagues just referred to this 
as about a reinforced battalion worldwide. We've learned to 
operate efficiently using private sector partners, NGO's, 
leveraging private sector funds, but at some point there's sort 
of an irreducible minimum where we need a certain number of 
officers on the ground to do the broad range of programs that 
we need to do, and so we've asked for a slight increase in our 
operating expenses, and in my view that would be money well 
spent.
    Thank you very much.
    Senator Murkowski. Thank you, Mr. Kunder.
    I'm trying to get a handle on the demographics here, your 
324 million that are between the ages of 15 and 24, am I to 
assume that the fastest growing segment of the population is 
within this age group? Is this a bubble that we've got coming 
up or is this just what we're dealing with?
    Mr. Kunder. I use that number because those are the folks 
who are either going to be entering the workforce, or potential 
recruits for terror organizations or instability. It's not 
necessarily a demographic bubble going through the system.
    Senator Murkowski. It's just a lot of people that we are 
talking about.
    Mr. Kunder. A lot of people between age 15 and 24; yes 
ma'am.
    Senator Murkowski. And your challenge as you point out with 
providing the education for the numbers, the population that 
we're talking about and even further so, providing that level 
of economic opportunity, jobs in a region, many of these 
regions where it's difficult to really get any kind of major 
programs moving forward.
    Mr. Kunder. These are the folks that will be making like 
decisions in the next couple of years whether they're going to 
buy into their country's democracies and job opportunities or 
whether they're going to be alienated and disaffected and 
potential recruits. Our analysis is there's not a direct causal 
relationship between poverty and recruitment, the people who 
bombed the World Trade Center were from middle-class 
backgrounds, it's not a direct causal relationship, but 
certainly folks who do not have a stake in their families, in 
their countries, in their system of governments and in jobs are 
certainly the pool from which terrorist organizations site, so 
that's why that figure struck me as such a dramatic number.
    Senator Murkowski. Let me ask you because you've kind of 
hinted to what you're doing, the efforts that you're engaged in 
on Mindanao and the effort to reduce the appeal of terrorism 
there, can you give me some more details in terms of what 
activities the United States Government and the Philippine 
Government are undertaking in this effort? You've indicated 
that you feel that it's pretty effective. But what, exactly are 
you doing at this point?
    Mr. Kunder. I can give a quick description of our 
demobilization program, and then I think Evans will want to 
talk more generally about what we're doing with the Philippine 
Government.
    What we've done there with the MNLF, is after the agreement 
with the Philippine Government, between the government and the 
rebels, we instituted a program to take fighters, young men 
under arms, and go through what is called in the trade, DDR 
programs, disarmament, demobilization, and reintegration 
programs. Certainly in our experience around the world, when 
you get young fighters, they are disaffected folks who are 
likely to have little opportunity, what you don't want is 
someone who's officially demobilized as part of a peace 
agreement, turns in one rifle, unburies their second rifle at 
home and then turns into a criminal or a recruit for another 
terrorist organization. There has to be a process of taking 
that person, giving him or her some opportunities, some job 
skills and then taking that person back into the workforce, 
trying to reintegrate them back into society. And that's what I 
think we've done with some pretty striking success in Mindanao, 
it is a very extensive program that takes them through each 
step of disarmament first, then into camps for training and 
reorientation, and then gives them some real-world job skills 
so that they can become productive citizens in the Philippines.
    Mr. Revere. If I could add to that, we estimate that about 
60 percent of the ESF funds that we dedicate to the 
Philippines, as well as 60 percent of development assistance of 
child survival and health funding is focused on Mindanao, and 
one of the reasons for that, obviously, is our concern that 
this is a major area where there have been terrorist operations 
in the Philippines. The programs that we are engaging in in 
that area indirectly support our counterterrorism goals, in a 
very helpful way, by giving the people of Mindanao, who have 
been historically marginalized, and historically the poorest 
people in the Philippines, a stake in peace in the provision of 
livelihoods for these important populations. It also provides 
better local governance, and, of course, improved health care 
and education.
    Our estimate is that our system has already helped 
reintegrate around 24,000 former combatants, which I think is a 
pretty significant number. Reintegrate them into the productive 
economy, and also it's helped restrict the ability of 
terrorists to find safe havens, and at the same time it has 
really supported our effort to reduce the alienation of local 
populations, and of course, anti-U.S. attitudes among local 
Muslim populations.
    Senator Murkowski. Tell me about the cuts for the Asia 
Foundation, I understand that this is the second straight year 
that we've seen a reduction in funding. Can you give me the 
rationale behind that?
    Mr. Revere. Looking over our numbers for this year, the 
request that we are making for fiscal year 2006 is $10 million 
and that figure is $2.8 million below the fiscal year 2005 
appropriation that Congress enacted. But that $10 million 
requested for 2006 is actually above what was requested for 
2005 in the President's budget for the Asia Foundation. The 
number for fiscal year 2006 was arrived at in light of our 
assessment of the constrained budget environment that we're 
operating in. It also took into account competing priorities, 
and we were also attempting to keep in mind, obviously, the 
President's priorities. It is in line with our previous budget 
requests, and as I said, based on the requests that we've made, 
it is, in fact, an uptake of the fiscal 2005 request. And in 
our estimation it does reflect accurately our assessment, or it 
is justified in light of the importance that we attach to this 
program, but I believe it is in keeping with our previous 
requests.
    Senator Murkowski. Let's talk about North Korea just a 
little bit. We continue to provide humanitarian food aid 
although they continue to limit NGO access and transparency. 
What is the expected level of food aid for not only this year, 
but the following year, and what kind of transparency can we 
anticipate in ensuring that those who should be receiving the 
assistance actually do receive it?
    Mr. Revere. This is something that we watch very, very 
carefully. I've been involved in food aid for North Korea over 
the better part of 8 or 9 years, one way or the other. We have 
not, for this year, made any decisions on the level of food 
aid. Our decisions, just to repeat our criteria that we base 
our decisions on, are based on three criteria, obviously 
demonstrated need in the country concerned, competing needs 
elsewhere around the world, but also the degree of access that 
humanitarian groups have to populations that are in need, and 
of course, the ability to monitor the distribution of food aid. 
We do not link our food assistance decisions to political 
factors, six party talks, et cetera, but they linked very 
directly to those criteria that I pointed out.
    As I've said, we have not made any decisions for the coming 
year, but we are concerned about a number of trends and 
developments in terms of transparency and in terms of 
monitoring. The North Korean Government has, for example, 
refused permission for an increasing number of requested World 
Food Program monitoring visits late last year, it has also 
denied the WFP access to 10 previously accessible counties in 
the DPRK counties and districts, and this has resulted in the 
WFP terminating food distributions in those areas because, of 
course, they don't want to be involved in distributions where 
they can't monitor.
    We are also concerned about reports that the North Korean 
authorities are refusing, on some occasions, to issue visas to 
NGO staff members. This, of course, means that some NGO 
representatives may be unable to remain there if these visas 
are not extended, and this, of course, imperils their ability 
to monitor distribution and continue to operate their own 
programs in North Korea.
    Other NGO staff have been allowed to continue making 
visits, and we have been working with the WFP and NGO to get a 
better understanding of the level of access, and have been 
monitoring this very carefully in conjunction with them.
    It is not clear at this point whether there will be a 
problem that U.N. agencies international staff may have in the 
DPRK, but that's something that we're looking very carefully 
at. Most NGOs who are in North Korea right now are, at this 
time, not focused on food aid, but this is something that 
contributes to our overall perception and assessment of the 
level of access and transparency there is, so it is an issue of 
concern to us and we are continuing to work very closely with 
the WFP and get constant feedback from them on their ability to 
access key areas in the north.
    Senator Murkowski. Let me ask you, in terms of how you 
balance the three criteria, your first criteria is demonstrated 
need, and based on all accounts, we would acknowledge that the 
people of North Korea in many, many areas are starving. And yet 
you've spoken more specifically to the access aspect of the 
criteria. Is there, it's probably not a fair question, but is 
there an equal balancing? Do you just have to weigh these 
criteria on a case-by-case basis? Does it depend on how long 
things play out, how cooperative the country is? Can you give 
me a little more guidance about how these criteria work?
    Mr. Revere. There is no specific numerical formula, there's 
no specific line that one has to cross in any one of these 
three categories, but let me just back up for a moment and 
reflect the DPRK is now in its ability to feed itself and call 
on resources of the international community and assistance and 
its own purchases, compared to where it was several years ago.
    I think it would be fair to say that the food situation in 
the DPRK is much improved compared to where they were in the 
mid- to late-1990s when there was significant starvation. 
Malnutrition has been a problem in North Korea for decades now. 
The period of significant mass starvation in North Korea is 
behind us, fortunately. The horrific stories and pictures that 
we saw, for example, in the mid-1990s, very heart rendering 
film of young children, emaciated children, and children who 
were on the verge of death, that situation is no more, thanks 
to the generosity of the United States, thanks to the 
generosity of the international community and excellent work by 
NGOs. There continues to be a problem with food shortages in 
the DPRK. This past year's harvest by most reports, was better 
than the previous several years harvests, so there has been an 
uptake in domestic food production in the DPRK, which is not to 
say that they are flush with food, but the situation is much 
improved. The WFP has made another appeal this year, we're 
looking at that appeal, but their air of crisis, the sense of 
crisis that existed several years ago about the imminent 
starvation of thousands or even millions of people is 
fortunately behind us. If that situation were to return, 
obviously, we would look at this very, very carefully, that 
factor would, of course, be a very significant one. No one, 
especially America, wants to see children starving.
    Senator Murkowski. Now, you've indicated that you've not 
yet made a decision about what level you might provide for this 
year or for next year, and you've also indicated that that 
decision is not necessarily dependent with the politics, it 
goes back to the criteria. You've also mentioned that it 
doesn't necessarily hinge on what happens with the six party 
talks. When would you make that determination as to whether 
there would be any assistance this year?
    Mr. Revere. Several factors would be looked at, number one, 
we continue to stay in touch with NGOs in order to get their 
best assessment of the best timing for food deliveries to be 
made, we look at ongoing assessments of the harvest and 
distribution within North Korea, we would be looking at the 
international response to the WFP appeal, that's always a key 
factor of ours over the years that we have looked at, if it 
looks as if the WFP appeal has not been positively or 
generously responded to by others, this is something that we 
take into account as well.
    Last year, for example, we ultimately decided on a 50,000 
metric ton of food donation through the WFP. All of that food 
is in the supply chain and has already arrived in North Korea, 
or is just reaching North Korean households. I can't give you a 
specific timeframe, but those are the factors that we would 
look at in the coming weeks and months.
    Senator Murkowski. You had mentioned spread of infectious 
diseases when you were speaking earlier, and we all have a 
growing concern about the bird flu in Vietnam. I'm not exactly 
certain but the number of individuals that they indicate may 
have died from it is, I understand, about 14 now. Apparently 
there are some recommendations by some to change the farming 
practices to combat this disease, can you tell me what role the 
United States is playing in this?
    Mr. Revere. My colleague may have something else on this, 
but this is something we are watching very carefully. We have 
our embassies in the region as well as science attaches in the 
region who are attending conferences and participating in a 
number of studies, passing back reports to Washington. It is an 
issue of concern to us as it is to the international health 
community, WHO, and others, something that we're watching 
carefully, but let me allow my colleague to expand on that.
    Mr. Kunder. We are, in fact, in the analytical phases, 
we've been in touch with our colleagues at the Centers for 
Disease Control and Prevention as well as local health 
officials, we have not yet made any decisions to reprogram any 
health funds. In other situations where you have incipient 
outbreaks of what could be epidemic diseases, either our office 
of U.S. Foreign Disaster Assistance might become involved, or 
we might take some of the funding that's already programmed in 
a country and redirect it toward supporting local health 
officials and heading off the spread of the epidemic. So at 
this point we have the data, we've been in touch with CDC and 
the local health officials, and this is exactly the stage we're 
at, we're trying to get a sense for if there is some potential 
for this breaking out into the larger population.
    Senator Murkowski. Something we're all sort of anxiously 
keeping an eye on.
    Mr, Kunder. Yes.
    Senator Murkowski. What is the recent trend in the number 
of refugees coming into the United States from Asia, and if you 
can identify for me what countries now have the highest rates?
    Mr. Revere. Yes, I think if you look at the overall flow 
into the United States, the two groups that occupy the largest 
raw numbers of refugees coming into the United States are the 
Hmong and Bernese. And by the end of last year, according to 
our statistics, we had over 6,100 Hmong who were admitted into 
the United States from Thailand, and a total of 15,000 of them 
had been approved to enter the United States, and the remainder 
of the approved group will be admitted as soon as some new 
health screening procedures are implemented to reduce the 
likelihood of transmitting communicable diseases, such as 
tuberculosis. We're also working with the Royal Thai Government 
to resettle Burmese refugees who were recently, apparently, 
residing in Thailand. Some 3,100 Burmese refugees were referred 
to the United States and about 1,000 of them were admitted last 
year, and the rest we anticipate being admitted this year.
    Looking at the region overall in terms of intraregional 
refugee flows, the greatest number of refugees in East Asia 
continues to be Burmese overall. There are about 144,000 
refugees, from a variety of ethnic groups in Burma, who are 
still residing in camps in Thailand to which they fled to 
escape attacks by the Burmese military and to escape 
prosecution, and the Thai Government is continuing to 
cooperated with the UNHCR on the registration and protection of 
refugee camp population.
    And, of course, North Korea is another area of concern. As 
a result of bad agricultural policy decisionmaking, natural 
disasters since about a decade ago, and the food shortages that 
we were referring to and other reasons, all of these events and 
more have prompted thousand of North Koreans to flee to the PRC 
and in many cases onward to other countries.
    The latest estimates that we have of the number of North 
Koreans in China ranges from 30,000 to 50,000, although some 
organizations put the estimate a lot higher than that.
    Senator Murkowski. It's interesting, even in Alaska you 
would think that the Hmong would want to stay somewhere where 
it's warm, but that's one of our fastest growing populations 
right now, it's interesting.
    What is the proposed $50,000 in IMET funding for Vietnam 
going to be used for?
    Mr. Revere. We are hoping to use that funding for English 
language training for military officers and Ministry of Defense 
officials from the Republic of Vietnam. The English language 
training course would be a prerequisite for any military 
training that the United States might provide to Vietnam in the 
future. We do not currently have, of course, an IMET program 
with Vietnam, the government of Vietnam has not signed a 
bilateral end use and retransfer agreement required by the 
Foreign Assistance Act, but we are hopeful that it will do so 
at some point, because IMET in our view, offers a tremendous 
opportunity down the line to develop professionalism among the 
members of the Vietnamese military.
    Senator Murkowski. Violence in southern Thailand. Can you 
give me any information as to how the administration's foreign 
assistance proposals pertain to the situation in southern 
Thailand right now?
    Mr. Revere. We are continuing to look at that situation 
with concern, it is one of the few flashpoints, if you will, 
where we have seen an uptake in violence, including a fairly 
horrific incident that happened last year. It is a constant 
element of our dialog with our Thai allies and friends, we know 
that the Government of Thailand is making efforts down there, 
we continue to urge them to deal with this in a humanitarian 
and transparent way. Our own Embassy officials have traveled in 
the region working with Thai and local community officials to 
try to enhance the level of transparency there and I think the 
ongoing cooperation that we have with the Government of 
Thailand enables us to reach out, both to local communities, 
but also, importantly, to the Thai Government itself to urge on 
them, since it is their primary responsibility, this important 
goal of dealing with this in a transparent and open way and 
bringing these local communities onto the side of being 
cooperative citizens and trying to develop a greater 
understanding between the two communities that appear to be at 
odds there. Perhaps my colleague may have something else to say 
in terms of the----
    Mr. Kunder. Nothing to add to that one.
    Senator Murkowski. Let's talk about Burma, Cambodia. What, 
if any, foreign assistance needs or goals in these two 
countries might be better addressed if we were to consider 
lifting foreign aid restrictions?
    Mr. Revere. Burma is a very troubling country for us, its 
treatment of its people, its continuing incarceration of Aung 
San Suu Kyi and a number of political prisoners, the Burmese 
military regime has been treating its people in what we regard 
as a horrific fashion, the fact that there are so many refugees 
across the border, in Thailand, speaks to the severity of this 
problem. It is our hope that the nature of the regime will 
change as a result of the constant emphasis that we have placed 
on this in our own dialog with Burma's neighbors, we have urged 
Thailand and other countries to do whatever they can to impress 
upon the Burmese the need to restore democracy, to free 
political prisoners. We have an Embassy there, we have a charge 
in charge of our mission there, we have limited dialog with the 
Burmese regime, we have, at this point, no contact, 
unfortunately with Aung San Suu Kyi which is a worrisome factor 
to us. I think the fact that we have a diplomatic presence 
there is an important thing, it enables us to monitor 
developments there, it enables us to report back here to 
Washington, but also to report to visiting delegations the real 
situation on the ground. There is a lack of transparency in 
terms of the regime's decisionmaking, this is worrisome to us. 
We continue to support, keep a diplomatic presence in Burma, I 
think it's important for us to be there, it's important for us 
to consistently and constantly make the points that we make 
about transparency in return to democracy and the freeing of 
political prisoners there. This is a critical priority for us.
    Senator Murkowski. We've got about 5 more minutes here 
before we finish up, so I'd like to conclude with Indonesia. If 
you could speak to Indonesian cooperation with the United 
States as it relates to antiterrorism activities and how our 
relief efforts, particularly those of the military, have 
impacted United States/Indonesian relations and 
democratization?
    Mr. Revere. Indonesia is indeed an important partner in 
counterterrorism. We have a very active dialog in cooperative 
relationship with them. They have vigorously pursued 
investigations into some of the bombings, as you are aware 
there is an ongoing trial of Alou Baka Ba'asyir, we are 
anticipating a verdict in that trial tomorrow, but above and 
beyond that, Indonesia has been a good partner, especially in 
pursuing issues of terrorist organizations, finance, et cetera.
    On the issue of our cooperation, I think we and the 
Indonesians have truly entered into a new phase of our 
relationship as a result of the horrific events of late 
December, the tsunami. The level of transparency that we saw, 
the level of cooperation that we saw from the Indonesian 
authorities, the level of access that we were able to achieve 
in Aceh in the aftermath of that tsunami, that tsunami was 
truly unprecedented. From the President of Indonesia, right on 
down to the ranks, officials at all levels of the Indonesian 
Government worked very carefully and closely and cooperatively 
and transparently with our Embassy, with our military, with our 
AID mission, and with the NGOs who were there and are there 
today. We continue to work with them on the reconstruction 
efforts, and I think that the ironic outcome of the tsunami 
disaster was that Americans and Indonesians have seen that they 
can work togther in this transparent and cooperative fashion, 
and I think we have launched ourselves, I believe, into a new 
era of cooperation with Indonesia.
    At the same time there continue to be some remaining issues 
that we're looking at very seriously. Despite our decision, our 
finding and determination that enabled us to resume full IMET 
relations with Indonesia, we are continuing to hold Indonesia's 
feet to the fire, so to speak, on pursuing the details and the 
case in the Timika killings. We have an FBI attache in Jakarta 
now, we are getting cooperation, that was the basis for the 
determination that the secretary made, we'll continue to work 
closely with the Indonesians to pursue this case and bring the 
offenders to justice.
    Senator Murkowski. I appreciate that. Mr. Kunder.
    Mr. Kunder. In terms of our, in terms of the 2006 request, 
our largest increase that we're requesting for development 
assistance is in Indonesia, and as Evans has said, we've 
generally, across the board in terms of education reform and 
democracy and governance and so forth, had good cooperation, so 
we think that would be a useful additional investment.
    Senator Murkowski. It's terrible when we have to deal with 
a natural disaster, the consequence that we saw with the 
tsunami, but I suppose if there are bright linings that can be 
found in enhanced cooperation, we look for the bright linings.
    I don't know if either one of you would care to offer any 
concluding remarks, Mr. Kunder, you haven't had as much of an 
opportunity to speak into the mike as Mr. Revere, so if you'd 
like to add anything finally, I'll give you that opportunity.
    Mr. Kunder. No, thank you, we tried to cover most of our 
main points in the opening remark, and obviously I've got a 
larger statement which covers additional detail. We work very 
closely with our State Department colleagues and obviously 
we've all cleared each others' statements here, so I completely 
concur with everything that Evans has said. In general, we 
share the same view, generally positive throughout the region, 
we've got a lot of work to do, but that's one place where I 
think we're making enormous progress both in regional and U.S. 
stability. Thank you.
    Senator Murkowski. Well, as chair of the subcommittee on 
this region, I'm pleased to hear the good news report. Mr. 
Revere, I notice on the schedule you have put your seat time in 
today, so I appreciate all the information that you have shared 
with the subcommittee and with that, we will conclude at three 
o'clock and I appreciate your attention.
    Mr. Revere. Thank you very much.
    [Recessed 3 p.m. to 3:05 p.m.]

   STATEMENT OF HON. GEORGE ALLEN, U.S. SENATOR FROM VIRGINIA

    Senator Allen. Good afternoon, to everyone who is here. I 
understand that if there are any Ambassadors or individuals 
from any of the countries which are in the purview of this 
hearing, this afternoon, which is to examine President Bush's 
budget request for foreign assistance programs to Eurasia and 
Europe. If any of you all are here, if you want to rise you're 
welcome to, if not, we'll proceed. I just wanted to welcome any 
who might be here and interested in this hearing.
    At this hearing we're going to be hearing from our 
witnesses who are with us. Mr. Robert A. Bradtke, who's the 
Principal Deputy Assistant Secretary, Bureau of Europe and 
Eurasian Affairs, Department of State. It's good to have, once 
again, the Honorable Kent Hill with us, the Assistant 
Administrator for the Bureau of Europe and Eurasia with the 
U.S. Agency for International Development.
    I'll make a few opening comments here and then we'll hear 
from our witness or witnesses, however you all want to use your 
time.
    Now then, I'll say to those watching and listening here, 
that the budget the President submitted to Congress, overall I 
look at it as a very tight and taut budget. There are some 
aspects of it which I would like to see reordering in, like in 
aeronautics and a few other areas. However, the President has 
tried to show proper discipline by reigning in excessive 
spending on nondefense, non-Homeland Security, discretionary 
spending. There is one area that he did propose an increase, 
and that is foreign aid.
    Now, in light of all that, some people may question how the 
administration propose strict limits on domestic spending, 
while asking for a 16-percent increase in foreign assistance. I 
think it's important for us, at least in this subcommittee 
hearing and in the context of the whole foreign relations 
budget, to understand the scope and gravity of the United 
States operations overseas. If we, as a country, are going to 
be successful in the war on terrorism as well as to promoting 
freedom, it makes sense to provide assistance and advise in 
constructing those institutions to make such progress stable.
    We have seen the advancement of freedom since the fall of 
the Soviet Union and the Iron Curtain mostly has been progress. 
Some cases there hasn't been progress, you see in some cases 
elections that don't meet international standards of fairness, 
some cases you see media outfits consolidated and just 
benefiting state-owned enterprises. Sometimes you see 
opposition groups being marginalized to the point of being 
ineffective or unable to fairly compete, but the majority, and 
I don't want to focus on the negatives, because there have been 
mostly positives. Just recently we've seen some great positives 
in the Ukraine and in Georgia with their revolutions, so 
there's reason for hope. Both of these countries, Georgia and 
the Ukraine rejected corruption, that was the business as usual 
for those governments for many years. In its place, the people 
of Georgia and the Ukraine elected candidates who have pledged 
sweeping reforms, transparency, and accountability in their 
government.
    My view is that the United States ought to seize these 
opportunities, work with these new governments to help further 
and foster the democratic and free market reforms that were 
started after the fall of the Soviet Union. Now, continuing to 
provide funding for the Freedom Support Act and continued 
support for Eastern European Democracy Act funding, offers 
needed assistance to help make the transition to democracy 
smoother and more likely to be permanent.
    President Bush has used the phrase, and the goal, a central 
theme that we heard in his inaugural address, ``the spread of 
democracy.'' The way I would use the words, or my views are we 
need to be promoting the concepts of free and just societies. 
It's the same sort of thing, we want people to live in free and 
just societies where they have freedom of expression, freedom 
of religion, private ownership of property, and the rule of law 
to adjudicate in a fair manner, disputes, as well as protect 
what I like to call God-given rights. Through the accession of 
the Northern European countries, as well as Romania and 
Bulgaria, to NATO, we've seen how this advancement of freedom 
has improved hope and opportunity for the people living in 
those countries, but it has also furthered our security here in 
the United States.
    A number of these countries in Europe and Eurasia have been 
extremely helpful in fighting the war on terrorism and in our 
military actions in Afghanistan and in Iraq. With countries 
like Bulgaria and Romania and many others making the sacrifice 
to combat terrorism, the United States should consider how we 
can provide aid to these partners and true friends and true 
allies for activities that are beneficial to them, but also 
beneficial to us as Americans.
    With organized crime and corruption in some of these areas 
continuing to afflict people, particularly in Southeastern 
Europe and Eurasia, it's certainly in the interest of the 
United States to help secure borders that have been 
historically used to smuggle drugs, traffic in persons, and as 
far as actual worrisome matters, the actual transportation, 
sale, and dealing in dangerous materials and weapons.
    Similarly, the United States will need to continue to help 
those nations who have uncovered terrorist cells within their 
borders. Al-Qaida groups that have been shut down in Albania 
and Bosnia, don't get much attention, but that's part of this 
overall global war on terrorism, and it's clearly in our 
interest as our country to continue in those efforts to assist 
those who are part of the whole effort.
    Let me focus on one thing that I'm glad we've seen an 
improvement in that we will not have to address, and that has 
to do with the South Caucasus. I'm pleased that the 
administration has requested an equal amount of foreign 
military financing for Armenia and Azerbaijan. A peaceful 
settlement of the Nagorno-Karabakh conflict becomes less likely 
if one side were to gain a substantial military advantage over 
the other. I think reaching a lasting resolution in that 
conflict is also key to our United States interest in the 
region. We should be mindful how we allocate aid and its 
potential impact in the prospect for peace there.
    So, let me close by saying that the United States has a 
tight budget; we need to be wise, we need to make sure that the 
money we spend actually improves our security while also 
advancing freedom for the people in these countries. It can 
play, foreign aid, a major role in furthering our foreign 
policy objectives in securing troubled regions around the 
world. There has been great progress if you just want to look 
at history, recent history in the last 60 years in Europe, in 
Western Europe. In Central Europe there's been great progress, 
really for the last 15 years. First in Poland, and Hungary and 
Bulgaria and the Czech Republic and Slovakia, and the last 15 
years have been wonderful.
    And then in eastern, what I consider Eurasia and Eastern 
Europe, there have been some rays and areas of hope. They're 
behind, but in the last really few months and years, there's 
been progress there. There remains a number of areas, though, 
in Eurasia and Europe that continue to be of concern for our 
security and for our interest. I look forward to hearing our 
witnesses' testimony this morning, and if anybody has any cell 
phones, please turn them off, unless you have some really good 
music that we'd all like to hear in here.
    So, with that, which one of you two gentlemen would like to 
proceed first? Mr. Bradtke.

  STATEMENT OF ROBERT A. BRADTKE, PRINCIPAL DEPUTY ASSISTANT 
SECRETARY, BUREAU OF EUROPE AND EURASIA AFFAIRS, DEPARTMENT OF 
                     STATE, WASHINGTON, DC

    Mr. Bradtke. Thank you very much, Senator, for this 
invitation to appear before you and discuss our assistance 
programs in Europe and Eurasia. I have a written statement that 
I would like to submit for the record, and with your permission 
then proceed with a summary of my remarks.
    Senator Allen. Your entire statement will be made part of 
the record.
    Mr. Bradtke. Thank you. Let me begin by thanking this 
committee for your support and leadership on our assistance 
programs in Europe and Eurasia. As you mentioned, these 
programs are playing a vital role in supporting U.S. interests 
in the region, and we are grateful for the dialog we've had 
with this committee, and your support for our programs.
    In addition to Kent Hill from USAID, who's next to me 
today, we have behind me, Tom Adams, who is our coordinator for 
European and Eurasian assistance. We are very fortunate in the 
Europe and Eurasian bureau to have a statutorily mandated 
coordinator in the bureau, who helps us to ensure that our 
policy objectives and our resources are closely linked 
together. It's also facilitated in our agency cooperation, not 
only with AID, but with other U.S. Government agencies which 
support our programs, and I think in the end, the result has 
been that we have been able to use the money that Congress has 
provided us more efficiently and more wisely.
    Mr. Chairman, you mentioned President Bush's visit to 
Brussels and Bratislava last week, and these visits did provide 
us the opportunity to put into perspective our foreign policy 
successes in Europe and Eurasia, as well as the challenges that 
we still face there. Those successes could not have been 
achieved without the contribution of our foreign assistance, 
and without the contribution of our foreign assistance we will 
not succeed in addressing the challenges that we still face.
    In Brussels, the President consulted with our partners and 
friends in the EU and NATO. These two institutions have acted 
like magnets in recent years, very powerful forces, pulling 
countries toward democracy, free markets, the rule of law, the 
resolution of ethnic and territorial conflicts. In other words, 
toward the values consistent with American values and favorable 
to our foreign policy interests.
    You mentioned the four pillars of freedom that you cited in 
your discussion with Dr. Rice at her testimony of her 
confirmation hearing, and we have seen great progress in these 
areas of freedom of religion, freedom of expression, private 
ownership, and the rule of law.
    But even as we celebrate the progress we've made and the 
accession of countries to NATO and the European Union, there 
are challenges that we still face, and we need to recognize 
that the process, this progress, did not happen all by itself. 
Our assistance did play a vitally important role. Our military 
assistance, through our FMF program, IMET and our peacekeeping 
funding was crucial, every step of the way, first to helping 
new countries prepare for NATO membership, and then to help 
them make meaningful contributions to NATO operations.
    Our political, economic, and social sector reform 
assistance through SEED and the Freedom Support Act have also 
been indispensable every step of the way to help create 
internal conditions that resulted in the aspiration to join 
Euro-Atlantic institutions, and then to help countries realize 
these aspirations.
    We need, as you mentioned yourself, Mr. Chairman, to look 
no further than the recent headlines to see how this process 
can work. The Orange Revolution in Ukraine had several 
motivating factors. Certainly discussed were the corruption and 
stagnation from the previous regime was very important. But 
clearly, the attraction of Euro-Atlantic unions was a key 
element in the process of change that took place there.
    Ukraine's democratic breakthrough did not come about 
because of United States assistance. Many other ingredients 
were necessary. Chief among them, of course, the courage and 
resolve of ordinary Ukrainian citizens who refused to allow 
their democratic rights to be stolen. But U.S. democracy 
programs played an important role. In the run-up to the 
elections, we helped improve the legal framework and electoral 
administration. We supported balanced media coverage, we helped 
educate voters about their rights and provided legal recourse 
when rights were denied. We strengthened political entities to 
participate effectively in elections, and we helped enable 
civil society groups and international organizations to monitor 
the process.
    Perhaps, even more importantly, the response of the 
Ukranian political parties, nongovernmental organizations, an 
independent media to electoral fraud was a testament to the 
vibrancy of civil society. There's no doubt that the training, 
grants, and exposure to new ideas, provided through U.S. 
assistance and exchange programs over the past 13 years helped 
create that vibrant civil society. If I have my numbers 
correct, Mr. Chairman, even just in the last 5 years alone, 
10,000 Ukrainians participated in exchange programs with the 
United States.
    Our assistance now will play a crucial role in helping 
advance the aim of integrating Ukraine with Europe and Euro-
Atlantic institutions as quickly as possible. This will require 
consolidating recent democratic gains, accelerating economic 
reform, and especially dealing with corruption in establishing 
the rule of law.
    We have requested, as part of the emergency supplemental 
recently sent by President Bush to Congress, $60 million to 
help the new government make rapid progress in these areas. We 
are also proposing to increase funding for Ukraine in the 
fiscal year 2006 budget for the Freedom Support Act to $88 
million.
    If I can return to the President's trip. His stop in 
Bratislava also highlighted the region's successes, especially 
triumph of freedom in Slovakia and many of its neighbors. The 
visit also put a spotlight on the serious challenges we face. 
The President's meeting there with President Putin allowed the 
two Presidents to identify common United States-Russian 
approaches to dealing with some of the most serious 
transnational problems we face, especially international 
terrorism, and the proliferation of weapons of mass 
destruction.
    The meeting also allowed the President to discuss our 
concerns about Russia's own democratic development. Here again, 
you can see how our foreign aid programs provide the tools we 
need to maintain a constructive, and a very complex 
relationship with a strategically important country, such as 
Russia.
    Our joint nonproliferation efforts are bolstered by funding 
from the NATO and Freedom Support Act accounts. Our common 
fight against terrorism is supported by law enforcement and 
counterterrorism programs, and our strong interest in seeing 
Russia get on the right track with democracy is furthered by 
Freedom Support Act programs that support the rule of law, 
independent media, and nongovernmental organizations.
    Mr. Chairman, you'll see in my written statement a longer 
discussion of past successes, and the current and future 
challenges we face in Europe and Eurasia, and how foreign 
assistance plays a critical role. If I can, I would just like 
to stress three additional key points. First, we view our 
foreign assistance as a flexible policy tool. It can be used 
for long-term developmental goals, building civil society, 
introducing the elements of market economy, dealing with 
infectious diseases. But it can also be used for short-term 
strategic goals. Supporting free and fair conditions for the 
conduct of a specific election, or helping to implement an 
ambitious reform program proposed by a new government. And it 
can be used for mixed strategic and developmental purposes, 
what I might call medium-term objectives, such as helping a 
country for the final push to get ready for EU or NATO 
membership.
    Preserving this flexibility is very important. Excessive 
legislative restrictions, even if they're well-intentioned, 
have not helped the process of providing our foreign 
assistance. We face an overwhelming number of legislative 
sanctions, certification requirements and other limitations as 
well as numerous funding earmarks. I'll be providing for the 
record a chart that shows some of the most important 
restrictions we're dealing with.
    Let me move onto the second point I'd like to make here and 
that is that many of the challenges we face in our region are 
relatively new. The authors of SEED and the Freedom Support Act 
in the early 1990s could not have fully foreseen the scope of 
the transnational threats that we now face. Vastly increased 
poppy production, for example, in Afghanistan, is flowing into 
Central Asia, and then on to Russia, the Balkans, and Western 
Europe, leaving behind a trail of corruption and ruined lives. 
Organized crime, especially in the Balkans, is a major obstacle 
to establishing the rule of law there, and HIV/AIDS is poised 
to ravage several countries, especially Russia and Ukraine.
    So we need to be creative in the way we deploy our 
resources, and to think beyond the traditional goals of SEED 
and the FSA which were primarily about achieving a transition 
from Communist systems to democracy and free markets. The 
problems go deep and touch on our important security interests, 
our involvement therefore, may need to have a longer time 
horizon.
    Third and last, I would draw an important lesson from the 
experience of the last 15 years, and the fall of the Berlin 
Wall, namely long-term investments pay long-term dividends. We 
saw that in Georgia a little over a year ago, and in Ukraine 2 
months ago, and we see it every day from the support we get 
from our European and Eurasian partners in the global war on 
terrorism. That support which we receive from the recipients of 
SEED and FSA funding in the global war on terrorism, is not 
just based on the policies of their governments. Rather it is 
based on shared values that go deeper into these societies and 
that have been promoted by our assistance in exchange programs 
over the past 15 years. Day after day, year after year, 
Americans are interacting with nongovernmental organizations, 
educational institutions, private companies, students, 
scientists and many, many others. From this engagement comes a 
network of linkages between our society and their societies, a 
web of linkages strong enough to withstand the ups and downs of 
bilateral relations over time. This is an excellent return on 
the investment of our foreign assistance dollars, and it is one 
that the members of this committee can be proud of having 
supported.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Bradtke follows:]

   Prepared Statement of Robert Bradtke, Acting Assistant Secretary, 
     Bureau of European and Eurasian Affairs, Department of State, 
                             Washington, DC

    Mr. Chairman and other distinguished committee members, I am 
pleased to participate in your examination of U.S. foreign assistance 
programs. United States 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. With me today is Dr. Kent Hill, my counterpart from the U.S. 
Agency for International Development. Also, sitting behind me is Tom 
Adams, the Coordinator of Assistance to Europe and Eurasia. We are 
fortunate to have in our Bureau a Coordinator with statutory authority 
to coordinate all assistance going into our region; we think this helps 
ensure that foreign aid reinforces foreign policy objectives, in a way 
that maximizes the value of each taxpayer dollar.
Assistance Advances American Interests
    Mr. Chairman, in Europe and Eurasia you will find a case study of 
how foreign assistance can serve America's national security interests 
in the short, medium, and long term. The past year, however, has 
provided ample evidence that the U.S. Government's strategy of the past 
15 years--which has involved intensive engagement with governments and 
with the broader society through technical assistance, training, 
grants, and exchanges--is beginning to bear fruit. First in Georgia, 
then in Ukraine, we witnessed the extraordinary expression of 
democratic spirit by ordinary citizens who refused to allow the will of 
the people to be subverted. Many ingredients were necessary for these 
breakthroughs to occur--the courage and resolve of the Ukrainian and 
Georgian people chief among them--but U.S. democracy programs played an 
important role. In the run up to elections we targeted our assistance 
to encourage improvement of the legal framework and electoral 
administration, to support more balanced media coverage, to educate 
voters about their rights and provide legal recourse when rights were 
violated, to strengthen political entities to participate effectively 
in the elections and to enable civil society groups and international 
organizations to monitor the process. The result of our assistance was 
increased expectations for democratic elections and a huge spotlight on 
electoral fraud, laying the basis for the Georgian and Ukrainian people 
to challenge manipulated results. The sustained and ultimately 
effective response of Ukrainian and Georgian political parties, NGOs, 
and independent media to electoral fraud, was a testament to the 
vibrancy of civil society in these countries. There is no doubt that 
the training, civil society grants, and exposure to new ideas provided 
through U.S. assistance and exchange programs, helped create the 
foundations for effective action.
    The countries of the former Soviet Union and Communist Eastern 
Europe, all of which have received substantial United States assistance 
since the early 1990s, remain bulwarks of our Coalition operations in 
both Afghanistan and Iraq. Nineteen of them were active supporters of 
Operation Iraqi Freedom, Operation Enduring Freedom, and/or the 
International Security Assistance Force in Afghanistan in 2004. At the 
same time, many of these transition countries are strongly engaged with 
Euro-Atlantic institutions, and it is clearly in our long-term foreign 
policy interest to encourage their movement toward NATO and the 
European Union. We can try to do this through dialog alone, but it is 
much more effective when diplomacy is coupled with foreign assistance. 
The Foreign Military Finance (FMF), International Military Education 
and Training (IMET) and Peacekeeping Operations (PKO) accounts are 
helping countries make the operational and structural changes they need 
to integrate with NATO security structures. Political and economic 
transition assistance through the FREEDOM Support Act (FSA) and Support 
for East European Democracy (SEED) Act are helping build constituencies 
for reform, and once countries are committed to meeting EU or NATO 
standards, giving them the necessary tools to gain admission. Since 
this committee examined our foreign assistance in Europe and Eurasia 1 
year ago, eight more Central and East European countries (Czech 
Republic, Hungary, Poland, Slovenia, Slovakia, Estonia, Latvia, and 
Lithuania) have joined the European Union and two (Romania and 
Bulgaria) joined NATO. Albania, Macedonia, and Croatia are poised as 
candidates for NATO.
    We can clearly see how, in the short and medium term, many 
countries in this region are moving from being consumers of assistance 
to being contributors to our global security interests. It is sometimes 
more difficult to recognize the longer term trends. For many years now, 
this committee and many others in the Congress and in the 
administration have expressed frustration with the slow pace of 
democratization and economic reform, particularly in the former Soviet 
States. Some have questioned the efficacy of our assistance, and 
wondered whether the twin ills of official corruption and popular 
apathy might cause these countries to remain indefinitely in a post-
Soviet twilight zone.
    Democratic gains in both Ukraine and Georgia must be consolidated, 
and here, too, our assistance will play a crucial role. Georgia has 
made significant progress in economic and democratic reform in the year 
following the November 2004 Rose Revolution. Tax revenues have greatly 
increased; corrupt officials have been made to account for past 
actions; effective law enforcement institutions are being created; 
civil service reform has begun; and the government has begun to think 
strategically about issues such as energy and education. At the 
government's request, the United States has provided funding for 
advisors to six government ministries.
    Ukrainian President Yushchenko aims to integrate his country with 
Europe and Euro-Atlantic institutions as quickly as possible. Our task 
over the next months and years will be to work with the Ukrainian 
Government to consolidate the country's recent democratic gains, and 
advance its economic reform and integration with the European and 
global economies. In addition to the fiscal year 2006 budget, we 
currently have a request before Congress for $60 million in 
supplemental funds to help the new government make immediate progress.
    The Ukrainian and Georgian democratic ``revolutions'' have 
reverberated throughout the region, including in Russia. Last week in 
Brussels President Bush said ``Russia's future lies within the family 
of Europe and the transatlantic community.'' It is this future that our 
assistance programs in Russia aim to help secure. More than any other 
country in the Eurasia region, Russia's future stability--which is 
linked to its democratic development--directly affects United States 
national security interests. We are aligning resources within FSA 
funding for Russia to focus on support for democracy. In 2005, over 
half of the Russia budget will be dedicated toward supporting civil 
society, rule of law, and independent media in Russia, and we expect to 
dedicate an even larger proportion of the budget to these priorities in 
fiscal year 2006.
    Presidents Bush and Putin announced in Bratislava a desire to 
dramatically increase bilateral exchanges between our countries. Their 
meeting reflected a relationship that acknowledges challenges but seeks 
to maximize opportunities for cooperation. Through our exchanges and 
assistance programs, we will work to increase these people-to-people 
collaborations that have proven so effective in removing the distrust 
of a bygone era.

Old and New Challenges
    When the FSA and SEED accounts were created, the focus was on 
economic and democratic transition. There was a sense that if only the 
transition countries could get their political structures and economic 
policies ``right,'' stability and prosperity would follow. And it has, 
in fact, turned out to be generally true that the level of commitment 
to reform has correlated to economic growth and internal stability.
    But new factors, not anticipated by the authors of SEED and FSA, 
have complicated the picture. Familiar transnational threats, such as 
organized crime and the illegal narcotics trade, have grown in scope 
and virulence. Relatively new challenges--extremism, human trafficking, 
HIV/AIDS--have arisen, threatening to undermine political and social 
stability. Vastly increased poppy production in Afghanistan is flowing 
into Central Asia, and on into Russia, the Balkans, and Western Europe, 
leaving a trail of corruption in its wake. Organized crime is 
especially entrenched in the Balkans, and is a major obstacle to 
establishing good governance and rule of law. HIV/AIDS is poised to 
ravage these transition countries, most particularly Russia and 
Ukraine.
    Furthermore, the creators of SEED and FSA did not foresee the 
complete collapse of the Communist-era social service infrastructure, 
which has resulted in an alarming decline in health and education 
indicators in many of these countries. In Ukraine, for example, the 
number of deaths surpasses the number of live births by a ratio of 197 
to 100. In Tajikistan, secondary school enrollment is half what it was 
at the end of the Soviet Union. These are but a few of the 
manifestations of declining quality of life that may eventually be 
reflected in political and social instability.
    Countries where political, economic, and justice sector reforms are 
incomplete (or completely absent, as in Belarus or Turkmenistan) are 
the most vulnerable to the destabilizing effects of transnational 
threats and deteriorating social conditions. That is why even as we 
direct an increasing proportion of our SEED and FSA assistance to 
address transnational threats and social sector problems, we continue 
to focus the largest share of these accounts on fundamental economic 
and political reform.
    In the Balkans, we have energetically pursued the downsizing of the 
international military presence in a region recovering from more than a 
decade of violent ethnic conflict. In Bosnia and Herzegovina, defense 
reform took a quantum leap forward with the creation of a state-level 
Ministry of Defense and on December 2, 2004, the NATO-led Stabilization 
Force (SFOR), that had ensured the peace and stability as civilian 
reconstruction progressed, successfully completed its mission and a 
European entity, the European Union Force (EUFOR) assumed 
responsibility for stability. But Euro-Atlantic integration cannot be 
completed until Serbia and Montenegro, Croatia, and the Republika 
Srpska entity in Bosnia cooperate fully with the International Criminal 
Tribunal for the former Yugoslavia (ICTY); nothing would do more to 
advance the cause of peace than the arrest and transfer to The Hague of 
Radovan Karadzic, Ratko Mladic, and Ante Gotovina. Meanwhile, in Kosovo 
stability remains fragile, as evidenced by the ethnic conflict that 
erupted last March, resulting in death and injury. Our policy objective 
is to help build a secure, stable, and multiethnic Kosovo that can be 
fully integrated into Europe. United States assistance is helping 
Kosovo achieve that goal through implementation of the Standards for 
Kosovo. In mid-2005, the Contact Group will review progress on 
Standards implementation, and if results are positive the international 
community will move toward a process to address Kosovo's future status.

Looking Forward: Strategic Priorities
    The fall of the Berlin Wall and the breakup of the Soviet Union 
fundamentally changed our world and challenged us to develop new 
foreign policy approaches, backed up by new foreign assistance 
programs. Fifteen years later, we are faced with a new set of complex 
challenges, forcing us to to reorder priorities. Following is a list of 
the key priorities we have set for our assistance programs over the 
next few years.
    1. Supporting Partners in the Global War on Terrorism: As I have 
mentioned, many countries are already contributing to internatonal 
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. If not for the participation of these countries in 
the Balkans, OIF, OEF, and ISAF, the burdens on American troops would 
be greater. We need our partners to be interoperable with the U.S. 
military and with NATO. We need them to be trained in modern military 
practices. Our security assistance through FMF, IMET, and PKO is truly 
an investment in our own security.
    2. Facilitating Euro-Atlantic Integration: For those countries with 
governments committed to integration with western institutions and 
willing to tackle the tough issues (like corruption) that stand in the 
way of that goal, we focus assistance on accelerating reforms and 
consolidating the institutions of a market-based democracy. Bulgaria, 
Romania and Croatia are examples of countries that soon will graduate 
from such United States assistance. Bulgaria and Romania are due to 
complete their SEED programs over the next few years, joining their 
fellow SEED graduates as EU members in 2007. Croatia's SEED program 
will begin to phase out in 2006, with prospective EU membership 
contingent on cooperation with the ICTY. Georgia and Ukraine are now on 
a similar track, but at the beginning of the process. In addition, 
security assistance helps with integration with NATO, which furthers 
trans-Atlantic relations. SEED and FSA funded programs are key to 
advancing the broad USG goal of creating law enforcement agencies, 
specialized units, legislation and criminal justice sector systems that 
are harmonized with European and internationally accepted standards.
    3. Promoting Democracy: The experience of the past 15 years has 
shown us time and again the value of patient support for democratic 
transition. Even in places where democratization at one time seemed to 
be going in reverse--Slovakia, Serbia and Montenegro, or Ukraine, for 
example--slow and persistent support provided to civil society groups, 
human rights advocates, democratically oriented political parties and 
movements, and independent media eventually proved decisive. We have 
also learned how effective it can be to reinforce our technical 
assistance with the right diplomatic message about the priority we 
attach to democratic development. This will be particularly important 
in the future, as the events of the past year in Georgia and Ukraine 
have exacerbated government suspicion in the rest of the Eurasia 
region, leading to harassment of NGOs and democracy programs. As we 
look ahead to important elections this year in Macedonia, Moldova, 
Albania, the Kyrgyz Republic, and Azerbaijan, it will be critical to 
synchronize assistance with diplomacy.
    4. Empowering Entrepreneurs: 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. The creation of capital markets, strengthening of 
property rights, deregulation, rationalization of tax policies, 
commercial law reform, promotion of regional trade, identifying areas 
of competitiveness and privatization of land--especally in rural 
areas--are the keys to building a vibrant market economy, and we are 
working on all these issues throughout the region. Increasingly though, 
we are focusing on support for the emerging class of entrepreneurs, 
which we do through training and lending facilities. Small and medium 
businessowners can be the catalyst for job creation and economic 
growth, even in the most desperately poor areas of our region.
    5. Fighting Transnational Threats: 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 rates. Because our resources alone cannot 
fully address this problem, we are coordinating closely with the 
European Union and the United Nations on the drug issue, while also 
leveraging grant resources from the Global Fund to Fight AIDS, 
Tuberculosis, and Malaria to address the HIV/AIDS challenges. At the 
same time, we expect to continue devoting significant resources to 
combat human trafficking in fiscal year 2006.

FSA and SEED Phase Out
    Mr. Chairman, although there have been clear successes in these 
transition countries we never stop retooling our strategies, adjusting 
programs to fit changing realities, and trying to ensure that our 
programs are cost-effective. We are also aware that the ultimate goal 
is to see the need for the SEED and FSA accounts disappear. These were 
conceived as transitional accounts, with programs expected to phase out 
when stable market democracies emerged to take the place of the former 
Communist states. Consistent with this original intent, we conducted, 
in 2004, a comprehensive interagency review of the transition status of 
all 12 FSA countries and the 5 SEED countries slated to continue 
receiving assistance after fiscal year 2006. The review analyzed 
progress in the political, economic, social, and security/law 
enforcement sectors, and ultimately recommended phase-out dates for 
each sector of assistance in each country. These phase-out dates have 
been identified for planning purposes and do not convey any commitment 
to funding levels or entitlement to assistance until that time. 
Comparative analysis conducted in the course of the phase-out review 
made starkly clear that the post-Soviet transition process in democracy 
and the social sector has not been as fast as the founders of the SEED 
and FSA accounts had anticipated. In fact, in both of these sectors 
there has been considerable backsliding in recent years. 
Notwithstanding the important breakthroughs of the past year, there is 
a long way to go before the original intent of SEED and, especially, 
FSA can be realized. There are sure to be setbacks along the way, and 
the coming years will require us to maintain a long-term perspective 
and to persist in engaging the peoples and governments of the Eurasian 
countries through technical assistance, training, exchanges, and 
partnership programs.

Conclusion
    We have not yet seen the emergence of full-fledged failed states in 
our region, but we are ever alert to the warning signs. In this regard, 
we view our assistance programs as a form of preventive medicine. We 
are making investments today aimed at preventing the future growth of 
extremist and anti-American ideologies, of organized crime and 
infectious disease and other forces that could ultimately touch our 
shores.
    As I stated at the beginning of my remarks, we also view our 
assistance programs as an indispensable tool of our diplomacy, that 
helps us garner support for immediate, as well as longer term foreign 
policy objectives. And, in that context, it is worth emphasizing that 
the overwhelming support we have received from the recipients of SEED 
and FSA assistance in the global war on terrorism is not just based on 
the policies of governments currently in power. I truly believe that in 
most 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 
nongovernmental 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 strong enough to withstand the 
ups and downs of bilateral relations over time. That is an excellent 
return on the investment of our foreign assistance dollars, and it one 
that members of this committee can be proud to have supported.

    Senator Allen. Thank you, Secretary Bradtke for that 
summation but also the spirit of your remarks and the purpose 
of these funds. I appreciate your leadership and guidance. Now 
we'd like to hear from Administrator Kent Hill.

STATEMENT OF HON. KENT R. HILL, ASSISTANT ADMINISTRATOR, BUREAU 
     FOR EUROPE AND EURASIA, U.S. AGENCY FOR INTERNATIONAL 
                  DEVELOPMENT, WASHINGTON, DC

    Mr. Hill. Thank you, Mr. Chairman, for the opportunity to 
once again appear before this committee and you, to talk about 
the work of Europe and Eurasia and the work that USAID is doing 
there.
    I do want to express my appreciation that I am here with my 
copanelist, Robert Bradtke, and I also want to acknowledge the 
presence in the chamber of Tom Adams, who is not only the 
coordinator for assistance from the State Department, but a 
close colleague and a good friend who models the kind of 
attitude that makes good collaboration possible. I really 
appreciate that, Tom.
    I also want to suggest at the outset, strongly suggest, in 
fact, that I do affirm and strongly support our budget and 
operating expense requests for Europe and Eurasia. Allocations 
at such levels would help us to achieve the overriding goal 
that we share with you for the region which is, in a phrase, 
the establishment of market-oriented democracies with 
responsible social safety nets.
    We have much to report that's positive, the performance of 
some of our recipients has been sufficiently impressive that we 
are ending our bilateral assistance, and, in fact, as you know, 
between 1996 and 2000, we graduated country programs for the 
eight states in the Northern Tier of Central and Eastern 
Europe, and over the next several years we will have graduated 
missions from Bulgaria, Croatia, and Romania. And we plan to 
phase out of economic sectors in Kazakhstan, Russia, and 
Ukraine over the next several years as well.
    Within the Millennium Challenge Account, both Armenia and 
Georgia have been declared eligible for resources and Albania 
has been designated as a threshold country. Our missions in 
each of the three countries are collaborating with host country 
governments and the Millennium Challenge Corporation to produce 
programs that will effectively use MCA resources.
    The region is growing robustly, a far cry from the 1990s 
when there were episodes of negative growth. In fact, in 2004, 
Southeast Europe grew 5 percent, and Eurasia 7.4 percent, owing 
in part, to United States aid efforts to encourage economic 
reforms, promote competitiveness, spur agricultural activity, 
enhance small and medium enterprises, and to make energy 
sectors more efficient. And we are making some progress and 
headway in the area of freedoms in the region.
    The most tangible expressions of popular empowerment are 
indeed Georgia's Rose Revolution, and Ukraine's Orange 
Revolution, but, in fact, these were not revolutions at all. 
They were, instead, examples of democracy at work. What was 
revolutionary is that democracy simply was allowed to work.
    Also, more than 70 percent of our recipients are now ranked 
as free, or partly free by Freedom House, though sadly we must 
note that Russia moved from the ranking of partly free, to not 
free in 2004, which emphasizes the need to continue our support 
of democracy activities in that country.
    In the area of changes that affect peoples' lives, what we 
call the social transition region, USAID has developed 
effective HIV prevention programs, worked toward countering the 
deadly impact of injecting drug use, controlled a diphtheria 
epidemic in Eurasia, demonstrated internationally approved and 
cost-effective TB control approaches, offered women 
alternatives to abortion, revolutionized care for orphans and 
vulnerable children, strengthened pension programs for 
retirees, improved the targeting of social benefits, and made 
teaching methods more effective.
    Nevertheless, a number of critical challenges persist. 
First, unemployment continues to plague the region. In 
Southeastern Europe unemployment rates can be as high as 42 
percent in the case of Bosnia-Herzegovina, and on average they 
exceed 20 percent. We're especially cognizant of the need to 
support meaningful employment opportunity in Islamic majority 
countries and regions such as Albania, Central Asia, and the 
North Caucasians because, absent political rights and jobs and 
hope, segments of those populations are more vulnerable to 
extremist rhetoric, and may be drawn toward radical Islamic 
elements and terrorism. There is a connection between success 
in development, and whether these areas are more or less 
vulnerable to forces that we know are problematic.
    A second challenge that needs to be mentioned, is since the 
collapse of the Soviet Union, democratic freedoms have 
generally stalled or regressed in Eurasia with the exception of 
Georgia and Ukraine, and the democracy gap between Southeastern 
Europe and Eurasia continues to widen, not narrow.
    The committee is undoubtedly aware of the backsliding in 
Russia. Moldova elected a Communist government in 2001 and more 
importantly, shows some signs of moving away from earlier 
reforms. We weren't sure that was going to be associated with 
the Communist government initially, but that seems to be the 
direction they're headed. We're very much aware, of course, 
that Belarus and Turkmenistan remain extremely repressive 
states.
    A third challenge is the area of social transition. We are 
contending with a health crisis, illustrated by falling life 
expectancies in Eurasia, a fast growing HIV infection rate 
which is mainly fueled by injecting drug use. In addition to 
most disturbing demographic trends in Eurasian countries such 
as Russia, there is the problem of multidrug resistant TB rates 
in the region, which are among the highest globally, and, in 
fact, are categorized as epidemic in proportion. These 
difficulties threaten the progress that we have made in the 
economic and democratic transition areas, and that's a point to 
keep seriously in mind.
    Fourth, corruption and trafficking in persons are important 
crosscutting themes. The corruption index compiled by Freedom 
House scores 17 Europe and Eurasia countries at five or higher, 
on a scale where seven represents the worst possible level. As 
for trafficking in persons, as many as 25 percent of 
trafficking victims worldwide come from Europe and Eurasia. We 
need to redouble our efforts to get our recipients in the 
region to integrate into regional and global organizations such 
as the European Union, NATO, and the World Trade Organization. 
In the case of the European Union, that means having our 
missions continue to work with host country governments to meet 
EU accession requirements.
    Now I want to say just a quick word about the foreign 
policy context for all of this. The Europe and Eurasia region 
remains extremely important to the United States. America's 
most important foreign policy and security interest in the 
region is still Russia, the world's second largest exporter of 
oil in 2002. The United States needs Russia as a strong and 
reliable long-term partner in addressing issues of mutual and 
global importance such as nonproliferation, counterterrorism, 
and HIV/AIDS. Quite apart from development objectives are 
maintenance of connections with Russia at a number of levels, 
including security and military, commercial, and science just 
to name a few. This is vital to American foreign policy 
understandings and interests.
    And in conclusion, the committee's invitation letter, 
Senator Allen, asked us to testify about our strategy to 
promote freedom and democracy in the region, and I think it's 
imperative that our work in democracy, as well as in other 
areas, stay the course despite the difficulty of the task and 
the occasional bumps along the way. After a decade and a half 
working in the region, we are more convinced than ever that 
premature disengagement can have enormous costs in a negative 
way long term. Many of our programs have long gestation 
periods.
    A case in point is indeed Ukraine. We spent a number of 
years building up civil society, and a mature civil society 
together with timely elections assistance were the key tools 
that the country's populace required to make a contribution to 
the Orange Revolution. But in the end, it's got to be noted 
that final victory can only be secured by the will of the 
people, not by the assistance of international donors. We can, 
however, be a responsible supporter of the aspirations of free 
people, and those who long for freedom.
    Thank you, Mr. Chairman, I would ask that my full written 
testimony be included in the record, and I welcome the 
opportunity to respond to questions. Thanks.
    Senator Allen. Thank you, Administrator Hill, your entire 
statement will be made a part of the record.
    [The prepared statement of Mr. Hill follows:]

 Prepared Statement of Hon. Kent R. Hill, Assistant Administrator for 
    Europe and Eurasia, U.S. Agency for International Development, 
                             Washington, DC

                              INTRODUCTION

    Chairman Allen, distinguished members of the Committee on Foreign 
Relations, thank you for the opportunity to testify on United States 
foreign assistance programs for the countries of Europe and Eurasia.
    When the Berlin Wall fell in 1989 and the Soviet Union collapsed in 
late 1991, the Europe and Eurasia region became a new frontier for the 
United States Goverment. Your committee responded through the 
authorship of the Support for East European Democracy (SEED) Act of 
1989 and the Freedom for Russia and Emerging Eurasian Democracies and 
Open Markets (FREEDOM) Support Act (FSA) of 1992. From the inception of 
these acts, USAID has been the main federal agency managing programs to 
promote democracy and human rights, to introduce and institutionalize a 
market economy, and to alleviate the social and humanitarian problems 
in the former Communist states of Europe and Eurasia. Our underlying 
objectives in the region have been and continue to be freedom, peace, 
prosperity, and regional stability.
    Since we initiated work over a decade and a half ago, extraordinary 
progress has been registered across the region, particularly in the 
democracy/governance and economic growth areas, though much remains to 
be done in some countries. Notable achievements include (a) the 
reemergence of positive economic growth since 2000 after years of 
contraction, (b) Freedom House's ranking of 19 of the former Communist 
states as free or partly free with a return to communism unlikely in 
most countries, (c) Georgia's ``Rose'' Revolution and Ukraine's 
``Orange'' Revolution, and (d) the significant integration of a number 
of the region's states into regional and global organizations such as 
the World Trade Organization (WTO), European Union (EU), and the North 
Atlantic Treaty Organization (NATO). In fact, performance has been 
sufficiently good that we have graduated country programs for the eight 
Central and East Europe (CEE) Northern Tier countries, enabling the 
closure of the five Missions that serviced these countries.\1\ Three 
more country programs and their attendant Missions will close over the 
next several years--Bulgaria, Croatia, and Romania.
---------------------------------------------------------------------------
    \1\ The Northern Tier consists of the Czech Republic, Estonia, 
Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia; 
Southeastern Europe, Albania, Bosnia-Herzegovina, Bulgaria, Croatia, 
Macedonia, Romania, and Serbia and Montenegro, in addition to the 
province of Kosovo; and Eurasia, Armenia, Azerbaijan, Belarus, Georgia, 
Kazakhstan, the Kyrgyz Republic, Moldova, Russia, Tajikistan, 
Turkmenistan, the Ukraine, and Uzbekistan.
---------------------------------------------------------------------------
    Still, a number of challenges persist--in encouraging economic 
growth, developing democracies and promoting respect for human rights, 
improving health, and increasing educational levels.

   Encouraging Economic Growth. Unemployment and the lack of 
        opportunity make a society vulnerable to extremism. A vibrant 
        economy provides jobs and incomes. It allows people to buy 
        houses, farms, and shops, and gives them a stake in the future. 
        Job growth that benefits all regions and all ages, particularly 
        the young, is vital to the long-term stability of our region.
   Developing Democracies and Promoting Human Rights. The seeds 
        of democratic change are slow growing but can produce strong 
        results over time--patient support for democratic institutions 
        and human rights in Georgia and Ukraine gave their citizens 
        strong political voices. Support for the persistent voices of 
        freedom and democratic reform--civil society groups, democracy 
        and human rights advocates and movements, and independent 
        media--will prove decisive.
   Improving Health. Collapsing populations, eroding life 
        expectancies, and rising rates of drug abuse and HIV/AIDS are 
        too common in our region. To be viewed as viable, post-Soviet 
        States must ensure that basic health services are available to 
        their people. Improving health status, therefore, is critical 
        to political stability and a significant challenge.
   Increasing Educational Levels. Along with health care, 
        educational attainment was a bellwether of Soviet success. The 
        erosion of educational levels is seen by many as a symptom of 
        state failure. Lack of educational training also leaves youth 
        ill-prepared to fill today's job needs. Increasing educational 
        attainment, meeting current needs, is a significant challenge 
        to our countries.

                 THE GEOPOLITICAL AND SECURITY CONTEXT

    The E&E region continues to be of considerable foreign policy 
importance to the United States. Countering authoritarianism, human 
rights violations, and economic stagnation, which together provide fuel 
for domestic unrest, extremism of various sorts, and international 
terrorism, is key to protecting U.S. interests in the region.
    Since the September 11, 2001, attacks on the United States, the 
geopolitical and security importance of the countries of Central Asia 
and the Caucasus has increased dramatically. These states constitute 
the front line in helping to create stability in a region vulnerable to 
extremism, drug trafficking, and terrorism. The Caspian region's 
tremendous oil and gas resources add to its importance to the United 
States. The proven oil reserves of just two states in the Caspian Sea 
basin, Kazakhstan and Azerbaijan, are just slightly less than those of 
the United States. Also, Kazakhstan's Kashgan field is perhaps the 
largest petroleum find in 30 years.\2\
---------------------------------------------------------------------------
    \2\ National Energy Policy, pp. 8-12, Report of the National Energy 
Policy Development Group, GPO; May 2001.
---------------------------------------------------------------------------
    In the Southern Caucasus, the region's significant Caspian energy 
reserves, unresolved ethnic and nationalist conflicts, and the threat 
of international terrorism, underscore the states' geopolitical and 
security importance to the United States. Both Azerbaijan and Georgia 
provide the routes for the planned Baku-Tbilisi-Ceyhan oil pipeline and 
a South Caucasus Gas Pipeline, together which will bring the Caspian 
region's vast oil and gas resources to world markets. Also, an uneasy 
stalemate over Nagorno-Karabakh exists between Armenia and Azerbaijan. 
In Georgia, separatist movements in Abkhazia and South Ossetia threaten 
the integrity of the state internally, while the conflict in the 
neighboring Russian Republic of Chechnya places pressure on regional 
stability. The simmering conflict in Chechnya also has been tied to 
terrorist incidents, including the downing of two civilian airplanes, 
bombings in the Moscow metro, and the tragic attack in Beslan, although 
not all Chechen fighters are terrorists.
    The internecine warfare accompanying the collapse of the former 
Socialist Federal Republic of Yugoslavia in the 1990s not only caused 
humanitarian catastrophes but also 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 in the 
Balkans since the Milosevic era of the 1990s, ethnic and nationalist 
tensions and human rights abuses, combined with ongoing economic 
hardship and soaring unemployment, continue to drive instability, and 
the area remains an important geopolitical and security concern to the 
United States.
    Trade with, and investment in, the E&E region are certain to 
benefit the United States increasingly. 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 roughly $7.1 billion in 
2003 with direct investment adding to no less than $4 billion in that 
same year. USAID's work to combat corruption, promote enforcement of 
contract and other commercial laws, help E&E countries join the WTO, 
and lay the foundations for the private sector, have helped pave the 
way for American trade and investment.
    Extremism threatens to destabilize several areas within the E&E 
region. In particular, we must monitor the role of political and 
radical Islam and the conditions that permit Islamic extremism to 
flourish. USAID will continue to play a vital role promoting democracy 
and respect for human rights in the region. Not only is this the right 
thing to do, but it avoids adding fuel to the fire for any kind of 
extremism.
    In the National Security Strategy of September 2002, development 
was officially recognized for the first time as one of the three 
pillars of national security (along with defense and diplomacy). This 
represents a profound new understanding of how dangerous failed states 
are to the security of the United States and the rest of the world, and 
how important development assistance is in dealing with failing and 
failed states. We cannot ignore those regions in Southeastern Europe 
and Eurasia struggling to escape the debilitating legacy of communism. 
Thus, the work of USAID to root firmly democratic, economic, and social 
reforms in formerly communist, corruption-ridden Eastern Europe and the 
former Soviet Union, is central to United States security.
    Indeed, President Bush's National Security Strategy already has 
yielded fruit in Europe and Eurasia. E&E countries are becoming 
America's allies. Bulgaria, Estonia, Latvia, Lithuania, Romania, 
Slovakia, and Slovenia joined NATO in March 2004; the Czech Republic, 
Hungary, and Poland had joined the Organization in 1999. The backing of 
the region's states in the international war on terrorism and of U.S. 
policy also has been strong. Indeed, 19 recipient countries in Europe 
and Eurasia have been active supporters of Operation Iraqi Freedom, 
Operation Enduring Freedom, and/or the International Security Force in 
Afghanistan in 2004.
    Finally, America's most important foreign policy and security 
interest in the region is its relationship with Russia. The United 
States needs Russia as a strong, reliable, democratic, long-term 
partner in addressing issues of mutual and global importance such as 
nonproliferation, counterterrorism, and HIV/AIDS. Russia also is an 
energy powerhouse. In 2000, it was the world's second largest exporter 
of oil, and it holds one-third of the world's proven natural gas 
reserves.\3\ Quite apart from development objectives, our maintenance 
of connections with Russia at a number of levels, including security, 
military, commercial, and science, to name a few, is vital to United 
States foreign policy interests.
---------------------------------------------------------------------------
    \3\ National Energy Policy, pp. 8-12.
---------------------------------------------------------------------------
                               RESOURCES

    From the inception of the SEED and FSA accounts through fiscal year 
2005, Congress has appropriated a total of $17.3 billion in assistance 
under both accounts to the region. This excludes this year's $60 
million Ukraine supplemental appropriation. 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 for the E&E region. In fiscal year 2005--the last 
year for which moneys have been appropriated, USAID administered the 
lion's share of both SEED and FSA moneys, 66 percent in the case of 
SEED and 67 percent for FSA.
    The fiscal year 2006 request, including $382 million for SEED and 
$482 million for FSA, will be directed to those remaining gaps defined 
by the Bureau's Monitoring Country Progress (MCP) system, taking into 
consideration the best judgment of EUR/ACE, Mission, and Bureau staff 
on the recipient's commitment, the likelihood of progress, and the need 
for continued investments.

              JOINT STATE DEPARTMENT/USAID STRATEGIC PLAN

    In order to make the new focus on development in the U.S. National 
Security Strategy operational, the U.S. Department of State and USAID 
developed a Joint Strategic Plan (August 2003). It identifies 4 
strategic objectives, 12 subject areas, and 13 priorities. USAID's E&E 
Bureau focuses on mainly three subject areas under the objective 
``Advance Sustainable Development and Global Interests.'' These are:

   Economic prosperity and security;
   Democracy and human rights; and
   Social and environmental issues.

    In addition, USAID programs in the E&E region advance the joint 
strategy's subject areas of regional stability, international crime and 
drugs, humanitarian response, and public diplomacy.\4\ We promote 
regional stability through our conflict resolution work--most of which 
takes place at the grassroots level--in the Balkans, the Caucasus, and 
Central Asia, and, with Economic Support Funds, Cyprus and Northern 
Ireland. Our work in helping to strengthen laws and judicial systems 
and in promoting transparent and accountable public and private 
institutions together which combat corruption contributes to minimizing 
the impact of international crime and drugs on the United States and 
its citizens. In the unfortunate cases when it has been necessary, we 
have provided humanitarian responses due to crises in the Balkans, the 
Caucasus, and elsewhere. Also, 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.
---------------------------------------------------------------------------
    \4\ The other joint strategic subject areas are: Counterterrorism, 
homeland security, weapons of mass destruction, support of American 
citizens, and management and organizational excellence.
---------------------------------------------------------------------------
    The priorities from the State-USAID strategic plan with high 
relevance in the E&E region are:

   Democracy and economic freedom in countries in the region 
        with significant Muslim populations,
   Alliances and partnerships, particularly the strengthening 
        of (a) ties to NATO and the European Union and (b) United 
        States bilateral relationships with Russia and other E&E 
        countries and allies in Asia and the Middle East, and
   HIV/AIDS prevention, treatment, and care.


                              WHITE PAPER

    USAID has produced a document ``U.S. Foreign Aid: Meeting the 
Challenges of the Twenty-First Century,'' the so-called ``White Paper'' 
that provides the framework for all its work. The core goals within the 
USAID ``White Paper'' are to (a) promote transformational development 
consisting of sustained democratic, economic, and social change, (b) 
fortify fragile states, (c) support strategic states as determined by 
the Department of State and the National Security Council, (d) provide 
for humanitarian help, and (e) address global and transnational issues 
and other special concerns, e.g., HIV/AIDS. While a number of E&E 
countries or entities can be classified as fragile (Bosnia-Herzegovina, 
the Kyrgyz Republic, Serbia and Montenegro, and Tajikistan) or 
strategic (Cyprus, Kazakhstan, Kosovo, Northern Ireland and the 
Republic of Ireland, Russia, Turkey, Turkmenistan, Ukraine, and 
Uzbekistan), the greatest proportion of activities, even in fragile or 
strategic countries, are transformational development in nature. The 
White Paper also disaggregates countries by income status (low income, 
middle income) and commitment to reform (weak, fair, good, top).

                                RESULTS

    USAID is pleased to report to Congress that those programs that we 
administer are having a profound impact on the lives of the populaces 
of our recipient countries.
Economic Prosperity and Security
   In Azerbaijan, our program in agriculture has created over 
        35,000 jobs, working with over 150 enterprises that have 
        entered new markets. Also, a 100-member Agro-lnput Dealers 
        Association that we helped create is providing fertilizer, 
        seeds, and other agricultural chemicals to some 40,000 farmers 
        through a network of dealerships associates.
   While we have a number of credit programs in the region that 
        are providing for jobs, at the forefront are those for Russia. 
        Under the credit programs that we support, small and medium 
        enterprises were provided last year over 51,100 loans worth $83 
        million. These loans created or sustained some 82,700 jobs by 
        enabling these enterprises to grow their businesses 200 to 300 
        percent on average.
   To spur much-needed investment in Bulgaria that would 
        provide for additional jobs, we helped the country to 
        promulgate a new Law on the Promotion of Investments, develop a 
        National Investment Strategy, produce an ``Invest Bulgaria 2004 
        Guidebook,'' and promote the institutional development of the 
        National Council for Economic Growth--now the leading body for 
        public-private dialog and policy formulation. The end product 
        is a share of foreign direct investment in GDP that is 
        approaching 10 percent, the highest in Eastern Europe.
   We have assisted in the establishment of a robust mortgage 
        industry in Kazakhstan, a development that is providing for 
        much appreciated housing for the country. Residential and 
        mortgage lending surpassed $564 million last year, a $200 
        million increase from the preceding year, owing to the creation 
        of the Kazakhstan Mortgage Company that helped make housing 
        more affordable.
   USAID provided business and trade advisory services to 81 
        companies in the Kyrgyz Republic, producing portfolio growth in 
        excess of $18 million that provided for sales increases of 76 
        percent and productivity hikes of 66 percent for assisted 
        enterprises.
   Major advances in business registration were achieved in 
        Ukraine. Our program, active in more than 130 cities across the 
        country, reached 70,000 enterprises via the hotline that was 
        put in place, decreased the cost of business registration by 55 
        percent on average, reduced the time to obtain licenses and 
        permits by about 50 percent, and lowered significantly the 
        number of visits to government agencies, in addition to 
        dropping corruption in the process by 84 percent.
   In the energy area, we helped introduce new energy laws in 
        both Bulgaria and Macedonia, privatize seven electricity 
        distribution companies in Bulgaria, and hike by $2.2 million 
        collections by the state electricity entity in Georgia, among 
        other accomplishments.
Democracy & Governance
   Years of USAID democracy support contributed to the peaceful 
        democratic transitions that displaced corrupt, 
        semiauthoritarian regimes in both Georgia and Ukraine. In both 
        countries, USAID played a critical support role in fostering 
        the development and maturation of civil society groups that 
        ultimately mobilized to decry wide-scale electoral fraud. USAID 
        also played an important role in helping civil society 
        organizations to conduct necessary oversight over electoral 
        processes. After fraudulent elections, this led eventually to 
        elections which reflected the will of the people.
   In Croatia, USAID support has led to the vibrant growth of 
        service delivery and issues-based advocacy NGOs, which in 2004 
        enabled the mobilization of 62,000 citizens in advocacy-related 
        campaigns and the delivery of critical social services to 
        37,000 of the country's most vulnerable citizens.
   Through USAID assistance, the Macedonian Parliament 
        increased transparency, conducting its first ever public 
        hearings on key draft legislation that resulted in positive 
        legislative reforms. In addition, 24 members of Parliament 
        (MPs) opened new constituent offices, bringing to 60 the number 
        of such members who hold regular meetings with the public.
   Over a dozen indigenous NGOs that have served as electoral 
        process ``watchdogs'' in their own countries in Europe and 
        Eurasia have begun to work together in observing elections in 
        the region with USAID's sponsorship. This organization, the 
        European Network of Election Monitoring Organizations, fielded 
        approximately 1,000 monitors for the second and third rounds of 
        the Ukranian Presidential election and will send observer 
        missions to the parliamentary and Presidential elections in the 
        Kyrgyz Republic.
   Throughout the region, independent media assisted by USAID 
        and its partners are forcing governments and politicians to 
        answer difficult questions, are opening up the airwaves and 
        newspapers to stories that reveal both crime and corruption, 
        and are providing important information to improve the lives of 
        people.
Social & Environmental Issues
   Generally speaking, USAID has helped (a) control the 
        diphtheria epidemic in Eurasia, (b) demonstrate internationally 
        approved and cost-effective TB control approaches, (c) offer 
        women alternatives to abortion, (d) revolutionize care for 
        orphans and vulnerable children, (e) strengthen pension 
        programs for retirees, (f) improve the targeting of social 
        benefits, and (g) make teaching methods more effective.
   In Kazakhstan, where USAID has supported tuberculosis 
        control efforts since 1998, TB deaths have decreased 41.6 
        percent between 1998 and 2003, and the Centers for Disease 
        Control calculates that the USAID-supported TB control strategy 
        has saved more than 20,000 lives during that time.
   In Romania, USAID pioneered community-based programs to 
        reduce abandonment and institutionalization of children. The 
        steady decline in the number of children abandoned in 
        institutions over the past decade--from over 100,000 to just 
        over 24,000--demonstrates increased effectiveness of community 
        services provided to vulnerable groups. In the past year alone, 
        11,300 more children received community services than the year 
        before, bringing the total number in community care to more 
        than 76,800.
   In Ukraine, USAID's Maternal and Infant Health Project has 
        introduced evidence-based best practices for the care of 
        mothers and their newborns. These practices have resulted in 
        more rapid weight gain for mothers and their newborns, the near 
        elimination of newborns that become hypothermic after birth 
        (from 63 percent to near 0 percent), and an increase in 
        ``normal'' deliveries from 22 percent to 68 percent. Based on 
        this success, numerous other health care facilities have 
        requested to be included in the project. In addition, USAID/
        Ukraine reports that its family planning interventions have 
        contributed to an almost 50 percent reduction of the abortion 
        rate over the last 5 years.
   USAID's Healthy Russia 2020 program recently received 
        endorsement from the Ministry of Education for a family life 
        and health education curriculum that is expected to be used 
        throughout the country--the first such curriculum in Russia.

                           THE USAID PROGRAM

    USAID's principal goal within the E&E region remains the 
establishment of functioning democracies that have open, market-
oriented economic systems and responsive social safety nets. We will 
work to address the large disparities among E&E countries that exist in 
progress toward economic and democratic reforms (see the following 
chart). The eight countries of the European Northern Tier are well 
advanced in their transition to market-oriented democracies. 
Southeastern European countries have been plagued by instability from 
ethnic conflict throughout much of the 1990s and the disintegration of 
Yugoslavia. However, in recent years, reform progress among these 
countries has been impressive. In contrast, reform progress has lagged 
considerably in many Eurasian countries, particularly in 
democratization.


Assistance Area 1. Economic Prosperity and Security
    Across the E&E region, per capita income in 2003 is only one-fourth 
the average of advanced European economies, despite 5.2 percent annual 
economic growth since year 2000. Among E&E countries, only the CEE 
Northern Tier has sustained healthy annual rates of economic gowth over 
an extended period of time (averaging 4 percent since the mid-1990s). 
This has been sufficient to raise GDP in that subregion 20 percent 
above 1989 levels (please see the chart below). On the other hand, in 
2003, GDP in Southeastern Europe averaged about 10 percent below 1989 
levels, and, in Eurasia, it averaged 30 percent below. Still, since 
1999, economic growth has been the highest in Eurasia, though driven by 
factors, some of which may not last, including price increases for 
primary product exports (energy, metals, and cotton) and devaluations 
following the 1998 Russian financial crisis. Economic progress in the 
western Balkans countries, as well, remains fragile, due to weak global 
integration (small export sectors and little foreign direct 
investment).


    Several E&E countries view agriculture and related rural enterprise 
development as potential sources of growth. However, rural economies in 
many of these countries have been held back by relatively poor market 
infrastructure, excessive State controls, and lack of access to 
finance. These problems are exacerbated by agriculture subsidies 
imposed by the developed world that undermine the international 
competitiveness of E&E agricultural products.
    While the share of the economy controlled by the private sector has 
increased very impressively in nearly all E&E countries (excluding 
Belarus, Bosnia-Herzegovina, Serbia and Montenegro, Turkmenistan, and 
Uzbekistan), the international competitiveness of economies has shown 
little improvement, particularly so in Eurasia where monopolistic 
markets often prevail. In general, private enterprise in the region is 
inadequately prepared to participate in the global economy. Old systems 
for supplying inputs and for collecting and distributing products have 
collapsed, and new ones have yet to emerge. Institutions that support 
and regulate markets are weak.
    Unemployment looms large as an issue, especially in Southeastern 
Europe where rates on average exceeded 20 percent in 2003, including a 
whopping 42 percent in Bosnia-Herzegovina. In Eurasia, while official 
unemployment rates are generally in the single digits, the region is 
characterized by considerable underemployment. Many workers in the 
region either have (a) poor-paying jobs in the informal sector or (b) 
employment with state enterprises in which there is little actual work 
or pay. Generally speaking, youth in both subregions are 
disproportionately affected.
    More generally, E&E will target small- and medium-enterprise (SME) 
development across most of its recipient countries. Engines of economic 
growth, competitive SMEs can increase productivity, create jobs, 
provide incomes for an emerging middle class, and spearhead integration 
into regional and global economic systems. To stimulate SME growth, E&E 
will focus on (a) policy issues and (b) the development of clusters 
providing for enhanced competitiveness through the forging of linkages 
between economic agents and institutions. SME growth also depends on 
the adequacy and availability of appropriate labor skills. Hence, 
workforce development programs may be pursued to make SMEs more 
productive and competitive.
    An important aspect of SME development is country performance in 
agriculture. As our recipients reform, we will increasingly move within 
the agricultural sector from taking on policy issues to the development 
of markets, both internal and external. Within our market development 
work, competitiveness will increasingly emerge as a thrust.
    For selected SEED and FSA middle-income countries (Albania, 
Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Kazakhstan, Macedonia, 
Romania, Russia, and Serbia), a big push will be made to integrate them 
into global markets. These countries are better prepared to enter 
global markets. Hence, trade and investment promotion will take 
precedence in these countries.
    Most first stage economic reforms (liberalization of domestic 
prices, trade, and foreign exchange regimes and small-scale 
privatization) have been accomplished, except in the three Eurasian 
weak-performers (Tajikistan, 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.
    For their part, commercial law and property rights adjudication, 
important keys to the promotion of foreign investment, constitute 
complex issues that will be pursued across all our recipients, 
especially those recipients that possess a deep commitment to reform.
    We also have much unfinished work in the energy sector. Energy is 
an extremely important issue for E&E, and E&E Missions must remain 
engaged. Energy sectors are large especially in our Eurasian 
recipients, owing to their significant petroleum and natural gas 
sectors. Energy sectors also pose a major drain on government 
resources.
    Until energy sectors are reformed and efficiency gains realized, 
governments will not be able to devote the resources needed to address 
other critical problems, e.g., health and education. The deterioration 
of heating systems and the affordability of heat to the poor remain 
major economic and social problems in some countries.
Assistance Area 2. Democracy and Human Rights
    Although much of the region has not yet achieved the prosperity, 
peace, and security expected in the post-Soviet era, the level of 
personal freedom that exists today is well beyond what millions in this 
region knew for decades, and people do not want to lose these freedoms. 
For the most part (with the exception of Belarus, Turkmenistan, and 
Uzbekistan), the totalitarian impulse to interfere with citizens' 
private matters (beliefs, choice of work, travel, etc.) is no longer 
pervasive, Sadly, however, among many of the states in Eurasia, a 
perceptible movement back toward authoritarian patterns of political 
authority is being felt in a number of areas, including constraints on 
freedom of the press, restrictions on political activity and 
competition, executive influence over judiciaries, and discrimination 
against minority religions. Significantly, Russia dropped in Freedom 
House's rankings in its global survey of democratic freedoms from 
``partly free'' to ``not free'' in 2004.
    The remaining challenges facing democracy and governance are 
generally far greater in Eurasia than in Southeastern Europe. Since the 
collapse of the Soviet Union, democratic freedoms have generally 
stagnated in most of Eurasia, and the gap between Europe and Eurasia in 
building democracy continues to widen (please see the chart below)


    Because democratic reforms are stalled or regressing in most 
countries in Eurasia except Georgia and the Ukraine, most areas of 
assistance in democracy and human rights will be emphasized in that 
region, including municipal governance, rule of law, independent media, 
civil society including human rights advocacy, and political party 
development and elections. Especially important in the coming year will 
be assistance to support elections that meet OSCE standards in 
countries such as Azerbaijan, the Kyrgyz Republic, and Moldova, in 
addition to Macedonia in Southeastern Europe. Southeastern Europe is 
relatively advanced in civil society and electoral processes, so in 
that subregion the other forms of democracy and governance assistance 
will receive greater emphasis. As for states that are considered to be 
fragile, an important theme of programs early on was ethnic and 
religious tolerance.
Ethnic Extremism and Islam
    Ethnic and religious extremism is a major source of instability in 
several subregions within E&E. In particular, we need to encourage 
Islam to be a source of stability, rather than instability, within the 
region. Several of our recipients' governments actively discriminate 
against Islamic communities, a development that encourages radicalism. 
Diminution of the role that Islam plays in serving as a source of 
instability can be best accomplished through encouraging economic, 
democratic, and social development, since extremist behavior is often 
linked to socially, economically, and politically disenfranchised 
populations. We will consider (a) institutional mechanisms that 
encourage all groups of citizens to feel that they are part of the 
State and (b) specific educational and communication programs that 
promote the discussion and advancement of democracy, religious freedom, 
and economic liberty within the context of both secular and religious 
world views.\5\ USAID already has active programs to reduce tensions 
between, or discrimination against, religious groups in Kosovo, 
Macedonia, Uzbekistan, and elsewhere. E&E also will fund research to 
monitor such discrimination.
---------------------------------------------------------------------------
    \5\ See Strengthening Education in the Muslim World, PPC, June 
2003.
---------------------------------------------------------------------------
    In addition, we are especially cognizant of the need to provide for 
meaningful employment opportunities in Islamic-majority countries and 
regions such as Albania, Central Asia, and the North Caucasus. Absent 
political rights, jobs, and hope, segments of the countries' 
communities are more vulnerable to extremist rhetoric and may be drawn 
to radical Islamic elements and terrorism.
Assistance Area 3. Social and Environmental Issues
    Early assumptions that Soviet health and education sectors and 
social safety nets for vulnerable groups would survive and sustain the 
transition have often proven false. Indeed, the social transition has 
produced very disappointing indicators, revealing widespread declines 
in many aspects of health and education, degradation or elimination of 
social safety nets, and increased vulnerability of youth and other 
social groups. The fact that the majority of people in many E&E 
countries, today, are living less well materially than they did before 
the Soviet bloc crumbled threatens to undermine constituencies for 
economic and democratic reform in countries where people fail to 
perceive benefits from those reforms.
    The difference between the Southeastern European and Eurasian 
subregions in health indicators demonstrates an especially alarming 
pattern of decline which is summarized starkly by divergence in life 
expectancy (please refer to the chart below). Life expectancy is rising 
in Southeastern Europe and falling in Eurasia. Based on data for 2002--
the latest available, the largest gender differences in life expectancy 
worldwide also are found in Eurasian countries. Russian females with a 
life expectancy of 72, for example, live 13 years longer than Russian 
males (59 years). In contrast, the spread is 6 years in Western Europe 
and 7 years in the European Northern Tier countries. In sum, while in 
2002 life expectancies averaged between 72 and 74 years in Southeastern 
Europe, they stood between 65 and 69 years in Eurasia. The rapid spread 
of infectious diseases combined with lifestyle behaviors and resultant 
diseases are contributing greatly to the health crisis in Eurasia.


    Major health risks or demographic pressures that threaten the 
sustainability of reform include:

   Fast growing HIV rates, particularly in Russia, the Western 
        NIS states (Belarus, Moldova, and the Ukraine), and the Baltic 
        countries (Estonia, Latvia, and Lithuania);
   A tuberculosis (TB) epidemic that continues to soar and is 
        exacerbated by increases in HIV/TB coinfection and Multi-Drug 
        Resistant TB, such problems being most salient in the Central 
        Asian Republics (CARs), notably Kazakhstan (the other CARs are 
        the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan);
   High infant and child mortality rates in the CARs and the 
        Caucasus (Armenia, Azerbaijan, and Georgia);
   Continued high rates of abortion and maternal morbidity in 
        Azerbaijan, the CARs, Georgia, Moldova, and Romania;
   Aging and shrinking populations combined with declining life 
        expectancy in Eurasia;
   The decline in the capacity of health finance and delivery 
        systems to address the evolving epidemiology and demographics;
   Cardiovascular and other noncommunicable diseases that 
        account for three-fourths of all deaths (many prematurely); and
   Little attention to disease prevention and continued risky 
        behaviors that reduce life expectancy.

    The stock of human capital varies considerably across countries--
highest in Slovenia (and the other European northern tier countries) 
and lowest in Tajikistan (and in the remaining CARs and the Caucasus). 
Some indicators allow optimism that the worst of the social 
deterioration already may have occurred. For example, trends in real 
wages and, possibly, education expenditures and secondary school 
enrollment shares (the share of the population aged 15 to 18 that is 
attending secondary school) are slowly improving in a majority of E&E 
countries. Secondary school enrollment shares had declined in Eurasian 
countries from 60-70 percent in 1989 to 30-40 percent in the early 
2000s; declines, albeit not as great, also had taken place in these 
same countries at the primary level.
    Health will be an increasing concern for all E&E's Missions, 
building upon USAID experience to date. High abortion rates and low 
contraceptive rates throughout the region require continued attention 
to reproductive health in most E&E countries. E&E will focus on child 
survival and maternal health interventions in countries of greatest 
need. The Caucasus countries and the CARs have the highest under-5 
mortality rates in the transition region. Almost all our recipients are 
encountering difficulties with infectious diseases, including HIV/AIDS 
and tuberculosis (TB), and HIV/AIDS and TB funds will be targeted in 
those countries where infection rates for these diseases are highest, 
most notably Russia, Ukraine, and Central Asia. Also, work in health 
systems and administration will be entertained principally in those 
countries where there is commitment to reform, e.g., Albania and 
Uzbekistan, although it also could be pursued in other countries to 
build commitment and improve system efficiencies.
    Especially through further collaboration with the World Bank and 
other donors, education assistance to selected countries/entities in 
Eurasia (Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan) and 
Southeastern Europe (Kosovo, Macedonia) has particularly high long-term 
potential. E&E will continue its existing basic and secondary education 
program in Central Asia, with vocational education an added emphasis in 
selected countries. Also, general university education in countries 
where E&E has already established a role, e.g., selected middle-income 
Southeastern European countries, will be supported, in addition to 
university-level business management education.
    We will address social protection and labor issues. E&E also will 
sponsor workforce competitiveness studies that identify skills training 
and labor market reforms required to spur economic growth. Finally, 
social sector reforms to deal with corruption will be an important 
element of E&E's programs; we will seek to eliminate rent-seeking in 
the delivery of services in both the health and education sectors.

                     CROSSCUTTING ASSISTANCE AREAS

    While some of the most important USAID priorities do not easily 
fall into the above three assistance areas, they are indispensable for 
achieving our basics goals, including values and social capital, 
corruption, trafficking in persons, and conflict.

                       VALUES AND SOCIAL CAPITAL

    USAID has always recognized that sustainable development is 
strongly supported by widespread acceptance among the beneficiary 
population of certain values necessary to the fair and efficient 
functioning of the State and the economy. To provide for values 
supportive of economic, democratic, and social development, E&E 
programs will more consistently seek ways to build social capital. The 
term ``social capital'' refers to the prevalent mindset that results in 
voluntary compliance with established laws, trust, cooperative 
behavior, and basic codes of conduct.\6\
---------------------------------------------------------------------------
    \6\ The phrase ``social capital'' has been used in recent times by 
many scholars (e.g., James Coleman, Francis Fukuyama, Robert Putnam, 
etc.) and institutions (e.g., the European Bank for Reconstruction and 
Development, the International Monetary Fund, and the World Bank).
---------------------------------------------------------------------------
    Social capital has deteriorated significantly in the E&E region 
since the transition began a decade and a half ago. Academic analysts, 
news media, and donors have generally underestimated the degree to 
which weak social capital in the former Soviet Union and the Eastern 
Bloc has undermined efforts to promote democratic and economic reform. 
Differences in the stock of social capital account for the pattern 
across the E&E region in which countries that experienced a longer and 
deeper exposure to communism have shown a slower pace of reform in the 
post-Soviet era.
    Our task is to seek ways to append a values and social capital 
enhancement dimension to existing programs. Likely involving more 
attention to youth, possible program areas include:

   Values education, including the development of curricula in 
        the area of character education. Materials could be gathered 
        and disseminated which rely on indigenous historical, literary, 
        religious, and political figures who embody the values that 
        need to be cultivated such as integrity and honesty;
   Exchange programs and training exercises that promote ethnic 
        and religious tolerance;
   Media projects, both written and visual, which feature 
        leadership and visionary characteristics; and
   Activities that strengthen civil society relationships. 
        Positive values will emerge when citizens participate in civil 
        society structures and see the benefits they bring.

                               CORRUPTION

    Corruption is endemic to much of the E&E region. The corruption 
index compiled by Freedom House scores 17 E&E countries at 5 or higher 
on a scale where ``7'' represents the worst level. Recent surveys 
confirm that citizens view endemic corruption as one of the region's 
most serious societal problems, ranking close behind poverty, political 
instability, and crime. In the presence of corruption, the Bureau's 
transition goals (democracy, economic, and social) have been slowed or 
blocked. In sum, while programs directed specifically at reducing 
corruption may be undertaken, an orientation toward reducing corruption 
will run through numerous programs in countries where it is a 
widespread problem.
    The E&E strategic approach to addressing corruption promotes 
transparency, accountability, prevention, enforcement, and education. 
We are promoting transparency through our work to create open, 
participatory governments. We promote accountability through support of 
(a) checks and balances amongst government branches and from outside 
sources such as independent media, trade associations, and political 
parties, (b) inspector general functions, and (c) the decentralization 
of power to other layers of government. Our programs support prevention 
of corruption through the systemic reform of institutions and laws to 
decrease opportunities and incentives for rent-seeking behavior. USAID 
is working to promote enforcement through the consistent application of 
effective standards and prohibitions. Finally, USAID programs support 
educational efforts that point out the adverse consequences of 
corruption, the tangible benefits of reform, and the concrete potential 
for positive change. Our approach to corruption also relies on USAID's 
new agencywide Anti-corruption Strategy.

                      TRAFFICKING IN PERSONS (TIP)

    TIP is a major issue in the E&E region; as many as 25 percent of 
trafficking victims worldwide come from the E&E region. The USG 
considers human trafficking to be a multidimensional threat. It 
deprives people of their human rights and freedom; it is a global 
health risk; and it fuels growth of organized crime. Some of our field 
Missions already address TIP through activities which strengthen local 
government, promote SME development, support advocacy groups, utilize 
media to sensitize potential victims and populations, emphasize the 
health-related needs of victims, and fortify the rule of law.
    When targeting TIP, efforts on the part of the USG, including those 
of USAID, should focus on the three ``Ps,'' namely Prevention, 
Protection, and Prosecution:

--Prevention of TIP through economic empowerment; crisis prevention; 
        public education and awareness; capacity building of 
        government, NGOs and the media; and legal reform and 
        implementation;
--Protection of victims through assistance for government and NGO 
        referral services and protection of witnesses; and
--Prosecution of criminals through improved judicial coordination.\7\
---------------------------------------------------------------------------
    \7\ See Trafficking in Persons: The USAID Strategy for Response, 
February 2003.

    Increasingly, we are expanding the anti-TIP paradigm to include the 
three ``Rs,'' consisting of rescue, removal, and reintegration of 
victims.

                   CONFLICT MANAGEMENT AND MITIGATION

    In the wake of the collapse of the Soviet bloc, political and 
ethnic tensions have risen and fueled bloody conflict in the name of 
national and ethnic liberation. For example, between 1991 and 1995, 
over 300,000 people lost their lives in violence associated with the 
breakup of Yugoslavia. The E&E Bureau has integrated its conflict 
mitigation efforts within its work in each of the three transition 
subject areas. In order to address conflict vulnerabilities, we 
encourage programming that implicitly builds social cohesion, 
communication, and understanding. This type of programming might 
include regional cooperation, the promotion of economic growth via SME 
development, the empowerment of communities through the collective 
resolution of practical local issues, support for civil society 
advocacy actions, the engagement of idle youth, the decentralization of 
government for improved service delivery at the local level, and the 
promotion of transparency by strengthening actors and institutions 
related to the rule of law. Notable activities include tolerance 
projects in both Bosnia-Herzegovina and Russia and the assessments for 
Kosovo and Serbia and Montenegro led by the Agency's Conflict 
Management and Mitigation Office.

                 THE MILLENNIUM CHALLENGE ACCOUNT (MCA)

    Announced on March 14, 2002, by President Bush, the MCA is designed 
to provide additional assistance to countries that have met specific 
indicators related to ruling justly, investing in their people, and 
encouraging economic freedom. With strong bipartisan support, Congress 
authorized the Millennium Challenge Corporation (MCC) to administer the 
MCA and provided $1 billion in initial funding for fiscal year 2004. 
President Bush's request for the MCA in fiscal year 2005 was $2.5 
billion, of which Congress appropriated $1.5 billion. The President has 
pledged to increase funding to $5 billion per annum in the future. 
These funds can be an important tool in helping leverage significant 
reforms.
    The MCC, which administers the MCA and for which USAID 
Administrator Natsios is a board member, met in May 2004 and identified 
16 countries as eligible for MCA assistance, including Armenia and 
Georgia from the E&E region. The MCC Board also approved a ``Threshold 
Country'' program which will be directed toward a number of countries 
that have not met the requirements for MCA eligibility but demonstrate 
significant commitment to meeting those requirements. From the E&E 
region, the Board selected Albania to be eligible for threshold country 
status. New candidacy criteria for fiscal year 2006 may provide MCA-
eligibility and threshold status for more E&E countries.
    All USAID Missions in the E&E region will work to encourage our 
recipient countries to focus on MCA's criteria of ruling justly, 
encouraging economic freedom, and investing in people.

                      PHASE OUT OF USG ASSISTANCE

    The USG Goverment always has planned that assistance to the region 
would be temporary, lasting only long enough to ensure successful 
transition to sustainable, market-oriented democracies with responsive 
social safety nets. The performance of Bulgaria and Romania in fiscal 
year 2002, the year the two countries were notified that they would be 
accepted into NATO, is used as thresholds, representing sufficient 
transition performance to phase out SEED and FSA assistance. Accession 
to NATO demonstrated that the two countries had progressed to the point 
that they had reached the irreversible path to becoming market-oriented 
democracies. USAID/E&E's MCP system provided the analytical base for 
systematic interagency review led by EUR/ACE to establish timeframes 
for the phase out of USG assistance in all our recipients. Through this 
interagency, analytical process, phase-out dates have been determined 
for each of the economic, democratic, social, and law enforcement 
sectors for our Southeastern European and Eurasian recipient countries. 
These phase-out dates have been identified for planning purposes and do 
not convey any commitment to funding levels or entitlement to 
assistance until the established dates. USAID/E&E's Bureau also uses 
these data to adjust strategies to address remaining gaps and maximize 
the impact of USG assistance.
    Over the next several years, three country programs will graduate 
and their Missions will close, including Bulgaria, Croatia, and 
Romania. In addition, we plan to phase out of the economic sectors in 
Kazakhstan, Russia, and Ukraine also over the next several years. These 
decisions all assume that performance continues as projected. Across 
all the region's countries, E&E will monitor closely transition 
indicators using the Bureau's MCP system as well as Mission and Bureau 
staff understanding of problems, progress, and prospects in each 
sector.

    CYPRUS, NORTHERN IRELAND AND THE REPUBLIC OF IRELAND, AND TURKEY

    The E&E Bureau also administers Economic Support Fund (ESF) 
allocations for Cyprus, Northern Ireland and the Republic of Ireland, 
and Turkey, and the fiscal year 2006 request includes $42 million in 
such allocations. Turkey, as a front-line state against the war on 
terrorism, will benefit from $10 million under the fiscal year 2006 
request; Cyprus, $20 million; and Northern Ireland and the Republic of 
Ireland, $12 million. For fiscal year 2005, $13.4 million had been 
appropriated for Cyprus; $21.8 million for Northern Ireland and the 
Republic of Ireland; and zero for Turkey. Turkey, however, had received 
$10 million in fiscal year 2004, and these moneys funded activities, 
including (a) support for a World Bank prenatal care and education 
activity under the Bank's Social Risk Mitigation Project; (b) an 
International Office of Migration antitrafficking activity; and (c) a 
business partnering program implemented through the American Chamber of 
Commerce. As for Cyprus and Northern Ireland, past allocations have 
supported reconciliation and conflict resolution amongst warring 
factions. For their part, moneys that Cyprus received in the past also 
have been funding partnership activities for economic growth and a 
scholarship program. An important intermediary for the Ireland moneys 
is the International Fund for Ireland.

                              CONCLUSIONS

    We are proud of our successes in the E&E region, a region that 
remains of considerable foreign policy importance to the United States. 
Our programs, which are integrated into the frameworks set by the 
National Security Strategy, the Joint State/USAID strategy, and the 
USAID ``White 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, I would urge the distinguished members of the Senate 
Foreign Relations Committee to support our Budget and Operating Expense 
requests that are focused, for the most part, on countries that 
demonstrate a commitment to sound development principles and democracy. 
Allocations at such levels would help us to achieve our overriding goal 
in the region--the establishment of market-oriented democracies with 
responsible social safety nets. Our very close working relationships 
with the State Department Coordinator would allow us to program 
resources in a way that would help us meet that goal.
    Finally, it is imperative that our work stay the course, despite 
the difficulty of the task and the occasional bumps along the way. 
After a decade and a half, working in the region, we have learned that 
premature disengagement can have enormous costs in the long run. Many 
of our programs have long gestation periods. A case in point is 
Ukraine. We spent a number of years building up civil society, and a 
mature civil society together with timely elections assistance were the 
key tools that the country's populace required to carry out the largely 
successful ``Orange'' Revolution.
    In the end, final victory can only be secured by the will of the 
people, not by the assistance of international donors. We can, however, 
be a responsible supporter of the aspirations of free people and those 
that long for freedom.
    Thank you, Mr. Chairman.

    Senator Allen. I very much enjoyed looking at this 
statement and I recommend its reading to many others. We can 
talk in theory and principles, and that's important, but one 
needs to be guided by postulates of life principles and 
philosophy. Where I'm impressed by you and your agency is you 
take from different groups ratings, metrics, measurement. Maybe 
that's from the sports I've grown up with, you don't just play 
and think you're winning, you either are or you're not, that's 
why you have wins and losses, and play to win.
    It is very interesting the various charts that you have in 
your testimony that will be made part of the record. You look 
on a chart economic reforms on one leg and democratic reforms 
on the other leg, and how the European Union, of course, is at 
the highest; the European Union, fifteen. Very close to them 
are Hungary and Poland, Estonia, Latvia, Lithuania, Slovenia, 
Slovakia, and the Czech Republic, and so they're making great 
progress, you see that. Then the next group is Bulgaria, 
Croatia, Romania, Macedonia, Bosnia and Servia, Montenegro, 
then Georgia and Ukraine in the third and furthest down as you 
went through these various gradations. That's a very 
interesting chart.
    Then the next chart is what's the gross domestic product of 
certain areas, the ones with greater freedom have greater 
prosperity. When they have those economic and democratic 
reforms, which means it's good for the people, greater hope, 
greater opportunity and also it charts in with the Northern 
Tier C.E.E., versus Southeastern versus Eurasia, and 
interestingly, and that's on the democratic freedoms front.
    Then you look at life expectancy at birth, so it's not just 
hope and opportunities, it's actually a healthier life that 
comes with greater freedoms and greater economic opportunities. 
In the Northern Tier life expectancy at birth has increased 
from it looks like about 71 now to 73 in just a little over 10 
years, Southeastern Europe stayed about the same and picked up 
just about the time Southeastern Europe was picking up there. 
Now Eurasia, not including Russia, actually life expectancy has 
gone down from about 70 to 67, Eurasia is also down from where 
it was in 1989.
    So these sort of things, and charts and graphs which are 
based on objective facts, give us an idea and a comfort that 
yes, these ideas are not just theory and they're not just 
platitudes, it's not academia or elected officials espousing 
those wonderful Jeffersonian principles, they actually work and 
have a positive impact on peoples' lives in the real world. I 
appreciate the way you work, and this is something, I think is 
helpful to those of us who, when we're spending the taxpayers 
money, want to be able to show that there's an impact, and it's 
not just, ``Gosh, don't we feel good by spending money?'' Go 
ahead, Secretary Hill.
    Mr. Hill. Yes, Mr. Chairman, I'd like to add one point to 
your observations, I'm pleased that the charts are helpful to 
you. We actually developed those at USAID 8 or 9 years ago, and 
we did it for two reasons: The first reason was we wanted a 
rational way to actually tell when a country was approaching a 
time when we could phase out or lower assistance, but we've 
discovered that there's been a second use of the charts that's 
been very helpful.
    Sometimes when Tom and I are traveling in that part of the 
world, we meet with a Prime Minister, or Minister of the 
Economy, we'll simply take out one of those charts, if we're in 
Central Asia for example, and put it down on the table, hand it 
to the Minister and say, ``This is where your country is in 
relation to your neighboring countries.'' And sometimes when 
they want to argue with us about what we have to say, when we 
show them the empirical facts that come from international 
agencies like the World Bank, or Freedom House, or the European 
Bank for Reconstruction and Development, they have to take 
seriously that they are lagging. And if you can also make a 
connection between the lack of democratic developments and the 
lack of economic development, it gets their attention, so we'll 
often leave the chart with them as something to think about. It 
sometimes seems to help.
    Senator Allen. It also gives them a sense of competition 
that, while these other countries are doing better, especially 
if you have neighboring countries. I know the Heritage 
Foundation has their Freedom Index, and a lot of these will, of 
course, to the extent especially these emerging democracies 
want to get investment. Romania, for example, is happy that 
Smithfield has invested in Romania, but to the extent that 
they're trying to get more investment in Poland or any of these 
other countries, it does help to have some objective way you 
can say, ``Hey, this is a good place to do business, here's 
someone else saying it. It's not just the economic development 
promoters saying, `Gosh this is the best country.' '' So, there 
are a variety of ways that these and other matrixes or 
measurements will make things better there.
    Let me ask you, Mr. Hill, about Russia. Because you look at 
this and you see where Russia is, not where it ought to be. 
They have the resources, they have capability, the intelligence 
of a population that should not be where they are in every one 
of these charts. No matter whether it's life expectancy, 
economic reforms, freedom reforms, and so forth, they have been 
backsliding by most objective measures on democracy in a 
variety of forms. I just want to know if you're discouraged by 
it, what's the future of assistance programs in Russia, how 
long will it be appropriate for us to keep helping Russia while 
they're acting the way they are presently. And what will USAID 
do to ensure that the key connections stay in place to prevent 
even further strained relations?
    Mr. Hill. It's a very interesting question, I remember 14 
years ago my wife and I and our two children were living in 
Moscow in 1991 when the hammer and sickle flag came down over 
the Kremlin, and the Soviet Union ceased to exist, and there 
was an atmosphere of heady optimism; there was a freedom of 
conscience law that was passed that met international 
standards, everybody was enthusiastic, and after living there 
for 7 months and looking back, it's clear that in some ways 
that was the high point with respect to the freedom index. If 
you look at the freedom measures from that time on, they 
started to go down.
    And yet, I would resist being too pessimistic about the 
future of Russia. My academic teeth were cut on Russia and the 
Soviet Union, and I can't forget where they were long before 
Glasnost and Perestroika and what has happened, and even though 
they have moved backward in many indices, they're certainly not 
where they were in the fifties or the sixties or even the 
1970s. There are forces that have been unleashed, not the least 
of which is an expanding middle class, and if history teaches 
us anything, it's that if the economic middle class grows, then 
in time it can create political pressures that are difficult to 
control for those who would otherwise like to ``manage 
democracy,'' as the Russians sometimes say. They find it 
difficult to do so.
    I think what's called for in looking at Russia is long 
view, a patient view, continuing doing things that make sense, 
continue our democracy programs, continue our exchanges. I 
think Mr. Bradtke was absolutely right. The key to a lot of 
what happens in these countries is the extent to which we can 
have exchanges, et cetera, and so although I'm disappointed 
that there hasn't been progress and that there's even been some 
regression, I still think we're on the right course. I think 
the game is far from over, and I think the worse thing that we 
could do is lose hope, because I think there are many positive 
signs as well, but we're going to have to be patient, it's 
going to take some time.
    Senator Allen. Well, we will be patient. I know the 
President wants to be, but the reality is when you see a 
country like Russia, with all the resources they have, and you 
see where they are on every one of these objective 
measurements, then you compare it to a country, not even a 
bigger country like Poland. You compare it to Estonia or 
Lithuania. Granted they have a sea port, so does Russia, maybe 
not as quite a warm water. The reality here is these very small 
countries, the Czech Republic, Slovakia, no where near the 
capabilities as far as mass and resources and population, and 
here they are, pretty well integrated into Western Europe 
standards, and then some as far as assistance in some of the 
military actions, even more assistance in that regard.
    It's a disappointment to me, there's just no reason why 
they should be this way. I do think the Russian people deserve 
better, they have the capabilities innately, as well as 
resourcefully, so to speak, in their country.
    Let me ask you, Secretary Bradtke, one of the things, maybe 
Mr. Hill will want to answer it as well. As far as Russia is 
concerned, one of the things I have had a great concern with is 
the theft of intellectual property. Russia's one of those, 
China's awful on this and so are some other countries, but 
Russia is one of the key violators of our intellectual property 
rights. How much funding do you know, and this is a larger 
issue than just Eurasia and Europe. But how much funding is the 
administration proposing to combat the problem of intellectual 
property violations, so that countries, (A) understand what it 
is, and (B) make sure their judges and prosecutors actually 
enforce such laws? It is taking, literally, billions of dollars 
out of our economy from the creativity and ingenuity of 
American technology as well as some of our artists, so to 
speak, in the motion picture industry, but also in a lot of 
intellectual property, computer software, and programs and 
systems.
    Mr. Bradtke. You're correct, Senator, this is a problem in 
Russia, but it's a problem in many other countries as well, and 
our efforts have focused on both ensuring that countries have 
modern intellectual property laws, because given the rapid 
development of technology and other elements, it does require 
updating these laws, and some of this is very complicated, 
difficult work.
    The second path is to make sure these laws are enforced, 
and again for many of the countries in transition this is also 
a major challenge, to have their legal systems operating 
effectively, law enforcement systems operate effectively here.
    Now, in the case of Russia, we have also made this an 
element of our high-level dialog with the Russian Government, 
to make sure the Russian Government understands the importance 
of this issue and the need to protect American intellectual 
property. We have, in addition to the high-level exchanges on 
this subject, a working group on intellectual property, that 
met in October of last year, that had a video conference in 
February of this year, and will probably meet again, soon, to 
discuss how we can work together on this issue.
    Now, specifically in terms of assistance, I know that in 
the fiscal year 2004, we had a program together with the 
Russians, designed to train judges, prosecutors, people who are 
involved in implementing the laws that Russia has to make sure 
that these laws are carried out effectively and that they're 
trained to carry out these laws. Similar program in 2005 and we 
will continue these efforts in 2006 as well. I would also 
mention we're working with Ukraine on this issue. The 
Ukrainians need some help in developing their own intellectual 
property laws, so some of our assistance to the Ukraine will be 
going into this area as well.
    Senator Allen. As far as Russia's concerned, are there any 
objective measurements by which we can determine whether what 
we've been doing in the last, since 2004, having an impact? Are 
they prosecuting, or has there been a diminution in the amount 
of violations of intellectual property rights or law?
    Mr. Bradtke. I can only give you my impressionistic 
response that this remains a serious problem, that we think 
there's a greater awareness on the part of the Russian 
Government of the nature of the problem, but I couldn't point 
to statistics that suggest that these efforts have had the kind 
of results that we've hoped up to this point.
    Senator Allen. So, at this point we're only getting a sense 
of things, do you have a sense that they consider this serious? 
Or do they just consider that you all are charging too much for 
this property?
    Mr. Bradtke. Well, I think that your point was correct, 
it's not just do they take it seriously, is something being 
done to stop the theft of intellectual property, and this is an 
issue that we'll be looking at extremely closely in the next 
couple of months to see what further measures we might have to 
take.
    Senator Allen. Well, I think it's going to be very 
important, not just in Russia, but throughout the world, and 
you can count on me riding hard on that one, on that issue, 
because it's very important.
    Another thing, Mr. Hill brought this up, no, maybe it was 
you, Mr. Bradtke, was talking about the student exchanges or 
the exchanges back and forth, which I think is very important, 
not just with Europe and Eurasia, Eastern Europe, but generally 
speaking, throughout the world. One thing that I've heard from 
business interests and business leaders in my home, 
Commonwealth of Virginia, is that it's very difficult to get 
visas for skilled workers. I also hear from colleges and 
universities the difficulties of getting student visas. I well 
understand the importance of security and background checks to 
make sure that those wanting to enter this country are clean, 
they're not criminals, they're not in any way aligned with any 
terrorist organization. But the length of time for some of 
these visas is harming business, to some extent, tourism, and 
it's also harming having workers come in as well as students. 
In my view I'd like these students to stay here if they're 
coming to our engineering schools, because we need more 
engineers. I'd like to see more native-born Americans going to 
engineering schools, but to the extent that we can do that, I 
think that's good for relations, they understand our country 
better, what it means to be an American, what are those 
principles we believe in actually at work. If they do go back 
to their countries they end up being appreciative of this 
country. And if they don't, and they come to this country, 
clearly many of them, if not all, especially those who are 
getting post-graduate degrees clearly can be contributing 
members of our economy and our society.
    Are there any plans or initiatives to not only reduce these 
delays and increase the number of visas for the workers, but 
also, just get this visa processing done in a more expeditious 
way, cognizant of the need for security. It seems to me that 
there are programs, and what the European Union is doing in 
some of their efforts to make this visa process much, much 
faster.
    Mr. Bradtke. We certainly have been working hard to achieve 
the right balance between having America be open to all the 
contributions that students and other visitors make to this 
country, both economic and social, and the security 
requirements that we saw so dramatically on September 11. I 
think we've made some progress here. I would be happy to take 
back your points to my colleague, Assistant Secretary Maura 
Harty, who's in charge of consular affairs.
    I know from my own conversations with her that we have made 
progress in this area, particularly in the case of visas for 
students who come here for long-term programs, who were 
previously required to leave the country and then reapply for 
visas and come back. We now have a better system in place, so 
that that requirement is no longer in many cases, required. So 
again, we are aware of this problem, we do want, as Secretary 
Rice has made clear, for the United States to be an open 
country, it's one of the great strengths of our society.
    We need to balance that with our security requirements, and 
as I say, I think over the past year or so we have made 
progress in trying to come up with process and procedures that 
are less cumbersome that enables students to come to this 
country for extended courses of study. I don't know the current 
numbers, my sense is again that these numbers show some 
improvements in this area.
    Senator Allen. I hope you recognize we do still need to 
improve. You may say it has gotten a little bit better 
recently, it does need to improve, and I look forward to 
working with you all. It is a major concern and it's one that I 
think, when one looks at those who were involved in 9/11 
attacks and one of the most amazing things to me is what 
information we were getting in briefing 5 days afterward and 
what everyone knew about all 19 of these hijackers who crashed 
into the Pentagon, the New York towers, and the field in 
Pennsylvania. I was thinking, the key to this is getting a 
system where the consulates are talking with defense 
intelligence, the CIA, the FBI, and when they get in this 
country, make sure our folks in this country know what the 
consulates and the CIA and defense intelligence and immigration 
all know. A lot of that is a question of technology that shares 
that information, so (A) they don't get into this country, and 
(B) if somebody gets into this country you know where in the 
heck they are. I'm not going to rehash all of that, but 
regardless there are ways to improve it and I hope to work with 
you on it.
    Let me bring up another area, and it has to do with this 
war on terror, and looking at the support we've gotten from 
Central European countries, the more recent countries that have 
gotten into NATO and the European Union. I realize this is 
mostly a Department of Defense decision, but I'd be interested 
to know if the State Department sees any strategic value in 
shifting a portion of our U.S. military assets or capabilities 
to locations and regions that are closer to the threats. In 
other words, to the Black Sea area. We're going to have a 
hearing on the Black Sea area fairly soon, and the Black Sea, 
it would seem to me since we are using some of the facilities 
of the Black Sea for transport into the Middle East, it would 
seem to me a great location for our equipment and for our 
troops to, at least, be temporarily based or have those 
capabilities.
    Does the State Department have any view on how, while that 
is military operational asset management issue, do you see any 
benefits diplomatically, let's say, and strategically in 
addition to militarily, in making such an investment?
    Mr. Bradtke. Mr. Chairman, we have been working with our 
colleagues at the Pentagon closely on this issue. The approach 
that the President has directed us to take is to look for ways 
to have forces in Europe that are more suited to the current 
threats that we face. We no longer face a threat of Soviet 
invasion across Central Europe, so that having large numbers of 
heavy forces in Germany is not a requirement any more.
    One of the things we have been looking at is ways of trying 
to move some of our forces to other parts of Europe; to parts 
that are closer to areas that might be threatened, and one 
thing I would say, though, is that the approach here is to look 
at possibilities not for recreating the kind of facilities we 
have in Germany, necessarily, not with large numbers of 
permanently stationed forces, with family members and a huge 
infrastructure.
    What we're looking at as we go down this road is having 
potentially rotational forces that might come and train in some 
of the countries of Southeastern Europe. There might be 
prepositioned equipment in these countries, so the troops could 
come in, fall on the equipment and then train on that 
equipment. So this is the thinking that we have now. We are 
consulting with these governments, including the German 
Government, because this is going to mean a reduction in the 
number of our forces in Germany. This is an ongoing process. We 
have a dialog, as I say, with countries like Romania and 
Bulgaria about our ideas. There are still final decisions that 
the Pentagon will have to make, there are budgetary issues that 
are very important for my colleagues at the Pentagon that they 
will have to address, but we are looking closely at ways we can 
have a force structure in Europe that is lighter, that is more 
mobile, that is potentially located closer to some of the areas 
that we perceive threats as coming from.
    Senator Allen. Thank you, Mr. Secretary, I can tell you're 
well-conversed on that opportunity. Let me finish up with one 
question, either one of you can answer this. I think it is an 
example of something positive, some of these other things are 
going to be outgoing concerns which I think are achievable, 
some are just logistical issues. I just wanted to ask you, 
going through, again, going through the charts, here you have 
United States assistance, we've had helping countries that were 
newly admitted to NATO in 2004, countries like Bulgaria, 
Romania, Lithuania, Estonia, Latvia, Slovenia, and Slovakia, 
all of them doing very well. We helped them working to 
restructure and also modernize their militaries and implement 
democratic, civilian and military relations, how is our, this 
is a great leading question, but it's a success. I'd like for 
either of you, or both of you, if you so desire, to say how has 
United States assistance helped these countries. Not just in 
their democracy, but in their modernizing their militaries, 
restructuring them from the way they were in the past to where 
they're moving now? Also, these countries that I've just listed 
off, they all have been, maybe not like Australia or Great 
Britain or Italy, but they don't have the economies of the 
United States, Great Britain, Australia, the Netherlands, and 
Italy, but they have made a disproportionately strong effort in 
assisting us in the war on terror, including of course, in 
Iraq, so how has our assistance helped them?
    Mr. Bradtke. If I could start out and then I'll ask my 
colleague, Kent, to add a few words. The last time I appeared 
before you, Senator, was to testify about the enlargement of 
NATO, when the Senate was considering providing its advice and 
consent to the changes in the NATO treaty that had to be made 
to bring these seven countries into NATO. So this is an issue 
that I've followed very closely, and it is a great source of 
satisfaction to me, and I think it should be to the Senate as 
well, that all seven of these countries have provided important 
assistance, as you say, within their means and capabilities. 
But that as we look at Afghanistan, for example, all seven of 
the new NATO countries are participating on the ground, with 
soldiers, either in Operation Enduring Freedom, or in the NATO 
operation ISAF, the International Security Assistance Force. 
All seven of them are there with boots on the ground, and some 
of them have troops in both operations.
    If you look at Iraq, all seven countries are contributing 
in one way or another to the NATO training mission, which we 
set up last year at the Istanbul summit. So again, all seven 
countries contributing one way or the other, financially in 
some cases or with troops and trainers as part of the NATO 
training mission.
    Senator Allen. Or equipment.
    Mr. Bradtke. And some of them are also providing equipment. 
I was told by one of my colleagues in the military what 
important assistance was provided for the elections, when one 
the seven countries that I think probably doesn't want its name 
mentioned here in an open session, but provided some AK-47s 
that were immediately made available to the Iraqi security 
forces to help secure polling places. And again, six of the 
seven countries have actual troops on the ground, again 
participating in military operations in Iraq. So we've really 
seen a very strong support from these countries politically and 
militarily, and our assistance has helped get them to the point 
where they can do this.
    There are continuing assistance needs, there needs to 
continue the process of full interoperability, it's so 
important for us to be able to have them with us side by side. 
There's continuing need for assistance to help in their defense 
reforms, and because their operational requirements have 
drained some of the resources that they were intending to spend 
on modernization, they do need help in this period ahead. And 
that's why we have requested in our 2006 budget, but again, I 
think in terms of the contributions they're making, I think we 
can all take great satisfaction in the support that was 
provided for bringing these countries into NATO.
    Senator Allen. Thank you, Mr Secretary.
    Mr. Hill. Between 1989 and today, we've expended about $17 
billion in FSA and SEED funding, and if the question were posed 
``What has the United States gotten for that $17 billion?'', 
the results would really be quite startling. If you look at the 
numbers of those countries that have successfully managed to 
make the transition from Communist, centrally planned 
nondemocratic states, to democratic states, it's really quite 
amazing. To be sure, the further south you go in Eastern Europe 
and the further you go toward the Russian far east, the more 
difficult the task. But still the process is incredible, and if 
you compare that $17 billion to the size of the Defense 
Department, as important as that is, it is a very small 
percentage of the allocations that we put into the military, 
and the truth is, that what the first administration of George 
W. Bush demonstrated conclusively, and the 2002 new National 
Security Strategy made absolutely clear, that it was going to 
be fundamental in his thinking, in this administration's 
thinking about foreign policy, that no longer would foreign 
policy be viewed primarily as just defense and diplomacy. There 
really was going to be a third ``D,'' and it was going to be 
development and the argumentation. The rationale behind that 
and the national security strategy stated that fragile states 
are as dangerous to the United States as are powerful military 
states. Conclusion: If there are fragile states and they can be 
helped to become democratic or economically prosperous, the 
possibility of them becoming a real threat to the United 
States, whether it's Afghanistan or Sudan or whoever it is, go 
down tremendously. And the conclusion, of course, to all of 
this is that we know that wars are immeasurably more expensive 
in terms of dollars and suffering, than the development 
required to make wars more unlikely.
    I was trained as a historian, and the one thing that 
historians say about the 19th and 20th century development of 
democracies is, that if they are democracies, and they're 
genuinely democracies, they almost never go to war with each 
other. There's a connection. And so the investment in 
development is one of the very best things we can do to ensure 
our own national security, and I guess it's time for me to 
stop.
    Senator Allen. We've got to get the energy bill passed.
    Mr. Hill. I think it works. Maybe the electricity doesn't, 
but the foreign assistance does.
    Senator Allen. Has our court reporter been able to 
transcribe the words from Administrator Hill, were you able to 
get those? I think that we are, we're past 4 o'clock, we are to 
adjourn, those are perfect words to end on. It is important to 
look at the past, I majored in history as well, and I think one 
learns from history, and it doesn't have to be back to the days 
of the Magna Carta, we can look at how the advancement of 
freedom, that gravity of freedom and the quest of human beings 
wanting to control their own destiny, have a say in their 
public servants, as well as the importance of prosperity or 
opportunity or development as you mentioned, Administrator 
Hill, is very important, and it's not just in the Central 
European or Eastern European countries, it's going to be 
important also in Palestine as hopefully that ray of hope will 
brighten up like this room finally has once again. But I want 
to thank both you, Administrator Hill and Secretary Bradtke for 
your testimony here today, thank you for your leadership, and 
thank you for standing strong for freedom.
    [Whereupon, at 4:05 p.m., the hearing was adjourned.]
                              ----------                              


       Additional Questions and Answers Submitted for the Record


   Responses of Deputy Assistant Secretary Donald Camp to Questions 
            Submitted for the Record by Senator Joseph Biden

    Question. The administration states that aid to Nepal is ``under 
review,'' yet it has had more than a month for such review since King 
Gyanendra's seizure of full executive power on February 1. During this 
period, the governments of India and the United Kingdom have suspended 
their military aid to Nepal, and the World Bank has suspended its 
budgetary support.
    (a) How much time will the administration's review require, and why 
has it already taken so much longer than the review the two nations 
with whom our policies toward Nepal are closely coordinated?
    (b) Why do the actions of the King on February 1 not trigger the 
provision of section 508 of the Foreign Appropriations Act, which 
prohibits aid to the government of a country whose ``duly elected head 
of government is deposed by decree or military coup?'' I understand 
that the theory may be that the duly elected head of government had 
been deposed in 2002, and was serving as an appointed leader in 2005. 
If that is the theory, why then, was section 508 not triggered in 2002?

    Answer. (a) We continue to work closely with the Government of 
India and the United Kingdom. In considering the issue of security 
assistance, we are very aware of the trade-off between the military 
risk in cutting off aid with the political risk should there be no 
resolution of the current crisis between the King and the parties. We 
continue to review our assistance on a case-by-case basis, examining 
the best ways to encourage a restoration of Nepal's democratic 
institutions while avoiding steps that could lead to a Maoist takeover.
    (b) The King's dismissal of Prime Minister Deuba in September 2002 
was the culmination of a series of events that began the preceding May, 
when the Prime Minister recommended to the King that Parliament be 
dissolved and new elections scheduled. The King did so. In late 
September both ruling and opposition parties agreed that, due to 
continuing Maoist attacks, elections could not be held as scheduled. 
Prime Minister Deuba accordingly asked the King to postpone the 
elections. The King did so, and at the same time dismissed the Prime 
Minister for failing to ensure that elections could be held within the 
period specified in the constitution.
    The King acted pursuant to Article 127 of the Constitution, which 
provides that ``[i]f any difficulty arises in connection with the 
implementation of this Constitution, His Majesty may issue necessary 
orders to remove such difficulty and such Orders shall be laid before 
Parliament.'' While there was no Parliament before which the King's 
order could be laid, we were unable to conclude, under the 
circumstances, that the King's actions were sufficiently at variance 
with the Nepalese constitution to raise a serious question under 
section 508.
                                 ______
                                 

 Response of Ambassador Michael Ranneberger to Question Submitted for 
                  the Record by Senator Lincoln Chafee

    Question. Two years ago I was involved in the effort to secure 
money for Liberia as it began its transition from the rule of Charles 
Taylor. I understand that $75 million has been requested for Liberia 
for 2006. Is this funding sufficient to address the needs there?
    I also have a few questions about the elections coming up in 
October. Will everything be ready for these elections to be successful? 
Beyond these elections, which will be a positive first step, what is 
the administration's vision for the United States role in assisting 
Liberia? It seems that while much progress has been made, there remains 
much to do to strengthen Liberia's transition to democracy. Given our 
historical and current ties to Liberia, I would hope we would continue 
to play a strong role in helping this nation.
    Answer. Thanks to strong congressional support in fiscal years 2004 
and 2005, the United States has been able to play the leading role in 
helping Liberia begin recovery from 14 years of civil war, generations 
of corruption, and a near-total absence of government services and of 
respect for human rights and the rule of law. Congressional funding has 
enabled us to: Support U.N. peacekeeping operations; assist in the 
establishment of an effective government; support the upcoming 
elections; support programs for community reintegration and 
rehabilitation of ex-combatants and war-affected individuals; address 
the needs of internally displaced people and refugees; build Liberia's 
capacity to provide its own security; and contribute to the general 
reconstruction of Liberia.
    We are satisfied that the fiscal year 2006 $75,000,000 in Economic 
Support Funds (ESF) and the $10,758,000 in combined Development 
Assistance/Child Survival and Health funding will adequately address 
expected needs. These funds would support local elections; legislative, 
judicial and rule of law programs; agricultural livelihoods; customs, 
tax, auditing, and budgetary reforms; aviation safety; extensive 
privatization and an acceptable trade and investment framework; 
microcredit programs; sustainable and transparent natural resource 
management; education and literacy; and health programs.
    Through fiscal year 2005, we will have directed $60 million toward 
our goal of providing $180 million in security sector reform, which is 
extremely cost-effective. The sooner we operationalize a professional, 
fiscally sustainable Liberian security sector, the sooner the 
conditions will exist that would lead to the termination of the 
peacekeeping mandate for the U.N. Mission in Liberia (UNMIL), which 
annually costs the United States about $245 million in contributions.
    Holding free and fair elections in October 2005 is a top priority. 
With $10 million from the International Disaster and Famine Assistance 
(IDFA) account, USAID is providing financial assistance for the 
preparations and conduct of the October 11, 2005, national elections 
that will choose Liberia's President, Vice President, Senate (30 
members), and House of Representatives (64 members).
    USAID is providing essential material and technical assistance to 
Liberia in preparation for the upcoming elections. Specific material 
contributions include ballots, ballot boxes, forms, and various other 
election equipment and supplies. With regard to technical assistance, 
USAID is strengthening the capacity of Liberia's National Elections 
Commission (NEC) to administer the national elections, supporting 
political party development and training, preparing NGOs for election 
observation, and training polling place officials. Additionally, the 
agency is supporting ``get out the vote'' initiatives, training civil 
society organizations to educate voters, and providing nationwide 
coverage of the election process. The assistance is being provided 
through the Consortium on Elections and Political Process 
Strengthening, which includes the International Foundation for Election 
Systems (IFES), the International Republican Institute (IRI), and the 
National Democratic Institute (NDI).
    The U.N.'s Electoral Division is coordinating the election process 
and supporting the NEC. The U.N.'s timely completion of its 
responsibilities and the filling of its election advisor positions are 
essential to the success of the elections. The timeline and milestones 
leading up to the elections are ambitious but feasible barring any 
further delays. We will also work with the United Nations and others to 
address the provision of election security. The European Union is also 
providing support for civic and voter education.
    The generous supplemental of IDFA funds have played a significant 
role with other donor funding to jump start numerous transitional 
activities that will lead to sustainable programs for a new government. 
We plan to follow through on our progress to date. With the 
international donor community's substantive support, this may be 
Liberia's best chance to move to democratically elected government. 
Reducing instability in the Mano River Union countries (Liberia, Sierra 
Leone, and Guinea) remains a high United States policy priority for the 
subregion, and our assistance supports the goal of restoring stability 
there.
    In one short year since cessation of armed conflict, Liberians have 
made credible progress toward reversing the negative impact of 14 years 
of conflict. However, much more needs to be done to complete the 
resettlement tasks, rebuild communities, hold free and fair elections, 
restructure key ministries in government, educate the youth, and 
rebuild civil society from the bottom up. These tasks appear arduous, 
but with continued collaboration through the family of United States 
agencies, international donors, nongovernment organizations, and the 
private sector, Liberia can turn around its fortunes and ensure a 
government that has legitimacy in the eyes of the people. We intend to 
provide meaningful support to Liberia's newly elected government.
    As the peace is consolidated through an elected government, the 
United States and other donors must continue commitments and facilitate 
apolitical and ``good will'' interest groups in America and Europe that 
wish to see Liberia succeed in its reconstruction efforts. USAID and 
other USG entities will be working hard to address the enabling 
environment such that all development resources invested in Liberia can 
be easily tracked for impact and sustainability.
    Our greatest remaining challenges in Liberia are corruption; the 
lack of adequate public services, basic infrastructure, and a private 
sector; security sector reform; illiteracy; the centralization of power 
in the executive branch; and Liberia's staggering $3.5 billion debt. 
However, we are committed to the opportunity to establish a new Liberia 
that will be peaceful, productive, and prosperous.
                                 ______
                                 

Responses of Ambassador Michael Ranneberger to Questions Submitted for 
                  the Record by Senator Russ Feingold

    Question. Please explain what kinds of assistance the United States 
plans to provide to northern and eastern Uganda, both in terms of 
humanitaiian response and in terms of addressing urgent development 
needs. What portion of total United States assistance to Uganda will be 
spent in this region in the current fiscal year? How does this compare 
to anticipated spending in FY06?
    Answer. We are committed to addressing the long-standing conflict 
in northern and eastern Uganda and continue of work with limited 
resources to address the most urgent needs. Following an NSC request 
for a post-conflict strategy, USAID submitted a ``Post-Conflict 
Reconciliation and Recovery Action Plan for Northern Uganda (2005/
2007).'' This plan seeks to assist the voluntary return or resettlement 
of well over 1 million internally displaced people (IDPs) fleeing 
conflict areas. The plan addresses multiple issues in northern Uganda 
including emergency intervention, health assistance, IDP protection, 
reconciliation process support, strengthening of local governance, 
encouragement of democratic participation and political 
enfranchisement, food and livelihood security, education and training. 
Due to the pressing needs In northern Uganda, additional resources are 
critical to the effective implementation of this plan. A USAID team 
visited Uganda in March 2005 to assess the immediate needs and resource 
requirements and its findings and recommendations are expected by the 
end of April.
    Currently, the USAID Mission in Uganda offers humanitarian and 
development assistance to provide relief to the war-affected regions of 
Uganda. Total USAID assistance in strife-torn regions of Uganda was 
over $77 million in fiscal year 2004. USAID's program activities 
include:

   Humanitarian Assistance Activities: USAID continues to 
        address the needs of almost 1.4 million internally displaced 
        persons (IDPs) in Uganda. This group represents 12 percent of 
        the total number of IDPs in Africa. In fiscal year 2004, 
        approximately US$72 million was provided to meet humanitarian 
        needs in food aid, water, sanitation, shelter, and health.
   The Community Resilience and Dialogue Program: USAID works 
        with district authorities, local and national NGOs to provide 
        psychosocial rehabilitation, conflict resolution and peace 
        building activities, and HIV/AIDS services to victims of 
        conflict. USAID/Uganda uses Displaced Children and Orphans 
        Funds to assist war-affected children in northern and western 
        Uganda, including formerly abducted children, former child 
        soldiers, child mothers, and IDPs with counseling and 
        vocational training.
   The Northern Uganda Peace Initiative: This is an American 
        initiative that addresses a peaceful solution to the ongoing 
        civil conflict in northern Uganda and seeks to engage the 
        Government of Uganda and the Lord's Resistance Army (LRA) in 
        talks, with the goal of achieving peace and support for 
        national reconciliation.

    Plans for 2006 will depend on available resources and circumstances 
in Uganda. Should the Lord's Resistance Army be defeated, or if a peace 
agreement is reached, conditions could change dramatically.

    Question. It seems clear to me that one way the United States could 
provide some needed assistance to the Ugandan military is in the area 
of technical assistance to help improve Ugandan capacities to address 
complaints or problems with the UPDF raised by Ugandan civilians in the 
north. The report submitted on February 2, 2005, to Congress by the 
Department of State pursuant to the Northern Uganda Crisis Response Act 
states ``The UPDF (Ugandan People's Defense Force) is feared by many 
ordinary civilians in northern Uganda and its record of civil-military 
relations is mixed. The relation between the UPDF's complaint 
processing system, the civil judicial process, and the UHCR (Ugandan 
Human Rights Commission) needs to be clarified, and links between the 
various systems need to be strengthened.'' Do you plan to provide 
assistance to help address these needs?
    Answer. Under the International Military Education and Training 
(IMET) program, the United States is providing training for the UPDF in 
the areas of civil/military relations, military justice, professional 
military education, and human rights at a cost of roughly a quarter of 
a million dollars in FY05. Using FY05 and earlier Foreign Military 
Financing (FMF) we are providing counterinsurgency-oriented command and 
staff training to UPDF army units at a cost of roughly $700,000. The 
United States also provided $5.8 million in nonlethal communications 
and ground mobility assistance to the Ugandan Armed Forces with a goal 
of combating the Lord's Resistance Army.

    Question. I was delighted to see that the Child Survival request 
for Somalia for FY06 is $300 million [sic], a very significant increase 
from the FY05 estimate of $100 million [sic]. I also noted that the 
Development Assistance request for Somalia contains a modest increase 
from the requested FY05 level, although represents a significant 
decrease from the estimated FY05 level--I presume because of tsunami 
relief. Would you tell me a bit more about your strategy for increasing 
United States engagement in Somalia? What are your plans in the 
education and health sectors? What about providing technical assistance 
to help regulate informal banking networks? Do you plan to engage with 
the interim government?
    Answer. The United States strongly supports the establishment of a 
functioning central government in Somalia capable of bringing the 
Somali people out of this long period of civil conflict and addressing 
the international community's concerns regarding terrorism. United 
States assistance programs in Somalia are currently alleviating 
suffering and promoting stability while helping Somalis develop a more 
self-sufficient population as they address reconciliation, transition, 
and development problems. We will continue to work with Somalis 
themselves, with countries of the region, and with our international 
partners to support the reestablishment of stable and effective 
governance in Somalia. A complete description of our strategy for 
engagement in Somalia regarding the activities you mention above is 
contained in the March 8, 2005, Report of U.S. Activities in Somalia. I 
understand your staff has a copy of this report.

    Question. I was pleased to learn at the hearing that the 
administration has budgeted $40 million for public diplomacy programs 
in Africa in FY06. Would you please provide a breakout of the country 
allocations in this budget?
    Answer. A further review of FY06 requests for public diplomacy 
programs in sub-Saharan Africa indicates that the actual figure for 
FY06 is $33.3 million. This $33.3 million is to meet program, 
administrative, American salaries, and operating costs for public 
diplomacy. Following is a projection of likely allocation of public 
diplomacy funds by country.

Budget Request by Country for FY06

                        [In thousand of dollars]

Djibouti......................................................       $91
Luanda........................................................       600
Maseru........................................................        60
Kinshasa......................................................       920
Mbabane.......................................................       387
Yaounde.......................................................       959
Gaborone......................................................       447
Bangui........................................................        --
Praia.........................................................        --
N'Djamena.....................................................       452
Cotonou.......................................................       379
Malabo........................................................        --
Addis Ababa...................................................       918
Brazzaville...................................................        --
Dakar.........................................................     1,187
Libreville....................................................        60
Accra.........................................................     1,125
Asmara........................................................       368
Bissau........................................................        --
Conakry.......................................................       508
Abidjan.......................................................     1,301
Nairobi.......................................................     1,373
Bujumbura.....................................................        --
Kigali........................................................       459
Monrovia......................................................       311
Antananarivo..................................................       872
Bamako........................................................       483
Nouakchott....................................................         5
Maputo........................................................       687
Niamey........................................................       442
Lagos.........................................................     2,576
Freetown......................................................       171
Mogadishu.....................................................        --
Lusaka........................................................     1,061
Lilongwe......................................................       640
Port Louis....................................................       340
Windhoek......................................................       472
Harare........................................................       862
Khartoum......................................................       211
Dar Es Salaam.................................................       904
Banjul........................................................        90
Lome..........................................................       659
Kampala.......................................................       798
Pretoria......................................................     3,857
Ouagadougou...................................................       487
ARS Paris.....................................................     2,533
Office of Public Diplomacy....................................     3,254
                    --------------------------------------------------------------
                    ____________________________________________________

    Total.....................................................    33,309

    Question. Many observers are concerned about the glacial pace at 
which the transitional government in the DRC is moving toward 
elections. What are the carrots and sticks that the United States is 
using to try to create an incentive structure that will facilitate a 
genuine transition?
    Answer. The Democratic Republic of the Congo is making progress 
toward the completion of the transition process agreed by the Congolese 
belligerents in 2002, and the United States has been an active and 
engaged part of that progress. We use our political influence, our 
assistance programs, and our contacts with Congolese officials and 
civil society to advance the process toward the eventual goal of a 
democratic election to choose the Congo's leadership. Given Congo's 
political history--30 years of President Mobutu's rule followed by an 
extremely violent civil war with substantial outside support to 
belligerent factions--progress has been slower than we might have 
wished. Nonetheless, it has been steady and in a positive direction.
    Although preparations for elections are moving more slowly than 
expected, much has been accomplished. In 2004 the United States helped 
get the Independent Electoral Commission established and operational. 
We were the first donor to provide material support to the Commission. 
Management and financial plans were developed and a provisional 
timeframe for electoral operations has been adopted. Furthermore, our 
programs are concentrating on support to key transitional institutions 
such as political party development, legislation critical to the 
transition, human rights advocacy, and anticorruption.
    With continued pressure from the United States, and the Kinshasa-
based International Committee to Support the Transition in Democratic 
Republic of Congo (known by its French acronym CIAT) a voter 
registration law was passed in December 2004 that defined and 
streamlined the process by negating calls for a full national census 
prior to the election. The CIAT, in which the U.S. Ambassador in Congo 
actively participates, has been a useful means by which to urge the 
transitional government to implement the transition process and avoid 
delays in election preparations. At this time, CIAT is working to help 
the Congolese complete a draft constitution; we expect the transition 
Parliament to adopt this draft constitution in early April. In all 
these interventions we have made it clear that the United States 
supports the rapid and successful completion of the election process 
and that U.S. support is contingent upon participation by all Congolese 
leaders in good faith in a fair, transparent, and nonviolent manner.
    We have also supported the expansion and redefinition of the 
mandate of the U.N. Mission in Congo (MONUC) as it prepares to support 
both the security environment and the conduct of the coming elections 
in Congo.

    Question. I share the President's enthusiasm for supporting 
democratization around the world, though I sometimes disagree with the 
administration regarding the most effective ways to go about it. Having 
served on the Subcommittee on African Affairs for over 12 years now, I 
am interested in hearing more about how this applies to Africa. How do 
you plan to support democracy in Uganda or Chad, where serving 
Presidents are in various stages of pursuing constitutional changes 
that will enable them to serve for third terms? How do you plan to 
support democracy in Rwanda, where the government has grown 
increasingly intolerant of dissent?
    Answer. We will continue to promote democracy in Chad. Specific and 
ongoing strategies will focus on assisting the judiciary and National 
Assembly to develop as counterweights to the dominant executive branch. 
Recognizing the essential role of civil society, we will focus on 
improving the capacity of Chadian organizations and associations to 
defend human rights and perform a watchdog role on government 
activities. Specific attention will be paid to improving communication 
and substantive interaction between the government and human rights 
organizations and between civil society organizations and the Chadian 
public to address key human rights issues. Key programs that will help 
support these goals include an ESF-funded project to help Chad bolster 
the capacity of the judicial system, a capacity building program for 
the National Assembly that also encourages linkages between members of 
Chad's National Assembly and other legislatures, expanded IMET courses 
and attendance at Africa Center for Strategic Studies seminars to 
emphasize the role of the military in a democracy, and an HDRF-funded 
nationwide radio program on civil liberties and civil rights.
    With regard to Uganda, we have an active program to promote 
democracy and good governance. Our programs train elected officials and 
staff with a goal of increasing the probity and transparency of local 
election boards, to supporting anticorruption efforts in Parliament, 
and strengthening the oversight capabilities of parliamentary 
committees and local governmental institutions. We also train civil 
society organizations, and assist political parties and advocacy groups 
to develop clear positions on constitutional and electoral issues. We 
use Democracy and Human Rights Funds for visitor and educational 
exchanges, journalism training, and public information programs.
    In Rwanda, our challenge is the weakened state of human rights 
observance and respect for the rule of law. In fiscal year 2004, the 
Government of Rwanda (GOR) narrowed the boundaries of freedom of 
expression and further closed the political space. We will continue to 
work with key Rwandan institutions, such as Parliament and the 
judiciary. We will also support civil society organizations that seek 
to carve out a constitutionally sanctioned role in influencing GOR 
policymaking. For example, the Secretary of State is the Chairman of 
the Board of the Millenium Challenge Corporation, and Rwanda is not 
able to receive Millenium Challenge Account financial assistance until 
it improves its performance in the Governing Justly category.

    Question. What steps are you taking to call attention to extremely 
problematic preelection conditions in Zimbabwe? What kind of 
instructions do our southern African Ambassadors have to raise this 
issue with SADC government both publicly and privately?
    Answer. We have urged all members of the Southern African 
Development Community (SADC) to use their influence with the Government 
of Zimbabwe to ensure that the parliamentary election on March 31 is 
free and fair. Specifically, we have asked SADC governments to urge the 
Government of Zimbabwe to comply with SADC election guidelines by 
inviting credible monitors to observe the election, by granting all 
parties fair access to official media, by promptly complying with the 
rulings of electoral bodies, and by ensuring that the campaign is 
nonviolent and all parties are able to hold rallies. Our messages to 
SADC have tracked our public statements in Congress, the United 
Nations, on the Voice of America, and elsewhere.
    We have also urged SADC governments to apply vigorously the SADC 
election guidelines and to make a frank assessment of the election 
environment.

    Question. What is the status of the East African Counter-Terrorism 
Initiative? Does this initiative no longer exist? If not, can you 
explain the rationale for discontinuing it? If you do envision 
continuing it, how do you intend to fund it? I cannot find it anywhere 
in your budget request.
    Answer. EACTI continues. The $100 million announced by the 
President should last through the end of FY05. EACTI was never a line-
item in the budget, but drew on a dozen or more funding streams (e.g., 
ESF, FMF, PKO, INCLE, NADR, DA) and existing programs. We are looking 
to these same sources to fund EACTI-related and follow-on programs in 
FY06.
                                 ______
                                 

Response of Hon. Lloyd Pierson to Question Submitted for the Record by 
                         Senator Russ Feingold

    Question. You indicated at the hearing that the administration's 
Anti-Corruption Initiative in Africa still exists, despite the fact 
that no separate budget line for this Initiative is included in the 
administration's request this year. As I understand it, you further 
indicated that this Initiative is now being pursued at the country 
level, with resources provided in the broader foreign assistance 
accounts. Does this mean that there has been an addition to the 
Development Assistance account request in the amount of the Initiative 
budget for FY06, or will anticorruption programs now be competing with 
other important priorities at the country level without any additional 
resources to accommodate them?
    Answer. Anti-Corruption Initiative (ACI) funds are included as part 
of the Africa Bureau's Development Assistance (DA) budget request for 
democracy and governance (DG) activities in FY06, as they have been for 
the last 3 fiscal years. The Bureau's total DA/DG request for fiscal 
year 2006 is nearly $6 million higher than the fiscal year 2005 actual 
level, reflecting the importance that the Bureau places on DG and 
Conflict related activities in Africa. Because anticorruption 
activities are common to many of USAID's good governance programs in 
Africa, a separate budget line is no longer provided for the ACI. 
Instead, the Bureau maintains the Initiative as a separate fund within 
the DA account. The ACI fund allows the Bureau to allocate a consistent 
level of funding for anticorruption activities to bilateral and 
regional missions over several successive fiscal years. These funds are 
notified by the Africa Bureau in the annual Congressional Budget 
Justification.
    The initial selection of mission programs was conducted in FY03, 
based on an internal competition among missions for multiyear 
anticorruption programs. The Bureau chose a multiyear approach focused 
explicitly on corruption because past USAID experience indicated that 
successful anticorruption efforts require a long-term commitment. The 
ACI is designed to foster innovative programs at the country level 
through a coordinated and coherent program that facilitates information 
sharing and learning among USAID missions. ACI prioritizes countries 
that demonstrate the political will to implement reform; helps 
consolidate emerging democracies; capitalizes on unique windows of 
opportunity to fight corruption in each country; creates linkages with 
the Millennium Challenge Account (MCA); and tests a wide range of 
strategies to establish best practices and create replicable models.
    Since FY03, ACI funds have been transferred directly to nine 
bilateral missions (Benin, Kenya, Madagascar, Mozambique, Nigeria, 
Rwanda, South Africa, Tanzania, and Zambia) and three regional missions 
in support of in-country and subregional anticorruption activities. A 
small portion of ACI resources are used by the Bureau in Washington to 
provide technical assistance to the field, monitor the impacts of the 
Initiative, and share information among bilateral and regional 
programs.
    ACI funds complement, rather than compete with, country-level and 
regionwide programs. ACI funding allows recipient missions to integrate 
anticorruption activities into broader development objectives. For 
example, USAID/Rwanda uses ACI funds to add an anticorruption focus to 
the Mission's existing decentralization and health programs. ACI funds 
are used to equip community-based organizations with the skills they 
need to participate in planning meetings with local government leaders 
on how to spend their annual healthcare budgets. This helps to ensure 
that local elected officials are accountable to their communities. The 
program encourages citizens to develop common priorities, practice 
democratic decisionmaking, and be involved in monitoring the spending 
of local health resources. USAID/Rwanda achieves these objectives with 
an annual ACI allocation of just $250,000--far less than a stand-alone 
anticorruption program would cost. As an ACI recipient, USAID/Rwanda 
has been able to count on ACI funding since fiscal year 2003, allowing 
the mission to take the longer term approach that is generally needed 
to fight corruption effectively.
                                 ______
                                 

 Responses of Hon. Lloyd Pierson to Questions Submitted for the Record 
                        by Senator Barack Obama

    Question. USAID has proposed expanding the ``Transition 
Initiatives'' (TI) funding account in fiscal year 2006. What are the 
requirements for TI funding and how do they differ from the 
``Development Assistance'' (DA) funding rules? How will USAID guarantee 
to American taxpayers that TI funding is held to the same rules of 
accountability as the DA funding?
    Answer. The Transition Initiatives (TI) account provides support to 
countries that are confronting crisis or in transition from crisis to 
transformational development, As such, the TI account finances 
activities that provide a rapid response and are short term in nature, 
intended to address immediate causes of crisis while building the 
institutional foundation and setting the stage for longer term 
development activities. On the other hand, Development Assistance funds 
are intended for long-term transformational development activities. We 
are proposing expanding the TI account because we are increasingly 
finding situations like Afghanistan and the Sudan where the conditions 
for an effective long-term development assistance program are not yet 
in place. The resource responsiveness and flexibility of the TI account 
improves our ability to program resources for results consistent with 
conditions on the gound.
    Crises or vulnerabilities that lead to crisis take many forms--
conflict and insecurity, governance and economic crisis, or famine--and 
create environments that are often highly charged and fluid. The local 
conditions in countries confronting vulnerability and crisis can change 
quickly. In such countries where USAID works, we must adapt quickly to 
both the challenges and opportunities as they emerge.
    The use of the TI account enables us to hasten our programming 
response to crisis, so that we can successfully achieve our goals of 
enhancing security and stability, advancing opportunities for reform, 
and developing capacity of essential institutions and infrastructure.
    As with Development Assistance and all other accounts utilized by 
USAID, we will manage TI funds in accordance with Federal Financial 
Accounting Standards. USAID will monitor activities and report results 
in a manner appropriate with conditions on the ground, recognizing the 
rapidly changing local conditions. As we program TI funds, we will 
consult with Congress.

    Question. USAID has determined that eight sub-Saharan African 
nations qualify for Millennium Challenge Account funding. Please 
provide me with a list of these eight countries, along with the entire 
list of eligible nations, and provide me with the exact standards USAID 
used to develop this list and an explanation of how these eight 
countries meet the standards,
    Answer. In January 2004 the U.S. Government created the Millennium 
Challenge Corporation (MCC) as an independent agency to administer the 
Millennium Challenge Account (MCA). Through the MCA, development 
assistance levels will be substantially increased to a select group of 
countries that demonstrate a commitment to ruling justly, investing in 
people, and encouraging economic freedom.
    The MCA is not administered by USAID, but USAID Administrator 
Andrew Natsios is on the MCA Board of Directors. We are pleased at the 
level of collaboration between USAID and the MCC as the process has 
moved forward in sub-Saharan Africa. We are especially pleased that the 
MCA Board of Directors decided that 8 of the first 16 countries to be 
asked to submit MCA proposals in the first year of the program (FY 
2004) are in sub-Saharan Africa. These countries are: Benin, Cape 
Verde, Ghana, Lesotho, Madagascar, Mali, Mozambique, and Senegal. In 
fiscal year 2004 all 75 countries eligible to receive concessional 
assistance through the International Development Agency (the soft loan 
window of the World Bank) were considered for selection by the MCC. 
Twelve countries were excluded from further evaluation for foreign 
policy reasons (e.g., North Korea, Cuba, etc.). The rest were evaluated 
on their performance on 16 indicators that measure commitment to ruling 
justly, investing in their people, and promoting economic freedom--as 
assessed by institutions such as Freedom House and the World Bank. 
Detailed information on country selection process and criteria are 
available on the MCA web site, www.mca.go.
    The MCC has also set aside separate funding for a group of 
``threshold countries''--countries that came close to qualifying for 
the MCA but did not--to help them improve their policies in indicator 
areas where they were weak. For fiscal years 2004-05, 13 countries have 
been invited to submit proposals for this program, including 7 in 
Africa: Burkina Faso, Kenya, Malawi, Sao Tome and Principe, Tanzania, 
Uganda, and Zambia. USAID is the lead implementer for this program, 
under the direction of the MCC. This program is also described on the 
MCA web site.
                                 ______
                                 

Responses of Ambassador Michael Ranneberger to Questions Submitted for 
                   the Record by Senator Barack Obama

    Question. The Congress has been long awaiting real results from the 
Millennium Challenge Account program. You mentioned that the Account 
will start releasing compacts for actual projects soon. Please provide 
me with a detailed listing of the projects the Account will be 
proposing, along with the specific name of the participant groups, 
nongovernmental organizations, or private companies, the expected 
funding level, and the term of the grant.
    Answer. Congress passed the Millennium Challenge Act at the end of 
January last year. By law, the Millennium Challenge Corporation (MCC) 
could not select countries until early May 2004, which means that MCC 
was not able to go to countries to inform them about the MCC until that 
time. MCC's Board of Directors approved the first Compact with 
Madagascar on March 14, 2005--less than 6 months after Madagascar sent 
in a proposal. MCC has notified Congress and will wait the requisite 15 
days per our authorizing legislation prior to signing the Compact. The 
Compact is a 4-year, $110M agreement to support Land Tenure, Financial 
Reform, and an Agricultural Business Investment Projects. In forging 
the Compact with Madagascar--and in all of the other Compact 
negotiations--MCC has applied the principle of country ownership. 
Eligible countries, rather than MCC, drive the process, setting the 
development priorities, designing the programs, and establishing a 
budget. MCC is also currently in compact negotiations with three other 
countries: Georgia, Honduras, and Nicaragua.

    Question. You mentioned that ``anticorruption'' efforts will be 
inclined in the soon-to-be announced Millennium Challenge Account 
programs. One area where corruption appears to be a major problem in 
many African nations is in the handling of oil and other natural 
resources. This corruption has made it difficult for both citizens and 
corporations to work with the governments of certain nations. What will 
the Millennium Challenge Account projects do to address the need for 
transparency in the handling of oil and other natural resources in 
African nations?
    Answer. One of the lessons from the past five decades of 
development upon which MCC is founded is that policies matter. MCC's 
selection process and operations are guided by this philosophy, and a 
country's anticorruption efforts factor significantly into MCC's 
decisionmaking. First, in selecting eligible countries, the MCC Board 
evaluates a country's demonstrated commitment to ruling justly, 
investing in people, and encouraging economic freedom, including a 
country's efforts to control corruption as measured by an index 
developed by experts at the World Bank. The Board also considers a 
country's economic policies to promote the sustainable management of 
natural resources. Then, once a country is named as eligible, MCC 
assesses Compact proposals for their transparency and accountability, 
as well as the sustainable management of natural resources. MCC is 
working with countries to build up financial accountability mechanisms 
that provide for transparency, have clear lines of accountability, 
produce maximum integrity, and wherever possible, build capacity that 
will remain in place at the end of the MCC program--a key issue for 
Africa (and elsewhere) in terms of dealing with financial flows from 
extractive resources.

    Question. According to your statement, strengthening Africa's 
capacity to fight terrorism is one of the administration's six 
priorities in Africa. Please tell me what specific action has been 
taken to strengthen Africa's capacity to fight terrorism. What programs 
has the United States implemented? How much funding has been expended 
on these programs? With which governments, nongovernmental 
organizations, or other outside contractors has the United States 
worked on these efforts? What are the administration's plans for the 
fiscal year 2006 funding requested for counterterrorism efforts?
    Answer. The United States carries out a wide variety of 
counterterrorism programs in sub-Saharan Africa. In addition to other 
funds, we estimate that we will spend $1.2 million of the requested $11 
million in International Military Education and Training, and $4.1 
million of the requested $24 million in Foreign Military Financing, on 
counterterrorism work in FY06. Major initiatives include the East 
African Counter-Terrorism Initiative (EACTI), which will have invested 
$100 million in counterterrorism efforts in Ethiopia, Uganda, Kenya, 
Tanzania, and Djibouti between its inception in June 2003 and the end 
of FY05. Another major initiative is the $8 million Pan-Sahel 
Initiative (PSI), which includes Mali, Niger, Chad and Mauritania. The 
administration plans follow-ons to both initiatives, and to efforts in 
other parts of Africa, in FY06. EACTI, PSI, and efforts in other 
African countries draw on a wide variety of worldwide and regional 
funding streams (e.g., Economic Support Funds, Foreign Military 
Finance, Peacekeeping Operations, International Narcotics Control and 
Law Enforcement, Development Assistance) and existing programs to work 
with African militaries, law enforcement, and civilian officials. As an 
example, in FY06, State's Anti-Terrorism Assistance (ATA) program plans 
to devote $6 million in the four PSI countries, two EACTI countries, 
and another African country.
                                 ______
                                 

 Responses of Hon. Roger Noriega to Questions Submitted for the Record 
                        by Senator Richard Lugar

    Question. In November 2004 the State Department and the Department 
of Treasury's Office of Foreign Assets Control (OFAC) threatened to 
``clarify'' the regulations governing agriculture export sales to Cuba 
under the Trade Sanctions Reform and Export Enhancement Act of 2000 
(TSREEA). There have been indications that TSREEA will subsequently be 
interpreted in a way that may serve to impede agricultural exports to 
Cuba, which is contrary to the original intent of the bill. The 
Treasury Department states that it engaged in discussions within the 
administration and received input from industry officials before 
issuing this clarification in February 2005. I would appreciate an 
explanation detailing what caused OFAC and the State Department to 
consider issuing such a clarification. What industry officials were 
consulted in the administration's conclusions? What input did the State 
Department provide in these consultations, and what role did the State 
Department play in considering and ultimately concluding that such a 
clarification was necessary?
    Answer. TSREEA provides that agricultural products may be exported 
to Cuba as long as they are paid for through a letter of credit from a 
third country financial institution or by ``payment of cash in 
advance.'' Some United States financial institutions, in late 2004, 
refused to process payments for the sale of United States agricultural 
goods sold to Cuba because of concerns the sales (generally made on the 
basis of receipt of cash prior to delivery) were not in compliance with 
the U.S. Department of Treasury's Office of Foreign Assets Control 
Regulations (CACR) and requested clarification of the rules. OFAC, 
therefore, initiated a review of whether ``cash in advance'' would be 
interpreted to mean payment prior to the shipment of the goods to Cuba 
rather than prior to transfer of title to the goods to the Cuban 
authorities.
    The administration engaged in interagency discussions and received 
input from a wide range of industry officials involved in agricultural 
exports to Cuba, including large and small exporters of products such 
as meat, dairy, fruit, and vegetables, as well as shipping industry 
representatives, before issuing the regulation. The Department of State 
heard directly from U.S. exporters and participated in the interagency 
process that led to OFAC issuing the new regulation.
    Ultimately, OFAC clarified that under the Cuban Assets Control 
Regulations the term ``payment of cash in advance'' with regard to 
shipments of agricultural commodities to Cuba means payment of cash 
prior to shipment of goods. OFAC determined that this meaning conforms 
to a common practice in international trade finance. We believe this 
interpretation is consistent with TSREEA.

    Question. What is the administration's policy agenda for Bolivia? 
And, what has the administration done to advance it?
    Answer. The United States remains fully committed to supporting 
Bolivian democracy, and in our public and private conversations with 
Bolivia's leaders, we have made clear our commitment to democratic 
government and our opposition to any efforts to sidetrack Bolivian 
democracy by unconstitutional means. We have encouraged all members of 
Bolivian society to resolve the current crisis through open dialog 
within a democratic framework. We have urged the Bolivia Support Group 
and other international partners to express their backing for the 
constitutional process and have reiterated our willingness to work with 
the international community to ensure Bolivia retains the support it 
needs.
    Our focus will remain on fostering democratic stability as the 
necessary foundation for economic development and for continued 
counternarcotics and counterterrorism success. If this foundation can 
be strengthened in the coming months, Bolivia is less likely to fall 
under the influence of radical, antidemocratic forces.

    Question. Please explain why aid for Ecuador has been reduced from 
the ACI initiative by 46 percent in FY05 and an additional 22 percent 
in FY06, in interdiction operations, when it is clear Ecuador is a 
major transit path for illegal drugs and chemicals?
    Answer. Our request for the Andean Counterdrug Initiative (ACI) in 
fiscal year 2006 will fund the Department's counternarcotics efforts in 
Bolivia, Brazil, Colombia, Ecuador, Panama, Peru, and Venezuela, as 
well as fund the Air Bridge Denial Program and the Critical Flight 
Safety Program. Our fiscal year 2006 request for ACI is for 
$734,500,000, or $9,348,000 more than the appropriation for fiscal year 
2005. The increase in our request for ACI funding highlights the 
Department's recognition of the key role each of the ACI countries 
plays in our counternarcotics efforts in this hemisphere.
    Our request for fiscal year 2006 also includes a new program to 
upgrade the aircraft performing critical counternarcotics missions in 
Bolivia, Peru, and Colombia. This $40,000,000 program will fund 
modifications necessary for the continued safe execution of aviation 
operations in those countries.
    We believe the funding level for the ACI is appropriate to support 
our key goals in region and in each country. Not only did we consider 
the changes occurring in each country, but also the effects that 
changes in one country will have on another. For example, reductions 
over the past 2 years in Colombia's coca cultivation will have an 
impact on the transit countries, such as Ecuador, that border Colombia.
    The request for Ecuador, and for the other ACI countries, does not 
indicate flagging counternarcotics performance or a failure to 
recognize the challenges those countries face. In fact, Ecuador is 
making increased use of its own resources and has made significant 
advances in securing its northern border with Colombia. United States 
assistance has contributed to those efforts and will continue to play a 
key role in supporting Ecuador's counternarcotics efforts.
    ACI assistance in fiscal year 2006 will sustain and reinforce 
military surveillance and interdiction capabilities along the northern 
seacoast and the land border with Colombia. Funds will be used to 
maintain and, if needed, replace or augment land vehicles, boats, and 
field equipment provided to Army and Navy forces in 2002-05. Funds will 
also support some field operations of the new Quick Reaction Forces 
being established by the Ecuadorian Army on the northern border.

    Question. Please explain why Military Border and Coastal Control 
funds for Ecuador have been cut by 50 percent in fiscal year 2005 and 
will suffer an additional 50-percent reduction in FY06? How will this 
cut affect interdiction efforts and the development of a coastal 
surveillance system on the highly porous 500 km border with Colombia?
    Answer. The United States provided a combination of Foreign 
Military Financing (FMF) and Andean Counterdrug Initiative (ACI) 
funding to help Ecuador enhance control over its northern border with 
Colombia and improve its interdiction capabilities. In fiscal year 
2004, $6,955,000 in Foreign Military Financing funds were allocated to 
Ecuador for this purpose, and from 2002-05 ACI funding provided 
vehicles, boats, and field equipment to Army and Navy forces involved 
in border security and interdiction missions.
    Due to the prohibitions on FMF contained in the American 
Servicemembers' Protection Act of 2002, we reprogrammed Ecuador's 
fiscal year 2004 FMF funds and had to reassess the level of subsequent 
FMF assistance to Ecuador, which is a party to the International 
Criminal Court and has not entered into an Article 98 agreement with 
the United States.
    The United States continues to provide Ecuador with 
counternarcotics assistance, including $10,912,000 in fiscal year 2005 
ACI funds for interdiction and other law enforcement activities that 
support counternarcotics interdiction on Ecuador's coast and along its 
border with Colombia. Though the fiscal year 2006 request is a decrease 
from the fiscal years 2004 and 2005 levels, the assistance is primarily 
intended to maintain and augment key equipment provided to the Army and 
Navy in the 2002-05 period. Fiscal year 2006 funding will also support 
some field operations of the new Quick Reaction Forces being 
established by the Ecuadorian Army on the northern border.

    Question. Please explain why the administration has requested a 50-
percent cut in the Economic Support Fund allotment for Ecuador?
    Answer. We believe the funding level requested for Economic Support 
Fund (ESF) programs in Ecuador is appropriate to support our goals in 
Ecuador, including promoting prosperity and strengthening democracy.
    In fiscal year 2006, we anticipate continuing key activities such 
as implementing justice and anticorruption reform, boosting local 
government capacity to deliver services and expand democratic 
participation, strengthening Ecuador's Internal Revenue Service, 
preparing Ecuador to participate in a free trade agreement, improving 
sustainable management of natural resources, and supporting small 
business development.
                                 ______
                                 

 Responses of Hon. Roger Noriega to Questions Submitted for the Record 
                        by Senator Norm Coleman

    Question. Plan Colombia expires at the end of 2005. Colombian 
Foreign Minister Carolina Barco has talked about reducing Colombia's 
dependence on United States aid in approximately 2 years. I can see 
from the President's budget what is planned for 2006. But what specific 
plans are in place for future aid to Colombia? What are we planning for 
2007, 2008, and beyond?
    Answer. The United States Government has been a strong supporter of 
Colombia and of ``Plan Colombia,'' the Colombian Government's strategy 
to defend its democracy from the scourges of narcotics and terrorism. 
President Bush reaffirmed this strong support for the Colombian 
Government's strategy in his November 2004 visit to Cartagena, 
Colombia. In general terms, United States assistance is focused on 
supporting Colombian efforts to strengthen its democratic institutions, 
promote protection of human rights, enhance respect for rule of law, 
improve regional stability, foster socio-economic development, address 
humanitarian needs, reduce the supply of illicit narcotics being sent 
to the United States, and end the threats to democracy posed by 
narcotics trafficking and terrorism.
    Plan Colombia has had exceptional success, particularly during the 
Uribe administration. President Uribe is one of our strongest allies, 
and United States support has enabled his government to make great 
progress against narcotraffickers and United States-designated Foreign 
Terrorist Organizations, strengthen Colombia's democracy, improve the 
day-to-day lives of Colombia's citizens, and ensure political 
pluralism. Our partnership advances our mutual interests and defends 
our shared values. To ensure that the narcoterrorists are fully 
defeated, security is established permanently throughout the country 
and economic growth is sustained, further support is essential.
    The Colombian Government has not yet announced a continuation of 
Plan Colombia, at least not in formal terms. Nevertheless, anticipating 
the conclusion of Plan Colombia in late 2005, the Colombian Government 
has begun planning a follow-on strategy that would build upon and 
consolidate the progress made to date. Initial versions of the 
Colombian Government's strategy have described four major initiatives. 
These are: (a) Fighting terrorism, narcotics trafficking, and 
international organized crime; (b) economic and social reactivation; 
(c) institutional and justice system strengthening; and (d) peace 
negotiations, demobilization, and reintegration of illegal armed 
groups.
    The United States agrees with these priorities and has told the 
Colombian Government that we will seek continued support from Congress 
through the Andean Counterdrug Initiative (ACI) and other funding 
vehicles on an annual basis as Colombia develops its future 
programming. Future assistance will seek to solidify the gains made 
under ``Plan Colombia.'' We have had informal discussions with the 
Uribe administration on its plans, but we have made no decisions about 
specific funding levels in FY07 and beyond.
    Three of the four areas described for after ``Plan Colombia'' 
represent a continuation of successful programs we are already 
undertaking. The fourth, that of ``peace negotiations, demobilization, 
and reintegration of illegal armed groups,'' is the result of progress 
made by Plan Colombia. The Uribe administration's ambitious plan has 
already removed nearly 4,800 paramilitaries from combat. The 
administration's FY06 budget request does not include a specific amount 
of assistance for the demobilization process. This will be the subject 
of additional consultations with Congress as that process develops and 
further information becomes available.

    Question. There is no question that the United States has a great 
deal at stake in Colombia. American demand for drugs clearly helps to 
fuel the insurgency there, and we have a direct stake in stability in 
this part of the world. We have an interest in making sure the 
insurgents don't compromise security elsewhere. For instance, there is 
recent evidence that the FARC was involved in the kidnapping and murder 
of the daughter of the former President of Paraguay. Europe is also a 
consumer of Colombian cocaine and has an interest in supporting 
democratic governance. Can you please discuss the contributions other 
nations are making to help implement Plan Colombia?
    Answer. Drug consuming countries have recognized a shared 
responsibility with drug producing countries to combat the violence and 
destruction caused by narcotics, including in Colombia. We are 
disappointed that European donors, with some exceptions, have not 
contributed more. Nevertheless, European support and concern for 
Colombia seems to be growing, and we have been using every available 
opportunity to encourage them to become more engaged. According to 
Colombian Government figures, the EU and its member states invested 
about $120 million in Colombia in 2003, of which some $84 million was 
bilateral. Figures for 2004 are not yet available but we believe will 
show an increase.
    The international community voiced its continued strong support for 
Colombia at the 2003 London Conference and a follow-on meeting in 
February 2005 in Cartagena. We continue to urge countries that have 
announced contributions to Colombia to speed the implementation of 
their programs and to consider additional projects.
    As requested by House Manager's Report 108-599 accompanying the FY 
2005 Foreign Operations Appropriations Act, the Department of State is 
preparing a report to the Committee on Appropriations that ``details by 
dollar level and fiscal year, multilateral and bilateral projects and 
programs supported by the European Union and individual countries in 
Europe'' to the Andean region, including, of course, Colombia. We 
expect that report to be provided to Congress in April and will ensure 
that you receive a copy.
    Question. The budget includes $40 million for a new Critical Flight 
Safety Program. Can you please describe this program, its objectives, 
and the way it fits into the overall Andean Counterdrug Initiative?
    Answer. Part of the great success of our eradication and 
interdiction efforts in the last few years has come from increasing the 
operational tempo for already aging air assets. Many of the 
Department's existing aircraft are over 35 years old with more than 
10,000 airframe hours. Major components are obsolete and no longer 
being manufactured, presenting serious challenges for mission and 
flight safety. The Department of State Air Wing aircraft have suffered 
serious structural in-flight failures, and we have been fortunate not 
to lose aircrew and aircraft due to them. This increased operational 
tempo, combined with the aging condition of the fleet, means that we 
now have to spend more money on maintenance and depot overhauls to 
assure safety for our aircrews.
    The administration has requested $40 million in the fiscal year 
2006 budget to address the immediate need for a Critical Flight Safety 
Program (CFSP) to upgrade the Department of State Air Wing aircraft 
fleet. This program will bring our fleet back to commercial safety 
standards in order to sustain its counternarcotics and counterterrorism 
missions. The CFSP will upgrade, sustain, and replace aircraft for the 
Bureau of International Narcotics and Law Enforcement's (INL) 
eradication/interdiction programs in Bolivia, Colombia, Peru, and 
Pakistan.

    Question. One of the concerns shared by the United States and much 
of Central America is the presence of gangs. Many gang members have 
spent much of their lives in the United States before being deported to 
their home countries, and they retain contacts in both countries. Can 
you please discuss what is being done to work with the governments of 
Central America to combat this growing problem? Do you believe there is 
scope for increased cooperation?
    Answer. Over the last few years, the Department of State and USAID 
have supported a variety of programs to address different aspects of 
the gang problem--from general human development and job promotion, to 
exchanges of experts, technical support for investigations including 
the formation of antigang units, and tattoo removal for individuals 
seeking to leave gangs. The Department is currently examining how to 
bring these different elements together into an overall plan for the 
region. The governments of Central America are actively seeking 
international support in this area. There is certainly scope for 
increased cooperation.
    In prior years, in El Salvador, we supported the formation and 
provided in-service training for antigang units in the Civilian 
National Police (PNC). The PNC is now reaching out to state and local 
law enforcement agencies in the United States in order to develop 
better information on gang activity, and the FBI has formed an MS-13 
Task Force to focus the attention of federal agencies on this problem. 
The FBI has requested permission to establish a Legal Attache's Office 
in San Salvador to support the Task Force. We welcome this initiative 
and believe it will open important new avenues of law enforcement 
cooperation, both within Central America and between the region and the 
United States.
    The Embassy in El Salvador is supporting the work of the National 
Public Security Advisory Council (PSAC), which together with the 
Ministry of Education offers workshops and instructional materials for 
public school students on detrimental aspects of gang life. The Embassy 
has also donated a tattoo removal machine to the local NGO FundaSalva, 
for use in programs to assist individuals who have left gangs. In order 
to qualify for tattoo removal, individuals must formally renounce gang 
life, attend counseling for anger management and substance abuse, and 
lead a crime-free life for 6 months. Afterward, the PSAC assists them 
in finding gainful employment.
    Similar programs are in different stages of development in other 
countries. In Guatemala, State and USAID are working together in a 
community outside the capital (Villa Nueva) to reduce gang violence 
through better law enforcement and prevention efforts. Separately, 
USAID is engaged in a delinquency prevention program with a coalition 
of NGOs. In Panama, an effort to improve gang intelligence has just 
been launched in Colon and a Culture of Lawfulness program, focused on 
junior and senior high school students, is in development. In Honduras, 
an administration of justice program aims to assist the Ministry of 
Public Security and the Public Ministry bring successful prosecutions 
in high priority cases, including instances of gang violence. We are 
currently evaluating whether the latter program should be reoriented 
more toward gang issues.

    Question. Nicaragua's eligibility for MCA assistance is based in 
large part on the courageous efforts of President Bolanos to root out 
corruption. Yet today it appears that forces in Nicaragua are beginning 
to threaten President Bolanos' efforts. Can you speak about the 
importance of democracy and the rule of law in Nicaragua, in light of 
apparent efforts to undermine the man who may be Nicaragua's best 
chance for reform?
    Answer. Fifteen years after the democratic transition, Nicaragua 
has made important strides in the development of democratic 
institutions. However, the abuse of power, corruption, and the 
politicization of many state institutions, especially the Sandinista-
dominated judiciary, continue to impede the consolidation of democracy 
and hinder economic growth.
    President Enrique Bolanos' strong stand against corruption, which 
resulted in the 2003 conviction and imprisonment of his predecessor, 
Arnaldo Aleman, on money-laundering charges, left the Executive 
isolated with little political capital to move forward on political and 
economic reform. The Liberal Party (PLC), controlled by former 
President Arnoldo Aleman, and the Sandinista Party (FSLN), controlled 
by Daniel Ortega, are allied in their efforts to undermine the Bolanos 
government. The political pact between these two strongmen has thwarted 
the efforts of Bolanos to govern. These two parties maintain control of 
the National Assembly and recently passed a series of reforms that 
further reduced Presidential powers and increased political instability 
in the country.
    The weakened executive remains in a precarious situation, though an 
ongoing national dialog brokered in January by the UNDP and Catholic 
Church has alleviated some political tensions and includes a commitment 
to allow Bolanos to complete his term as President. Accordingly, we 
must continue our support to the Bolanos administration.
    Our efforts in Nicaragua are focused on strengthening democratic 
governance and fostering economic growth. A key component of sound 
governance is reducing corruption. The United States Government's 
anticorruption assistance, which includes assisting Nicaragua under the 
framework of its G-8 anticorruption compact, supports President 
Bolanos' initiatives to dismantle the long-standing foci of corruption 
that have hindered progress in Nicaragua. The USG provides technical 
assistance to anticorruption activities that focus on transparency, 
civil society oversight, and enforcement. The Embassy suspended aid to 
the judicial branch throughout 2004 as a warning that backroom deals 
and judicial corruption would not be tolerated. Development assistance 
resources also go toward helping Nicaragua fight corruption and 
improving legal and regulatory frameworks, because good governance is 
the foundation upon which other goals rest. Without wide-ranging 
reforms, corrupt and inefficient institutions could erode Nicaragua's 
economic gains.
    A credible and transparent election process is also key to 
Nicaragua's future as a stable democracy. In the lead up to the 2006 
Presidential elections, we will invest significant ESF resources to 
provide civic education and enhance civil society engagement to enable 
free and fair elections. Given the monopolization of the election 
machinery by the PLC and FSLN, it is critical that civil society and 
minor parties be strengthened to counterbalance this effective duopoly 
of power and open the political system to outside voices. We plan to 
invest heavily in the areas of citizen participation, voter education, 
and public awareness to empower minor parties and civil society. We 
will also fund domestic and international election observation, 
transparent elections administration and post-election analysis.
    For democracy and its institutions to succeed, it is imperative 
that the Nicaraguan economy be strengthened. The USG encourages the GON 
and the National Assembly to maintain the responsible economic policies 
advocated by President Bolanos that led to modest economic growth in 
2004. We hope to be able to showcase the fruits of democracy and 
economic growth by signing an MCA compact with Nicaragua and ratifying 
the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).
    Increased stability in Nicaragua's democratic institutions and 
growth of its economy are at the heart of our bilateral relationship 
with Nicaragua. This two-pronged approach is our best recourse in the 
face of those elements that seek to undermine the good work of 
President Bolanos.

    Question. Increasingly the nations of the Western Hemisphere, 
including the United States, have been willing and able to work 
together to address common security concerns. This budget requests $1.5 
million for a new Western Hemisphere Regional Security Fund. Please 
describe this new initiative and explain what you see as its usefulness 
in the future.
    Answer. A widening security gap exists in the Western Hemisphere, 
and the Regional Security Fund is needed to protect the homeland and 
generate regional cooperation against threats to the Western 
Hemisphere.
    Specific funding has been lacking within the Western Hemisphere 
budget to support regional security cooperation and conflict prevention 
activities, despite the fact that these are crucial issues for the 
Hemisphere. Among some future activities we hope to fund:

   Encourage the transformation and rationalization of the 
        defense and security forces in Latin America, particularly in 
        Central America, in order to better confront the challenges of 
        the 21st century.
   Provide technical and financial assistance for resolution of 
        several of the 15 remaining maritime and land border disputes 
        that are potential flashpoints, including the mitigation of 
        current irritants in the Belize-Guatemala or Guyana-Suriname 
        relationships, is a priority for the RSF.
   Follow-up efforts for the Summit-mandated Experts Group on 
        Confidence and Security Building Measures, including workshops 
        and seminars to strengthen civilian control of the military and 
        foster greater trust among countries.
   Address the lack of capacity of many nations in the region 
        to implement legal norms related to security by providing 
        assistance and training linked to implementation of the Inter-
        American Convention Against the Illicit Trafficking in Firearms 
        (CIFTA) and Inter-American Convention Against Terrorism are 
        essential.
   Provide assistance for stockpile management and conventional 
        arms destruction.
                                 ______
                                 

Response of Hon. Adolfo Franco to Question Submitted for the Record by 
                          Senator Norm Coleman

    Question. In my travels to Africa and South Asia, I have 
consistently come away believing that the impact of clean water on 
public health is impossible to overstate. Assistant Administrator 
Franco, in your testimony you mention the President's Water for the 
Poor Initiative. Can you please go into further detail about the 
implementation of this initiative in the Western Hemisphere?
    Answer. Over $51 million were dedicated to implementation of the 
President's Water for the Poor Initiative in 2004. The following is a 
brief description of illustrative activities and achievements that 
pertain to the Initiatives' three main focal areas: Water supply and 
sanitation, watershed management, and water productivity.

                      WATER SUPPLY AND SANITATION

    Water supply and sanitation are important social and economic 
development issues in Latin America. In 2004, USAID contributed $28 
million to water supply and sanitation, which also includes wastewater 
management. For example, under the Bolivia mission's Alternative 
Development Yungas Development Initiative 58 small-grant community-
prioritized projects to increase household access to clean water and 
sanitation were completed in 2004.
    In Peru, nearly 16,850 families were provided with access to new 
sanitary/health infrastructure works, using all local materials. 
Working with its Ministry of Health, the Colombian mission supported 
the development of community enterprises to manage the effective 
delivery and administration of water services, and, with the United 
States Army Corps of Engineers, helped to improve water treatment 
facilities and an aqueduct in Putumayo. In Central America, the USAID/
El Salvador water program has supported the installation of community-
operated water systems, and increased access to clean water for 
beneficiaries in rural areas to 65 percent (the country average is 22 
percent), representing more than 165,000 people. The program also 
helped to include a line item in the water tariff to help pay for 
conserving the water source and completed construction of three sewage 
treatment plants.

                          WATERSHED MANAGEMENT

    Watershed management is an integral and crosscutting component of 
USAID assistance in LAC. In 2004, USAID contributed $18 million for 
watershed management in LAC which includes integrated water resources 
management, coastal zone management, freshwater ecosystems management 
and industrial water pollution control. Under the USAID Central 
American and Mexico (CAM) Strategy and Plan, for example, integrated 
water resource management is one of the underlying foundations for all 
development activities. In Panama, the mission has helped enhance long-
term watershed protection by encouraging participation of civil 
society, the private sector, and local governments in the management 
and protection of the Canal Watershed. In Ecuador, the mission has 
established a trust fund to finance watershed conservation activities 
and is working with the Nature Conservancy under the USAID Parks in 
Peril Program to protect the Condor Biorreserve, which is the primary 
source of drinking water for the city of Quito and the greater 
metropolitan area. A similar activity is under way in Bolivia.
    In the area of coastal zone management, USAID's Global Development 
Alliance with the United Nations Foundation has supported the work of 
the International Coral Reef Action Network (ICRAN) to protect and 
preserve the Mesoamerican Coral Reef, a World Heritage ecosystem that 
provides critical habitat for fisheries in Mexico, Belize, Guatemala, 
and Honduras. Assistance to ICRAN has provided important research on 
pollutant circulation patterns, supported sustainable fisheries 
practices, and promoted long-term marine and coastal ecotourism. In 
Jamaica, USAID's environmental program has worked on protecting both 
upland watersheds and coastal areas. Improvements in faecal coliform 
levels for example resulted in five Jamaican beaches recently being 
accepted into the International Blue Flag certification program, making 
them more attractive tourist destinations for environmentally 
conscience travelers from around the globe. The control of industrial 
water pollution has also been a key component of USAID assistance.
    USAID's Central America and Caribbean regional environmental 
programs, as well as the program in Bolivia, have provided training is 
such areas as hotels, dairy products producers, slaughterhouses and 
tanneries to reduce water use and pollution through the adoption of 
cleaner technologies and environmental management systems.

                           WATER PRODUCTIVITY

    In 2004, USAID contributed $5 million in LAC for water productivity 
which includes irrigation and agriculture-related best management 
practices, fisheries and aquaculture, and small-scale hydropower. 
Launched this past February, USAID supported the Regional Visualization 
and Monitoring System (SERVIR) for Mesoamerica. With the U.S. National 
Aeronautics and Space Administration (NASA), the Water Center for the 
Humid Topics of Latin America and the Caribbean, the World Bank and 
others, SERVIR mainstreams earth observation information from NASA and 
other sources by providing accessible data archiving, dynamic mapping, 
and support tools to help improve the management of agricultural lands, 
freshwater resources, and coastal zones. Elsewhere in Central America, 
USAID/El Salvador has successfully promoted on-farm water storage to 
expand off-season agriculture and the use of drip irrigation systems 
powered by solar water pumps. In the Dominican Republic, USAID 
assistance has helped increase civic participation in environmental 
protection by training local partners and community organizations on 
avian conservation and nondestructive fishing techniques.
                                 ______
                                 

Response of Hon. Roger Noriega to Question Submitted for the Record by 
                          Senator Bill Nelson

    Question. Please provide the administration's specific objections 
to Senator DeWine's Haitian Economic Recovery Opportunity (HERO) Act 
passed by the Senate in the 108th Congress.
    Answer. We strongly support the people of Haiti. We continue our 
efforts to help the Interim Government to fashion a more prosperous 
economy that produces quality jobs for its people. Clearly, Haiti's 
economic development is in the United States interest. Creating jobs 
and economic opportunity in Haiti will make Haitians less dependent on 
foreign assistance for survival. It will help deter illegal migration 
and provide alternatives to drug smuggling as a source of income. It 
will increase the government's revenue base and the country's overall 
stability.
    The United States has taken broad steps to assist Haiti, including 
a pledge of $230 million at the World Bank Donors' Conference, which 
included $22 million to support economic growth and job creation. The 
textile sector seems to offer the greatest opportunity to produce new 
jobs relatively quickly. We must take care, however, to ensure that 
American workers do not suffer negative consequences as we work to help 
Haiti. While the Senate passed the HERO legislation in the last 
Congress that would have granted new textile benefits to Haiti, the 
House took no action. We want to work with the Congress to fashion 
legislation that will find the right balance between job growth in 
Haiti and maintaining jobs here at home.

                                  
